May seem a strange question but how do Retail outlets (online and other) manage to offer such huge discounts ? is this just because they can buy in bulk and able to keep overheads down, or are some of the items discontinued or out of fashion eg (Bausch&Lomb Legacy Half price) it makes you think it is just as well we dont know what they are brought in for! would like to hear from anybody who has worked in the trade how the sales strategy is run.
Most products carry a MSRP (Manufacturer Suggested Retail Price). This is a figure determined by the manufacturer to be the standard price, or highest fair price that someone should pay for these from a retail store. It includes a fair profit for the seller. A seller is not bound to sell the item for this price, and in some cases hard to get items may sell for premiums over this amount. Generally you will never pay full retail on an item from most stores.
Some companies also have dealer specific requirements on how much they may advertise any paritcular product for. This is called MAP (Minimum Advertised Price). This is done so all dealers have less competition selling any particular product brand, as there is no real advertisable competition on price. Many times, a retailer does not have to actually sell any given product at this price, they just can't advertise a lower price. This tends to give every retailer an equal chance to sell this brand, and also makes getting this item at a discount less likely unless you inquire with the retailer if they can offer a better price, because they cannot show it online or print media. Most MAP does not affect an in-store price, as those can usually be marked at anything they wish.
Some companies require that an item be sold at a particular price as well, and doing so may break a manufacturer requirement for authorized dealer agreement and could jepordize a dealers status... See the consistency of Leica and Swarovski from store to store. I'm not sure if either of these companies have this type of agreement, but you'll never really see either brand at a discount.
Retail price is what you would pay as a non-business-related private party sale from a retail store. This price is usually determined to be the minimum amount a business can sell the item without taking a loss. Factors determining pricing policies include: paying employees, paying the rent, paying advertising, shipping on the item in question, and other expenses plus a profit margin of some sort.
So, the way retail sales works... there is a price the dealer must pay to buy an item for stock. This is usually called Dealer Cost or Wholesale price. There is a MSRP, which can be anywhere from 10% to 100% higher than Dealer Cost. A price is determined by the dealer, or set by dealer agreements with the manufacturer, and a price is set. That price is the price you pay, and why some items can have drastically different prices from one dealer to the next, and the reason why other items are always the same price no matter where you go.
Many times discontinued or refurbished items are offered to the retailer at a much lower price, and usually these items do not have a MSRP or MAP applied, and you can find these at much closer to dealer cost than new items.
Some dealers need to charge more than others. Comparing a retail store with a public business location and an internet dealer without one. The costs of running an internet business is much less, so the markup can be considerably less, so they may offer the item at a huge discount, or rather 5% or 10% over cost, where a retail store would need to charge more. MAP is designed to help level this field, especially with products that have considerable markup or profit designed into pricing structures.
And yes, sometimes there is a price break for a dealer if he buys X amount of items for stock.
Well, I'm tired of typing. lol. Hope that helps.
[QUOTE=xenophobe]Most products carry a MSRP (Manufacturer Suggested Retail Price). This is a figure determined by the manufacturer to be the standard price, or highest fair price that someone should pay for these from a retail store. It includes a fair profit for the seller. A seller is not bound to sell the item for this price, and in some cases hard to get items may sell for premiums over this amount. Generally you will never pay full retail on an item from most stores.
Some companies also have dealer specific requirements on how much they may advertise any paritcular product for. This is called MAP (Minimum Advertised Price). This is done so all dealers have less competition selling any particular product brand, as there is no real advertisable competition on price. Many times, a retailer does not have to actually sell any given product at this price, they just can't advertise a lower price. This tends to give every retailer an equal chance to sell this brand, and also makes getting this item at a discount less likely unless you inquire with the retailer if they can offer a better price, because they cannot show it online or print media. Most MAP does not affect an in-store price, as those can usually be marked at anything they wish.
Some companies require that an item be sold at a particular price as well, and doing so may break a manufacturer requirement for authorized dealer agreement and could jepordize a dealers status... See the consistency of Leica and Swarovski from store to store. I'm not sure if either of these companies have this type of agreement, but you'll never really see either brand at a discount.
Retail price is what you would pay as a non-business-related private party sale from a retail store. This price is usually determined to be the minimum amount a business can sell the item without taking a loss. Factors determining pricing policies include: paying employees, paying the rent, paying advertising, shipping on the item in question, and other expenses plus a profit margin of some sort.
So, the way retail sales works... there is a price the dealer must pay to buy an item for stock. This is usually called Dealer Cost or Wholesale price. There is a MSRP, which can be anywhere from 10% to 100% higher than Dealer Cost. A price is determined by the dealer, or set by dealer agreements with the manufacturer, and a price is set. That price is the price you pay, and why some items can have drastically different prices from one dealer to the next, and the reason why other items are always the same price no matter where you go.
Many times discontinued or refurbished items are offered to the retailer at a much lower price, and usually these items do not have a MSRP or MAP applied, and you can find these at much closer to dealer cost than new items.
Some dealers need to charge more than others. Comparing a retail store with a public business location and an internet dealer without one. The costs of running an internet business is much less, so the markup can be considerably less, so they may offer the item at a huge discount, or rather 5% or 10% over cost, where a retail store would need to charge more. MAP is designed to help level this field, especially with products that have considerable markup or profit designed into pricing structures.
And yes, sometimes there is a price break for a dealer if he buys X amount of items for stock.
Well, I'm tired of typing. lol. Hope that helps.[/QUOTE] WOW That was a real in depth answer to my post thanks question what is GREY AREA PRODUCTS ?