DISCOUNTS, DISCOUNTS, DISCOUNTS - It is raining discounts

Types of discounts: Discounts are reductions on basic price of goods or services. Discounts are disliked by companies but are routinely offered as they garner quick sale for the company. In the times of recession it is very common to see companies offering price discounts on their products. Many companies offer genuine discounts. A genuine discount is one where the company consciously reduces its margin and offers a deal to the customers. In the modern world customers are very business savvy and can catch on to a genuine offer very quickly. Let us see some methods of discounting that are unethical or downright sleight of the hand.

1.     Upto 60% off discounts: One of the most popular discounting methods. Up to 60% off means that the discount varies from product to product and the item that is offered to at 60% off will be a low priced product like a handkerchief. Even that handkerchief would not be available. Most of the other products sold would be available at a marginal discount of 10% to 15%.

    2.  Buy one and get 12 off discounts: This is an amazing offer. Buy one shirt and get 12 shirts free. Wait there is a catch. The MRP of shirt number one on offer is Rs 4,550/- . 1+12 = 13. 4,550 divided by 13 is Rs 350/-. Thus the cost of each shirt is Rs 350/-.

3.    Mark up and offer discounts: One of the favorite tricks of the retailers. MRP (Maximum Retail Price) is a tool that comes in handy. The shop keeper will mark up the cost of the product and offer the same as discount. For example a shirt’s MRP is Rs 500/-. It would be marked upto Rs 750/-. The shop keeper would offer a discount of 20%. 20% of Rs 750/- works out to Rs. 150/-. Even after giving a discount of 20% the cost of the shirt would come upto Rs 600/-. That is a extra profit of Rs 100/- on the earlier price of Rs 500/-.