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Don鈥檛 get tricked by retailers鈥 sale schemes

If you see a huge price markdown while shopping, you may feel compelled to make a snap purchase. That鈥檚 what retailers want you to do.

By Courtney Jespersen , NerdWallet

If you see a huge price markdown while shopping, you may feel compelled to make a snap purchase. That鈥檚 what retailers want you to do.

Stores have a habit of making sales look a lot better than they are. So how do you avoid falling for the facade of a great deal? Here鈥檚 what you should know.

What鈥檚 the deal?

A product on sale often has a sale price and a regular price, so most shoppers generally form their opinions of the deal based on the difference between the prices.

But some prices may not be what they seem.

One sale tactic used by聽retailers聽is showing the MSRP, or manufacturer鈥檚 suggested retail price. It is the price that manufacturers suggest retailers ask for a product. Manufacturers set MSRPs because they don鈥檛 want their items to be discounted too much, says Rebecca Hamilton, a marketing professor at Georgetown University鈥檚 McDonough School of Business.

But retailers may charge a lower price as long as it鈥檚 within the manufacturer鈥檚 guidelines for the lowest possible price. 鈥淭he MSRP is always the highest price you鈥檒l see, and maybe it鈥檚 never sold for that price,鈥 Hamilton says.

Another pricing trick drew attention in early December 2016 when Los Angeles City Attorney Mike Feuer announced lawsuits against J.C. Penney, Kohl鈥檚, Macy鈥檚 and Sears over alleged false reference pricing schemes.

The retailers allegedly used false regular prices (also called聽reference prices) to 鈥渕islead customers into believing items were being sold at significant discounts鈥 during a sale, according to聽the office鈥檚 news release. It also said that under California law, retailers can鈥檛 advertise a former price unless that price聽was 鈥渢he prevailing market price within three months of the advertisement,鈥 or unless the retailer聽stipulates the date when the former price was charged.聽The lawsuits claimed that the聽retailers usually sold products at the sale prices, not at the reference聽prices.

So why do some retailers want you to see a higher original price?

鈥淭he highest price the consumer sees helps them develop their idea of how valuable something is,鈥 Hamilton says. 鈥溾 It鈥檚 kind of like when you move to a new city and you don鈥檛 know how much you鈥檙e going to have to pay for an apartment. You see what they charge and then you develop your beliefs about what you鈥檙e willing to pay.鈥

How to beat the system

It鈥檚 important to do due diligence while shopping. Here are a few ways to avoid getting duped:

  • Use a price history tracker.聽Websites such as CamelCamelCamel and MyAlerts offer the price history of a product so that you can see if it was mostly sold at the regular price or at the sale price. Use these sites on a one-off basis to search for聽products or sign up for a free account to receive聽tracking notifications.
  • Sign up for pricing alerts.聽Slice Watch is a聽browser extension聽that can be added to Google Chrome. When you visit eligible retailers after signing into Chrome, the extension gives a pop-up option to 鈥渨atch鈥 a product. If that item drops in price, you鈥檒l immediately receive an email notification. Another similar tool is Keepa, an Amazon-specific browser extension that works with Firefox and Chrome.
  • Compare prices at multiple retailers.聽Search engines such as Google or Yahoo can help you look for the item and compare its price at multiple retailers鈥 websites. We tested this strategy for the聽Keurig聽K55 brewing system, which was advertised on sale for $119.99 at Macy鈥檚 and Kohl鈥檚 in late November. But the Macy鈥檚 website reflected a regular price of $174.99 for the coffee maker, while Kohl鈥檚 showed $139.99. Don鈥檛 let聽the size聽of the supposed discount ($55 at Macy鈥檚 compared to $20 at Kohl鈥檚) sway your decision.
  • Think for yourself.聽Ultimately, you should be the one to recognize if a deal is worth it, instead of relying on a retailer to say it is a good deal. Hamilton recommends looking at the price you鈥檇 pay 鈥 if you spend that amount on one item, you won鈥檛 be able to spend it on anything else. Is the cost still worth it to you?

And if at all possible, ignore those regular prices.

Courtney Jespersen is a staff writer at NerdWallet, a personal finance website. Email: courtney@nerdwallet.com. Twitter:聽@courtneynerd.

This story originally appeared on NerdWallet.