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According to a report from TheKnot.com, they put the average price of an engagement ring around $5,000. In my opinion, this number seems about right after going through the ring-buying process recently (we got engaged on Friday, March 15th, 2013!). If we assume the average household income in the US is $50,000 per year, this equates to ~1.2 months salary spent on the engagement ring.
The Engagement Ring Markup
Have you ever stopped to think about why alcoholic beverages at bars and restaurants cost $8 when you can go out and buy an entire bottle of the alcohol in the drink for $15 or eat a dinner at that same restaurant for $10?
The answer is actually quite simple – it’s because we as society over time have allowed the price to be set this high. Think about it – if we didn’t continue purchasing drinks like this, the price would go down (supply/demand curves, right?). However, the truth is that we are OK to pay this price because an alcoholic drink is more than a simple mixture of raw materials – it’s an experience, both of the taste buds and of the mind (because the alcohol makes us feel a certain way and we often enjoy these drinks in the presence of friends).
Similar to how we routinely pay for the large mark-up in alcoholic beverage prices, we have also grown accustomed to paying the markup associated with engagement rings. It’s the same sort of reasoning. The engagement ring is more than just a compilation of raw materials, it’s an experience, a symbol, and something that will be worn for a very long time. Thus, people often are willing to pay an arm and a leg for the ring of their dreams. According to one of my friends that is a diamond wholesaler, the stores that he sells to mark up the price of the rings at the retail point 3 times! That’s quite a business, right?!
Even though we as ordinary consumers do not have much control over the global price movements/markups of engagement rings, we should focus on what we can control – trying to optimize our own engagement ring purchase so that we save the most amount of money while obtaining the most value.
In an effort to help others, I thought I would share 8 cost-saving strategies that I employed recently while negotiating a path through the world that is engagement ring purchasing.
Money-Saving Idea # 1 – Have an Idea of What You can AFFORD vs. What You Can Comfortably SPEND Prior to Going to the Ring Store?
For me, an important distinction in the ring-buying process was drawing a clear line between what I could AFFORD based on my salary and savings and what is an INTELLIGENT amount to spend based on my financial goals.
Because of the magnitude of the engagement ring purchase, I think that a lot of guys have these lines become very blurred. In other words, since they are only going to complete this purchase once, they think about the maximum amount they can AFFORD (utilizing credit cards, savings, payment plans, etc) instead of thinking about a comfortable amount they can spend while still working towards their long term goals and not racking up more debt. This is the same sort of logic that goes in to buying an appropriate “amount” of house; the lenders will give you a house payment that is 40% of your salary, but most the time, an intelligent amount is only 28-30% max of your monthly salary.
When I first started thinking about purchasing an engagement ring, I loosely defined my comfort/intelligent spending level as $1,000. This was a good number to have in mind/establish internally before actually going out and being influenced by salespeople, my girlfriend/fiance, etc.
Money-Saving Idea # 2 – Ask For a Discount and Search for Better Offers Elsewhere
- Do you have the XYZ ring that I want to purchase?
- Can you beat the price and 10% discount being offered by my local Zales location for this ring?
Money-Saving Idea # 3 – Don’t Forget to Consider Outlet Store Versions of Jewelry Vendors
Money-Saving Idea # 4 – Wait to Buy Until There is a Sale
- 15% for Valentine’s Day.
- $50 off for signing up for free email updates from Zales.com
- 15% off store-wide online only sale, for no particular reason other than having a sale! (haha!)
- 75% off clearance items.
- 25% off clearance items.
Money-Saving Idea # 5 – Consider Shopping Online After Trying on Rings at the Jewelry Store
- No pressure sales.
- Even though the saleswomen at Zales was very nice, in my mind, it is always a good idea to spend some time by myself prior to making a large purchase just to double-check that everything is good to go.
- By purchasing online, you can buy an engagement ring at any time of the day or night, at your speed, in the comfort of your home.
- No pressure to buy extended warranties (which more than likely, are not needed – see more about this below).
- More sales/promos being offered to online shoppers only.
- This was really the biggest factor for me. When I purchased the engagement ring, I bought during a 15% off sale that was only available to Internet shoppers. Pretty good in my book!
- In addition to store sales, you can also take advantage of cash back websites (see more on this below).
Money-Saving Idea # 6 – Utilize Cash Back Website
- When I did this, the search revealed that people saved money on their Zales purchases in three primary ways:
- Sales/promo offers
- Check – already done in my case!
- Online coupons
- Unfortunately, the coupons I could find for Zales were for very small amounts of savings such as free shipping, $30-$50 off, etc, and could not be combined with other sales.
- So, coupons were out of the question for my case!
- Clicking through to the site you’re buying from through a cash back website
- Now, this was a new thing for me to hear about!
- What happens with these cash back websites is that brands pay these sites a portion of affiliate income anytime someone comes directly from their site and makes a purchase at the brand. And, these referring sites pass on some of their affiliate income to you, the purchaser! Pretty cool, right?!
- These cash back opportunities can be significant – anywhere in the range of 2-15% cash back, so they are definitely worth looking in to!
- To find out what type of cash back websites and offers are available for any major purchase you’re thinking about, simply Google, “cash back website + the store you’re purchasing from.”
- In my case, the best offer (which I took advantage of) was 7% cash back using the site, BeFrugal.com.
Money-Saving Idea # 7 – Extended Warranties Make the Store More Money Than They Save You, the Purchaser
Money-Saving Idea # 8 – Use a Cash Back Credit Card for the Purchase
Putting it All Together – Total Money I Saved
- + $97.75 for sales tax
- – $345 for 15% off for buying during online-only sale
- – $161 for 7% cash back clicking through to Zales.com from BeFrugal.com’s cash back website.
- – $23 for 1% cash back using Chase Freedom Visa Card.
How about you all? What techniques would you utilize to save money on your engagement ring? Have you used any of the ones discussed above?
Share your experiences by commenting below!
***Photo courtesy of http://nominalnuptials.com/wp-content/uploads/2013/03/ring.jpg