Published August 15, 2012
Perhaps the most underrated savings tool is simple patience. When a new consumer product hits the shelves -- say, a DVD of a movie that came out recently or a new model of a laptop -- it's generally sold at the manufacturer's suggested retail price, or MSRP. After some time has passed, however, that price will start to drop. This happens either because the retailer decides to put it on sale or because the manufacturer itself decides to implement a price cut to boost sales.
So how long do you actually have to wait to start seeing the price decrease? For individual products it will depend a lot on sales figures. The Nintendo 3DS, for instance, saw a price cut of $80 after just five months, a move prompted by sluggish sales. But it's also possible to look at past trends to estimate average wait times for different classes of products.
To do so, we researched a number of price-tracking sites to find out just how much patience shoppers need to show to get the best price. Here's how long you can expect to wait before that new product you have your eye on will see its first significant drop in price.
Books and E-Books
When it comes to books, the main price drop comes when the book is released in the much-cheaper paperback format. E-books, meanwhile, tend to follow the lead of their print counterparts.
"The first price drop (for an e-book) is going to come when the paperback comes out," says Christian Hupfeld, founder of eReaderIQ, a site that tracks price drops in the e-book market. Unfortunately, the paperback release timeline is hard to predict. "The timeline has been getting smaller, and it does have a huge variance," he says.
That variance depends a lot on sales. While you used to have to wait about a year for the paperback to come out, these days the wait can be less than six months. It could be longer than a year if the book is still selling briskly in hardcover. Take George R.R. Martin's "A Dance With Dragons," the latest in a best-selling fantasy series that has become even more popular since HBO adapted it into "Game of Thrones." The book isn't due out on paperback until late August, more than 13 months after it was released in hardcover.
Based on data provided by CamelCamelCamel, a site that tracks prices on Amazon.com, video games tend to start falling in price just a few weeks after release. During this time, the first price drop falls in a range of 3% to 6%. Take "Max Payne 3," for instance, which came out May 15 at an initial price of $60.
According to CamelCamelCamel, the game saw its first price drop (to just less than $58) by the end of May, and it dropped again to just more than $52 in early June. In other words, gamers willing to wait just a few weeks after release were able to get a discount of about 12% on the game.
Why should new games fall in price so quickly? One theory suggests the used-game market is responsible. Many people who buy a game on day one may be done playing it within a few weeks, and they'll subsequently trade in the game to a used-game store such as GameStop, where it will be sold at discounts of $5 to $10. With gently used versions of the game available at a discount after just a few weeks, retailers have to drop prices to compete.
It's never fun to see the new TV or stereo you just bought drop in price a week after you buy it. Thankfully, there are sites out there to help you avoid that feeling altogether. According to pricing data gathered by Decide.com, a site that tracks historic pricing trends and intelligence on when next-generation products are due to be released, TVs rank as the most volatile class of consumer electronics.
On average, 30% of new television models see a price drop of at least 5% within just 10 days of release. Within 25 days of release, 50% of new television models see a drop in price, meaning that if you wait a month after that TV hits the shelves, there's a better-than-average chance it will have dropped in price.
Decide CEO Mike Fridgen attributes this price volatility to competitive forces within a dynamic market.
"These are higher priced products, and (they) have technology that's moving at a fast rate -- for instance, refresh rate and screen technology," he says. "You have a lot of new product coming into the market."
The smartphone market sometimes feels like a story of Apple versus everyone else, so it's no surprise the price-drop timeline is similarly divided.
The pricing of iPhones is fairly predictable at this point: The baseline model is $199 with a new two-year contract. It remains at that price until the next generation iPhone is released, usually about a year later, at which point the price drops by $100.
Then there's Android.
According to Decide, after just 10 days on the market, 10% of new Android models have already dropped by a whopping 30% of their original price. And after 35 days, half of all new Android phones drop in price by 30%. While the iPhone takes a full year to come down in price, Android fans only need to wait around a month before the price of that new model comes down significantly.
"There's much more competition on the Android side than on the iOS side," says James Brown, director of merchant accounts for price-comparison site PriceGrabber.com. "There are new Android phones coming out on a weekly or monthly basis, as opposed to yearly."
Laptops and tablets
Compared to phones and TVs, computers tend to take a bit longer to start seeing significant price drops. It takes an average of 40 days for 50% of laptops to see a price drop of at least 5%, and tablet prices are even stickier. According to Decide.com's survey of 94 top tablet models, it takes a full 65 days before half of new tablets have dropped in price.
Once again, Apple products are the outlier here. As with the iPhone, iPads will drop in price by $100 once the new generation comes out, which usually takes about a year. Usually a few retailers will pre-emptively drop the price a few weeks before the next generation is due to be announced -- but by that time, it's worth it to wait a few more weeks to see what features the new version will boast before you decide which to buy.
In general, though, it's just as important to consider seasonal trends when it comes to computers and tablets. Using price-fluctuation data from Decide.com, the three best times to buy a laptop are right after the Consumer Electronics Show in January (when new models have been announced and the old models will be priced to move), just before back-to-school season and after Black Friday.
According to CamelCamelCamel, the first price change for a new DVD happens within two or three weeks, a time frame similar to video games. There's just one big difference: That first price change is, on average, a slight increase. This indicates that a lot of retailers sell new DVDs at a discount on day one and then raise their prices after a period of time.
"It seems like there may be a lot of pricing competition between retailers when DVDs are first released," says Ben Engebreth of CamelCamelCamel. "Perhaps this abates a bit after the release, allowing prices to rise modestly."
Brown also observes this oddity in the DVD market, noting that the competition brought about by the likes of Netflix and iTunes makes for some volatile pricing.
"Retailers will add new releases at a discounted rate and use those as a loss leader to get (customers) in stores," he says. "They'll start off over the weekend with a box set at a discounted rate, and then the price goes up after a week to the normal MSRP."
After that happens, the price will subsequently start to fall again. But this is a rare occasion when buying on day one might be a wise choice.
Clothes and Toys
Clothes are very much a seasonal item, and seasonal pricing trends therefore apply.
"By the middle of the season is when you'll start to see prices move on (clothes)," says Brown. That means there's a time frame of about three or four months from when an item first appears on the shelves to when it sees a truly significant price drop. Brown says that sandals, for instance, can be expected to come down in price around mid-July.
As with other categories, slow sales could prompt a retailer to accelerate the price-drop timeline, though Brown says that with high-end clothing lines, the manufacturer may prevent retailers from doing so.
Toys also follow seasonal pricing trends, though to a lesser extent than clothes. When there's a hot new toy, such as Tickle Me Elmo, it's obviously released with the holiday season in mind, and the first real price drop won't come until after Christmas. Other than that, though, the timeline depends on the type of toy.
"If it's an educational toy product, there is no season, and it's largely demand-driven," says Brown. "If it's something following a recent Pixar or Disney release, they're riding that wave for a three- or four-month window where they're going to maximize the price. Once the movie's been out for so long, the pricing is going to drop fast."