There is not complete price transparency. The shop claims the normal price is higher than it actually is, in order to make the discount seem more attractive. That is deception, and therefore not transparency.
If only the final price mattered, shops wouldn't be advertising such discounts.
The only purpose of a discount is to make the buyer feel better. If they changed the price without labeling it a discount, the buyer’s utility of the item doesn’t change, but they’re feeling good about it does.
I’d rather see education in schools teaching people that discounts are sales tactics that should be ignored rather than laws governing discounts, which would be costlier to implement and enforce.
It makes the buyer feel better because the buyer gets intentionally misinformed about the value of the item. That lies can make someone feel good does not necessarily make the lie okay. (I suppose it might in some circumstances, but I don't think trying to manipulate someone into spending money is one of those circumstances.)
If you think discounts are completely meaningless, then completely banning advertising with discounts is very easy to implement and enforce. Much easier than to properly educate everybody how to arm themselves against deceptive sales practices (though I agree it would be nice if we could do that).
The value of an item is decided at the time an agreement is made between a seller and buyer. There is no one size fits all "value" until then. This can easily be seen in goods such as low volume, high margin goods such as land, vehicles, heavy equipment, intellectual property, and of course, labor.
However, in the developed world, logistics and supply chains have sufficiently developed to allow for minuscule margins on many everyday, low price items that make it uneconomical to negotiate the value of each item to each buyer, so the seller just lists one price for everyone.
In markets in poorer countries, the seller might not do that, and it might be worth their time to negotiate each sale. If they say to one buyer "I'll sell this to you for 50% off today, and charges him the same price as yesterday, and the buyer agrees to buy", who is harmed?
Price discrimination is a natural part of markets, and the only reason it hasn't been happening is because it wasn't worth the retailers time in the US. But with automated systems coming into place, there is no more labor cost and so it's becoming economical to price discriminate again.
If you want to get technical about it, the value is determined by the market, by the forces of supply and demand. Advertising with a fake discount suggests that the market was willing to pay more for the product than it actually was.
Most products are actually sold with a one size fits all price. People don't haggle over every single item they buy in a shop.
The market does not pay for anything. Individual buyers pay for things, and individual buyers and sellers determine the value of items, at a certain place, at a certain time.
Most everyday items are sold “one size fits all” (but not in large quantities) in developed countries (since the seller's time is valuable enough to offset the extra revenue (or loss) from price discrimination), but there are quite a few places in the world where people still haggle over the price of tomatoes and onions.
But even in the developed world, once you move beyond low margin retail items that are not expiring goods, there is no single sale price. Sometimes price discriminating turns off more customers than the revenue it generates or the labor it costs the seller, so it doesn't make sense for a seller to do it. Sometimes it's worth it, so some sellers might.
Do we really need to deconstruct all of economics here? The market consists of those individual buyers and sellers. But they set the value together. No single buyer can set the value of the items they want to buy in the supermarket. They buy them or they don't buy them. In response to that, the seller adjusts the price. If not enough people buy it, the seller lowers the price, if he runs out too fast, he raises the price. That is "the market" determining the price in a free market.
So if a potential buyer sees something 70% discounted, that implies that originally, the market determined that higher price as a fair price: a price that at least some buyers would pay for this item. The buyer trusts the market that that is apparently a fair price, but today the buyer is in luck, because it's been discounted to below the usual market price!
If the seller advertises with a fake discount, he's betraying the buyer's trust in the free market by intentionally lying about what the market is willing to pay for this item.
>So if a potential buyer sees something 70% discounted, that implies that originally, the market determined that higher price as a fair price: a price that at least some buyers would pay for this item. The buyer trusts the market that that is apparently a fair price, but today the buyer is in luck, because it's been discounted to below the usual market price!
This whole paragraph is wrong in my opinion. A 70% discount does NOT imply anything other than it's 70% off of some number that the seller is free to decide, since they own the product they are selling and I'm not aware of any laws dictating what they have to sell at.
The second part I don't agree with is a seller selling at "below" market price. There is no such thing, unless the seller is doing charity work. When a sale happens, that is at the market price, unless of course there is some collusion where the buyer and seller agree to do some other trade-off to avoid paying taxes, but that's neither here nor there in this conversation.
On popular sale days, such as Black Friday, the sellers aren't selling below market price. They are selling at the price that they think they need to in order to get the publicity/feet in the door that they think will lead to other sales. In effect, the seller is buying the buyer's time and attention and whatever probability the buyer has of spending more money on other things with the "discount" they offered.
We're not talking about what the law says, we're talking about whether it's misleading.
If the amount from which it was discounted is utterly meaningless, then why mention it at all? Because the seller wants the buyer to believe the item is more valuable than it really is. That's why it's misleading.
The fact that the deception is legal, doesn't mean it's not deceptive. It is deceptive. It is very clearly, obviously, intentionally deceptive. The seller wants the buyer to believe they're getting a great deal that they're not getting, because the product was never actually meaningfully sold at that original price. That original price only exists to mislead the buyer.
Real life shows there exists a population of buyers that would prefer store A than store B in the example below:
Store A: sells item X at 80% off for $10
Store B: sells item X for $10
It's Kohl's and Bed Bath and Beyond and JCPenney's entire business model. Some people love waiting for their coupons at home and figuring out where they can get the most "%" off.
That's exactly my point: what store A does is very clearly misleading, and many people fall for it. People are being manipulated. That makes it not a free, informed market. If it was, store A would have no advantage over store B.
> I’d rather see education in schools teaching people that discounts are sales tactics that should be ignored
"I'd rather see education in schools teaching people that $instances-of-abuse are members of $family-of-methods-of-abuse that one should protect themselves against".
Funny how for almost everything else, the abuse itself is considered both illegal and morally repugnant, yet abusive sales tactics are legally above board and the profession itself is considered respectable.
Where is the abuse? A seller has the right to sell at whatever price they want (assuming non emergency situations).
If I'm a seller, I can raise the price 100% at 10AM, and then put a sign that says 70% off. And then the next day, I can reduce the price 100%. The very use of ambiguous wording is a signal that it's a sales tactic.
No one advertises 50% off the median average sale price in the past 30 days, because then it would be abuse. But that's not what any seller advertises. Stating that someone else saved Y dollars is also ambiguous. Saved compared to what?
Booking.com claiming so and so is selling out quickly! What is quickly defined as?
Until there are falsifiable metrics being falsified, I don't see what the abuse is.
It's abuse because it's intended to mislead the customer.
And it succeeds at misleading the customer, or nobody would be doing this. A misled customer is not an informed customer. For a free market it's vital that customers are well-informed, therefore this kind of deception hurts the free market. The customer agrees to the transaction based on a lie.
Even if technically, from a certain perspective it's technically true ("this morning before I opened the shop, the price was indeed that much higher for 5 minutes"), it's still deception.
You say elsewhere in the thread; you and others use discounts because it's a psychological trick that makes buyers feel good - and thus more likely to buy.
> If I'm a seller, I can raise the price 100% at 10AM, and then put a sign that says 70% off. And then the next day, I can reduce the price 100%.
Sure, you can do that. Or, you could simply list the price that lets you have some margin while still being competitive. Why would you do the former rather than the latter? Only because of a clear intent to abuse the customer.
> Booking.com claiming so and so is selling out quickly! What is quickly defined as?
Words have meanings. I can't tell you what exactly "quickly" is defined, but I believe everyone reasonable would assume it's something around minutes to hours in this particular business. Ask yourself, what would you assume?
> Until there are falsifiable metrics being falsified, I don't see what the abuse is.
I.e. until there's a clear and unambiguous statement that turns out to be purposefully false, you don't see a problem? Most lies aren't using clear and unambiguous language precisely because that makes them easier to spot; it doesn't change the fact that the intent is malicious towards your fellow human beings.
>Sure, you can do that. Or, you could simply list the price that lets you have some margin while still being competitive. Why would you do the former rather than the latter? Only because of a clear intent to abuse the customer.
JCPenney tried it, lost a ton of business, and had to reverse course. Turns out, buyers like being given a fake marked up price and then buying at a "discount". See my other comment for source, it was a very famous example of a famous Apple executive trying to do what makes sense on paper, but not in practice.
>Words have meanings. I can't tell you what exactly "quickly" is defined, but I believe everyone reasonable would assume it's something around minutes to hours in this particular business. Ask yourself, what would you assume?
I wouldn't assume anything, because there is not enough information given by the seller. I also know that a seller's incentive is to sell, and that as a buyer, the only thing I need to be concerned with is how much I'm paying.
>I.e. until there's a clear and unambiguous statement that turns out to be purposefully false, you don't see a problem? Most lies aren't using clear and unambiguous language precisely because that makes them easier to spot; it doesn't change the fact that the intent is malicious towards your fellow human beings.
How are the courts supposed to prove intent? Especially when a seller has the legal right to change the price of their goods anytime they like. Intent also doesn't have to be malicious. As I showed in my earlier example, the sellers that use discounts make more money...because certain people like shopping at places that give big discounts, they like the feeling of getting a discount. I don't think the harm to society rises to the level of involving the courts in this case.
> JCPenney tried it, lost a ton of business, and had to reverse course. Turns out, buyers like being given a fake marked up price and then buying at a "discount".
Is it that the buyers like it, or simply that the deception is effective? If you point out to buyers that the marked up price was fake and that the discounted price was always the real price, do they actually like that?
Nobody is denying that the deception is effective. But it being effective doesn't make it any less deceptive.
> Booking.com claiming so and so is selling out quickly! What is quickly defined as?
Look, be whoever you want, but own it, don't hide behind equivocation. No one else is buying (haha) any of this. The only person you're working to convince here is yourself.
No, specifically it was how it's not illegal, even though it's abusive. You're disputing that it's abusive. It is certainly lying. You may be fine with it. But it's lying.
If only the final price mattered, shops wouldn't be advertising such discounts.