Prices are considered the number one sales argument in eCommerce. The so-called strikethrough prices or cross-out prices are a popular means for retailers to attract the attention of customers. They are nothing more than pricing comparisons and promise a supposed bargain as opposed to the listed or competitive price. In addition, a saving is frequently made in comparison to the manufacturer’s recommended retail price (RRP) or the previous recommended end user price (REUP).
From a psychological standpoint, this type of price presentation is based on the anchoring effect. This means that people need a reference value for evaluating an offer. Strikethrough prices make the advantage of the price reduction more tangible to the customer. They are an effective means of winning over customers.
However, strict legal requirements, which you should consider as a retailer, apply when dealing with strikethrough prices. A disregard here is one of the most common reasons for reprimands in online retail. We have summarized everything you need to know on the topic of offerings communication in the following tips.
Tip #1: Name the supply source for your strikethrough prices
This price offer is typical for the presentation of discount campaigns in numerous online shops. Unclear in the example, however, is what the retailer’s strikethrough price is referenced to. Does it mean the RRP, a competitor price or a price that was previously demanded?
Until 2015, it was valid that strikethrough prices and cross-out prices must be defined to the extent that the consumer is clearly aware of the basic price concerned (BGH, Judgment of 17.03.2011, Ref .: I ZR 81/09). With a recent verdict, the Federal Court of Justice simplified advertising with strikethrough prices. It stated that consumers, at least on platforms such as Amazon, are generally able to recognize a strikethrough price as the price previously demanded by the advertiser (BGH, Judgment of 05.11.2015, Ref .: I ZR 182/14). It otherwise applies that when the price comparison is to be carried out at a price other than the previously demanded price, for example the manufacturer’s RRP, then a further description will be necessary.
Tip #2: Check your strikethrough prices for recency
For any type of price promotion, you should be aware that this is as up-to-date and as genuine as possible. Both fictitious (LG Köln, Judgment of 14.02.2013, Ref. 31 O 474/12) and outdated RRPs (LG Wuppertal, Judgment of 24.02.2014, Ref. 12 O 43/10) are deemed to be anti-competitive. Advertising with a previous retail price should also be updated. If a retailer quotes an extremely outdated purchase price, or if an unreasonably long period of time at a discount is advertised, then this is deemed misleading (LG Dortmund, Judgment of 18.12.2008, Ref. 16 O 134/08).
Tip #3: Only show truthful discounts
Price promotion reaches its limits when the basic price is set unrealistically high. A comparison with the former retail price is only permitted if you have genuinely asked for this price in the past. This means that the previous price must have been up to date in your online shop over a longer period of time. Many retailers raise their prices at short notice in the run-up to a sale campaign, in order to be subsequently able to advertise at heavy discounts. The consumer is being suggested a reduction here, which in reality does not exist. Also prohibited under competition law are so-called predatory prices, which are a specific handicap of competitors (§ 4 No. 10 UWG).
Tip #4: Limit your discounts in duration
Reductions are often limited in time. It is important in this case that you inform consumers about the length of the offer period (OLG Stuttgart, Judgment of 08.02.2007, Ref. 2 U 136/06). Additionally, it is deemed anti-competitive if a time-limited discount campaign is then subsequently extended (BGH, Judgment of 07.07.2011, Ref. I ZR 173/09; Judgment of 07.07.2011, Ref. I ZR 181/10). If the offer period has expired, retailers must then ensure that the advertised product is offered again at the old price.
Tip #5: Compare the prices of competitors
Orientate yourself towards your competitors for a realistic price optimization. If you wish to advertise your prices in this context, then this is only permissible if the advertised products are comparable. When the products differ significantly, then this must be pointed out (BGH, Judgment of 19.11.2009, Ref.: I ZR 141/07).
A rapid reaction to price changes by other vendors helps you to fully maximize your margins and also increase your profits. A monitoring and analysis of the market is the most important requirement in this objective. Automated tools for price monitoring on the Internet support you in the implementation of your high-potential pricing strategy. With the Vistex’s Business Intelligence software, you can keep an eye on the market as well as your competition, and thus improve your success in eCommerce.