What exactly is the value of MSRP (Manufacturer’s Suggested Retail Price)? I started a part-time job in a retail outlet last week, and I realized just how much of a discounts people were getting over the typical retail price. In some cases, a product normally priced at $220 is being sold for just $99. That’s a HUGE discount … if you consider the MSRP to be the value of the product.
I met one customer last week who came in under the impression we were having a sale. He was told (by a friend) that everything was 50% off or more in the store. He picked up a very expensive item and asked me, “so I’m getting this at 50% off, right?”
I looked at the tag, “About 50% off the retail price, yes. You’ll be paying $99.”
“So it’s not on sale then?”
“Well, you are getting a really good price on it, but it’s not ‘on sale.’”
“But I thought you just said I get 50% off.”
To some people, MSRP means nothing. A product is only as valuable as the sticker price. If it’s marked at $99, it’s only worth $99 … no matter what other people have paid for it or what it’s been marked down from. This happens a lot in sales, particularly with luxury and other high-end goods.
Cars are highly priced today; in a tough market, they are also heavily discounted. But look at the different way thousand dollar cars are priced as compared to hundred dollar items. Cars aren’t marked down … instead you get “cash back.” You still pay the regular $12,000 price, but then they give you an extra $2,500 to say thank you. Whether you apply this immediately to the principle of your loan, or hold on to it for later is up to you … but you’re really getting the car at a $9,500 price point.
So, really, is it worth $12,000? Or is it only worth $9,500? Was the item I sold the man last week really worth $220? Or was it only worth $99? Does a discount remove value from your products? Or is that just the way people see things in today’s market?
