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2/5/08 Where do Rug Sellers get Their Suggested Retail Prices From?!?

One of the most confusing aspects of the Oriental Rug industry is where sellers come up with outlandishly high "suggested retail prices."   The fact of the matter is, it depends on the store.  Well, there are one of two things going on here: 1. Either the price stated is highly inflated, OR 2. Retailers have actually sold a similar item at this price at some point in time.  As the consumer, remember that price adjustment is good, price inflation is bad.

Exploring both options:  suggested retail price INFLATION vs. Price ADJUSTMENT 

1.  "Suggested Retail Price" Inflation - The only "explanation" to these inflated prices would go as follows:  oriental rugs are made in countries with lower mean income per household.  One could make the argument that if the rug were made in America, the cost of materials in addition to labor and transport costs would be equal to the Suggested Retail Price as marked.  However, in reality, this is not an acceptable response as it is little more than a tactless marketing ploy.  The fact of the matter is, the rug is not made in the States.  More often than not, these prices are driven by greed to arrive at a final "desired" selling price to make their discounts appear "competitive."  Here at Rug Rag, even WE cannot surmise where these outrageous retail prices come from.  Unfortunately, some of the largest and most well known department stores use this form of price inflation as a starting point to arrive at their final selling price after taking 70% off, another 30% off, and then another 15% off if you sign up for their credit card.  That's how a $22,000 rug winds up selling for $3,929 and it is still overpriced.  The sad part of this pricing tactic (or antic) is that many legitimate rug sellers would gladly sell the same rug for $3,000 +/- and still be making a profit.   

2.  "Suggested Retail Price" Adjustment - The market price of an item is a function of supply, demand and vise versa.  Any given year, with any given fluctuations of labor cost, demands for certain colors and designs dictate the prices of Oriental Rugs.  Basically, replacement cost of an item changes according to the materials, labor cost and other as well as what was "in" last year is not necessarily "hot" this year. 

What are we getting at here?  The real question is: What does the "Suggested Retail Price" really mean? 

The suggested retail should truly reflect what similar rugs (country of origin, quality, size, design, condition and coloring)  have actually sold for in the past.  Not a price in the seller's imagination, but a truly representative price.  Any answer different than this is unacceptable.

Verdict?

Both challenge the seller and consider what they have at stake.  If they are running a blanket sale with "all items 80% off," take a look around at the tags on their goods.  Are some of the price tags new?  Are ALL of their price tags new?  What you want to see is several price tags on their rugs appearing to have a different age, and consistently lower and lower in pricing.  If ALL price tags are new, with a blanket sale of xx% off, be wary as their suggested retail prices, more often than not, have been recently generated specifically for the "sale."

 

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