What Is an Advertised Price?
An advertised price is the price of a product or service as displayed or announced in a print, radio, television, or online advertisement. If the advertised price is well below the normal price of a product, it is likely to be a loss-leader that is priced to entice customers into the retail store in the hopes that they will make additional purchases. Advertised prices may be negotiable, though a minimum advertised price (MAP) is the lowest price that may be advertised for a particular item by law.
Understanding Advertised Price
Advertised prices are used to make the public aware of the price of an item for sale as a means of promotion. An advertised price in stores may be non-negotiable, while the advertised price for bigger-ticket items, such as cars, boats, furniture, college tuition, medical bills or procedures, and rent, may be negotiable from their advertised price.
There are strict laws in North America against false or misleading selling price representations, such as sales made above an advertised price. Stiff fines are payable by a company that sells a product above its advertised price, except in cases where the advertised price was a mistake that was rectified promptly.
According to New York City's Consumer Affairs Bureaus, an advertised price "shall mean the price of a stock keeping unit which a retail store has caused to be disseminated by means of promotional methods such as an in-store sign, or newspaper, circular, television or radio advertising."
It stipulates that "no retail store shall charge a retail price for any stock keeping item, whether or not exempt under subdivision c of this section, which exceeds the lower of any item, shelf, sale, or advertised price of such stock keeping item."
- Advertised price is the price of a product as advertised through mass media and is generally set by manufacturers and retailers working together.
- An advertised price cannot be lower than the minimum advertised price (MAP), which helps set market price for an item and gives retailers a built-in profit margin.
- Sometimes stores offer negotiable advertised prices, which enable them to offer discounts or match prices with another store.
Advertised Price and Minimum Advertised Price
In 2007 the U.S. Supreme Court ruled that manufacturers and retailers could work together to set minimum advertised prices. A MAP is the lowest price that may be advertised, though products may be sold for less based on private negotiation. Even though a lower price may be negotiated, a minimum advertised price helps to set a market price for an item and gives retailers a built-in profit margin.
Advertised Price and Price-matching
A company may offer a price-matching guarantee to its customers based on the advertised price for a specific product. If a rival offers the same product for a lower advertised price, the company will either match the lower price or refund the difference if the customer has already purchased the product from it. Some retailers have been known to match a competitor's advertised price and also add on a percentage-based discount for a buyer.
Advertised Priced and Promotions
Advertised prices are sometimes used to entice shoppers into stores for special sale events, such as Black Friday or Boxing Day. For example, a "doorbuster" or "door crasher" is an item, usually with low quantities, that is advertised at a very low price in order to get shoppers in a store early to jump-start holiday sales and also get them to buy more regularly-priced items while they are there.
Example of Advertised Price
For example, clothing store ABC is selling branded jackets for $100. However, jackets from the same brand are available at store XYZ for $90. It advertises a discounted price of $85 for the jacket during a month-long sale and increases the inventory and variety of clothes and accessories available in its store in order to entice customers to purchase more while they are inside.