Can someone explain to me how "on special" deals work

Example, laptop - normally $995, on sale now for $499. Save $496
My understanding is that businesses never sell at a loss.
So, selling at $499, they still make money.
Extrapolating this, selling at $995 is purely making a whole lot of profit.
This example is offered by a long running business that will not be closing down anytime in the next few years. The business has a multi million dollar turn over. So they are not selling at cost to have short term bulk cash.
Is this what is called treating customers with contempt?
I notice supermarkets putting up the price of an item by 40% then the next week have the item at the price is was the previous week and claim that the customer is saving 40%.
A special that is not a special.

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SunshineGirl · 36-40, F

Trading standards in my country require a bricks-and-mortar shop to have advertised the item at the higher price for at least 14 days before advertising the 'price reduction'. I've no idea how this would apply to the internet where you can presumably offer the same item at different prices simultaneously.

OldBrit · 61-69, M

Most retail is 100% markup. Ie something they sell at £500 cost them £250.

That's not true for high vol consumer goods but say electrical goods, furniture, jewellery etc

Retail is expensive. High rent, high taxes like rates in UK, high running costs electric, heating etc and of course staff costs. You look in a shop when say 3 assistants you're looking at probably more than £50-£60 am hour just to be there. So what £600 to £700 a day income just to break even.

carpediem · 61-69, M

Inventory financing is expensive. You have to move products to get them off the books. The 50% margins represent anticipated gross profits that include rents, overhead, financing, and also shoplifting costs. The devil is in the details. The items with deep discounts are simply not moving like they need to. So they dump them.

NoGamesTolerated · F

No one in the business world will short himself.

Convivial · 26-30, F

Not necessity true... That model may be getting replaced by a newer model and they're selling it at cost price to move it.

Also a100% markup on cost is not unusual when you consider rents, staff wages etc

Gusman · 61-69, M

@Convivial I was told by the owner of a Trade store that the business was allowed a 300% mark up.

Convivial · 26-30, F

@Gusman possibly true... The 100 % i mentioned was from a friend in a clothing shop... Computers aren't as quick moving as clothes

DeWayfarer · 61-69, M

I don't know how things are run where you are. Yet here if stock doesn't move it gets taxed. So the retailers do everything they must to move excess inventory for the new stuff. Because that gets taxed as well.

So they will at times sell it at cost to avoid being taxed.

Justafantasy · M

Do they need the space for something with a higher profit margin? Is it to a customer that'll be back many times?

It's not just drug dealers who use "the first time is free" sales tactic. It's for the same reason

DarkHeaven ·

Pricing is all psychological. Things cost what the consumer is prepared to pay for them and the profit is just a reflection of that.

bookerdana · M

No one buys at listed prices and sometimes the manufacturer offers special deals on older models

Gusman · 61-69, M

@bookerdana Can you explain - no one buys at listed prices - please

bookerdana · M

@Gusman Its just a price that the maker assigns to the PC,nominally.No one buys at the MSLP.
In reality no one in retail expects to sell at that price

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