Inside The Mind of the Cheapskate

September 9th, 2010

By Tom Reilly, author of “Value-Added Selling”

“I do not prize the word ‘cheap.’ It is not a badge of honor. It is a symbol of despair. Cheap prices make for cheap goods; cheap goods make for cheap men; and cheap men make for a cheap country.” William McKinley, 25th President of USA (1896-1901)

The catchy title of Jeff Yeager’s newest book, The Cheapskate Next Door, caught my attention, so I bought a copy to study how people make price-oriented buying decisions. It is part of my ongoing research in this area. What better resource than America’s self-proclaimed cheapskate extraordinaire! Two things immediately jumped out:

1. Jeff surveyed hundreds of cheapskates and discovered that price is NOT the number one thing that cheapskates look for when buying something; it is number two. Number one is quality/durability. People who watch their money want to purchase good stuff that lasts. How does your quality translate into value for your customers?


2. A 2007 Consumer Reports study found that 90% of consumers who asked for a cheaper price or discount got it. This is consistent with our research on price-cutting salespeople. Again, why should salespeople have pricing authority? By the way, their managers are no better at holding the line on prices. Consumers revealed that going up the ladder to a manager more often than not got them the price concession they desired. Maybe the managers should not have price authority either.

There was some useful information about cheapskates that we all could benefit from:

• Cheapskates hate debt, which means they pay off their credit card balances in full every month, and 85% of them pay off their mortgages early.


• When it comes to stuff, they wear out versus throw out. Jeff points out that cheapskates have been on the leading edge of the Green Movement because they do not burden landfills with items that can be repaired or worn out. He argues that living green saves you green.


• They practice delayed gratification (he calls it spending procrastination) to avoid “wanton-izing” their needs. If they delay purchasing for a day or two, cheapskates may not buy something that they thought they needed but really just wanted.


• Perhaps the best tip in the book is: Cheapskates live below their means.

How could anyone argue with these commonsense tips? In fact, as I read I found myself saying often, “Hey, I do that.” Does that make me a cheapskate or simply frugal?

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