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What's the legality on inflating retail prices?

post #1 of 3
Thread Starter 

Some shops seem to love inflating the prices, so that they can have incredible "sales" all year round. 

Watches with 3000$ MSRP, that can be had for 150$.

 

Or some of those affiliate deal-finding websites, where they also seem to jack up the retail prices for the sake of looking more attractive. 

 

Is it 100% legal? 

post #2 of 3
Quote:
Originally Posted by dreamspace View Post

Some shops seem to love inflating the prices, so that they can have incredible "sales" all year round. 
Watches with 3000$ MSRP, that can be had for 150$.

Yeh I see that frequently. Either they're bullshit brands that nobody has ever heard of or they're fakes. Either way, don't bother. You'll often see it on Ebay as well.


Quote:
Originally Posted by dreamspace View Post

Or some of those affiliate deal-finding websites, where they also seem to jack up the retail prices for the sake of looking more attractive

Probably similar thing as with the watches?
Quote:
Originally Posted by dreamspace View Post

Is it 100% legal? 

Probably depends on the country you're in. Where I am, 100% legal AFAIK, and no one ever pays MSRP prices here anyway....unless you're a mug.
post #3 of 3
I'm pretty sure that the government usually stays away from price controls because of, ya know, the free market and shit. Um. Apart from that, though, I think that some clothing brands put minimum prices that specific things can be sold at, for the sake of retaining brand quality, and I think that they might limit the number of time per year that their clothes can be sold on sale. Goyard isn't sold online, which is only loosely related but is illustrative of the contractual measures that companies will take to keep up the "mystique" or whatever.

And, because clothing brands can undercut department stores by selling their shit for directly to the consumer at a lower price than the department store is able to but at a higher price than the department store pays for the clothes in bulk, a lot of department stores will set contractual minimum prices that brands are allowed to charge for the clothes that they sell directly.

But what you're describing just sounds like bad business. It's smart to mark up prices if you can get away with it, because of higher margins, but a lot more goes into consumer choice than price ... for example quality. So I don't think that it'd be possible to keep this up for very long, because someone could pretty easily steal your business by selling higher quality clothes at the same price and just living with the reduced margins. And constant sales erodes a merchandiser's credibility pretty quickly. Honestly, I think it might be symptomatic of a business that is trying not to fail rather than a constant-state quality. I just read an interesting article that briefly touched on why e-merchandising sites have sales:
http://www.businessinsider.com/jody-sherman-ecomom-2013-4

It's pretty long, though, and is mostly about a go who committed suicide because his e-merchandising website failed..... anyway.

Anyway, when prices stray pretty far from marginal cost I think that it can almost always be attributed to some sort of pecuniary externality and is not arbitrary. Like, it might not cost Prada a whole lot more to make a pair of shoes than it costs other brands, but people have a strong preference for Prada's shoes .. but the important thing is that the preference came before the price rise, and not the other way around.
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