People are always on guard about hidden charges and higher prices. They look closely at whether they will need to pay more than they initially expected for anything — from housing to utilities and food. What they do not typically pay enough attention to is if some perks or incentives are being pulled back.
Incentives are something that is typically provided by companies — big and small — in a slow market to lure buyers or consumers. It is one way that providers can reduce costs or present attractive deals without compromising on the price. These incentives are typically overlooked or taken for granted until they are gone.
In essence, actual incentives equal money. When you get a couple of rent-free weeks on your lease, that rent money is left in your bank account. When you get a free transfer of your credit card balance, that is a cost that you don’t have to take.
One sign of a tighter market is seeing these incentives and concessions go away. And in some cases, you even may see them replaced with price hikes, less favourable terms, and smaller space for negotiation as well as fewer options. Although all of the above are good signs for an improving market with more consumer demand, these circumstances could catch you by surprise and wipe off a good amount of your income.
Is there anything you could do? Not really, except for being aware of the fact that the market is getting tighter, prices are increasing, and concessions are being pulled back. You should be able to anticipate more pressure on your income because of inflation coupled with this higher consumer demand.
This type of market isn’t all bad news, however. Although you may see old options in products and services are getting pricier and less affordable, a thriving market also can help new options emerge. With that, you could be able to find the right fit for your need. In addition, a stronger consumer demand is also a good driver for large retailers and big-scale vendors and providers who can drop prices if the demand is higher.
So the bottom line: there are some advantages that may come along on the long run. But until then, the change can be hard to swallow. To help yourself go through the transition, consider the following two strategies:
Calculate
Look at where you’ve enjoyed perks in the past couple of years. These could no or small rent hikes, flat school tuition, free gym membership, etc. Add up the equivalent of these perks in money terms to see how much this will cost if wiped out by inflation or lack of incentives. The sum of this should be an indicator of your potential cost if everything is rolled back.
From here you will be able to plan the required savings or income increases that offset this cost and keep you afloat. Taking a good look at your budget is, of course, the first step. But in all cases, you must also consider alternatives and think positively of options such as downsizing your accommodation or moving into a cheaper neighbourhood if a big hit is coming from housing.
Check options
Not every retailer, vendor or service provider is able to compete at a thriving market on the same footing. Some smaller players may be still struggling to attract customers, creating opportunities for competitive prices and charges. As mentioned, others may be large-scale and able to benefit from higher demand. Either way, if you shop around a little bit you may find golden opportunities. Being rigid when prices are on the up isn’t a good approach.
Rania Oteify, a former Gulf News Business Features Editor, is a Seattle-based editor.
