Although it’s always wise to check with your attorney before making any final decision concerning special offers and how you market them, you should be familiar with the following list of the more common and serious illegal pricing practices, as indicated by the federal laws of the United States. Make sure you never get fooled into engaging in any of the following:
- Price fixing: Simply put, price fixing is where businesses that compete with each other discuss and agree on prices to take fair options away from consumers. No form of this is legal or ethical on any level.
- Price fixing by purchasers: If retailers you sell to are joining together to dictate the wholesale prices they want you to give them, that may also be price fixing. Have a lawyer review any such plans.
- Exchanging price information: You can’t talk to your competitors about prices. Ever. If you or anyone in your company gives out information about pricing and receives some in return, you could be in trouble. Announcing a planned price increase is called price signaling and is often seen as an unfair exchange of price information to signal to others that everyone should make a price increase.
- Bid rigging: If you’re bidding for a contract, the preceding point applies. Don’t share any information with anyone. Don’t compare notes with another bidder. Don’t agree to make an identical bid. Don’t split by agreeing not to bid on one job if the competitor doesn’t bid on another. Messing with the bidding process in any manner is bid rigging and can get you in trouble.
- Parallel pricing: In some cases, the U.S. government can charge you with price fixing, even if you didn’t talk to competitors, just because you have similar price structures. After all, the result may be the same — to boost prices unfairly. In other cases, the law considers similar prices as natural. To be safe, avoid mirroring competitors’ prices exactly.
- Price squeezes, predatory pricing, limit pricing, and dumping: To the average marketer, these four illegal acts are effectively the same (although they’re tested under different U.S. regulations). They all involve using prices to push a competitor out of business or to push or keep a competitor out of a particular market.
Pricing is only part of the equation. How you position your product’s ability to help consumers reach their tangible and intangible goals helps establish your perceived value and the highest price they will pay for that value. Offering discounts and special pricing should be seen as a reward for customer loyalty or first‐time trial, not pricing as usual.
