Dave Ramsey is really big on paying cash for things, and he often talks about getting a better deal on things when paying cash since the store gets the cash up front, doesn't pay overhead to credit card companies, etc.
So we are shopping for a new washer and dryer and I thought it would be a good time to try Dave's approach. We have shopped very carefully using Consumer Reports, comparing store prices to those online, etc.
Yesterday we withdrew a substantial amount of cash from the ATM (no Bank of America branch here) and went into Lowe's to get our selected washer and dryer. We informed the salesman of our intent and showed him a price we had found online at US Appliance and asked whether they could match it. The answer was no. The manager quoted us the bottom line price, which was still $123 more than US Appliance. So we left. (Don't get me wrong, the Lowe's price was still a decent deal.)
This morning I awoke to discover that the US Appliance deal had expired, so I went to Lowe's and approached the manager. I told him I had the cash to buy our selected washer and dryer (patting the fat envelope on the counter) and asked if he could knock a little more off the price quoted the night before. He replied, "I'm not going to give you a discount just because you're paying cash." He seemed amused/annoyed that I was even asking. I said, "Even though you will have to pay 3%-5% if I pay with my credit card?" He said, "I don't care about that." I said, "OK" and walked out of the store while he apologized. He can let the money walk out the door - it's not my problem (turns out the US Appliance deal is back on again anyway, so we'll likely do that).
In essence, this is what I heard from the manager, "I know that you are going to save me money by paying with cash, but I am not willing to pass any of those savings on to you." OK, well that's fine but I'm still going to buy the appliances at the cheaper place. I definitely wasn't expecting him to say, "Oh, sure I'll cut 10% off the price." But even a small discount for me would be awesome and would go a long way toward me being a repeat customer, and I would tell everyone how awesome Lowe's is. But now I'm instead telling you how much I dislike them. Oh well.
As I've thought about it, I've come to see it two ways.
Reasons he should offer a slight discount to me:
1. He's saving 3%-5%
2. The company immediately gets the cash assets, as opposed to a monthly payment
3. Better for me to spend my money there than elsewhere
However, there are some good reasons why he didn't give me the deal
1. He's the manager, and my purchase doesn't affect his paycheck.
2. Most people who shop for washers and dryers NEED them - it's not often a whimsical purchase. So he knows there's a good chance I'll be back to pay his reasonable price.
3. "The establishment" makes it difficult for them to make "exceptions" for individual customers.
4. In the case of a washer and dryer, he knew that no one else in town had a lower price on those models (Home Depot was the same price). If it were a custom job, like counter tops or carpet, he isn't as confident that he's the lowest in town and may be more likely to give me a better price.
So what do you think? Is it crazy to think I might get a discount on a large purchase just for paying cash? Is the Lowe's manager dumb to turn me away? Or is this a case of "Dave Ramsey fail?" Or is it just not the right situation to apply Dave's cash tactic? Should the system reward financing purchases while offering no advantage to those willing to pay cash?
-------------------------------------------
Side note: The large ATM withdrawal prompted a freeze on our debit card, email notification of suspicious activity, and multiple phone calls from Bank of America (within hours of the withdrawal). Score one for them for customer protection!! The irony is, I went and deposited the money back in our local bank account. Too funny.
I would have tried Best Buy and Walmart...I know Walmart matches prices, sometimes they will even take word of mouth instead of the actual proof.
ReplyDeleteI think the guy at Lowe's was being rude. They can always take something off.
I am a huge Dave Ramsey fan, as you know, but I have never gotten a deal on a purchase by offering to pay cash (and I always pay cash).
ReplyDeleteOn the contrary, if you had signed up for a Lowes credit card, you would likely have gotten at least 10% off and maybe as much as 20% off.
It was reported recently that Sears makes more money from their credit card department than all the merchandise they sell. The same is true for many car companies. The financial wings are where all the money is, which is why they love car loans and leases.
What a world, eh?
I like your ambition. I think part of the problem is a tight economy. In a warmer economy, prices are a bit higher and they might be more willing to negotiate. But in this economy, they probably don't have a lot of wiggle room (who even knows if they're in the black right now!). And I think your conclusion about the institution imposing restrictions in probably accurate - he most likely doesn't get any wiggle room to make deals from his superiors (a manager is just a manager, not an owner, after all). Keep trying though and post when the negotiation tactic works!
ReplyDeleteWhether or not it gets you a discount, there is something very... honorable about paying cash. Here is a devotional from Richard G. Hinckley: http://speeches.byu.edu/reader/reader.php?id=12009 In it he tells of his father paying cash for their new car. It's a good story, enjoy. I hope you two are doing well!
ReplyDeleteI think you are more likely to get a better deal with cash from a small business where the manager who is probably also the owner is more motivated to do business.
ReplyDeleteWe have personally used the cash tactic to buy nice used furniture/cars from private sales. When you have a pile of cash in hand they know the deal could be a done deal right away...so you can ask less.
However, I think this is a good question for Dave. You should call him and ask.