Farewell to ‘Moonshine prices’

More and more device manufacturers, such as V-Zug, are saying goodbye to inflated catalogue prices. An expert explains this by saying that customers are better informed nowadays. But the supposed transparency has its pitfalls.

After the change of the product range and the catalogue on 1 March, the price of some V-Zug appliances was only slightly above half of that shown previously. The Swiss kitchen appliance manufacturer has decided to dispense with so-called ‘moonshine prices’. This is the expression used to describe list prices that are set very high, so that there is the impression of a very high discount when the retailer sells them. In an interview, V-Zug CEO Peter Spirig explained these measure as being necessary for increased price transparency: "I have also experienced how customers in our exhibition hall were put off a purchase  because a steamer, for example, was registered with a price of CHF 5,500. It was only when they looked in the Internet that they realised that they could obtain it much cheaper in the retail trade, where our devices are sold on to the end customers." That leaves a strange backtaste.

Price psychologist Christian Weibel.
Photo: PD

Bosch and Siemens lowered their prices as early as early 2020
V-Zug is not alone in this decision: catalogue prices at Bosch and Siemens were already reduced by 40% from the beginning of 2020, for the same reasons. "Due to the dynamic market environment and times of increasing price transparency," writes a spokeswoman. Christian Weibel, price psychologist at the Lucerne University of Applied Sciences (HSLU), knows: "Moonshine prices are still practised, but because the possibilities for comparison on the Internet make consumers increasingly sensitive to pricing, many companies are rethinking this strategy." The increased quality awareness also plays a role here: "Especially for quality products such as Swiss kitchen appliances, a high discount can send the wrong message."

The development is confirmed by the online retailer Brack, which operates a logistics centre in Willisau and also offers kitchen appliances: "There are certainly still manufacturers who set high, non-binding prices when launching products. But this has changed by and large over the last 20 years," writes a spokesman. Price transparency is high in online retail, and market prices can quickly fall, so that the list prices of the manufacturers have little relevance. As a positive example in terms of price transparency, Christian Weibel from HSLU cites the strategy of displaying not only the original price for comparison, but also the lowest current market price. "Individual online retailers, such as QoQa, have already chosen this path."

The Swiss kitchen manufacturer Veriset in Root installs V-Zug appliances, among others. Daniel Jost, Head of Market and Brand, is sympathetic to the manufacturers' decision to reduce catalogue prices. Even so, there is still sufficient scope for rebates. "Ultimately, it’s the net price of the products that counts," he says. But because of the online retailers and the big chains, price comparison is anyway still a difficult subject from the point of view of his industry. "We are often at a disadvantage, because while our service includes everything, from delivery to installation, many customers often only notice the price of delivery to the curb, and then come to us with these ideas regarding the price."

It’s well worth bargaining
Swiss people buy most products and services without first negotiating, says Beni Manz, CEO of financial comparison service Moneyland. You don’t expect haggling in Switzerland at all, and it’s generally considered unfriendly. He thinks this is a mistake, however, because: "An astonishing number of products still have room for negotiation." He gives the following tips:

When is it worth negotiating?
You should always negotiate, especially in  more expensive purchases, or at least ask for discount prices. Negotiating is usually more difficult with discount providers. Negotiation is also not usual with online purchases.

What’s the best way to do this?
In a friendly, but determined manner. The most innocuous option is simply to ask for a discount. The next level would be to claim that you have seen the product at a more favourable price with a competitor. And the best way is to prove this right away. The most extreme variant, but one that can also be successful, is: tell the seller that you won’t buy the product, or will buy it from his competitors.

How much room for manoeuvre is there for discounts?
This varies massively from 0 % to probably more than half the price. Beni Manz has heard of a case in which the seller would have come down by up to 50 % on a branded pocket knife – if the customers had negotiated.