Posted on Tuesday, 24th November 2009 by admin
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The manufacturer’s suggested retail pricing is referred to as the list price. It might be or might not be the price asked of the consumer. Mostly it depends on the product itself, the built-in profit margin, and supply and demand. A product whose demand is high in the market and it has low availability then it will sometimes sell higher than the list price, though this is less common.
Resellers buy products in bulk quantity
Virtually all products have a suggested retail or list price. It is assumed by this that the product is sold individually to the end-user or consumer. In order to be able to profit from selling the product at or below list price resellers buy products in bulk quantity and they get a substantial discount.
Great discounts on products
Products that are inexpensive to manufacture and those that are manufactured in great bulk can have large built-in profit margins. Such products are offered at great discounts of 50% or more by retailers.
Customers can be drawn in by the sales on items like this and then these customers ay also buy other products as well.
Products that will sell on more than list price
However there are some cases in which a product of limited availability in high demand will sell for more than the list price. This sometimes happen for new car models that becomes backlogged. As sellers are able to ask what the market will bear so there is nothing illegal about this practice.
List price can be exceeded in the housing market
The housing market is another area where list price is often exceeded. In this case, by comparing the property to other similar properties that have recently sold in the same area list price is set. However, bidding wars often result among potential buyers if the home is in a highly desirable location where the demand for houses is far higher than the turnover of homeowners. There are several cases, where the property sells for thousands of dollars over the list price.\
Tags: bidding wars, built-in profit margins, business, Consumer, homeowners, housing market, limited availability in high demand, list price, resellers, supply and demand
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