Pricing on the package

03Dec07

In some industries, it’s standard practice to disclose the suggested retail price, and then show how much money you’re saving. Cars are probably the best example, with only a small number of cars ever selling at (or above) MSRP. I’ve seen this with groceries, too. In fact, some stores just use the price that’s printed on the package, rather than affixing a separate price tag.

Here’s where it gets strange. Due to market conditions in certain areas, the selling price may actually be higher than what the package says. I saw this with some Kraft products: the package said $2.99, but the price tag said $4.50. This is confusing to the buyer, as we’ve been trained to expect things to sell for list price or less.

I have no idea what sort of sales increase you get by printing a suggested price on the package, nor how this is affected by cases where the selling price is higher than list. All else equal, it’s usually best to avoid pricing practices that confuse or deceive customers. This is especially true for low-cost products that rely on repeat purchases to achieve optimal profits.

With this in mind, I would recommend that brands start by identifying those products that sell for more than list price in some markets. Then, they should consider offering an alternate package design for that market, without any list pricing shown. This would reduce confusion, build trust, and probably increase sales in the affected markets.



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