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January 2014

I hate to burst your bubble,

Burst bubbleI hate to burst your bubble…


Here’s an insider’s secret. Well, it’s not really a secret, but it may appear to be.

If you really believe that you can buy high jewelry at 60 to 70% off and get a great deal, well, I hate to burst your bubble, but you’ve fallen for a very old trick.

When companies constantly advertise and sell their product at 50, 60 or even 70% off, ask yourself, “How can they make money and still be in business?” and, “Am I really getting such a great deal?” The fact of the matter is, the “original” price is grossly inflated and is much higher than it should be to allow them to mark the item down so much. Every company, those with a large number of stores or those touting to be wholesalers or manufacturers, will pay very close to the same price as any other store for their jewelry. Then, it’s up to the owners or upper management (or the banks in some instances) to determine how they will price each piece. Some will take the high road and put a reasonable markup that will allow them to operate their business and make a small profit while giving their customers great value. Many use deceptive pricing strategies to give the perception of huge savings while making about the same amount of profit.

Case in point, using a true story from 2012. A large mall store priced a 2 carat round diamond at $48,000.00. Right off the bat, the price was dropped 50% to $24,000.00, then to $22,000.00 and finally 60% to $19,200.00. The customer wanted a lower price and, with a lot of negotiating, finally accepted a price of $18,000.00 for the diamond. A few weeks later while talking with the companies District Manager, it was learned that one of the owners of the company would have accepted selling the diamond for $15,000.00, a price many independent jewelry stores would have sold the very same diamond and given better service to the customer.

So, did the customer get a great deal with the huge discount? Well, he was happy with the price he paid and the company was very happy with the profit they made. But, the diamond really wasn’t worth $48K in the first place.

I’ll tell you ways to protect yourself in my next post.

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