View random article

What Is a List Price?

List price is not what the consumers see on the price tags. It actually refers to the manufacturer’s recommended retail price, but can be tweaked by the store owners according to their own profit margins and the supply and demand. For example, the store owners have the right to increase the price of a product that is very popular but is in limited supply; they can also drop the price during a sale. Store owners may also get large orders from the manufacturer—taking advantage of bulk sale prices, which offer a discount of 50% or more—and sell at a lower rate in order to attract consumers.

The difference between the list price and the actual selling price can be very large, especially if the products are cheap to produce and can be made in large quantities. With such large profit margins, store owners can really play with the prices. One marketing tactic is to place a sticker with the list price, and then place another sticker with the much lower selling price.

In some cases, though, buyers can save a lot by going directly to the manufacturer, especially if the product is in demand. This is true of limited edition products like designer bags or car models, where prices can skyrocket as stocks run low and the prestige of owning one makes it worth the additional cost.

So while all products will have a list price, the actual product price rises and falls with the laws of marketing and free trade. Since stores are not legally bound to follow the recommend retail price, it is a game of “may the best price win.”

Featured in Life