Beware Five of the Biggest Rip-offs
Getting the most for your money is clearly a top priority. While few of us want to scrimp needlessly on quality, none of us likes to feel cheated either. So you may be surprised to learn that, in these all-too-common examples, you may be getting a raw deal.
1. Movie Theater Popcorn
If you’ve taken your family to the movies lately, you know it’s not an inexpensive proposition. Sure, ticket prices are high, but part of what drives up the cost is that obligatory bucket of buttery popcorn. Depending on the area of the country and the size purchased, moviegoers can shell out anywhere from $5 to $10 for a bag or box —sometimes more than the ticket itself.
But according to Richard McKenzie, an economics professor at the University of California-Irvine and author of the book Why Popcorn Costs So Much at the Movies and Other Pricing Puzzles, that same popcorn actually costs less than 10 cents an ounce to produce. Why the incredible mark-up? McKenzie concedes that movie theaters do not make much money on ticket sales, forking over half to three-quarters of the ticket price to the studios. That makes the concession stand the ideal place to make up for lost revenue.
2. Ordering Wine in Restaurants
For some, nothing’s more relaxing than having dinner in their favorite restaurant and pairing a nice bottle of wine with their meal. Unfortunately, many times the same bottle of wine you buy at your local liquor store is sold for twice the retail price (or more) in a restaurant. You’ll be paying an even higher premium if you end up ordering your wine by the glass. Often, the least expensive wines have the greatest mark-ups.
While there may be a legitimate difference between the restaurant’s and other retailers’ wholesale costs for the same bottle of wine, the fact of the matter is that the operational cost of running the restaurant is factored into the prices you see on the wine list. And yes, you’re paying for the convenience of having that bottle served to you.
3. College Textbooks
If the bill for your child’s college tuition, room and board, and other fees isn’t enough, the price of a semester’s worth of college textbooks is enough to make any parent’s jaw drop. It’s not uncommon to shell out hundreds —or, for some majors, well over a thousand —dollars per year just for books and supplies.
Adding insult to injury, many students receive just pennies on the dollar when attempting to sell back those textbooks at the end of the semester. Still, keeping the book in good condition—especially if the same edition will be used the following year —should yield some return. Shopping around for used books or even e-books can result in savings.
4. Brand-name, Over-the-Counter Medications
If you’ve filled a doctor’s prescription lately, you’ve probably noticed that your health insurance plan charges less for a generic than for a brand-name medication —if you’re even given a choice. These days, generics or “store brands” also are available for many popular over-the-counter meds, from allergy and cold pills to pain relievers, though many people still opt for the brand names out of habit.
The truth is, the Food and Drug Administration (FDA) requires that generic medicines contain the same active ingredient and demonstrate the same safety and effectiveness as their brand name counterpart. Your savings in buying generic comes from less expensive packaging, fewer marketing costs, and different inactive ingredients.
5. Premium Gasoline
It used to be true that if you skimped and used regular octane gasoline when premium was recommended, your car would let you know it: pinging, knocking, vibrating, and, over time, damage to your engine. These days, knock sensors and other sophisticated technology under the hood make all that a thing of the past. Yet many people still opt for premium, thinking they’re getting a better quality product or that they’ll get better mileage or performance out of their vehicle.
The fact is, octane is simply a measure of how fast fuel burns (i.e., the higher the octane, the slower the burn) and not a measure of quality. According to the AAA, only 6% of today’s cars truly require premium gasoline, so you’ll need to read your owner’s manual fuel requirements carefully and use only premium when required. The rest are set to perform just fine at 87 octane, which is the level of regular unleaded gasoline.