Sales, price comparisons and markdowns are some examples of how a business might use pricing to promote its goods or services. Any claims made about price must be clear, accurate and unambiguous for you as the consumer.

Prices must include or be clear about the 15% Goods and Services Tax (GST). Any surcharges must be declared before you buy. When you see a price on a product or a shelf price, it is reasonable to expect that this is the price you will be charged at the checkout.

You should shop around, do not assume that because there's a discount or sale advertised, it is the cheapest available price.

Discounts

Businesses often discount goods and services and advertise the savings you can make by buying at the discounted price. A common technique is to compare the discounted price with the non-sale price of the good or service (often using "usual", "was", "normal" or "everyday" prices) to highlight the bargain.

The 'usual', 'was', 'normal' or 'everyday' price all mean the same thing – they are a reference to the price at which a good or service is usually sold, or the price at which the good or service was offered before it was marked down.

A business that makes these types of discount claims might mislead consumers if:

  • it does not charge the "usual" price
  • the 'usual' price is made up only for comparison purposes
  • the claimed usual price is one of many prices at which the business commonly sells the good or service
  • the claimed usual price is out of date.

If a business routinely sells products at a promotional price, then the promotional price becomes the usual selling price. It would be misleading for a business to keep claiming it was discounting a price when the discounted price had become the usual selling price.

Example:

A nationwide supermarket chain claimed customers could save "at least 20%" or "at least 25%" off all beer in a special promotion. However, it had been 32 weeks since the shelf price had been displayed for some products and the claimed saving of 20% off was misleading as the product had been sold at a lower price for that period. The Commission issued the company with a warning.

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 may be misleading for a retailer to make a comparison with an RRP unless it is a genuine manufacturer's RRP and reflects a price at which the item is readily available.

Comparisons with competitors

If a business compares its 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.

The business should also be able to substantiate the comparison by identifying where its customers can purchase those goods or services at that price.

Sales

In the mind of the consumer, the word "sale" means an opportunity to buy goods at reduced prices for a limited time.

There are many different types of sales. All sales, however, imply that a lower price than usual is being charged and you should expect that any goods or services a business promotes as part of a sale are priced below normal levels. If a sale does not include stock already on sale or discounted, then this must be clearly disclosed. Likewise, a business should make it clear if a sale is limited to certain products.

Example:

A nationwide bicycle retailer used exaggerated discounting strategies that gave customers the impression they were buying bikes at significant mark-downs from the normal retail price - typically 50% off. It also advertised clearance specials that created the impression that the discounts were for a limited time only. In fact, the discounted prices were the usual selling prices and out of nearly 6,000 bike sales the Commission investigated only 30 were sold at the so-called full price. The discounted prices were regularly available by the company. The company was convicted and fined $800,000.

Special offers

Businesses advertising "special offers"or "specials" must be offering something genuinely special – such as lower prices, add-on or additional features – or they risk misleading consumers.

Businesses may also mislead you if they advertise a special offer widely but only a few people are able to take it up. A business 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.

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