[fawad0222]

Today in our country, how are prices of any article marketed, derived. Is there a system in place or any regulatory structure working.
I ask these questions as everyday I find people struggling including myself to make sure that they are not being fleeced massively. This scenario cuts across all the sectors, industries, right up to the level of corner shops and street vendors. We can say that free economy works on the basis of the market competition and brings out the best for the consumers. We know and economists can explain better, that it is not true, as there are different market scenarios including concept of monopoly, duopoly and so on which distort the picture. Yes there are organizations like competition commission of India and few others systems including the MRP. concept, which play a role here. But the reality is very different on the ground. Isn't so.
As I am from the medical background, I will give example from my sector. Yesterday I bought an antimalarial injection for Rs 110 per unit from a medical store, which was being sold for Rs 250 at another shop and for Rs 270 at the govt hospital premises, medical store which was bound to give 25% discount on every medicine being purchased. Same medicine, same company, a difference of whopping more than 150%. Can you guess the MRP printed on the label. No! It was around Rs 450.
I believe more or less, similar situation extends across the country and the market products including automotive sector.
So my question is, how can we confidently pay what we pay.
As today financial lendors have crisil data to assess the credibility and ability of the borrowers, can there be a system in place which can provide the similar confidence to buyers.
Mods: Please shift the thread to an appropriate section, if this one is not the right one. Thanks

[saket77]

For all branded items, I check the prices at e-retailers like Amazon and Flipkart and I think they are a good benchmark. Most offline stores sell these items for little more than Amazon etc and I understand and consider it. However, prices for unbranded items are difficult to assess as neither Amazon nor offline stores can se used as a benchmark. Prices for these unbranded items are mostly quite inflated on e-retail platforms so, difficult to assess.

For services, it’s exponentially more difficult to assess.

[Electromotive]

Originally Posted by fawad0222

Today in our country, how are prices of any article marketed, derived. Is there a system in place or any regulatory structure working.

The price of anything is a matter of demand and supply. Every time.

Reduce demand or increase supply, price falls. Reduce supply or increase demand, price increases. Look at GPU prices -- perfect scenario of high demand and low supply, so price remains high.

Now demand is a matter of need or desire. If you can make people need or desire something, you can make them pay for it. The more useful or desirable your product, the higher you can charge for it.

This is why something as useless as crypto currencies (or tulips a few centuries ago) get priced sky high -- because enough people are convinced they are valuable and are willing to pay a high price for it. It is the same reason why there is an IPO euphoria in the stock market -- the buyers are willing to pay a lot higher than what the asset is worth.

Price is whatever you can get someone to pay, and at this time people are willing to pay sky high because they believe they can still make profit. This is called the greater-fool theory -- the idea being there is always a greater fool willing to pay higher to buy the asset from you. And this is working very well in the current stock and crypto markets.

So, how do you convince someone to pay more? Create hype, reduce supply or both. As long as there is lack of competition or transparency, it is a sellers market i.e. the seller dictates the price. This is why there are anti-trust laws - to ensure there is always enough competition to keep prices in check and to prevent formation of cartels and price fixing. Unfortunately, we live in a lawless state and cartel behavior is generally the norm. But ecommerce enforces transparency and competition so prices remain in check (example - phone acc or other chinese imports).

For example, now that you have revealed that a certain drug is sold at Rs 110, I and other consumers privy to this information won't be willing to pay anything over 120. The price is now public information, so the seller selling at 110 gets most of the business. The other sellers now have supply and no demand, so will be forced to reduce prices to remain competitive.

Now, to answer you question -- if the product you are buying has a lot of competition and the price is publicly available (think FMCG products), your chances of getting fleeced are low. If it is a luxury or specialized product then you are more likely to pay a lot more than intrinsic value (think perfumes, jewelry, medicine) - the only way to avoid being fleeced is to do more research (ask multiple vendors, check competition etc.) before purchase.

Also read up on the anchoring effect.

[Fx14]

Originally Posted by fawad0222

Yesterday I bought an antimalarial injection for Rs 110 per unit from a medical store, which was being sold for Rs 250 at another shop and for Rs 270 at the govt hospital premises, medical store which was bound to give 25% discount on every medicine being purchased. Same medicine, same company, a difference of whopping more than 150%. Can you guess the MRP printed on the label. No! It was around Rs 450.

The MRP is the "Maximum Retail Price" prescribed for sale of the product, which is inclusive of all the intermediaries costs involved in transport, storage as well as their profit margins.

The sellers are free to sell at any price lower than MRP.

Thus you observe supermarkets offering higher discounts on products due to lesser number of intermediaries involved.

IIRC some years ago, some vendors used to illegally charge a couple of Rs. Extra above the MRP for a "cold" cold drink stating that it was the refrigeration charge.

This was subsequently penalized and also a condition stipulated that products with a differential in pricing due to specific circumstances carry a printed notification on the product "specifically packaged for ****" with the specific different MRP.

[CarNerd]

Anything closer to MRP, you should be Wary, Anything closer to Zero, you should be Happy

I think it's better to look at 2 to 3 quotes of anything to get an approximate price. It's better to compare offline and online prices. There are many websites like Indiamart.com, mysmartprice.com, smartprix.com, etc where you can check prices.

[Shreyas Agarwal]

You simply cannot unless you are buying a Toyota Fortuner
Recently I was looking for a TV set. I zeroed in on this model.

The MRP for the same is Rs. 1,79,900.

Went to the Reliance Digital store and their salesman tells me that with their Diwali Dicounts and best offer deal which includes extended warranty and insurance it will cost you Rs 1,24,900.

Contacted a Sony distributor who was ready to give the same TV for Rs. 1,15,000 and was supposedly not making single penny on the same.

Amazon has currently listed the TV for Rs 1,10,490.

Contacted a TV repair guy who told me "sir please contact me whenever you buy a new TV. I will get you a good deal and it will make me comission as well".
He told me sir I can give it to you for Rs. 98,000 net.

Now I take this 98k deal to the Reliance digital and they are also ready to sell it to me for 98k and to better his deal they offer Extended warranty for 5 years and 1 year insurance as well. These are the same people whose best deal with all possible discounts was 1,24,900

I tell the same to the repair guy that they are offering EW and insurance. Some bargaining and he is down to 95k albeit without the warranty and insurance.

Moral of the story: Cross shop and hope for the best. You can never confidently pay what you pay unless of course, you are buying a Toyota Fortuner where you pay whatever the on-road price is. No discounts.

[aargee]

Originally Posted by fawad0222

So my question is, how can we confidently pay what we pay.

None!! Everything works based on leap of faith; Humans are here today just because of the power of our imagination, this is why Napoleon Hill said What the mind can conceive and believe it can achieve

Ever done NEFT? The money gets debited immediately, but does it gets credited instantaneously? Then how come IMPS works immediately? If a private company like GPay can transfer money from banks in no time, why the banks weren't exploring this option earlier or just copy the same source code? For any online transaction, take IRCTC for example, the money gets credited immediately, however, when cancelled, it takes an easy 3-4 days or even more to get credited back.

How can we confide in such a system?

Point is, whether we believe it or not, all of us, every single on us, consciously or not, we're all living in blind faith to an extent. Even a business magnate or hotshot executive who takes calculated risk, takes a leap of faith, which includes a bit of blind faith, with their estimates.

Originally Posted by fawad0222

As today financial lendors have crisil data to assess the credibility and ability of the borrowers, can there be a system in place which can provide the similar confidence to buyers

In that case, I would advice you not to watch this movie as you'll lose the entire faith on the system


PS - Would you believe if I said, the concept of money by itself is imagination

PPS - Do you celebrate Diwali? If not, would you atleast buy fireworks? If not, try it next time hehe

[mvadg]

Interesting thread.
There's another side to this with services. You ask a carpenter or plumber or even a tailor (applies to every service, including dentists and doctors, but may be not to those working as employees) for a quote for doing something, and you get a quotation for a 5 * service. What you get really is the bare minimum, and sometimes even worse - you get shoddy service that actually causes you to lose out - may be materials are no longer usable, premises damaged and in fact you lose much more than what you paid for the services and the materials - all WITHOUT RECOURSE to any kind of restitution.

Many times when I see threads complaining about shoddy service by A S Ss, I think, how wonderful it would be to have plumbers and carpenters held to the same high standards!

[V.Narayan]

Originally Posted by fawad0222

Today in our country, how are prices of any article marketed, derived. Is there a system in place or any regulatory structure working.
I ask these questions as everyday I find people struggling including myself to make sure that they are not being fleeced massively. This scenario cuts across all the sectors, industries, right up to the level of corner shops and street vendors. We can say that free economy works on the basis of the market competition and brings out the best for the consumers. We know and economists can explain better, that it is not true, as there are different market scenarios including concept of monopoly, duopoly and so on which distort the picture. Yes there are organizations like competition commission of India and few others systems including the MRP. concept, which play a role here. But the reality is very different on the ground. Isn't so.

So my question is, how can we confidently pay what we pay.

There was a utopia where the price of everything was fixed across the country and never changed with geography or time. That place was called the USSR. Only snag was that things may not be available most of the time when you need it or for long afterwards. But the price was fixed and clearly stated.

What you may be seeking always is the lowest perfect price it seems. Because in a large economy like India with its vast geography, long supply chains, thousands of demand segments a forced fixed price will only ensure entrepreneurs don't produce. The imposition of maximum retail price forces manufacturers to buffer in all possible exigencies of supply, transport, inventory holding, inventory damage, etc into that M.R.P. which is why some choose to sell at varying levels below the M.R.P. The M.R.P. is also fair and the chap selling it at 15% lower is also fair. That is the fundamental point to be understood. Fair is a range of price and not a point of price.

Price is the variable that accommodates all the market forces of demand & supply and variables of production, change in input factor costs, supply chain, holding costs etc. If you force fit price production output will become the variable that will swing from month to month or week to week or worse no production at all.

We cannot say that the lowest price is the only fair price as we don't know the seller may be selling at a loss to get rid of inventory.

If we pay a price that you can afford to buy a good or service that you reasonably enjoy the benefits of then that is a fair price. If we constantly hanker for the lower price that Joe Smith next door got we will always be unhappy and in search for a utopia that does not exist.

As I am from the medical background, I will give example from my sector. Yesterday I bought an antimalarial injection for Rs 110 per unit from a medical store, which was being sold for Rs 250 at another shop and for Rs 270 at the govt hospital premises, medical store which was bound to give 25% discount on every medicine being purchased. Same medicine, same company, a difference of whopping more than 150%. Can you guess the MRP printed on the label. No! It was around Rs 450.

Can't comment on one example without all the facts around it.

[fawad0222]

Originally Posted by Fx14

The MRP is the "Maximum Retail Price" prescribed for sale of the product, which is inclusive of all the intermediaries costs involved in transport, storage as well as their profit margins.

The sellers are free to sell at any price lower than MRP.

Thus you observe supermarkets offering higher discounts on products due to lesser number of intermediaries involved.

IIRC some years ago, some vendors used to illegally charge a couple of Rs. Extra above the MRP for a "cold" cold drink stating that it was the refrigeration charge.

This was subsequently penalized and also a condition stipulated that products with a differential in pricing due to specific circumstances carry a printed notification on the product "specifically packaged for ****" with the specific different MRP.

Thanks for your reply. MRP fails to serve the purpose when its too high than the base price, like in the case i mentioned the drug quoted had MRP of 450 while I got it for 110. This shows that the MRP was much more inflated than what is supposed to cover like the transportation and other variables for different areas of the country, subsequently providing scope to vendors for selling at a huge profit.

[fawad0222]

Originally Posted by Fx14

The MRP is the "Maximum Retail Price" prescribed for sale of the product, which is inclusive of all the intermediaries costs involved in transport, storage as well as their profit margins.

The sellers are free to sell at any price lower than MRP.

Thus you observe supermarkets offering higher discounts on products due to lesser number of intermediaries involved.

IIRC some years ago, some vendors used to illegally charge a couple of Rs. Extra above the MRP for a "cold" cold drink stating that it was the refrigeration charge.

This was subsequently penalized and also a condition stipulated that products with a differential in pricing due to specific circumstances carry a printed notification on the product "specifically packaged for ****" with the specific different MRP.

I feel there is a need to check the authenticity of the MRP in the first place.

Originally Posted by fawad0222

Thanks for your reply. MRP fails to serve the purpose when its too high than the base price, like in the case i mentioned the drug quoted had MRP of 450 while I got it for 110. This shows that the MRP was much more inflated than what is supposed to cover like the transportation and other variables for different areas of the country, subsequently providing scope to vendors for selling at a huge profit.

Originally Posted by Electromotive

The price of anything is a matter of demand and supply. Every time.

Reduce demand or increase supply, price falls. Reduce supply or increase demand, price increases. Look at GPU prices -- perfect scenario of high demand and low supply, so price remains high.

Now demand is a matter of need or desire. If you can make people need or desire something, you can make them pay for it. The more useful or desirable your product, the higher you can charge for it.

This is why something as useless as crypto currencies (or tulips a few centuries ago) get priced sky high -- because enough people are convinced they are valuable and are willing to pay a high price for it. It is the same reason why there is an IPO euphoria in the stock market -- the buyers are willing to pay a lot higher than what the asset is worth.

Price is whatever you can get someone to pay, and at this time people are willing to pay sky high because they believe they can still make profit. This is called the greater-fool theory -- the idea being there is always a greater fool willing to pay higher to buy the asset from you. And this is working very well in the current stock and crypto markets.

So, how do you convince someone to pay more? Create hype, reduce supply or both. As long as there is lack of competition or transparency, it is a sellers market i.e. the seller dictates the price. This is why there are anti-trust laws - to ensure there is always enough competition to keep prices in check and to prevent formation of cartels and price fixing. Unfortunately, we live in a lawless state and cartel behavior is generally the norm. But ecommerce enforces transparency and competition so prices remain in check (example - phone acc or other chinese imports).

For example, now that you have revealed that a certain drug is sold at Rs 110, I and other consumers privy to this information won't be willing to pay anything over 120. The price is now public information, so the seller selling at 110 gets most of the business. The other sellers now have supply and no demand, so will be forced to reduce prices to remain competitive.

Now, to answer you question -- if the product you are buying has a lot of competition and the price is publicly available (think FMCG products), your chances of getting fleeced are low. If it is a luxury or specialized product then you are more likely to pay a lot more than intrinsic value (think perfumes, jewelry, medicine) - the only way to avoid being fleeced is to do more research (ask multiple vendors, check competition etc.) before purchase.
Yes we must check up with multiple sources before finalising any deal. But in many situations it is not possible or practical leaving one to the mercy of the vendors

Also read up on the anchoring effect.

Originally Posted by Shreyas Agarwal

You simply cannot unless you are buying a Toyota Fortuner
Recently I was looking for a TV set. I zeroed in on this model.
Attachment 2232107
The MRP for the same is Rs. 1,79,900.

Went to the Reliance Digital store and their salesman tells me that with their Diwali Dicounts and best offer deal which includes extended warranty and insurance it will cost you Rs 1,24,900.

Contacted a Sony distributor who was ready to give the same TV for Rs. 1,15,000 and was supposedly not making single penny on the same.

Amazon has currently listed the TV for Rs 1,10,490.

Contacted a TV repair guy who told me "sir please contact me whenever you buy a new TV. I will get you a good deal and it will make me comission as well".
He told me sir I can give it to you for Rs. 98,000 net.

Now I take this 98k deal to the Reliance digital and they are also ready to sell it to me for 98k and to better his deal they offer Extended warranty for 5 years and 1 year insurance as well. These are the same people whose best deal with all possible discounts was 1,24,900

I tell the same to the repair guy that they are offering EW and insurance. Some bargaining and he is down to 95k albeit without the warranty and insurance.

Moral of the story: Cross shop and hope for the best. You can never confidently pay what you pay unless of course, you are buying a Toyota Fortuner where you pay whatever the on-road price is. No discounts.

Thanks for the example. Really teaches us to not be lazy and do our homework

Originally Posted by aargee

None!! Everything works based on leap of faith; Humans are here today just because of the power of our imagination, this is why Napoleon Hill said What the mind can conceive and believe it can achieve

Ever done NEFT? The money gets debited immediately, but does it gets credited instantaneously? Then how come IMPS works immediately? If a private company like GPay can transfer money from banks in no time, why the banks weren't exploring this option earlier or just copy the same source code? For any online transaction, take IRCTC for example, the money gets credited immediately, however, when cancelled, it takes an easy 3-4 days or even more to get credited back.

How can we confide in such a system?

Point is, whether we believe it or not, all of us, every single on us, consciously or not, we're all living in blind faith to an extent. Even a business magnate or hotshot executive who takes calculated risk, takes a leap of faith, which includes a bit of blind faith, with their estimates.


In that case, I would advice you not to watch this movie as you'll lose the entire faith on the system
Attachment 2232142

PS - Would you believe if I said, the concept of money by itself is imagination

PPS - Do you celebrate Diwali? If not, would you atleast buy fireworks? If not, try it next time hehe

Thanks for the movie name. would try to watch it.

Originally Posted by mvadg

Interesting thread.
There's another side to this with services. You ask a carpenter or plumber or even a tailor (applies to every service, including dentists and doctors, but may be not to those working as employees) for a quote for doing something, and you get a quotation for a 5 * service. What you get really is the bare minimum, and sometimes even worse - you get shoddy service that actually causes you to lose out - may be materials are no longer usable, premises damaged and in fact you lose much more than what you paid for the services and the materials - all WITHOUT RECOURSE to any kind of restitution.

Many times when I see threads complaining about shoddy service by A S Ss, I think, how wonderful it would be to have plumbers and carpenters held to the same high standards!

Yes that's why i started this thread to explore on how to make our purchases whether an item or a service more objective price wise.

Originally Posted by V.Narayan

There was a utopia where the price of everything was fixed across the country and never changed with geography or time. That place was called the USSR. Only snag was that things may not be available most of the time when you need it or for long afterwards. But the price was fixed and clearly stated.

What you may be seeking always is the lowest perfect price it seems. Because in a large economy like India with its vast geography, long supply chains, thousands of demand segments a forced fixed price will only ensure entrepreneurs don't produce. The imposition of maximum retail price forces manufacturers to buffer in all possible exigencies of supply, transport, inventory holding, inventory damage, etc into that M.R.P. which is why some choose to sell at varying levels below the M.R.P. The M.R.P. is also fair and the chap selling it at 15% lower is also fair. That is the fundamental point to be understood. Fair is a range of price and not a point of price.

Price is the variable that accommodates all the market forces of demand & supply and variables of production, change in input factor costs, supply chain, holding costs etc. If you force fit price production output will become the variable that will swing from month to month or week to week or worse no production at all.

We cannot say that the lowest price is the only fair price as we don't know the seller may be selling at a loss to get rid of inventory.

If we pay a price that you can afford to buy a good or service that you reasonably enjoy the benefits of then that is a fair price. If we constantly hanker for the lower price that Joe Smith next door got we will always be unhappy and in search for a utopia that does not exist.

Can't comment on one example without all the facts around it.

Thank for your detailed reply but as I have said in one of my post here that MRP serves its purpose if its not artificially inflated which I find is happening very often.

[V.Narayan]

Originally Posted by fawad0222

Thank for your detailed reply but as I have said in one of my post here that MRP serves its purpose if its not artificially inflated which I find is happening very often.

By definition it needs to be buffered in some reasonable way otherwise how can a producer in one corner of a vast geography & economy fix a "never to be exceeded price" for his product no matter where or when it is sold - distance, markets, time, storage are all unknown variables. Even a public sector company with the best of intentions has to buffer its MRP.

[mvadg]

Originally Posted by fawad0222

I feel there is a need to check the authenticity of the MRP in the first place.
...

Thank for your detailed reply but as I have said in one of my post here that MRP serves its purpose if its not artificially inflated which I find is happening very often.

When we can have fuel prices changing on a daily basis, we should have fine grained MRP that more closely reflects the costs. Computational power is cheap now, not like in the 80s when determining the MRP would have been a more involved exercise.

[dragonfire]

MRP is a relic from the pre-GST era. When I was a kid, products used to come with a price printed with a "local taxes extra" in brackets. But then local taxes ranged anything from 0 to 20-25% based on the category of the product, so shops used to charge according to their will. That is when the govt mandated printing of an MRP which includes the taxes. But then taxes varied from state to state and for ease, the manufacturers print the maximum possible price on the products. Shopkeepers give some discount based on the margin they intended to sell the product for.

Now, it is foolish to assume that the price of a product is always the cost price + a fixed profit. 10% is the generally agreed average profit, but there are low and high margin products. It depends on a lot of factors. For example a fast moving item like rice would have a low margin while a slow moving item like a sofa would carry a high margin. A sofa manufacturer not only competes with other sofa manufacturer, but with rice producers too for capital. If sofa selling became too lucrative, investors would pull out from rice producing to sofa manufacturing. So no industry can sustain for long charging a high margin. Neither car shops keep charging you higher and stay in business when there are other shops selling for less.

Again, it also depends on where/how the product is sold. The price of tomato in a neighborhood store would be higher than a wholesale supermarket for the same quality and quantity. You pay more for the convivence offered by a local store but the supermarket would make better profits by volume.

The bottom-line is how much you should pay for a product depends on what value you are getting out of it. I usually buy most of our stuff from Amazon and Flipkart, but when our Mixer died, we drove to the nearest store and bought one for about a grand more, because we couldn't manage without one for even a day. So the value the high-priced mixer offered me was more than the low priced item + hassle of not having a mixer for 2 days.

Always make sure you doo your research before you buy anything, but if you are in a hurry to buy that medicine that could decide between life and death, even twice the regular price would not sound like a high price. So there is nothing like a fair price for anything - everything depends on how desperate you are to get it.

So chill, there is nothing wrong if somebody sells something for twice or thrice or ten times the MRP. Either he is depending on customers who are desperate to buy at that price, or he is going out of business soon. Either way it is not your headache.

[alpha1]

Originally Posted by fawad0222

Today in our country, how are prices of any article marketed, derived. Is there a system in place or any regulatory structure working.
I ask these questions as everyday I find people struggling including myself to make sure that they are not being fleeced massively.

You know in one way, everyone is, to some extent, being "fleeced" by everyone else. Anything that you "buy" is something that you did not produce yourself.

Keep in mind, The earth doesn't charge any dollars for any resource.

Some or the other human (or a syndicate - like corporate, government etc.) owns a piece of land / mining rights and charges the buyers for resources. And so the value chain starts. Call it value addition, know-how cost, manpower charges, or whatever: everyone in the chain adds his cut and ultimately you as consumer pay the final price of the goods.

No individual or organization can fixed price to each person's cut in this entire chain, and wherever it has been done (in communist countries) the system has failed. And the reason is that every consumer's value for money, appetite for spending, preferences for goods and services, judgement and evaluation criteria is different.

You may prefer buying cheaper stuff from Amazon, I may prefer paying 5% extra and buy from brick & mortar (because the owner is known to me, or perhaps they saved me on a rainy day, or some other factor)