Australians getting ripped off everyday unawares

By Lauren Leisk, Yahoo7 Moneyhound Updated February 12, 2013, 8:00 am

You probably don't know you're getting ripped off nearly every day

Most of us like to think of ourselves as fairly savvy shoppers, occasionally picking up a bargain in the sales or finding something cheaper online than in the shops.

However, retailers, banks and many other businesses are increasingly finding ways to get us to spend more without even realising it.

Price discrimination

Supermarkets are well known for their methods of targeting shoppers with special offers or their positioning of snacks next to the checkout.

However, the increasingly used technique of price discrimination is a more subtle method that sees retailers selling the same product for different prices, often simply in different packaging or at a higher price according to the geographical location of the branch.

You can dramatically reduce your grocery bills by shopping in less upmarket areas and buying cheaper ‘bargain’ versions of regular products, which are sometimes identical to the original, especially when it comes to raw goods like flour, sugar and raw nuts etc.

The most common price discrimination we see is with men's vs women's hair cuts. Hair dressers know that even women with short hair will pay more for their hair cut than men and price them higher. Whilst men can get away with a $20 cut a lady will almost never be charged less than $60.

Tech manufacturers will often provide cash back offers so that money conscious consumers can send in their purchase certificates for a small refund, where as well off buyers are unlikely to bother.

Banks and phone companies will offer honeymoon rates to new customers or those who are willing to switch, whilst assuming their current customers are happy to pay higher rates because they are locked in to a contract or can't be bothered to price fight. However complaining customers are looked after quickly when they threaten to leave.

It's quite evident what the mark ups are when retail stores decide to have a stock take clearance sale, discounting items by almost 80% just so they can break even on the merchandise to make way for new stock. This just goes to show how heavily marked up they were in the first place, and this is why a warehouse sale will not often occur in the retail store but at the warehouse which is likely to be out of town.

Even general practitioners will decide whether to bulk bill a patient or make them pay full price for the visit depending on their age and employment status.

On a global scale

It isn’t always easy to avoid price discrimination. Australians in particular end up paying far higher prices for tech products such and music downloads, PC games and computer software.

Aussie consumers have also been found to pay more for items such as clothes, consumer goods and cars compared to their counterparts in the US or UK.

For the average shopper, it’s almost impossible to avoid this as many US sites prevent customers with Australian credit card numbers or delivery addresses from purchasing from their sites.

However there a companies popping up like to help shoppers get around these problems by helping you purchase the item and delivering it to a US address, then forwarding the item onto you for a small fee.

Ways to fight back

When shopping online, try to search products across a range of different sites, both nationally and internationally, to find the best prices.

Also, always seek to get the best deal from anyone who you regularly make payments to – your bank, phone supplier or even your gym. These suppliers are in direct competition with other companies, so a bit of negotiation if you find somewhere cheaper could result in better prices to reward your loyalty.

Compare the rates you pay for your home loan, broadband and electricity with colleagues and friends. Go online and compare your rates with other providers who could be offering the same service for less. Comparison sites like Moneyhound are free to use and exist to help people easily compare prices to save money across all sorts of monthly bills like electricity, home loans, credit cards, mobile phone and broadband.

Price discrimination can be difficult to avoid, especially when it operates on an international scale. However, you can make changes to your everyday expenses by doing your research and being aware that the price you are being given may not necessarily be representative of the norm.

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