California Dad Says He's Cracked the Code to Smart Shopping

PHOTO: Kyle James is the founder of the coupon website Rather-Be-Shopping.com.

Kyle James, the founder of the coupon website Rather-Be-Shopping.com says he's cracked the code that can help predict if something you're buying might be marked down later.

James, 40, in Redding, California, says many stores have an internal pricing system that shows if a price has already been marked down, or if it will be marked down again. He said current and former employees have helped him develop knowledge of these systems.

For example, James says knowing about these pricing systems can help customers save money if followed correctly. He suggests you make significant purchases, such as electronics and patio furniture, when the price is at clearance or final markdown.

Here are some retailers' pricing systems, according to James.

1. Sears

Prices ending in $0.99: you’ll be paying full retail price.

Prices ending in $0.97: the price of a discontinued item on clearance. The price could go down even further.

Prices ending in $0.88: the final markdown price.

Brian Hanover, a spokesman for Sears, declined to comment when contacted by ABCNews.com, saying he cannot comment about the company's pricing strategies.

Read More: 3 E-Tools to Make Shopping Easier and Cheaper

2. Target

Prices ending in $0.99: full price.

The prices of some items may end in 8 or 4, such as $7.88 or $7.24, which typically indicates that the items are on clearance.

More importantly, James said, consumers should look at the top corner of price tags, which sometimes reveal the markdown percentage of the item from the original price. For example, if it says “50,” it’s 50 percent off the original price. An item will “typically” stay at the current markdown percentage for 10-14 days before getting marked down further, he said.

He said the number will be either 15, 30, 50, 75, or 90 and is the markdown percentage of that item from the original price.

Evan Lapiska, a spokesman for Target, said the company uses a number of different factors to determine an item's price and would not confirm that markdown percentages are noted on some tags.

"The ending digit of a clearance price is determined by several factors, including the original retail price and the applied percentage discount. It is not possible to determine the final markdown or timing of the price change from the item’s current price," Lapiska said.

3. JCPenney

Prices ending in $0.00: full price.

Prices ending in $0.99: clearance price.

Prices ending in $0.97: clearance or “reduced” items.

Kate Coultas, a spokeswoman for JCPenney, said she could not comment about pricing for competitive reasons, but she corrected James' pricing system, noting that prices ending in $0.99 are both clearance and sale prices, which still provide a "great deal."

James said the "real key" is to look for products ending in $0.97 as those items are further reduced clearance items.

James also lists his observations on the pricing systems of other retailers such as Costco and Sam's Club on his blog.

Costco did not respond to a request for comment.

A spokeswoman for Sam's Club, which is owned by Walmart, said she could not share the company's pricing strategies.

Catherine Woodling, a spokeswoman for Home Depot said the information in James' blog about the do-it-yourself store is not accurate. She said that if you’re looking for the best buy in the store, customers should look for the “New Low Price” tags, which remain at that price for 90 days. She also recommends you keep an eye out for “Special Buy” both in store and online, which is "as low as the item is going to go."

"Green tags are returned special order items, so there won’t be anything else like it in the store, but they're not necessarily close-outs or discontinued products," she said.

James acknowledges “none of this stuff is an exact science,” and only one store, Costco, has confirmed his information, he said.

He said Home Depot’s green tag was indeed in place when he in fact worked at The Home Depot, but he said he is constantly learning about new pricing systems from employees.

James founded Rather-Be-Shopping.com in 2001 and began working on it full time in 2003. The goal of the site is to help consumers save money with online and in-store coupons, the father of three children said.

He said he discovered pricing systems when he heard of a local news story about Target and its pricing systems. After more research, he said, "Then I hit the stores and started talking to employees and was able to crack the code at even more stores."

The Costco price tag code was first discovered back in 2009 by a writer named Len Rapoport, and he updated his findings last month after his article was widely distributed online.

In general, James advises looking for coupons online, but he never recommends buying something just because it's a good deal or on clearance.

"That surely is a recipe for a life of over-spending and credit card debt," he said.

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