Pricing your products or services

Offering savings, special offers, sales promotions and price comparisons are all common and legitimate techniques – but there are rules around how you do this.

Tips for planning price promotions

• Ensure discounts are taken off the usual selling price.
• Do not use fine print to hide important information like extra charges.
• A ‘sale’ is a brief and limited opportunity to buy at a reduced price.
• 'Clearance’ sales are only for clearing goods.
• Do not exaggerate savings to be made or the range of goods available at a discounted price.
• Be careful with claims like “lowest” and “cheapest” prices, unless you've done your research and know you have the lowest price.

Discounts

Businesses often discount goods and services by advertising the savings consumers can make by buying at the discounted price. This is usually done by comparing the discounted price with the non-sale price of the good or service (often expressed as the "usual", "was", "normal" or "everyday" price).

If you make these types of claims, you might mislead consumers if:

• you never charged the "usual" price
• you deliberately inflate the "usual" price to attract customers with a discounted price
• your claimed usual price is one of many prices at which you commonly sell the good or service
• your claimed usual price is out of date or was very rarely the real selling price.

If a businesses routinely sell products at a promotional price, then the promotional price becomes the usual selling price.

Price comparisons over time

You must be clear when making comparisons with earlier prices. For example, if you advertise a product as "was $15 now reduced to $10", but you more recently offered the product for $12, the "was" price may be misleading. The actual saving is only $2 not $5. You should instead advertise "originally $15, previously $12, now $10" or simply "was $12, now $10".

Recommended retail price

A recommended retail price (RRP) is the price a manufacturer suggests a retailer sells a product. However, a retailer is under no legal obligation to sell a good at the RRP and will often sell below the RRP.

It is illegal for a supplier of goods to enforce, or try to enforce, a minimum price at which a retailer must sell those goods. You can read more about resale price maintenance.

It may be misleading if a business makes a comparison with an RRP, unless it is the genuine manufacturer's RRP and reflects a price at which the item is readily available.

Surcharging

Accepting different payment methods can impose different costs on you as a merchant. A surcharge is an extra fee charged to recoup any additional cost from your customers where they choose to use a way to pay that is more expensive for you to provide.

Appropriate surcharges should be no more than your additional cost for accepting that particular payment method or group of payment methods. In most cases, this will be your merchant service fee for that payment method.

The associated cost of doing business and the operating costs required for all payment methods are generally not related to specific types of payments and are more the cost of doing business ie, POS costs, staff costs, electricity costs. These costs should not be included in any surcharge.

To surcharge appropriately you must:

1. be transparent about the surcharge and the customer’s options ahead of paying it
2. provide your customers with at least one alternative payment method that does not incur a surcharge
3. set surcharges so they do not exceed the additional cost of accepting the retail payment that the surcharge applies to. In most cases, this is likely to be the merchant service fee for those payments.

Read more about appropriate payment surcharging.

Comparisons with competitors

If you compare your prices with a competitor's (for example, "Elsewhere $X, our price $Y"), the goods or services compared should be exactly the same, not just similar. You should also be able to substantiate where your customers can purchase those goods or services from "elsewhere" at that price.

Read more about advertising your product or service.

Sales

In the mind of the consumer, the word "sale"means a chance to buy goods or services at reduced prices for a limited time. All sales imply that a lower price than usual is being charged, and so goods or services must be priced below normal levels. You must make it clear if a sale is limited to certain products.

Special offers

If you advertise "special offers" or "specials" you must offer something genuinely special – such as lower prices, add-ons or additional features – or you risk misleading consumers.

You must ensure that any conditions that apply to special offers are clearly disclosed and do not substantially change the offer.

Consumers may be misled if you advertise a special offer widely but only a few people are able to take it up. You must clearly state any limitations or qualifications to a special offer, such as if there are limits on the number of items per customer or there is limited stock available.

Read more about bait advertising.

Stating that "special conditions apply" will not protect a business when the conditions contradict the offer.

Read more about fine print.