If you’re a merchant, the only way to profit is to sell stuff for more than you pay for it. As a consumer, whether you’re sipping a martini in a swanky bar or swilling bottled water from the grocery store, you are swallowing that markup.
What’s a fair markup? Fifty percent? One hundred? Two? It depends on both product and business, but one thing’s for sure – you can save a lot of money by paying attention.
Here, in no particular order, is a larger list of products with high markups, along with ways to avoid paying a premium:
1. Movie theater popcorn/candy
What’s harder to digest? Movie theater popcorn has an average markup of 1,275 percent, or (with a soda) that popcorn has a caloric equivalent of three McDonald’s Quarter Pounders? Nutrition aside, concessions like $5 tubs of popcorn and $6 boxes of gummy worms are big revenue streams for movie theaters.
Since most theaters prohibit moviegoers from bringing in outside food and drinks, the way to save is to bypass concessions altogether.
2. Prescription drugs
Astronomical prescription drug prices – with markups ranging from 200 to 3,000 percent – are enough to give patients a headache. In fact, price hikes caught the eye of Arizona’s Attorney General Tom Horne, who in 2012 sued pharmaceuticals distributor McKesson Corp. for markups on Allegra, Celebrex, Coumadin, Flonase, Lipitor and Valium. But pharmaceutical companies were quickly at it again, with poster child Martin Shkreli’s turn at Turing possibly the most famous instance.
To save on prescriptions, ask your doctor for free samples and about generic substitutes. Comparison shopping is also a great idea. Walmart, Target and warehouse stores like Costco are good places to start. And take advantage of mail-order suppliers like Express Scripts if your prescription drug plan offers it. Check out “10 Tips to Get Your Medications for Less.”
Shoppers in the market for a diamond should be prepared to pay anywhere from 50 to 200 percent more than the wholesale cost, according to TheStreet.com. Information at this Google Answers page suggests markups range from 50 to 400 percent.
A diamond’s sparkle may cause shoppers to turn a blind eye to the price tag, but you can land a better deal by understanding what you’re buying and doing a lot of shopping. First, unless you’ve got very deep pockets, avoid the big name diamond retailers who can get away with massive markups by virtue of their brand. Consider instead, online diamond sellers like Blue Nile. According to Chron.com these web-based sellers are putting pressure on the whole market by marking-up their diamonds as little as 18 percent.
4. Bottled water
The price of bottled water is, on average a 300 percent markup over tap water, Slate reported, but the markup is more like 2,000 percent when bought in individual portions. (These numbers are from a few years ago, and the way people calculate the markup varies, though they reach the same conclusion — bottle water is crazy overpriced.) Saving is simple: drink tap water. In most of the U.S., tap water is perfectly potable. If you’re concerned about taste or quality, use a water filtration system.
5. Salad bars
Some salad bar items are marked up more than 350 percent, according to Food Network Magazine. Items that aren’t worth their weight: chickpeas (386 percent markup over retail), radishes (302 percent), and baby corn (277 percent). To save, load up on the lighter items that cost less than you’d pay at the grocery store, like bacon bits (55 percent mark down) and grilled chicken (44 percent).
6. Eyeglass frames
Dishing out $450 for Armani frames? Markups for eyeglass frames can reach 1,000 percent, due in no small part to Italian firm Luxottica effectively having a monopoly on the industry. Fortunately, focusing on warehouse stores like Costco and Sam’s Club and online sellers can help you find discounts. Check out “Lookin’ Good: How to Get a Killer Deal on Eyeglasses,” for more ways to save up to 90 percent.
Order a glass of Coke when you’re dining out, and you could pay 300 to 600 percent over cost. The cost is particularly egregious in the case of fountain sodas. Sure, you know going into a restaurant that you’re paying for the service and ambiance, too. But if you’re looking to save without sacrificing a night out, skip the extras like soda and opt for water instead.
8. Furniture and mattresses
Furniture stores usually make a hefty margin, with markups of about 80 percent. Try to shop during sales, but if your timing is off, don’t be afraid to negotiate a better price. Also take note of the product number and then search online to see if any other retailers offer a lower price. For mattresses, Consumer Reports urges you to “haggle with gusto” because these expensive furnishings have huge markups.
Start by asking for a price that’s 50 percent off the list price, and ask for free delivery and haul-away, to boot.
Or skip the retail store altogether, CR suggests:
Startups like Casper and Tuft & Needle are getting a lot of attention for their high-performing bed-in-a-box foam mattresses, but the fact is that you can buy almost any mattress online, innersprings included.
It’s not uncommon for restaurants to charge two or even three times retail for a bottle of wine. Order by the glass, and you’re sipping on an item marked up as much as 400 percent. So scan the menu for a reasonably priced bottle (tip: look for house wines). Some restaurants allow you to bring your own bottle, though they’ll usually charge a corkage fee, and it’s best to arrange it in advance. It’s pretty simple math to figure out which is cheaper.
10. Hotel minibars
Whether you’re reaching for a Snickers or a toothpaste kit, minibar markups are high. Some of the most ludicrous minibar prices can include markups of more than 350 percent over grocery store prices. Simple solution: Go to that grocery store.
11. Coffee and tea
Lattes are one of life’s little luxuries, but they can be marked up by 300 percent. If you’re looking to save, start by turning on your coffeemaker and bypassing the coffee shop.
Some of the world’s most expensive handbags: a $3.8 million purse made by The House of Mouawad in Dubai that’s adorned with more than 4,000 colorless diamonds and a $1.9 million Hermes Birkin bag.
Even if you are not shopping in that rarified air, handbags can be a blackhole for your money. Women own an average of 13 handbags and spending in the industry is more than $11 billion a year. Keep more cash in your purse by comparison-shopping online and in outlet stores. If you have your eye on something fancy for a special occasion, consider renting it. For more tips, read our story on “Finding Designer Accessories at Deep Discounts.”
13. Designer jeans
A $665 price tag on Gucci jeans and $225 for 7’s proves some shoppers are willing to go to great lengths for fashion. But a good share of the cost for top brands is sunk into marketing. According to The Wall Street Journal, it costs about $50 to make True Religion’s best-selling jeans, Super T Jeans, but the wholesale price reaches $152 and the average retail price is inflated to $335. To save, stay away from companies where you pay for the brand name — if the fit is right, the label won’t matter.
14. Bakery goods
For items that can easily be baked at home, you could be paying a 100 percent markup. Granted, convenience is a factor — especially for labor-intensive treats. But if you’re a big fan of bread, consider spending $50 to $200 on a bread-making machine for your kitchen. You throw in the ingredients, turn it on and walk away until it tells you it’s ready. (Your nose will also alert you!) It’s a relatively small investment to put a wide array of fresh-baked breads at your fingertips. Or spend $25 on a bread-making cookbook and another $30 on a good baking stone.
15. Greeting cards
Individual greeting cards are expensive. It’s easy to spend $5 or $9 a pop. Yes, they are typically on high-quality paper, maybe have pretty design or a meaningful poem — so who knows what they should cost? But if you’re on a budget, there are so many cheaper options: Make your own cards – or better yet, if you have school-aged children, have them design one. This will likely amount to a more sincere gesture and will leave a lasting impression. If you really like the idea of having a store bought card, consider buying them in bulk. (Example: Through this Amazon deal, you can get 72 cards for $23.)
16. College textbooks
Most college students will shell out about $563 for required textbooks this year. Although the number is trending down, the markup is not. Read “11 Ways to Save Big on College Textbooks” for cost-cutting tips, from asking professors about coursework in advance to textbook rentals.
An orchid can cost up to $25 per stem. Add Valentine’s Day or a wedding into the mix, and prices can surge. While disregarding flower purchases altogether isn’t always an option, shopping around for the best price is. Visit farmer’s markets, check out online retailers and buy blooms that are in season to help cut costs.
Produce is often marked up as much as 75 percent. Buying in season is the best way to find a bargain (and give you the best flavor). As we explain in our Seasonal Savings post, look for deals on grapefruits and oranges in January, asparagus in March, and melons in May. Also steer clear of precut veggies and fruit, which often have an additional markup of about 40 percent.
The average markup on cosmetics: 78 percent. Since most cosmetics are made from various combinations of dirt, oil, wax and fragrance, it’s surprising that shoppers pay such a premium. But thanks to anti-aging claims and celebrity-endorsed marketing, shoppers have been breaking the bank to look younger and more beautiful for years. Fortunately, there are some simple ways to get more bang for your buck when purchasing beauty products (hint: skip the drugstores and load up on free samples).
What products and situations do you find egregiously overpriced? Share with us in comments below or on our Facebook page.
Ari Cetron contributed to this post.
Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.