7 retail pricing secrets revealed

Retail prices can be confusing. What does "list price" mean if nothing ever actually sells at list? When is a sale a genuine deal? Money Magazine explains why things cost what they do - and how to use that knowledge to get a better deal.

Lesson 1: List price is just the opening offer
Lesson 1: List price is just the opening offer
Calling the manufacturer's suggested retail price the "list price" makes it sound like an item's carefully considered fair cost. In actuality, it's the maximum makers expect a retailer to charge.

To the extent that manufacturers do suggest a fair price to their retailers, it's the minimum advertised price (MAP) - or the lowest ticket they'd like to see. This usually isn't public knowledge. Manufacturers want to give retailers a chance to sell for more, and retailers certainly don't want to tell you when they're charging above what they have to.

Can stores sell below MAP? Sure. But it pays for them to be cooperative with suppliers. As Lisa Bradner, a senior analyst at Forrester Research, puts it, "There are levers a manufacturer can pull to encourage retailers that this is in their best interest."

To find a product's MAP, price it out at three large, reputable retailers. If they hover around the same price point, you're probably looking at the MAP. Can you do better? Maybe. Check smaller stores, which have less to lose by irking the supplier. Watch for rebates at big-box stores, which generally stick to MAP in their ads. And online, look for sites that say "click through for sale price."

Now for the caveats: That undersize price online may come from a less than reputable vendor, in which case you run the risk of getting last year's model, a "refurbished" version or no version at all. And a really deep in-store discount may signal that you're not getting the full product. "A low, low price digital camera may not include case, battery or memory stick," says marketer Paco Underhill, author of Why We Buy. "They're selling it at cost and making money selling you everything it takes to make it work."

Lesson 1

Lesson 2

Lesson 3

Lesson 4

Lesson 5

Lesson 6

Lesson 7
Invest to win 2007 Money Magazine's new list of best mutual funds. Plus: 5 perfect money makeovers. (more)
Best Jobs in America Get compensation stats and demand forecasts. Research by Money Magazine and Salary.com. (more)
Top 10: Fastest-growing counties Maricopa County, Arizona added the most residents in the U.S. Census Bureau's latest ranking. (more)

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.