Though it seems people are always complaining that things are getting more expensive, life is getting more complicated and the overall cost of living is going up, this is not always true. The prices of some products have actually been dropping in recent years, despite the common misconception that they are actually increasing in price.

Televisions
The price of televisions have come down dramatically in recent years, with the most cutting-edge technology taking the sharpest decline in price. Demand was anticipated to be much higher for 3-D televisions than it actually has been, which has caused the price point to decline sharply over a short period of time.

Part of the reason for these lagging sales is the required investment needed to move to 3-D technology. Buying a 3-D television alone isn't the only cost associated with moving to the latest and greatest technology in TV. You'd also have to buy 3-D glasses, a 3-D Blu-ray player and purchase the 3-D Blu-ray discs to watch on your new television. These costs really add up, making this new technology inaccessible to many people, at least for now.

SEE: Make Money From Your Old Electronics.

Smartphones
According to industry research firm Canalys, more than 158 million smartphones were shipped in the fourth quarter of last year, representing a 57% increase over the same quarter in 2010. This segment of the technology market has seen incredible growth in recent years, with a huge portion of the population making the move toward this type of mobile phone. Even though demand is up, this is also a likely cause for the decreasing price point. More and more cellular phone manufacturers have moved into the smartphone market, causing an increase in competition as everyone fights for their piece of the pie.

Laptops and Tablets
All types of computers have seen a decline in price over recent years, the prices of laptops and tablets in particular. It is typical that technological devices decline in price over time as new models and technologies are launched. However, recent years have seen a much steeper decline in the price of technology products than in previous years.

Tablet computers are extremely popular right now, with the iPad being the forerunner in the field. However, more competitors are entering the market and forcing prices down, especially since the launch of the Kindle Fire. As Apple continues to introduce newer models of the iPad, older models go down in price and other tablet manufacturers will be forced to reduce prices in order to efficiently compete.

Car Rentals
Though travel in general may be expensive due to a rise in oil and gas prices, many car rental agencies are not seeing the kind of sales they'd like. Cars are sitting unused on their lots, and this is causing car rental agencies to take action by providing sales and incentives to renters.

Hotels and Motels
Similar to car rentals, the travel industry generally remains flat, as the world is slowly emerging from a recession. Though airline prices may be on the rise, this is not so for hotels and motels. This is a great perk for those who are partaking in holiday travel as opposed to business travel and may have greater flexibility in their travel plans, allowing them to book holidays when they can get good deals on travel-related expenses.

E-Readers
Electronic book readers (or E-Readers) are going down in price quite rapidly as new models flood the market. The Amazon Kindle's price currently sits at around $100, with models featuring Wi-Fi capabilities and 3G technology being slightly more expensive. Sony and Kobo also have E-Reader product offerings in the $100 range, with other lesser-known brands starting to pop-up on store shelves as well.

Clothing
Many types of clothing have experienced a decline in price, according to the National Center for Social and Economic Modeling (NATSEM), with Baby clothes, women's hosiery and men's clothing seeing the biggest price drops. What accounts for the change? Much of our clothing is now produced overseas, where manufacturing costs are lower. It is also suggested that demand for new clothing has declined in recent years, causing retailers to slash prices in order to attract customers.

The Bottom Line
As items like gasoline, food, utilities and gold increase in price, some products have seen prices drop sharply over recent years, with technological products experiencing the most dramatic declines. This is a common trend, as the majority of technological advances have a certain "shelf life" to them. When the product is new and "cutting edge, its price will be the highest. Prices drop when other companies move into the market and expand on these innovations. Products that fall into the "discretionary spending" category, such as clothing and vacations, are also seeing declining prices, since they tend to be "nice to have" luxuries as opposed to "need to have" necessities.

Related Articles
  1. Economics

    Understanding Switching Costs

    Consumers incur switching costs when they receive a monetary or other type of penalty for changing a supplier, brand or product.
  2. Investing

    What’s Holding Back the U.S. Consumer

    Even as job growth has surged and gasoline prices have plunged, U.S. consumers are proving slow to respond and repair their overextended balance sheets.
  3. Economics

    Explaining Market Penetration

    Market penetration is the measure of how much a good or service is being used within a total potential market.
  4. Economics

    Calculating the Marginal Rate of Substitution

    The marginal rate of substitution determines how much of one good a consumer will give up to obtain extra units of another good.
  5. Stock Analysis

    Is the Apple Watch a Real Threat to Fitbit?

    Examine the potential for marketplace competition between Fitbit and the Apple Watch in the rapidly growing consumer wearables industry.
  6. Investing News

    How 'Honesty' Could Pay off for Jessica Alba

    Is it possible that Jessica Alba is one of the savviest businesswomen on the planet?
  7. Stock Analysis

    3 Stocks to Protect Your Portfolio from Inflation

    Discover three stocks to protect portfolios against inflation. The best companies to protect against inflation are those with pricing power.
  8. Chart Advisor

    Invest In Consumer Staples With This ETF

    The consumer staples sector is showing signs of strength in a weak market. We'll take a look at a couple ways to make a trade.
  9. Stock Analysis

    J.C. Penney: Identity Crisis or Buy Opportunity?

    With so many recent leadership changes, J.C. Penney might be suffering from an identity crisis. Here's why and what you need to know.
  10. Stock Analysis

    How Nike (NKE) Continues to 'Do It'

    Other than style, do sneakers from any maker really differ that much? That's debatable. But this is certain: Nike sets the standard for selling an image.
RELATED TERMS
  1. Duty Free

    Goods that international travelers can purchase without paying ...
  2. Fast-Moving Consumer Goods (FMCG)

    These are consumer goods products that sell quickly at relatively ...
  3. Virtual Good

    A good or product traded in the non-physical realm, typically ...
  4. Buyer's Option

    In commercial contracts, an agreement between a vendor and a ...
  5. Underinsured Motorist Coverage ...

    One of the two triggers that can be specified by an insured party ...
  6. Lemon Laws

    Regulations that attempt to protect consumers in the event that ...
RELATED FAQS
  1. What does marginal utility tell us about consumer choice?

    In microeconomics, utility represents a way to relate the amount of goods consumed to the amount of happiness or satisfaction ... Read Full Answer >>
  2. What are some common ways product differentiation is achieved?

    There are many ways to achieve product differentiation, some more common than others. Horizontal Differentiation Horizontal ... Read Full Answer >>
  3. What role does the OEM (original equipment manufacturer) play in the finished product?

    Original equipment manufacturers (OEMs) do not typically play much of direct role in determining the finished product. However, ... Read Full Answer >>
  4. What is the difference between an OEM (original equipment manufacturer) and a VAR ...

    An original equipment manufacturer (OEM) is a company that manufactures a basic product or a component product, such as a ... Read Full Answer >>
  5. Is the retail sector also affected by seasonal factors?

    Generally speaking, the retail sector is highly seasonal. Almost invariably, sales in the retail sector are highest in the ... Read Full Answer >>
  6. What has the retail sector evolved to its current structure?

    Retail is the catch-all phrase for the sale of final goods to consumers; a retail transaction is considered an "end" and ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!