This Amazon Prime Day (AMZN), on 12 and 13 July, could be a brilliant way to save money on incredible bargains — or a horrible opportunity to spend more than you can afford on things you don’t really need.
It all depends on the approach you take. If you’re wise to the psychological tricks being used to get you to spend more, and follow the three golden rules you need to beat them, you can snap up the bargains you need, without all the extra nonsense that you don’t.
Like any sale, Prime Day works on the idea of scarcity, and offering a limited number of items at a knock-down price. We’re hard-wired to seek out scarce items, so when we track down a deal this way, we get a rush of endorphins, which makes us want to do it all over again.
Right now, the idea of bagging a bargain is particularly attractive because prices are rising so rapidly. It means finding one gives us even more of a kick.
One of the big features of Prime Day is lightning deals, which last for very short periods, and provide the scarcity effect on steroids.
It also gives us less chance to check that what we’re being offered is a good deal, and to compare prices elsewhere. This is why, unless you’re careful, lightning deals are great way to secure a regrettable impulse buy.
Prime Day also cashes in on the idea of sunk costs. You have to be a Prime member to take part, so you’ve already paid for Prime membership. The sunk costs fallacy tells us that now we’ve committed our cash, we need to take advantage of the sale, or we’ll have wasted our membership fees.
Now that the day has become a bit of a fixture in the sales calendar, it has additional power. The fact you’re reading about it is a decent sign you’ve bought into the idea to at least some extent.
We don’t want to feel we’ve missed out on a big event, so we’re likely to buy something regardless of whether or not we really want it.
These sales are designed to make our instincts work against us, so we need to adopt some fairly strict rules to control our rogue impulses.
1. Think carefully before you sign up to Prime
By only being open to Prime members, the day aims to get more people to sign up.
Once we do, research in the US found that members tend to spend roughly twice as much with Amazon as non-members.
The vast majority of people also renew their subscription, so this boosts sales for years.
If you’re signing up to Prime just to take advantage of the sale, don’t let it become a fixture in your life by default.
Opt for a free trial, and if you don’t want to pay for it, or be sucked into letting it renew, make a date in the diary to cancel — and stick with it. If you don’t think you’ll get round to cancelling, you may want to steer clear altogether.
2. Decide what you need in advance
If you start without a plan, there’s a risk you'll pick your favourite thing out of whatever is available.
Planning ahead means that if there aren’t any deals on the items you actually need, you won’t be tempted to buy something else instead.
Don’t forget to narrow down the models as well as the brands. Prime Day is a good opportunity for retailers to sell old technology that has been superseded by something better or better value. The best way to ensure you’re not being saddled with something nobody else wanted is to be clear about the models you do want and the ones you want to steer clear of, in advance.
Part of the planning process also means setting a budget you can afford. If you overspend, you could end up putting it on credit, and wasting a fortune in interest.
Work out what you can actually afford to spend on the specific things you need, and set a limit on your spending.
3. Scope out the price on a variety of sites
Before you go anywhere near Amazon, do your research, and find out what constitutes a decent price for the item. Just because something is a deal on Amazon, it doesn’t mean you can’t get it cheaper elsewhere.
One thing to watch for is price increases just before cuts. Check out camelcamelcamel.com, which will show you what constitutes a historically good price on Amazon, so you can get some context on what a good deal looks like.
It also lets you set up price alerts, which will let you know if the price drops on something you need.
Sticking with the rules will help protect you from an expensive mistake. If you don’t think this is doable, then it may be worth considering whether it’s worth steering clear and avoiding temptation entirely.
Of course, the whole point of a sales event like Prime Day is that this is far easier said than done.