Buying big-ticket items is something every consumer or business has done or will do at one point or another in their life. big-ticket purchases can be defined as the buying of any item with a [perceived] high value. That being said, no dollar threshold can be used to determine whether an item is a big-ticket item or not; instead, what it really comes down to is the perspective of the buyer.
What makes an item, a big-ticket item?
However, a good way to determine whether an item is a big-ticket item or not is to consider the amount of money (and therefore time) it will take you to save the funds to make the big-ticket purchase. Another thing to consider--and a feature that several big-ticket items have in common--is the durability and utility the item at hand will provide. More often than not, big-ticket items are highly durable and are meant to last a number of years before they need replacing or become obsolete. Examples of big-ticket items include houses, cars, machinery--such as farm equipment, dentistry tools, restaurant-grade ovens and stoves, and the list goes on.
Who buys big-ticket items most often?
Although practically every consumer makes a big-ticket purchase at some point in their life--whether that be buying a plane ticket, buying a car, or buying a house--, more often than not, businesses are the entities processing large transactions--buying and selling big-ticket items-- the most.
The key word here might be ‘the most.’ Although households do participate in making large purchases, they do so at infrequent intervals; households (consumers) are likely to wait until their big-ticket purchase is no longer functional or has severe problems before replacing them for new ones.
On the other hand, businesses typically make large purchases relatively frequently. This is because many companies factor in the lifetime of their big-ticket item into their business model at the time of purchase. Most companies generally have a good idea--or even a hard deadline--of when they are going to replace the items they purchased, whether that be years or decades later. For instance, it is recommended that the average office replace their computers every five (5) years.
Another reason that businesses participate in big-ticket item buying more frequently than consumers is because making a big-ticket purchase typically requires a significant amount of planning and money--something that most consumers generally do not budget for in any given month, or even year for that matter.
And businesses are no exception to these costs; businesses usually need an even greater amount of wealth than consumers when it comes time to make their big-ticket purchases. And more often than not, businesses buy their big-ticket items in bulk. Take our office/computer example from above; if your office has ten (10) computers in it, we can easily be looking at a $10,000 purchase when it comes time to upgrade your computers.
So with that being said, how do the purchasers of big-ticket items usually pay for these rather expensive items?
Payment methods and problems
It is best to pay for big-ticket items via a secure payment/checkout method like via a business credit card that is paid off in installments, wire transfer, Automated Clearing House (ACH) payment, or via finance plans. These methods tend to be relatively more secure than writing a check--which could bounce if you do not have a sufficient amount of funds in your bank account, or using a debit card, which also requires you to have funds readily available to make the purchase--something not every business or individual will have the funds for.
But even some of the most secure methods come with unique risks of their own. For example, if a big-ticket item is bought with a credit card, there is a possibility that a chargeback will be initiated, and that the retailer will have to return the funds to the customer, even though the big-ticket item at hand may be off their shelf and long-gone.
This is just one of the problems with processing large transactions, which can create complications in other areas of the big-ticket item buying process. For instance, Logan Murphy, CIO of Financial Services company Currency says,
"The most common problem is knowing when to ship or release these large ticket items. Merchants are wanting safe and secure payments when dealing with items in the 10’s of thousands of dollars. Making sure they get their payment quickly and safely is paramount.”
The secureness of the payment method at hand can often carry-over to the shipping procedure. Sellers of big-ticket items want to be guaranteed that you as the buyer actually have the money and aren’t attempting to defraud their business after you receive your item. That being said, insecure, or pseudo-secure payment methods like credit cards can complicate that process, and add a bit of opaqueness to the buying and shipping process.
Everyone Makes big-ticket Purchases
Making big-ticket purchases is a necessity of life. At one point or another, you are going to need to buy item(s) that are priced relatively higher than your day to day, month to month, or even year-to-year purchases--and saving up to purchase these items is no small task, whether it be on a consumer level or a business owner/operator level.
This is because several factors go into making large purchases--from cost to quantity to payment method to fraud prevention--these are all variables you have to consider when buying or selling a big-ticket item. So it is important to know, or at least be aware, of these variables, because being aware will give you the knowledge you need to optimize your big-ticket purchases in the future.