50+ Goods and Services That Have Gigantic Markups
50+ Goods and Services That Have Gigantic Markups
Markup is defined as the amount added to the cost of a product or service to cover overhead costs and profit margin. If you charge too little, you won’t make enough to cover overhead costs. If you charge too much, your potential customers will seek out your competition. Consumer goods that have low markups include small appliances (30%), large appliances (15-20%), automobiles (5-10%), and automobile accessories (15-25%). Some high-tech products, such as video game systems and DVD players, often cost more to make than what they actually sell for. However, you can often tell whether a product has a high markup if it’s always on sale. Classic examples of goods that are on sale throughout the year include clothing, shoes, designer handbags, jewelry, furniture, and mattresses.
This article lists over 50 goods and services that have gigantic markups. To help you spend smarter, I will also show you the best products to buy for each month of the year:
1. Airline tickets – 389%
2. Bakery goods that you buy at the grocery store – up to 700% (Brock Kernin tells us that “The cost of a quarter sheet cake from the bakery at Walmart is currently $18.98. A quarter sheet cake is about 9×12 in size, normally being cut into about 18 pieces. That’s $1.05 per piece.” He adds that “The cost of a Pillsbury Funfetti cake mix is $1.18. Adding on another $1.48 for a container of pre-made frosting and you can make your own 9×12 cake for $2.66, or less than $0.15 per piece.”)
3. Batteries – up to 100% (Purchase batteries in bulk at Costco or when they go on sale for “buy one, get one free” at grocery and drug stores.)
4. Bottled water – up to 2,000% (Solution: Drink tap water and add lemon or lime juice for flavor.)
5. Brand-name pain relievers – up to 400% (Money.CNN.com confirms that “Brand names may give us more peace of mind, but the cheaper stuff works just as well, and in exactly the same way. It's required to, by law.”)
6. Brand-name prescription drugs - 200% to 3,000% (To get the best prices on prescription medications, I recommend GoodRX.com. You should also ask your physician about generic equivalents for brand-name medications.)
7. Cap and gown – Over 1,000%
8. Cell phone chargers – Nearly 700%
9. Check-cashing stores – You will often find check-cashing businesses in neighborhoods that have no commercial banks or retailers like Walmart or Kroger. They charge a fee of 1–12% to cash a government, payroll, or personal check. Check-cashing stores also sell money orders for as much as $5.00, which is nearly five times what you would pay at a grocery or drug store.
10. Cheese on your cheeseburger, chicken tenders, edamame pods, eggs, fried rice, guacamole, ice cream, kobe beef, lobster mac and cheese, pancakes, pasta, salad entrees, shellfish, soup, and waffles when ordered in a restaurant - up to 500%
DontWasteYourMoney.com tells us that restaurants mark up the price of favorite menu items such as hamburgers, burritos, and pizza from 155 percent to a whopping 636 percent. For example, meat or vegetables added to pizza both have a 525% markup; sour cream added to burritos has a 426% markup; cheese added to hamburgers has a 417% markup. But that’s not all: City Pages reveals that most restaurants mark up pasta dishes from 600% to 1,000%. (No wonder Americans spend nearly as much at restaurants as they do at grocery stores.)
11. Coffee-on-the-go – The freshly-brewed coffee that you buy every morning at Starbucks has a markup in the 250% to 400% range.
12. College textbooks – 163% (The average college student spends more than $1,200 per year on textbooks.)
13. Credit card interest – The average American household has almost $16,000 of credit card debt. According to a recent study, the average cardholder who carries a balance from month to month pays nearly $1,000 a year in interest charges on cards that have APRs ranging from 5%-25%.
If you're an average American, you spend $1.26 for every $1.00 that you earn. For example, if your annual income is $50,000, you spend $63,000, a difference of $13,000. If your annual income is $75,000, you spend $94,500, a difference of $19,500. If your annual income is $125,000, you spend $157,500, a difference of $32,500. And so forth. According to CreditDonkey.com, "An estimated 38 million households in the U.S. live hand to mouth, meaning they spend every penny of their paychecks. Surprisingly, two-thirds of them earn a median income of $41,000, which puts them well above the federal poverty level."
14. Cutting the lawn – 492%
15. Designer handbags - 100% (Retailers like Macy’s frequently put handbags on sale for 50% off the regular price.)
A Meat-Loaded Pizza Has a Markup of 636%
16. Designer jeans vs. brand - up to 500% (For example, the cost to manufacture a pair of True Religion Super T Jeans is around $50. From there, the jeans are marked up about 250%.)
17. Diamonds - up to 100% at brick-and-mortar retailers (However, there is now some light at the end of the tunnel: Timothea Xi points out that “The web is leveling the practice of marking up diamonds 100 percent of the wholesale price, known as keystone pricing. Online diamond merchants such as Blue Nile are driving markups down to a rock bottom of 18 percent.”)
18. Domestic beer – About 700%
19. Ethernet cable – 1,000%
20. Eyeglass frames - 1,000% (For the best prices, focus on warehouse stores as well as the Internet.)
21. Flowers (Did you know that an orchid can cost up to $25 per stem?)
22. Fountain soda – 300% to 600%
23. Furniture and mattresses - up to 100% (CBS Money Watch reports that "most furniture stores mark up their prices in the 80% range. This is especially true at boutique shops and high-end department stores like Macy's and Nordstrom.")
24. Greeting cards – 200%
25. High school ring – 1,329%
26. Hotel minibars – 400% (For example, Lay’s Potato Chips and Snyder’s Pretzels both have an average markup of 300%.)
27. House cleaning – 5,900%
28. Interior painting – 6,329%
29. Mixed drinks - 1,150%
30. Movie theater popcorn and candy – 1,000% (A bag of popcorn that costs about 50 cents to make can easily sell for as much as $5.00.)
31. Movie tickets - 192%
32. New roof - 650% (Replacing a roof is one of the costliest upgrades that a homeowner can ever make. Did you know that the average price for a new roof is around $12,000 and high-end ones can cost as much as $25,000?)
33. Ordering a soda when you dine out – 300% to 1,200%
34. Packaged coleslaw or salads at the supermarket. (Why pay $2.99 for a 16-ounce package of coleslaw if you can buy a head of cabbage for as little as 49 cents a pound?)
35. Payday loans are one of the worst kinds of bad personal debt. Chris Morran points out that:
The average payday borrower is not someone with a high-paying job. Only 4% of payday loans are made to consumers earning more than $60,000 per year. Meanwhile, more than two-thirds of payday borrowers have annual incomes below $30,000. The largest chunk of borrowers came from those making between $10,000 and $20,000 per year; this group accounts for nearly one-third of all payday loans.
Lenders generally make money on these loans by charging a fixed fee for every $100 borrowed. These fees generally range between $10-20 per $100 borrowed, with the median being $15 per $100. The median APR on a payday loan is 322%, with the average APR being slightly higher at 339%.
Yes, you read that correctly!
Wedding Cake Has a Markup of 500%
36. Pre-cut fruits and vegetables at the grocery store - 100% (Instead of buying pre-cut fruit such as watermelon or pineapple, buy the entire fruit and save money every time.)
37. Pizza - up to 636% (A meat-based pizza that costs $1.90 to make can sell for as much as $14. That's a 636% markup.)
38. Printer ink – 300% (Joe Mont tells us that "The ink and toner you need to keep your computer's printer from being more than a paperweight is among the costliest substances you can buy -- many times more expensive than gold, champagne and gasoline.")
39. Produce – up to 100% (Look for deals on broccoli, Brussels sprouts, cabbage, grapefruit, lemons, oranges, papayas, tangerines, and tangelos in January and February. Likewise, look for deals on apricots, blueberries, cantaloupes, corn, cucumbers, green beans, kiwi, lettuce, peaches, peppers, plums, raspberries, strawberries, summer squash, tomatoes, and watermelon in July and August.)
40. Psychic phone call – 9,186%
41. Restaurant wine and champagne - 400%
42. Salad bars - For example, chickpeas at the salad bar have a 386% markup, avocados (31%), baby corn (277%), beets (212%), black olives (78%), broccoli (50%), carrots (50%), celery (150%), chow mein noodles (50%), croutons (87%), cucumbers (274%), grape tomatoes (13%), green beans (201%), hard-boiled eggs (167%), mandarin oranges (188%), mushrooms (200%), pepperoncini (97%), sunflower seeds (63%), and radishes (302%). On the other hand, bacon bits have a 55% markdown, blue cheese (57%), Cheddar cheese (14%), dried cranberries (11%), grilled chicken (44%), ham (14%), peas (40%), and walnuts (19%).
43. Snow removal – 3,900%
44. Skin care products - 300%
45. Spices and seasonings at the supermarket - Grocery stores generally have huge markups on spices and seasonings. You can almost always find lower prices on store brands at the drug and dollar store or at Aldi. For example, a 1.2-ounce jar of name-brand parsley flakes costs $5.98 at Walmart.com while a 3.75-ounce jar of the same spice costs $1.19 at Aldi. The cost-per-ounce at Aldi is 31.733 cents while the cost-per-ounce at Walmart is $4.98.
Here's another example: A 3.17-oz. jar of private-label Supreme Tradition Crushed Red Pepper costs $1.00 at Dollar Tree. You would pay up to $3.04 for a comparable amount of the brand-name at Target. The cost-per-ounce at Dollar Tree is 31.5 cents while the cost-per-ounce at Target is $1.73.
Here is a third and final example: A 2.12-ounce jar of private-label ground paprika costs $2.59 at Target.com while a 3.75-ounce jar of the same spice costs $1.19 at Aldi. The cost-per-ounce at Aldi is 31.733 cents while the cost-per-ounce at Target is $1.22.
46. Valentine’s Day roses – 220%
47. Valet airport parking – 313%
48. Vitamins and supplements at regular retail prices – (Always buy vitamins and supplements when they go on sale for “buy one, get one free.” Drug stores such as CVS and Walgreens as well as grocery stores like Pittsburgh-based Giant Eagle frequently reduce the price of vitamins and supplements up to 50% off regular retail. From time to time, CVS also offers in-store coupons which can save you even more money.)
49. Wedding cake - up to 500% (Dave Roos and John Kelly tell us that “One slice of a multi-tiered, painstakingly decorated wedding cake will cost you around $15, about five times what you'd pay for a whole box of Betty Crocker cake mix.”)
50. Wedding dresses - 290% (Brooke Shunatona reports that “research company Edited recently released a study that shows that stores will charge customers roughly 3.9 times more for a ‘wedding’ dress than they would a similar white dress not labeled as ‘wedding.’ That means a $500 white dress would cost almost $2,000 if you were to buy it as a bridal dress.”)
How to Shop Smarter
To help you shop smarter, here are the best products to buy for each month of the year:
- January – Cold-weather apparel, Christmas decorations, linens, bedding, towels, televisions, fitness equipment, and watches
- February – Cold-weather clothing and discounted Valentine’s-Day gifts
- March – Frozen foods (March is National Frozen Food Month), St. Patrick’s items, and cold-weather apparel (what’s left of it)
- April – Cruise deals, mattresses, and jewelry (Never buy jewelry close to holidays like Christmas or Valentine’s Day.)
- May – Furniture and mattresses over Memorial Day weekend and “Star Wars” merchandise,
- June – Father’s Day deals, gardening supplies, and lingerie (Victoria’s Secret holds one of its semi-annual sales during June. The other one is in December.)
- July – Clothing and outdoor gear during Fourth of July sales, house paint, and personal electronics during Christmas in July sales
- August – Patio equipment, lawn mowers, swimwear, laptops, and back-to-school supplies
- September – Summer clothing, patio equipment, lawn mowers, swimwear, cars, and iPhones
- October – Candy, cars, jeans, outdoor furniture, and camping gear
- November – Black Friday deals on tablets, laptops, gaming systems, and home appliances
- December –Christmas decorations beginning the day after Christmas as well as cars
- This Is How Much Restaurants Mark Up The Price Of Food - DWYM
Have you ever wondered how much restaurants are marking up the price of ingredients in your food? Plate IQ analyzed data to find out.
- The Cost to Make a Pair of Jeans? | The Budget Fashionista
Ever wondered how much it costs to make a pair of designer jeans? We explore the cost behind the your jeans
- The Markup of Wedding Dresses – Expenses of Having a Wedding
- 9: Weddings - Top 10 Retail Markups | HowStuffWorks
- What Is the Markup on Diamonds? | Chron.com
Tiffany and Cartier may be able to get away with charging heavily marked-up prices for their diamond treasures without batting an eye, but other diamond merchants are facing a whole other playing field. The web is leveling the practice of marking up
- The Average Payday Loan Borrower Spends More Than Half The Year In Debt To Lender – Consumerist
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© 2018 Gregory DeVictor