Deceptive Pricing

The two pricing practices most likely to get your business into trouble are: making incorrect price comparisons with other merchants or with your own "regular" prices, or offering something that is supposedly "free" but in fact has a cost.

Price Reductions

Offering a reduction from your usual selling price is a common sales technique. But the price is misleading unless the former price is the actual, bona fide price at which you offered the article. For example, if you announce a new product for $129, but sell it to wholesalers as if it were a $79 product, and similarly discount it to direct customers, the $129 price never really existed -- and you have broken the law. It misleads customers into thinking they are receiving a discount.

It's even more blatant to buy a special batch of merchandise especially for a sale and create a fictional "regular" price or one you adhered to for only a day or two. Some merchants are tempted to do this when they buy seconds or discontinued product lines at a deep discount and want to pretend customers are getting a bargain.

If your ad compares your price with what other merchants are charging for the same product, be sure of two things:

• the other merchants are selling the identical product, and
• the other merchants had enough sales at the higher price in your area so that you're offering a legitimate bargain.

In other words, make sure that the higher comparison price isn't an isolated or unrepresentative price.

Less-Than Free Offers

Regarding offers of "free" products or services, you can offer gifts only if there are no strings attached. For example, if you offer a free paintbrush to anyone who buys a can of paint for $14.95, the brush really isn't free if you:

• usually charge less than $14.95 for this kind of paint.
• usually provide a service (such as free delivery) with a paint purchase, but don't when the customer gets a "free" brush.