50% Off (half price) Scams

50% off – WHAT A BARGAIN! – NOT!

Have you ever wondered how the major jewellery retailers can have a ‘half price‘ sale every two weeks and NOT go out of business?

We will lift the lid on these legal but immoral practices that are designed to fool the consumer (you) into thinking that you got a great deal when in fact you didn’t.

half-price-man-on-50Fact 1

Retailers buy direct from a manufacturer or wholesaler and ‘mark up’ the price of the item to sell in their retail business.
This occurs in all businesses and the price mark up has to pay for the running costs of the business.
Running costs include rents, wages, power bills, telephones, advertising etc.

A business operates to produce a profit, so the sales must outweigh the costs.
Charging for labour, or making a ‘margin’ on sales are the two most frequent ways for a business to run at a profit.

Fact 2

Retailers regularly selling goods at 50% off ARE NOT losing money on the sale. *in 99% of cases unless clearing items that don’t sell etc.
This means the ‘regular’ price is incredibly inflated above the cost of the product they pay to the manufacturer or wholesaler.

Fact 3

For an item to be sold at 50% off, and not lose money, the store must AT LEAST double their own cost; just to break even.
Think about this (where the retailer often has 50% off sales):

This doesn’t happen

  • Buy a widget for $100 from the manufacturer.
  • Price tag it for $200 for sale in your store.
  • Profit to store $100.
  • Buy a widget for $100 from the manufacturer.
  • Price tag it for $200 for sale in your store.
  • Have a 50% off sale and sell the widget for $100.
  • Profit to store $0.00 – Really, why would you do this?

This does happen

  • Buy a widget for $100 from the manufacturer.
  • Price tag it for $400 for sale in your store. As a minimum.
  • Profit to store $300.
  • Buy a widget for $100 from the manufacturer.
  • Price tag it for $400 for sale in your store.
  • Have a 50% off sale and sell the widget for $200.
  • Profit to store $100.00 –  This is what really happens.

Fact 4

The first jewellery manufacturer I dealt with supplied a very large national retailer of jewellery exactly the same jewellery I was buying (at the same price).

They would ship directly to the retailers’ central warehouse, from where the jewellery would be shipped out to the individual stores.

The manufacturer was provided with the retailers branded price tags and pre-priced the jewellery for the retailer (at the price they were told by the retailer)

What absolutely stunned me at the time was the REAL markup that the retailer was applying to the jewellery they were selling.

I saw silver chains with retail price tags of $350.00 being packaged for the stores. These same silver chains were costing me $50.00 from the factory.

This means that the store was making a profit of $300 on a chain that cost them just $50.00 on a day to day basis.

This means that the store was making a profit of $125.00 on a chain that cost them just$50.00 during their 50% off sales.

 

Next time you’re tempted into buying something because it is ONLY half price, you may wish to consider if that retailer often has half price sales; and if so, do you really want to support a business that will rip you off blind every other day of the year?