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How Minimum Pricing Keeps You Paying Full Price

WSJ article delves into the nasty-sounding world of Minimum Advertised Prices.

C.R.E.A.M.
C.R.E.A.M.
Ever wondered why you never see the shiny new toys and games for anything less than their full retail price, even in a season where some stores are doing anything they can just to get consumers into their stores?

The Wall Street Journal has the answer you've been looking for with an interesting article on the practice of manufacturers--like Activision and MTV Games with Guitar Hero World Tour and Rock Band 2, respectively--forcing retailers to adhere to set prices for their goods under penalty of reducing advertising subsidies or simply withholding product altogether.

This practice is what I used to think led to the whole "OUR PRICES ARE SO INSANE THAT WE CAN'T TELL YOU WHAT THEY ARE IN THIS AD" phenomenon, usually reserved for car stereo super sales and crap like that. But this practice was apparently re-enabled by a Supreme Court decision from last year designed to prevent a brand's image from being tarnished by severe discounts. That's a real thing, by the way, even though I know that might sound crazy to some of you. When I was in a band, for example, we sold more CDs at $10 than we did at $5, because the perception of the product's quality went up along with its price. We then turned around and spent that money on twice as many bottles of St. Ides Special Brew. Street thinkers call it "Tight Math."

Some people call this price fixing, and opponents of the practice are hoping to get this issue in front of Congress next year. Be sure to check out WSJ's article for the full story.
Jeff Gerstmann on Google+