At the end of 2023, the Washington Post Business Section published an article, “A common, illegal tactic retailers use to lure consumers” on retailers’ deceptive pricing tactics. This common, illegal tactic centers around engaging in “marked-up pricing.” This is where the retailer initially sets high prices before offering seemingly generous discounts. These pricing tactics are deceptive and mislead consumers about the true savings achieved.

Retail companies are not the only ones capable of, or currently utilizing, this type of pricing tactic. There’s a very good possibility that some of your vendors and suppliers are doing the same thing to you, with or without you even realizing it.

Imagine a potential new supplier saying, “The price was going to be $100 per unit, but I fought for you with my boss and I secured a price of $50 a unit if you can write a PO today.”

Does that sound like an easy win and cause you to immediately sign on the dotted line?

Do you excitedly tell your boss, “I achieved a 50% cost avoidance!”

Or, does it cause you to pause and question if that’s an improvement in their price at all?  Is it too good to be true?

That supplier is probably hoping that the promise of a 50% price reduction will keep you from asking for more.   Their absolutely lowest price might be $10 less, $20 less, who knows!  And, even if you do ask for more they can always say, “No I can’t do any better, I already reduced my price by half.”  And you may be apt to accept that, because it does sound like they are giving you one heck of a deal.

Without knowing what the item should truly, or reasonably, cost, you don’t have all of the information necessary to decide if that offer is really a fair price or not.

So, how can you avoid falling for these deceptive tactics? As I alluded to above, the key is knowledge. Do your research; utilize should-cost models and other sources of verifiable information. Be prepared and know what a reasonable price should be. And, always remind yourself not to be blinded by the promise of big price reductions no matter how good they seem.