There's not a personal life that doesn't want to get the biggest bang for his buck stretch that dollar to its limit and triumph over inflation, but the reality is that most of the products we purchase are made at ridiculously low prices resulting in huge markups and profits for multinational companies. I'll be talking a lot about markups going forward so let's first ensure you know exactly what I mean the term markup refers to the ratio between the cost of a good or service and its selling price so if something costs $1 to make and sells for 2 dollars and 50 cents its markup is 150%.
Number 10 : Mattresses within the furniture industry the mattress sector is far and beyond the most lucrative with markup prices vary from the expensive to the extreme. On the low end buyers can find prices that include a 100% markup on the high end mattresses can be marked up by well over 15 hundred percent that means you could be paying five thousand dollars for something that costs a mere three hundred dollars. To make this is the typical breakdown of what you're usually paying so how is this possible for a plethora of reasons apparently most obviously it's because there are only a handful of companies in the industry, this sort of market form is called an oligopoly because in the mattress industry only for companies account for around sixty percent of all revenue. Since there are so few competitors these companies have easily aligned very high profit margins without competition and we're just forced to pay their prices. So why doesn't someone just enter the market with a cheaper mattress and make millions, well it's not as easy as that most mattresses are sold through retailers who take a cut they order from the largest manufacturers and each mattress company usually slaps on a different name or label for each mattress retailer crucially, this makes it difficult for anyone but a tree mattress expert to compare prices. So when one retailer says they can match the price of another mattress it may be because it's the exact same one and after all we only really buy a mattress every five to ten years. So most of us find it hard to gauge its quality. Hardly anyone will feel bad laying on a new mattress when we've been sleeping on a mediocre one for years so we usually just soak up the salesman's rhetoric we're getting a good deal. Add to that all the features you likely don't notice but they upsell you anyway like extra foam and you have yet more reasons to add additional margins to the sale if you need a mattress. I suggest just ordering online sure you won't be able to test it before your purchase but they are far more transparent and inexpensive.
Number 9 : Popcorn and movies have always gone hand in hand but the price of popcorn and movie theaters have undergone massive price hikes over the years. As cinemas search out new revenue streams, as Studios take more percentage points on each new release. AMC and Regal Cinemas are two well-known theatre companies that retail a small bag of popcorn for six dollars fifty cents which costs a mere 35 cents to produce. That equates to a markup of an astounding 18 times the actual production rate, but it's not all doom and gloom based on conducted studies. This markup enables theaters to keep ticket prices lower and increase sales.
Number 8 : Text messages remember the days when text messages were free well that era is long over and now the largest phone carriers have clamped down and released coverage plans that seek to maximize profits per text. The cost that major telecommunication giants like AT&T;and Verizon have incurred for text average between a thousandth of a penny to eight thousand cents. But these days customers are charged an average of 20 cents per text with payment plans that include pay-as-you-go annual and multi-year options. That means we're paying tens of thousands more than it cost that great deal you thought you were getting. Doesn't seem that grand once you do some simple math so if wireless carriers price text messaging at their actual wholesale cost we would pay approximately one to eight cents for one thousand text messages and with so few companies offering complete coverage coast-to-coast, consumers choices are limited. Thus the price gouging continues.
Number 7 : Printer cartridges being able to print documents from the privacy of your own home is a convenience we all want, but it also comes with an added expense the major electronic manufacturers know. The premium printer cartridges are an absolute necessity subjecting consumers into a catch-22 situation where they sell printers at relatively inexpensive prices, but generate millions with their lines of printer cartridges. According to studies hewlett-packard offers cartridges for printers that retail between 13 to $50 with the production rates estimated between four to five dollars constituting two a markup that is three to ten times the actual cost. HP recently released a statement that the company invests billions of dollars annually into ink development and research. Though this hardly justifies the true reason they're so expensive which is profit with the biggest electronics and manufacturers in the industry adopting similar business models. It's virtually impossible for consumers to avoid the high prices associated with printer cartridges.
Number 6 : Textbooks costs about eleven dollars to print a new addition to the standard algebra textbook. Though college students often end up paying a retail price of over 200 dollars a markup more than 20 times the manufacturing fees. Though you may be led to believe that it's because publishers have other cost like royalties to authors, editorial, production, transportation marketing and employee salaries in bookstores. The main reason is simpler than that they cost so much because publishers force students to buy new books by releasing expensive new editions each year making older books obsolete. Therefore undermining the used book market on average students spend six hundred and fifty five dollars each year on textbooks. According to the National Association of college stores
Number 5 : Electronics are now essential parts of our everyday lives from remote-control devices to cables calculators and more one particularly expensive device is the graphing calculator Texas Instruments is the leading manufacturer of these devices their production costs range between fifteen to twenty dollars but at retail their ti-83 graphing calculator sells anywhere from 100 to $140 a market price that is typically seven times more than manufacturing costs they could do this because textbook publishers often provide exercises that coincide with specific calculators and their functions necessitating students to purchase a specific device regardless of price other electronics like TVs and video game systems don't turn huge profits for electronics stores so they turn to their accessories to maximize prophets HDMI cables give consumers the power to stream content directly between their TV and laptop at a cost of less than three dollars wholesale the retail price however averages about $20 and is unavoidable if you want to enjoy the advances in technology from the comfort of your home televisions these days are not manufactured inside the US anymore due to major brands outsourcing production costs to India and China where the workforce works for substantially less than their American counterparts
Number 4 : Shoes and Clothing the price we pay for clothes can vary dramatically from brand to brand but one component that remains the same is the markup of items purchased a typical polo shirt cost around five dollars to make but will sell for $14 a markup of one hundred and eighty percent the major costs include materials and transportation with only around two percent of the wholesale costs going to the workers there are only a few companies that can make be made in the USA claim as the majority of clothing brands opt for manufacturing overseas in other countries like Vietnam and Bangladesh where the labor rate is around $2 an hour compared to the average u.s. rate of $20 an hour the cost to make a pair of american-made jeans like True Religion for example are around $50 but the retail price comes in at 335 dollars the company factors in the cost of running stores shipping marketing and other overheads to justify the markup of nearly seven times the actual production rate another area where exorbitant retail prices abound is the shoe industry with most major brands significantly market a prices to cover endorsement deals international production and marketing cost Nikes airmax for example carries a production cost of only $33 but retailed for a hundred and ninety dollars a 600% markup that consumers are obviously willing to overlook similarly the Yeezy boost 750 cost around seventy six dollars to make but retails for 350 as long as there remains a hungry market for premium Footwear these prices will continue to hold
Number 3 : seasonal gifts a cheap car typically cost one or two dollars and premium carts can go for upwards of eight dollars but isn't that really a spencer for something that is essentially just paper with some ink on it yes but not as much as others in this usually the markup on a card is around fifty to a hundred percent which means that on the high end something that cost six dollars might cost around three dollars to make as usual the reason is economics the main reason they're so cheap to make is because the lack of competition in the retail space hallmark and American Greetings are the Giants of the industry cornering over ninety percent of the market which means they can easily gouge the market and charge as much as consumers will pay startups who try to compete down card prices are warded off by the deep relationships that the major manufacturers have with major paper companies and distributors they also prefer to charge a few dollars per card as a marketing tactic to encourage consumers to substitute up think about it if the cheapest card was three dollars and 99 cents as opposed to 99 cents then you're more likely to switch to the seven dollar premium card if you are swaying to that design anyway also they are not as cheap to produce as you may think especially the premium ones the companies employ a lot of people to brainstorm design and assemble them all so they're specialists printers are not cheap and paper costs are rising that's why you won't see much cheaper prices online just as the gift card industry is controlled by relatively few companies so is another seasonal staple floor street and roses during the peak season for row sales specifically around Valentine's Day you'll pay an average of 100 to 300% markup to buy roses apart from increased demand part of the reason is that eighty percent have to be imported from other places like Colombia and Ecuador and this is why prices can vary so much in Los Angeles where local growers supplement the import market and drive down prices wholesale prices increase from 70 cents per stem to a dollar eighty five per stem at retail they'll go anywhere from three to six dollars however New Yorkers have to import their roses and hence wholesale prices swelled from a dollar fifty to two dollars and fifty cents during Valentine's and retail prices typically rise for five to nine dollars according to Brad's deals calm the optimal time to buy roses for Valentine's Day is around January 15th to lock in a lower price as they inevitably get more expensive the longer you wait
Number 2 : Drinks we're all serial drinkers from breakfast through dinner from filtered waters coffees smoothies beer wine and beyond with such a high demand the industry has a variety of practices in regards to pricing their products bottled water is one of the largest growing areas in the industry which passes on huge markups from leading manufacturers on average we pay 300 times the cost of water whenever we buy a bottle of tap water according to the American Water Works Association bottled water is 2,000 times the cost of tap water when taken into account the fact that the majority sold our 16-ounce bottles obviously drink companies have costs to the bottle itself distribution and marketing but that's still an incredibly high markup carbonated drinks also have high markups Coca Cola's carbonated beverages dominate the market and retail from 50 cents for a can with material cost of well below 10 cents which is a markup of 5 to 12 times the production cost as a leader in the industry coca-cola could charge a lot to consumers because they're selling us experiences and not liquids they spend a lot of time on marketing and transporting their products to
Number 1 : Apple iPhones most of us cannot live without our smartphone and Apple leads the market in this realm though Apple never releases actual production costs however according to analysis by research firm IHS market the base model of the iPhone 10 with 64 gigs of storage cost approximately 370 dollars and 25 cents in raw parts then it's sold for just under $1000 so the markup is around a hundred and seventy percent without taking all other development a design cost into account that's actually a lot more expensive than previous models as Apple has really paid a premium for parts of the flagship model for example the iPhone 6 plus cost around two hundred and fifteen dollars to make whereas the cost of retail is seven hundred and forty nine dollars a markup of two hundred and fifty percent still it's not as much as other phones the Galaxy s8 is said to cost around three hundred and seven dollars and fifty cents per unit to make and they retail just over $700 so the markup is a lot lower at one and 30% so wire I phone so expensive it's simply because we're willing to pay for iPhones Apple still has a reputation for being easier to use and more reliable that Android though it's no longer necessarily the case in reality they also rarely offer discounts to make them seem more exclusive so there are very few opportunities for retailers to undercut the RRP on Apple's own site were you surprised about how inexpensive some products you buy are.
