What is an MSRP?



By Jeff Hahn
Sales Director

As Black Friday approaches and most retailers are getting ready to spend tons of money on advertising, absorb the additional overhead to be open odd hours, and show huge discounts – it brings up an important question: What is an MSRP?  Is it really a price that the product was ever sold for?  Is that 50% off really a half-price “deal”?  Is it worth getting up at midnight to shop ’till you drop?  Does it really make sense that stores are spending more money to get you to shop with them, while making less profit?  Let’s take a look at the reality of it all…

MSRP is an acronym for Manufacturer’s Suggested Retail Price.  It is the basis on which most retailers show a savings when an item is on sale.  It was created to standardize pricing and offer consumers an insight into what the value is of the product they are buying.  Unfortunately, MSRP’s can be easily manipulated by manufacturers to make their products look like they are a great savings to help the retailer sell more of their products.

In fitness equipment, there are not high margins like there are in electronics, clothing and jewelery.  If anyone is offering more than 10-20% off, it is simply an artificial MSRP.  Many of the companies in fitness equipment have gotten wise to what consumers are seeing in other products.  Why fight it, just blow the MSRP into the stratosphere so the retailer can show a huge discount.  The margins required to run a business and offer services to consumers have not changed.

So the reality has become – most products are not sold at MSRP.  The brands you find in big box retailers showing MSRP $1299 Sale Price $499 would never sell at $1299.  Heck, they shouldn’t sell at $499 but the artificial MSRP makes you think you are getting a deal, and you might get suckered into buying it. Do you really think they are making less profit on that sale, really?  Of course they are making profit – and at their normal operating margins, otherwise they would go out of business!!!

Fitness equipment is specialized.  If you plan to use it, you need to buy quality.  If you want it to last you need to buy quality.  Quality products do not sell for the same price as cheap ones.  What you really need to determine is the VALUE of what you are purchasing.  What is the price you are paying, and is the product a value at that price relative to other products in the marketplace?  Is a product at that price-point going to meet your needs?  Is it going to be durable?  Is it going to perform the way you expect?  What are you going to do if it ever has a problem?

These are all questions that are much more important than what is the percentage discount you are receiving off the MSRP.  Come check out our products.  Our products are on display for you to use prior to purchasing.  The quality speaks for itself – and we offer delivery, assembly and service by experienced technicians who have done it many times before.

So before you fall into the trap of thinking 50% off is a great deal, think about this: Would you ever consider buying that product at the MSRP?  If not, then it probably isn’t really a “deal”.

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Northwest Fitness Blog
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