Purchasing Power: What is it and How to Use it to Your Advantage
The definition of purchasing power is as follows: 1. General: Extent to which a person, firm, or group has available funds to make purchases. 2. Economics: (1) Money and credit available for spending and consumption of goods and services. Demand and prices cannot rise beyond the available purchasing power.
For most of us the idea of purchasing power is tied to income; the more income you have, the more power you have. However, every time we buy something, or use a service, we exercise our purchasing power regardless of the price of the purchase. When we choose one competitor over another for whatever reason we are using our purchasing power to support that entity. Here are a few things I consider when deciding who gets my business.
Customer Service has gone to the wayside for a majority of the companies providing our goods and services. In general, the larger the company the less customer service is provided and the more we as consumers must do to maintain the relationship. With more big companies pushing out the little guys, the more we are waiting on hold, choosing from a menu of items by pressing numbers, being transferred from one department to another, and stating our request over again with every new “customer care” representative we speak to. I recently had the experience of waiting on hold for over 30 minutes when calling to set up internet service for my home. I wasn’t even a customer yet and that was my first impression.
Why do we allow ourselves to jump through hoops for the opportunity to spend our money? We don’t give ourselves credit for the value of our choices. We have all had that experience where someone has gone the extra mile for us and it makes an impact. I was home one Tuesday morning when I heard the garbage truck stop outside the house. As soon as I heard it, I immediately remembered that we hadn’t gotten the garbage out to the curb. I began frantically fumbling into my winter boots to try to get out the door. Then, I noticed the garbage man was already walking down our driveway with our garbage and recycling cans. Before I could say anything he was gone. I called the company immediately and asked to speak to the manager because I wanted them to know how much that small gesture meant to me. I could be paying more for the service I get from that disposal company, but I would happily pay it to a place that is willing to take those extra 25 steps to make my day.
For most of us cable (or satellite), phone, and internet service can be bundled together and serviced to our homes from one company. While that may initially provide savings, before you know it, the bill continues to tick up and promotions expire. We are always seeing ads on billboards or mass mailings of who has the best offers for new customers. There is a lot of competition for those new customers out there so use that to your advantage. Call your provider and tell them what their competitor is offering. Then ask if they would be willing to match it. Often times they will not want to lose you as a customer and will offer you the same deal as their new customers. If they will not, you might have to be willing to change providers to get the better price. Whether you are a new customer or not, your business should always be important enough for their best offer.
Being a savvy consumer may not change our society as a whole but it may make us feel a whole lot better about where we spend our money. For me it is worth spending a little more to support the local hardware store, not just because they are a part of the community but because they partake in the community. I know that the hardware store supports local youth sports by sponsoring teams and buying equipment. I feel good about supporting a local business but especially one that gives back.
Use your power as you see fit!
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Author Ashley Hagelin with LSS Financial Counseling is a Certified Financial Counselor and specializes in Reverse Mortgage Counseling.