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In 2015, there were 25 lawsuits filed against companies who sold items as discounts compared to “list prices.” In the first six months of 2016 there were 24 more similar cases. The problem isn’t that companies were discounting items, it’s that they were claiming that the discount was steeper than it really was, by using manufacturer’s suggest retail prices (MSRP) or the more nebulous “list price” to indicate how much the buyer was saving. The problem is that few retailers actually sell things at the MSRP. We’ve entered an economy where everything is always on sale, especially online, which really means that nothing is ever on sale.
Amazon, which has a reputation of ignoring profits in favor of revenue and offering everything at discounted prices in order to do that, seems to be trying out ways to remove list prices from their site but still get people to think that they’re getting deals. They haven’t removed list prices from every product, at least not yet, but studies have shown that they’ve removed a lot of them. They’ve also experimented with different comparison models, like comparing the current price to the old price.
How does this affect online retailers? Well the lawsuits have largely been against large retailers, and mostly from California, which has a pretty harsh truth in advertising law that has formed the basis of the lawsuits. There have been some big payouts too. The takeaway here is that, if you’re going to use discounted merchandise to draw people to your site and buy things from you, then you need to be careful on how you advertise those products. Being honest is a good start, and you can directly compare to other sites, but that could get messy. Using MSRP is a safe bet, especially for items that actually list that on the package, as a lot of books do. But you might be best off simply letting your prices speak for themselves.