Avoid High Markups

Cut Wasteful Spending by Avoiding These Items

Avoid High Markups
December 4, 2014

Markups are an acceptable consequence of capitalism. Under this system, it is perfectly all right to make a reasonable profit. However, there are some products and services where the markup is quite large. It may be big for a valid reason, but it may not be.

Either way, there are ways to avoid paying higher markups on certain items.

  • Beverages – Restaurants from fast food joints to four-star restaurants dislike it when you drink only water with your meal, because beverages are a significant part of their profit margin. Sodas, coffee, and alcoholic beverages are significantly more expensive in a public setting than they are at home. Some restaurants without a liquor license permit you to “BYOB” (bring your own bottle of wine). By frequenting such a spot, you can eliminate the 3X markup typical on wine, as compared to a retail store’s price. Do check to see if the restaurant will charge you a corkage fee for bringing in your own refreshment.

  • Convenience Packages – A popular method of selling extra packaging is to sell smaller portions as a benefit – for example, snacks that are packaged to a low calorie count or individually wrapped snacks for school lunchboxes.

    These are not always a bad deal, but check the cost per unit weight. Often you can come out ahead with purchasing a larger container of snacks and packaging your own 100-calorie or individual treats in reusable containers.

  • Clothing – The hottest clothing trends come with the hottest prices. If these trends are so important to you that you must have them in spite of the excessive markup, well…, it’s a free country. If you are just interested in functional and/or stylish clothes, there are many inexpensive alternatives available to you.

  • Concessions – The markups in concessions at athletic events and movies are incredible. Economists call these enterprises “situational monopolies” as there is no competition within their walls. Items such as movie theater popcorn and beer at stadiums are relatively large to give the impression of getting your money’s worth, but the prices are jacked up even higher. Perhaps concession financing will be available before long!

    We cannot condone sneaking food and drinks into places where they are not allowed, but we can suggest that you eat and drink before or after events. For example, if you attend the right football tailgate party, you may not need to eat for a week.

  • Hotel Mini-Bars – Everyone should be aware of the mini-bar markup by now, but after a long day of travel, you may not care. Resist the temptation. There is almost always a reasonable alternative nearby… unless it’s 3 a.m.

  • Brand-Name Drugs – Brand-name drugs are often high-priced for a good reason – they are recouping research and testing required to receive FDA approval, as well as offsetting failed attempts with other drugs. However, even non-prescription drugs such as ibuprofen suffer from brand markups.

    Often, generic alternatives are available that can work just as well. Discuss the possible use of generics with your doctor. Generics also require FDA approval, so you can be reasonably assured of their safety.

  • College Textbooks – As if college costs weren’t high enough, average textbook costs (along with other course-related materials) have topped the $1,000 mark according to the College Board. Savvy publishers are constantly adding accouterments like accompanying online keys and producing new revisions to keep colleges from recycling textbooks. Check out our other Money-Saving Tips for College Students.

    However, if a book is reused in a class, there will usually be a used copy at the campus bookstore or nearby used bookstores. Versions are often available online. If you are really fortunate, you can work out a deal with someone who has previously taken the class and kept their book. For some texts, online versions are available for sale, and even for rent, at reduced rates.

Markups are understandable, but there is no reason to pay an excessive markup when it is avoidable. If enough people follow suit, exorbitant markups will be replaced by ones that are more reasonable. When that happens, we all win… except the guy selling $9 popcorn.

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