Can someone explain to me how "on special" deals work

Bretrick

Bretrick

Well-known Member
Location
Perth Western Australia
Example, laptop - normally $995, on sale now for $499. Save $496
My understanding is that businesses never sell at a loss.
So, selling at $499, they still make money.
Extrapolating this, selling at $995 is purely making a whole lot of profit.
This example is offered by a long running business that will not be closing down anytime in the next few years. The business has a multi million dollar turn over. So they are not selling at cost to have short term bulk cash.
Is this what is called treating customers with contempt?
I notice supermarkets putting up the price of an item by 40% then the next week have the item at the price is was the previous week and claim that the customer is saving 40%.
A special that is not a special.
 

Amazon is famous for this. I had an item I was considering buying and it lived in my Amazon cart waiting for a deal. Between the middle of October when I added it and the start of the holiday shopping season, the price went UP by 50% and then DOWN by 55%, thus making it look like you're getting an insane deal, but really only saved a few pennies.

It has a lot to do with psychology, that's why our prices are always $2.99 instead of $3.00, it's because people won't pay $3 but they'll pay $2.99.

There are sites like Keepa that will track Amazon prices over a period of time, helping you to decide if it's really a good deal or not.
 
So metimes the specials are legit because the manufacturer or supplier has discounted the wholesale price for a promotion. This happens locally with premium pet food.
 

Grocery stores will frequently advertise a "loss leader" - a popular product that is (at least in theory) offered at loss to them in order to bring people into the store. The assumption is that while the customer is there they will buy enough other things to more than compensate for any "loss".

Merchandisers (clothing stores, for instance) frequently operate on a 50% markup basis. This means that the marked price of an item is twice what the retailer had to pay for it. All of the store's operating expenses + profit come from the remaining 50%. There are many reasons for reducing marked prices, including being overstocked, seasonality, getting rid of soon-to-be-discontinued style/models, and market awareness.

At least this is what I was taught in college 50 years ago :ROFLMAO:

Btw, I was also taught that jewelry stores generally operated on a 90% markup basis (the store's cost was one-tenth the marked price), which accounts for some of the "amazing" deals seen in that sector. :rolleyes:
 
We have a local grocery store that has "buy two get three free deals all the time. While it appears you can save a bunch of money, you save nothing. It actually cost you more per item than going to Walmart.
 
Sometimes they do sell "at a loss" because hanging onto slow sellers can cost them.

They have to pay for the space to hold the inventory, but they're also paying interest on the loan that financed the stock. Car dealers don't get those cars they hold until sale for free, and the same applies for most retail goods.
 

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