Things You Pay Too Much For

“Living on Earth may be expensive, but it includes an annual free trip around the Sun.” – unknown

The Lansing State Journal, LSJ.com, (home of my alma-mater, MSU) has an article on the Top 5 retail mark-ups. These are items with huge profit margins for the marketers and bad economics for you the consumer.

Beverages
Americans pay $16 billion every year for filtered tap water in fancy bottles. With “a single bottle of Evian bottled water, you could pay for 1,000 gallons of municipal tap water.” You’re paying good money for that glass or plastic bottle.
Soda is one of the highest profit margin items at restaurants. The $1 or $2 cup of pop costs only pennies to provide a cup, ice, syrup, and carbonated water. Coca Cola spends more per bottle on advertising then it does on the ingredients. The Amazon page for a Soda Vending Machine claims the common markup for canned soda is 50% and the vending machine will pay for itself in six months.
Restaurants make good money on coffee and wine also. Quality coffee can be made for 50 cents a cup and sold for $3. Wine is frequently sold at 300% markup.

Diamond Rings
The diamond wedding ring is a huge marketing success for De Beers, which set the standard of 2-3 months salary for the ring. “The year of the advertising campaign was 1939. That's right, the tradition of diamonds as THE engagement ring...as the only correct option, started slightly over 60 years ago and was the main result of an advertising campaign. While the diamond did enjoy periods of popularity in times prior to this (Victorian era for example), this was the factor that made the diamond engagement ring the ONLY choice that was acceptable.” –WedFrugal.com
Today retailers mark up diamonds between 50 and 200 percent and 100 to 400 percent for gold. I once sold an engagement ring to a jeweler and received only 10% of what I paid for it. Diamonds are NOT a good investment.

Organic Food and Pre-cut Produce
“It's estimated that the average price of organic produce is 50 percent more than regular supermarket fruits and vegetables.” –LSJ.com (100% for meat and milk).
But the big money today is made with pre-cut fruits and vegetables. You will pay 75 cents more per apple to have it sliced and skinned.

Brand Name Clothing
“A study of French clothing franchises found that the average markup on clothing was 250 percent and 350 percent for accessories.” – LSJ.com While the $21.99 pair of jeans from Kohl's might have a 100 percent markup over wholesale, a $300 pair of designer jeans may hide a 300 percent markup over cost.

Some opticians charge 1,000 percent over wholesale for designer frames.

Concession food at movies & events
A captive consumer at an event will pay dearly for food. How about $6 or more for a sandwich? At the movie theater, people pay popcorn premiums of 1,300%. Profit margins for common concession foods include:
» Corn dogs: 82-89 percent
» Ice cream in waffle cones: 84-90 percent
» Snow cones: 92-97 percent

Bottom Line
Convenience comes at a price. You pay 70 cents for 3 cents of popcorn kernels in a prepackaged microwavable bag. Perhaps you can afford it. Perhaps the extra fee is worth your savings in time. But let it be a conscious choice. Don’t pay high markups out of ignorance.