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

Watch our video on discount claims and the usual selling price.

Tips for planning price promotions

  • Ensure discounts are taken off the usual selling price.
  • Don't 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.

Print out our Price Promotion Tips for Businesses

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  • your claimed usual price is out of date or was very rarely the real selling price.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.

Example

A camping and outdoor gear retailer advertised clothing as being discounted by up to 50–60% off normal retail prices during their nationwide sales. However, some of the items had already been available in store at this reduced price and, in some cases, were also available at the same "sale" price after the sale ended. The retailer was convicted and fined.

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.

Example

An appliance retailer advertised a number of sales over a period of four months. Each item advertised showed an RRP alongside the retailer's "sale" price which was significantly cheaper, and showed the percentage saving. The recommended retail prices were not the retailer's normal selling price; in fact the sale price was the normal selling price. The company was convicted and fined.

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.

Example

A leather furniture retailer incorrectly claimed its leather lounge suites on sale for $3,000 were sold by other retailers for $6,000. The Commission's investigation found that the more expensive leather lounge suites sold by other retailers were better quality. The company was convicted and fined.

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.

Example

A nationwide bicycle retailer advertised "closing down sales" at two of its stores but had no plans to close down either store. The retailer brought in extra stock for the sales and kept the sales running for several months. The Commission issued the company with a warning.

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 don't 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. You can read more about fine print.

Read more about pricing your products or services