The price is right

If you’re a salesperson who works at any point of the distribution chain, you’ll know that, for competition law reasons, you’re free to set your own sales price. However, at the end of the chain, retailers selling to consumers face more restrictions.

When selling to the public, retailers face laws restricting what the price can be – or at least restricting what they can say the price is. In short, the law states that retailers cannot mislead consumers. But what does this mean in practice? As ever the answer is “it depends” because the precise circumstances will always be relevant. If you’re planning a sale or promotion, here are our top 10 top tips for keeping your prices clear.

1. Don’t compare a price to another price which isn’t genuine. These might include an RRP which isn’t the price generally used, or a competitor’s price which is out of date or isn’t a like-for-like comparison.
2. Avoid claiming a bigger pack size is better value if customers can get the same volume more cheaply by buying smaller packs on offer.
3. You can’t say a price discount applies to “all” products of a particular type unless it does really apply to everything in that category.
4. Only make claims like “up to 50% off” if the maximum reduction quoted applies to a significant proportion of the products in question.
5. Don’t say something is “free” if there are additional costs associated with it (other than unavoidable costs such as responding to the offer or for delivery).
6. Make sure you have enough products to meet likely demand (or at least make it clear that your stock might run out).
7. Don’t falsely limit the duration of a pricing promotion to pressure consumers into rushing into buying.
8. If you’re not closing down, don’t pretend to have a closing-down sale.
9. You shouldn’t hide or omit any necessary additional charges, or have a pre-ticked box or default setting to obtain consent to optional additional charges.
10. Don’t charge a fee for using a credit or debit card which exceeds your own cost for providing that payment method.

Ben comments “While competition law leaves salespeople free to set their own sales prices, retailers selling to consumers are bound by more restrictions – and must make sure they’re not misleading them”.

To discuss this article in more detail or for help generally, please contact Ben Clay, Senior Associate at Lupton Fawcett.