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To save money it helps to know how the market works and how to make it work for you. This is certainly true in the case of product life cycles. Understand this cycle, and know where a product is in it, and you can save a lot of money.

Most products have a somewhat predictable life cycle. There is the birth of the product, the popularization, and then the common distribution. Once the distribution of a product is common, it is often much cheaper than when it was new. We have all seen this with VCRs, DVD players, futon couches and other things.

How do you take advantage of this to save money? The primary way to save is to wait if you can. The price of a product that is in the "mature" phase of its cycle can be as much as 80% less than when it is new. Consider that the quality and functionality of a $59 Walmart DVD player is about the same as that of one that cost $600 when they first came out. That's a 90% drop in price.

Fortunately, life cycles seem to be getting shorter, meaning you might not have to wait as long as in the past for prices to bottom out. With some new electronics, waiting a year can mean paying half as much. If you can afford to wait, watch for the time when most people who want the product have it. This is probably when manufacturing costs have hit their low and competition is at its greatest - in other words, when the price will be at its cheapest.

To really take advantage of the life cycle of a product, wait until it is a mature product and a new version is being introduced. With some products, you may need to the new version for functionality, but with others the change is more one of style. In any case, the old version often gets really cheap as it is cleared out. For example, if a new style of running shoe comes along, the existing one may get really cheap, even though it does essentially the same thing.

Pricing Cycles and Secret Codes

Some retailers have their own pricing codes that can be deciphered. "Price hackers," are those who try to break the codes and determine where things are in the pricing cycle. For example, some of them claim that when a price ends in "8" ($3.88, $7.28) at Target stores, the product price is beginning its descent. If it ends in "4" it is as low as it will go.

If you notice clues to these codes, you might figure them out. Of course, if the store you are in doesn't use such price codes, you'll be doing a lot of investigating for nothing. A simpler way to determine what the prices mean is to ask a friendly employee, who may be happy to help you and show off his or her insider-knowledge. In fact, learning how to identify and talk to friendly employees may be one of the better ways to spend less money.

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