This past week I was making my way to one of my favorite products at Costco: the croissants. I love croissants. At Costco, you can get a pack of 12 large croissants for $5.99. These same-sized croissants go for $4.99 at Target – but for a package of 4. That's right – for a dollar more, I could get 8 more buttery croissants (that are – in my opinion – equally as tasty). Now – talk about a mark-up!
Now, I don't know if Costco sells these goods so cheap to get folks in the door – or that (because they are selling 'em in bulk) can charge less for more. Whatever the reasons are – our friends at Target are selling theirs at a high profit margin (or so it seems).
This got me to thinking about other products we buy which have high mark-ups – or margins. The most notable are popular items like bottled water (4,000% – cost over price) and coffee (300%).
Here's a few others that I've discovered that we pay premium prices for. Knowing about how much products are marked up, can help you if you ever wish to negotiate a sale.
- Popcorn. Now I'm not poo-pooing the act of buying a tub of popcorn when you go to a movie NOR do I wish to be a kill-joy. I just think it's interesting to note the margins. According to MoneyTalks, Stacy Johnson (who did a similar story on this topic), popcorn has a mark-up as high as 1,275%. Crazy.
- Brand-name prescription drugs. It's no surprise that drug companies are making a killing these days. Their markups can range from 200-3,000%. Best way to avoid these high margins is to get generic drugs which can be a lot less. Or go natural.
- Diamonds. Ever wonder why you get the royal treatment when you go ring shopping for that special someone? There's some big markup in those sparkly things. According to some estimates – 50-200% over the appraised value.
- Text messages. If you don't have an unlimited plan and are paying per text, you are really getting a bad deal. For reference – experts have cited the cost for carriers to facilitate a text message at a mere 0.3 cents.
- Wine. Another item that many use to mark an occasion or put a high premium on is wine. Many restaurants will double the price they paid for it. And, if you get it by the glass the markup can be as high as 400%. Cheers!
- Greeting cards. I'm a big fan of greeting cards – and have enjoyed making my own ever since I was a wee one. When mass printed, the cost can go way down for the manufacturer (also called, “economy of scale” in the printing business). So, while Hallmark touches the heart-strings, they also know how to pull out your wallet with as much as a 200% markup on their paper goods.
- Pre-cut grocery products. I used to buy pre-made bags of salad like they were going out of style. And, I know others do the same. An uncle of mine who used to work at a grocery store told me their store could hardly keep the pre-cuts on the shelves! Markups here are over 100%.
- Furniture. I never feel too bad for negotiating at the furniture store. Markups there can be as much as 80% on these household goods.
Part of what makes capitalism so great is the potential for everyone to make money if you provide value. And, many of us are willing to pay these high markups for convenience and/or because they enrich our lives.