Only if you need it…

On the right side bar I have a section called “Only if you need it”. I have this to link to “deal sites” and other places/reward programs I use to try to get the best deal or value for something when I buy it. The title, of course, comes from the fact that buying something at a “good price” is only a “deal” if you actually need it or dare I say “want” it.

Americans spend so much money on useless crap it is not even funny. Just look at how “they” market to us. It is common to see sayings such as “Buy 2-get-1-free” and “The more you buy the more you save” – Only in America do you have to spend money to “save” money. This is an unfortunate perversion of the much better and truer saying “It takes money to make money”.

To make my case, if it pleases the court, I present Exhibit A: The Snuggie!

The “deal” here, is that for $19.95 + $7.95 + $7.95 ($35.85) you get the following:

  • Two “Snuggie” Blankets
  • A plastic book light

I am no expert, but lets break down what you are getting for your hard earned $35.85.

  1. First the lets cover the “book light” that is “free”. This light costs less than $1 to make and can be bought in bulk $1.47 each.
  2. Second, the “blanket”… this stuff is made from “Fleece”, one of the cheapest mass produced fabrics around. I don’t know the exact dimensions, but let’s say it is 50×60 inches. You can buy a fleece blank in bulk for $4.13 each.

So, we now have $1.47 + $4.13 + $4.13 in “raw material” costs. Now that is for your average Joe running a mom-and-pop operation. If I was a better business man, I am sure I could get the price of the price of these things down for large orders of 50,000 or so. Let’s be generous though and add in an allowance for cutting the “sleeves” and other Snuggie extensions to the blanket. I think it is safe to say that with these extras, the price of the “raw materials” would probably be closer to $1.10, $3.50 and $3.50. Or a total of $8.10. (Basically the price of “Shipping & Handling” – this must be a “secret rule of thumb” for this industry)

Now let’s add in postage (assuming it weighs 2LBs and its shipped with some form of bulk rate) $3.50.

Now let’s add in labor to package the thing and ship it out. Let’s say it takes 5 minutes per blanket set at minimum wage. $0.60

So $8.10 + $3.50 + $0.60 = $12.2

Let’s add in the cost of additional labor, storage, credit card processing fees, insurance, offices, etc and make it an even “$20” per blanket set. By these calculations… they probably make about $15.85 of “pure profit” on each blanket. Let’s say you sell a million of these things… you have a company with $35.85 Million in revenue and $15.85 net profit. Now that is a business I want to be in and its all made possible by American consumers buying a fancy blanket on TV.

Now this is not all bad of course. This is partly why America is great. This single product has probably made a few very smart entrepreneurs wealthy and employed 100’s of telephone operators and a handful of other “workers” – not to mention a bunch of factory workers in China, as well as postal workers and the like.

But for you, the poor reader that just wanted to get a “deal” on a stupid blanket, this is not good for you. Your money would be better spent buying a real blanket from somewhere else for $10. Or better yet a blanket that might actually save your life for $6.

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