Two-Price Comparison Advertising: How To Stay On The Right Side Of The Law In Victoria

Shopping Blog

Two-price comparison advertising (showing a higher price slashed to a lower price) is an effective way to attract your customer's attention. Comparative advertising highlights great deals to customers and can significantly boost sales in a short period, but you must follow the law when you advertise prices in this way. Find out more here.

Regulation in Victoria

The Competition and Consumer Act 2010 regulates all product pricing across Australia. While this type of price advertising may seem relatively simple, there are significant opportunities for unscrupulous businesses to mislead customers. As such, Consumer Affairs Victoria will investigate complaints about pricing before or at the point of sale.

Types of comparison pricing

You may decide to compare a current price to various other prices. These can include:

  • A price you charged before
  • The cost or wholesale price
  • The price a competitor charges
  • The recommended retail price (or RRP)

In any case, you must make sure the comparison you present is accurate and not misleading.

Avoiding misleading customers

A cross-through price is misleading if the product was not previously available at the higher price. This kind of misleading comparison is not always deliberate, but it's still illegal. For example, if you genuinely believe a competitor sold something for $100 and research shows that they sold it for $80, you have misled your customers.

It's also important to note that the older price had to be in place for a 'reasonable' period. This period will vary depending on the product and how often you normally charge prices, so you need to think carefully about price comparisons that refer to a higher price that was only available for a short period.

You may mislead customers if the quantity of products available at the higher price was too low. For example, if you only stocked one item at the higher price, and you now have hundreds of the items at the lower price, the comparison is misleading to customers.

Getting the right systems and processes in place

As a retail business, you must take every possible step to make sure your prices are right. Regular, manual price checks are necessary where you use shelf-edge labels to display prices, especially if you routinely cut or increase costs. If you make an innocent mistake, you must remove all items from sale until you correct the error. Refund customers promptly and in full, if requested, if it becomes clear you have accidentally overcharged somebody.

Pay particular attention to percentages. For example, it's easy to accidentally miscalculate a percentage, but if you advertise a price as '60 percent lower', you need to make sure you charge customers the right amount. Many businesses avoid percentages or fractions, as it's easier to check and control basic costs.

Comparison prices may not always suit the product. It's sometimes more accurate simply to advertise a 'great new price' or a 'hot new deal' as these terms are less misleading.

If you use two-price comparison advertising in your store, you need to make sure the prices are always accurate. For more information, contact a point-of-sale company such as Austech Weighing Pty Ltd.

Share

23 February 2016

Stocking my vintage shop

I have a knickknack shop. We sell a lot of genuine vintage items, but some items are hard to find or extremely expensive so we also stock a range of vintage reproductions at a lower price point so that anyone can come into our store and find a piece of memorabilia that they like and can afford. This blog talks about the process of selecting good vintage reproductions and how we decide which reproductions to stock. We also have some tips for consumers on the best ways to tell the difference vintage reproductions and the real deal. I hope you find it useful.