Mark ups are the small profit margins that retailers gain when an item is sold. It is the fundamental of business, and it is the reasons that the amount we pay is not what the item is actually worth.
The profit margin allows business owners to tack on to cover expenses and overhead costs such as rent, electricity, heating, and of course, earn a living for themselves.
But some markups are quite ridiculous and here are some of the really high ones that should be avoided or consume minimally:
- Text messages: 6,000 - 6,500% markup
Ever wonder why most of the world’s telecom companies are big (and bad)? They basically swallow up you.
Text messages are short, quick and cheap to transmit, they are such a tiny piece of data that they cost carriers only about one-third of a cent or less to deliver, according to computer scientist Srinivasan Keshav.
But on a pay-per-text plan, the 160-character messages can cost up to 10 cents outgoing and 20 cents incoming. That’s a markup of as much as 3,000 to 6,000%. OMG!
“It’s pretty much pure profit,” Keshav says. “Carriers would argue they put that money toward investing in new technology.”
Even if customers sign up for an unlimited texting plan for, say, $10 a month, carriers are still cashing in considering that their overhead is basically $0. That’s a lot to pay for a few LOLs.
“600 text messages contain less data than a 1 minute phone call,” Consumers Union policy analyst Joel Kelsey said.
“Sending six hundred text meesages cost you $60 or more, imagine that apply to a 1 minute phone call.”
What a ripoff! Bottled water is a corporate success story; they took one of the worlds most plentiful resources, packaged it into a popular product, and charge $2-4 a bottle.
In a shocking revelation, the U.S. Congress said in 2009 that about 45% of bottled water in the market comes from taps, and bottled water company may or may not do some additional filtering before pouring it in their logo-stamped bottles.
Bottled water are being marketed as being the purest or cleanest but in fact, all water must comply with federal regulations of cleanliness regardless of whether it is being drank out of a plastic bottle or from the tap.
Thing has evolved into an issue of convenience, as humans are advisable to take in 7 cups of water everyday, and a 2L bottled water a day serves that needs. The USA, with a population of 300 million, buys more than 500 million bottled water every week.
But you and your wallet are definitely better off investing in a simple filtering system and boiling kettle - just fill your water at home prior to going out. You can save as much as 6 times every year doing this than buying bottled water.
3. Movie theater popcorn: 900 - 1,275% markup
At the grocery store, microwave popcorn runs about $3 per box, and each box includes three 3.5 ounce bags of popcorn.
So why on earth would consumers even consider paying a whopping $6 for a single medium-sized bag of popcorn in the movie theater?
No one knows exactly why - but for some bizarre reason, movie-goers continue to drain their wallets to crunch on a bag full of those greasy little nuggets during their favorite film.
Richard McKenzie, an economics professor at University of California-Irvine, says theater owners mark up the snack so much because they don’t make much profit elsewhere.
When a movie is first released, most of the movie ticket proceeds go to the movie studios, not the theaters. Theater owners try to make up the difference by selling more snacks such as popcorn, and it is an effective method.
And boy, would you be surprised that the average movie theater makes 40 percent of its profits from such concessions. Owners try to keep ticket prices lower, knowing that higher ticket prices would stop you from going in, and in the process, buying a soda, candy bar or bag of popcorn.
The average markup? A whopping 1275%! At that steep price, you’d think those buttery bags were laced with gold.
4. Glasses frames: 1,000% markup
Why A little scrap of metal costs hundreds of dollars is one of lifes great mysteries. Yet eyeglass wearers continue to get smoked at the optometrist when they plugged out huge sums of money for frames that hardly weigh an ounce.
The markup can be as high as 1000%! If you can afford to wait, consider perusing the internet for alternatives before spending hundreds of dollars on frames.
Financial advisors suggest that you never buy accessories at optometrists offices because they are heavily marked up. Clip-ons, glasses cases, and other eyeglass accessories can usually be purchased for a very reasonable price on the internet.
The bottomline; dont pay for products at the eye care office before looking over the internet; or you could end up looking at it in hindsight and regretting it; and hindsight is 20/20.
5. Brand name clothing: 500 - 1,000% markup
How much did you pay for those True Religion jeans, that Burberry scarf and those towering Louboutin stilettos? Probably a small fortune.
But it was worth every penny, right? Not so much. When it comes to designer clothes, it’s pretty obvious that you are paying for the label.
Brand name clothiers rely on the advertising power of humans as walking billboards as well as conventional marketing strategies for the advancement of their products, and you play a major role in paying for those!
The cost of looking good and feeling pretigious rises every year as more and higher end clothing brands are created. The production cost of the clothes however, doesnt change; only the label on the back does, and thats what changes the price on the tag.
As a matter of fact, brand-name clothes are often marked up by 500 to 1000%. Yet, fashion-conscious consumers continue to drain their bank accounts and pile up massive amounts of debt to stay on the cutting edge of couture.
6. Diamond & Jewelry: 100 - 1,000% markup
The glittery rocks that cost a fortune are subject to volatile changes in price and high markups. Although the industry average markup varies widely, (100% to up to 1000%) its probably not a good deal regardless of where the jewelry is purchased.
Jewelers thrive on the uneducated buyer, so it is wise to do research before buying to settle on a good price and product. Ridiculously cheap or expensive jewelry should raise a red flag because it is probably of substandard quality.
Its always a good decision to find out what the same jewelrys price is at other stores. That information can be used as a negotiating tool.
Also, a diamond over $1000 should come with a certificate certifying its legitimacy. Dont let these rocks rock your monthly budget or you may find yourself in the hole.
How about dating a woman who show no apparent interest in jewelries?
Other high mark-up items:
Printer ink: 500%
Restaurant drinks: 300 - 500%
Hotel minibar: 300 - 400%
Cafe coffee (i.e. Starbucks): 300%
Mattresses and furniture: 200 - 400%
Greeting cards: 100 - 200%
Pre-cut vegetables & fruits (in supermarkets or groceries): 40%