View Full Version : Pricing regulation question for my WIP

09-28-2008, 12:59 AM
Are there regulations in the US about setting prices in a retail situation? For example, if someone buys an item from a wholesaler for $1 can they try to sell it for $500? Are there laws about this sort of thing?

Thank you in advance for any help -- my Google search about this topic has my head spinning, so I'd appreciate any advice and help.

09-28-2008, 02:48 AM
I don't know for sure, but I don't think so in most cases. There are sometimes special circumstances that trigger 'price gouging' laws. Those would apply to things like gasoline, milk, bread etc. But for non-necessity items the retailer could price things however they want. That is why you see such variation in price on the same item depending on which store you are in.


09-28-2008, 04:05 AM
Very short answer is you can charge what you can get away with.

Almost short answer is that there are rules with some products about price gouging, regulations, and fraud.

What's the specific product and/or industry?

Short answer for this question runs about a thousand words and a decent answer runs about the size of an economics textbook.

Best of luck,

Jim Clark-Dawe

09-28-2008, 05:16 AM
Not a lawyer--so don't quote me--but I've worked in retail for years, so maybe some of this random info will give you a place to start your search. Also, the regulations will depend on country and/or state--and the product too, of course.

There are some products that have a manufacturer's suggested retail price listed (most books and automobiles, for instance). Those are set prices, and you can't charge more for them. When I worked at Borders, we used to get a yearly visit from the Department of Weights & Measures just to be sure that we weren't, among other things, charging people higher than the retail price set by the publisher.

But the greater percentage of products don't have set prices. Price fixing is still illegal, but you have to prove that there was an intentional collaborative effort by several businesses to fix the prices. Price gouging is also illegal.

There seem to be more regulations for minimum pricing than for the steeper prices. Just as an example, I think Wisconsin has a law called the Unfair Sales Act, which basically states that retailers may not discount certain items below a certain percentage (or below cost). This is supposed to keep the huge corporations from using loss leaders in their advertising to put the smaller merchants out of business.

Is any of that helpful?

09-28-2008, 05:10 PM
When you have your book printed, you should have your retail price and ISBN/EAN with barcode printed on the back of the book. The retail price you set is the maximum you'll ever see coming to you (or to anyone) from the book - if you sell it at retail to friends, etc.

Throughout the industry there's a pretty well established scale of what libraries, small bookstores, and major retailers will pay for a book at the retail price you set - the big boys get 55% off across the board - i.e., if you set the retail price of your book at $10.00, they will buy it from you at $4.50. (They do have to make money on what they sell to stay in business.)

And - just as an added note - when you're pricing your book, be sure to factor in shipping costs; they're a lot higher than you think they are and can eat up profits quickly.

Back to your original question, I wouldn't envision any situation where you sold a book for $1.00 and someone else sold it for $500 unless it was some sort of fluky situation and the book ended up in an e-bay auction (fluky like a misprint so it looks like the devil showing up on page 666).

Hope that info helps a bit. Puma

09-28-2008, 05:42 PM
Thank you everyone for all the helpful information and leads about a rather complicated topic. The specific items in question are crafts (i.e. items someone has made, such as quilts and the like). It looks like my initial hunch is right and you can get away with upping the price quite a bit. Itís really interesting to hear that books and cars have some regulations about price setting.

Kathie Freeman
09-28-2008, 07:10 PM
California also has a "fair trade act" which prevents below market pricing on milk and some other items. Even so, prices can and do vary considerably from store to store. Regarding MSRP's, dealers can and do charge premium prices for vehicles that are in high demand and short supply, such as the Prius hybrids a few months ago.

09-28-2008, 09:30 PM
The short answer is NO. The government does not regulate the high end of the price you set. The market does. In the two cases mentioned above, Books and Cars, The inventory is not owned by the retailer. It is owned by the publisher and the car manufacturer respectively, that is why they can and should set the upper end of the price range.

09-29-2008, 04:44 AM
"Whatever the market will allow" is pretty much what stores charge. If everyone wants your product, you charge more. If few want it, you charge less.

You can't say that you are selling an XYZ auto part and actually sell a CDE auto part in an XYZ box. That's fraud. You can't fix your scale so that a pound of meat is actually 8 oz of meat or a gallon of gas is actually 9/10 of a gallon. If you are cheating, even when it's not illegal, when the liberal* media gets ahold of the story, the company cheating people will have no more customers, so it's not a good retail practice.

*Sorry. Did I actually say that? I've been spending too much time on the political board, listening to the commentary. They rub off, these sound bites. Again, sorry.