Why do we have Coupons – how understanding price discrimination can save money

Price discrimination is an economic term for selling the same product at different prices to different buyers. It exists everywhere: airlines, car dealerships, hotels, restaurants, and even at the places that you wouldn’t usually thing of, such as: amazon.com (who hasn’t heard of stories that if you put something in the cart and leave it, sometimes the prices are lower when you come back later), or depending on whether you use iPhone or Android, the price is different for the same item.

Business model of several companies such as Groupon and Living Social are based on price discrimination. and So next time when you see an an email with that 50% off coupon – think about the economic theory behind it. It’s good for both consumers and businesses. You get the picture now: researching things in advance and using coupons saves money. Before I buy anything, I usually google to see if that product or company has online coupons (internet has made this a lot earlier)

All of this sounds nice until people get wrapped up so much in deals that they buy stuff just because it’s on sale. That defeats the whole idea of of saving money and gets into the “pound foolish” territory.

What I recommend is figuring out what you already want to buy or have, then look for deals. It can be either an online search or those physical coupon books (it still exists, I just found some deals in Vegas 2 days ago that wasn’t available online)


Sometimes you see something and don’t have time to research, there is a long line and if you wait longer, you can get pushed even further. Don’t worry: in those situations, get in the line so you don’t lose the spot, then look for online deal. I’ve done that several times for activities ranging from a popular activity to an attraction.

When you’re on vacation and are going to spend money on certain things anyways – why not just spend few mins checking whether you can stretch that dollar! There is no better feeling than seeing people in line paying full price for that high roller you want to go to and saving $14 (by buying it online) and getting out of the line. Not only you pay less, but also get ahead in the line to beat the crowd. Didn’t they say, “time is money too!”

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