Buyer Beware: The Truth Behind Huge Discounts

Buyer Beware: The Truth Behind Huge Discounts

“Are you actually getting a discount, or is it just a pricing trick?”

Harvard Business Review asked that question last year in a piece about the pervasiveness of “misleading retail reference prices.”

In this case “reference price” is a catch-all term that refers to list price, original price, manufacturer’s suggested retail price, etc.

As HBR’s Rafi Mohammed writes, businesses should – in theory – be allowed to set whatever price they want in hopes of making sales.

Buyer Beware: The Truth Behind Huge Discounts

“The reality is trickier,” Mohammed says. “It’s common in the retail industry to show a reference price and a much lower ‘our price.’

“The only reason to show this comparison — the intent — is to convince consumers that they are getting a good deal. This comparison is only meaningful when a reference price reflects the true market value. It’s misleading to purposefully inflate a reference price to trick consumers into believing they are getting a bargain.”

So why are we talking about this? Because it’s a trend that extends to every industry. Some re-modelers will use this gimmick to get unsuspecting customers to reach out to them. They’ll offer steep “discounts” which just reflects their standard pricing.

If you’re concerned about fair pricing in the remodeling industry, here are some tips from Consumer Reports that you may want to consider.

1. Check Credentials

Consumer Reports conducted a survey that found that nearly 20 percent of general contractors lacked either a state license or the appropriate insurance. Nine percent lacked both. Proper credentials don’t automatically equal quality work, but they do indicate that you’re dealing with someone who runs a trustworthy operation.

Consumer Reports also found that fully accredited contractors were better at keeping down costs in the face of unexpected hiccups on the job.

And trust your gut. A good rapport with your remodeling contractor is important. Any bad feelings that surface during your initial meeting – they’re too bossy, or too hurried – will only get worse once your renovation project gets underway.

2. Don’t Be Afraid To Negotiate

Most contractors told Consumer Reports they are willing to negotiate with customers. Getting bids from a different contractor will give you a sense of what the market is like, and provide some bargaining leverage to customers concerned about fair pricing in the remodeling industry.

The lowest bid may not mean the best work. If the contractor whose bid is the highest also seems like the best person for the job, ask them why they may be higher. Give them the opportunity to explain. It could be that there are details of the job that cost more not obvious to you. Are they using a better material or brand hardware with a better finish that costs more? Are there fabrication techniques that are better, stronger, then the lower priced person. It could be that if the lower priced company used the same products their price would be higher.

What are the warranties? Is it in writing? Ask how they are handled if something needs fixed. How long have they been in business? If nothing can be determined to be different you can always ask for a discount but most legitimate companies do not raise their price to discount it. They know what their costs are and quote you a fair priced based on that plus a small profit so that they can continue to grow the business. Those companies that are so cheap today may not be around tomorrow if you should ever need warranty work.

3. Get It In Writing

Even if you have complete faith in your contractor, having a written contract protects you both. The agreement should detail the scope of each part of the project, the labor involved and the cost of materials. 

Don’t be afraid of a lengthy contract. The Pennsylvania Unfair Trade Practices and Consumer Protection Law requires business’s to have many details including a “3-day right of rescission” in the contract to protect you the consumer. Unfortunately, this can make some contracts scary. Legitimate companies will be compliant with the laws and have a detailed contract.

Also verify that the business you choose has a PA Contractor Lic #.  If they don’t they are not abiding by the Home Improvement Consumer Protection Act (“HICPA”).

4. Stay Involved

“You can’t just write your contractor a check—then check out,” Consumer Reports writes. Plan on keeping in touch with the contractor throughout the process.

If you’re ready to add new closet space, upgrade your pantry or give yourself a laundry room make-over, and are worried about fair pricing in the remodeling industry, trust that Closets & Cabinetry is there to provide reliable service.

Our team is made up of full-time employees, not sub-contractors, who are fully insured and follow EPA lead-safe practices.

We design, manufacture, install and guarantee our work, and are ready to help you with your next project. Contact Closets & Cabinetry today to find out how we can help you.


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