You see it all the time in newspaper ads… “Priced too low to advertise!!!” I even see this online sometimes: You have to click a link that opens a pop up with the price. The only explaination I have ever seen was “Our price is lower then the MSRP, so we can’t display the price.”
Is this a bunch of bologna? (Bologny?) It seems like its just a marketing gimmick to get people into the store… “Honeycakes, We must go to SuperOfficeMart to buy this 56” plasma TV, look its priced ‘too low to advertise!!!’" The online version of this makes no sense… “We can’t show you the price, but if you click here we can (Shhh! Its a secret!)”
So, does anyone know if there is some truth to this “too low to advertise” claim? Is there a law of some sorts that dictates advertisable prices? Does each manufacture set its own terms? Or is it really just a way for retailers to bring in customers?
It is a scam in lots of cases but the manufacturers often cut deals with retailers with restrictions like that. They may sell 10,000 TV’s to a discount chain yet not let them advertise the same product at a cheaper price than their other customers like the Wal-Marts of the world.
It’s very common with electronics. Basically, manufacturers have a “Minimum Advertised Price”, an ad pricing floor a wholesale buyer agrees to in order to be supplied with product or receive dealer incentives. Dictating a selling price, however, is illegal under antitrust law.
Manufacturers generally do it to help small businesses, who, although probably can’t compete pricewise with large retailers, at least have a chance to get customers in the door if their advertised prices are comparable to those of larger retailers.
Unless it’s a rip-off, a retailer will use this to attract customers and move a product that is in high demand. If they advertise the price a well below list, the manufacturer may cut their supply. In other words, their orders will be the last to be filled with the limited supply available. If they find a way to sell the product at a lower price without advertising the price they charge they may get away with it without inviting the wrath of the supplier. It’s a delicate balance.
A retailer like Wal-Mart will will placate a supplier while maintaining their “lowest prices” vow by selling a hot product at $199.88 instead of $199.99.
If some other retailer tries to sell the same product at $149.00 they will find that they will have a lot of trouble restocking their current inventory from the manufacturer.
Yeah, NewEgg does this all the time, and I think they are the most reputable electronics retailer around. I wonder if it prevents bots from searching for the lowest price on their website.
I remember hearing (here I think) that sometimes a manufacturer will cut a deal with a big company for a lot of product, but part of the contract (that the reseller puts in place) is that no one else is allowed to advertise the product for lower then their price. For example, Best Buy makes an offer to Samsung that they’ll take 100,000 plasma TVs, and that they’ll sell them for $2000, BUT no other retailer is allowed to advertise them for less then that. Now when Cicuit City contacts Samsung about the same TV, Samsung makes a deal with them, but puts in the contract that their lowest advertised price has to be greater then $2000.