Sale MontageThe New York Times has a revealing piece looking at the phenomenon of the “list” or “manufacturer’s suggested retail” price. It turns out that the MSRP sees the most use for tricking customers into thinking they’re saving money.

The article uses the example of, which was fined $6.8 million for using misleading reference prices to trick customers. It also cites a number of other retailers whose price policies are confusing, to say the least. There’s a Le Creuset skillet that sells for around $200 on most retailer web sites, but those same web sites claim it has a “list price” of $250 to $285.

The really funny thing is that this article does mention Amazon with reference to some of these prices, but doesn’t go into the single most egregious case of “suggested” retail price abuse—books, whose list price actually is meaningful. It could have gone into the time publishers broke the law to require Amazon to honor their “suggestion.” We just had the Supreme Court decline to hear the case. (But then, this article came out the day before that was announced.) As the final result, Amazon now lets publishers set its e-book prices, while gleefully undercutting them on the print volumes.

But interestingly enough, publishers aren’t the only manufacturers who aren’t terribly pleased at retailers discounting their wares. Most deal with it through a “minimum advertised price” stipulation in their contracts, however. This is why sometimes on Amazon,, or other e-tailers, you’ll see products with a price you can’t see until you add the product to your shopping cart—they can still sell the product at a lower price, but are forbidden from advertising it that way.

In any event, anyone who’s been shopping for very long at all already full well knows that “list prices” are effectively meaningless, and the price that matters is whatever competitor is carrying the item. That’s why the Internet is so handy. Sites like PriceGrabber and apps like Amazon Flow let you pricecheck from your phone. And most brick-and-mortar retailers have taken notice. It used to be they’d laugh in your face if you asked them to pricematch Amazon; now many will happily match Amazon,, or a number of other online retailers if you ask them to. (Which is a big area where Barnes & Noble falls down—still stuck in the past, Barnes & Noble’s stores won’t even pricematch themselves.)

It’s too bad those list prices are no longer quite so meaningless for e-books.


  1. I recently saw one purpose for list prices and it isn’t pretty, particularly for the non-savvy.

    A few months back, a nearby lightning strike took out my cable modem. That was no big deal in itself. I found a perfect replacement at at thrift store for about $5. What did bother me was the possibility that a similar strike would take out far more expensive hardware, particularly my desktop computer. We get a lot of thunderstorms where I live.

    I rearranged my power flow to put all my computer gear behind a string of ordinary surge protectors, but felt that might not be quite enough. Looking around, I discovered there are devices called whole house surge protectors that mount in your breaker box and offer entry-level protection.

    The devices seem to come in two categories. One you might call commercial grade. They cost about $150-200 even when discounted and mount inside your breaker box, connecting to two dedicated circuit breakers, which raise the total cost to well over $200. Installation by an electrician would raise that still more, but I once worked as one and can handle that side. The plus is that they’re very rugged. Most strikes, I gather, will be bypassed to ground and the breakers will trip without destroying the whole house protection device itself. Flip the breakers back on and you’re fine.

    The other might be called consumer grade. They’re easier to install because they’re made to install into circuit breaker slots, with one white wire run to ground. The downsides are that they’re not as rugged, they have no circuit breaker to reset, and their surge protector will probably sacrifice itself to save devices downstream. One close lightning strike and you’ll probably need to replace it.

    I’ve got a GE breaker box, so I need one in the latter category designed for it. The list price is interesting. As you can see from Amazon, it’s $200, much like its more rugged brothers:

    That list price makes Amazon’s $70 price look like a Real Good Deal. It isn’t. That’s what I meant by savvy. Lowes and Home Depot sell it for about $46, although Home Depot doesn’t make it easy to find that price.

    Do you see the advantage of those inflated retail prices?

    1. An electrician can get it for $45, but charge the person he’s installing it for $200 in addition to his labor. These homeowners think they’re paying the going price.

    2. Amazon can sell it for $70, even though it’s just as easily purchased online for $45. Amazon looks like it is offering a deal but isn’t. I suspect that Amazon knows that smart consumers will buy elsewhere, so it might as well not bother with their business.

    As with much in life, it’s all about the money. List prices are used to make some consumers pay more than they need and to convince others that they’re getting a deal when they’re not.

    Smart consumers ignore list prices. They always shop around. And if you’re looking for the occasional good deal on Amazon for anything but Kindle books, check out Set the price you’ll pay, and it will let you know when it drops below that. Patience is another way to save money. If you don’t have to buy it now, don’t buy it now. Wait for a price dip.

    –Mike Perry

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