How is a price tag determined?

The price tag on the grocery shelf includes a lot of helpful information. Learn what the numbers mean!

Retail Price – This is the price you pay for each item. 

Unit Price – The unit price will tell you how much an item costs per pound, ounce, quart, etc. It can be very useful when comparing two items!

The image below shows two different price tags. In the first one, the retail price is $1.62 for one 32 oz. yogurt. The unit price, in the red box, is $0.05 per oz. In the second one, the retail price is $0.72 for one 6 oz. yogurt, but the unit price is $0.12 per oz. Based on the unit price, you can determine that the larger, 32 oz. yogurt is the better buy because you are getting more for your money.

How is the unit price found?

TOTAL PRICE ÷ SIZE = UNIT PRICE

Example: What is the unit price of a 6 oz. yogurt that has a retail price (the price you pay) of $0.72?

$0.72 ÷ 6 oz. = $0.12 

The unit price of this yogurt is $0.12 per oz.



Courtesy of choosemyplate.gov

Label declaring the price of an item for sale

A price tag is a label declaring the price of an item for sale. It may be a sticker or attached by twist tie or other means.

Some jurisdictions[which?] require items (possibly exceptions for bulk good and produce) to be individually marked with the price, or have shelf tags or barcode scanners available so customers can determine prices without consulting store staff. In some cases, unit price is also required.

Some jurisdictions also outlaw price discrimination except for different quantities (e.g. quantity discounts are allowed) or different types of customers (e.g. individuals vs. organizations that might be expected to buy in bulk or have better creditworthiness). For example, the 1936 Robinson–Patman Act outlaws this practice in the United States.

Many price tags also bear the name of the store.

History

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Before the late 19th century, in most cases, retail goods did not have a fixed price, and each customer would be expected to haggle with the store clerk.[citation needed] The Quakers, who found it immoral for different customers to pay different prices (now known as price discrimination) were an exception.

The Pennsylvania Quakers" "honest price" was institutionalized in 1874 by John Wanamaker, when he opened his eponymous department store in Philadelphia. A renowned innovator of the highest integrity, Wanamaker was the first retailer to offer money-back guarantees. He also invented the price tag: "A devout Christian, he believed that if everyone was equal before God, then everyone should be equal before price." Before Wanamaker's, every purchase was open to a haggle.[1]

Macy's in New York (Rowland Hussey Macy was a Quaker) also began affixing physical tags to items in the 1870s, eliminating haggling. This allowed shorter training time for new clerks (who would no longer need to know the art of haggling nor the range of accepted prices for every item) and allowed clerks to serve more customers.[2]

Even large stores kept goods behind a counter, requiring clerks to fetch items for customers. The Piggly Wiggly chain of grocery stores was the first to become self-service in 1916, further cementing the need for price tags. Price tags soon became commonplace in Western retail stores, and haggling rare outside of proprietors and individuals selling used items.

See also

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• Dynamic pricing, a modern counter-trend to constant pricing

References

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