The price is right?

Marketing communications that include a price comparison must make the basis of the comparison clear (CAP Code, 3.39). When reviewing price statements, the ASA and CAP will take the Department for Business Innovation & Skills (BIS) Pricing Practices Guide into account. This document acts as a great starting point for those confused about how prices ought to be referred.

Essentially, you should be able to justify price comparisons and demonstrate that any price claims made are accurate, valid, representative, and that a claimed price advantage is genuine (CAP Code 3.17)

Referencing a previous higher price

You should avoid using descriptions like “was £X”, “reduced by” and crossed out higher prices which do not refer to your own genuine previous price. Your own price comparison should be made with the immediate previous price for the product. If the comparison is made with an earlier price, then this should be made explicitly clear in the ad.

In one ASA ruling, (Ebuyer (UK) Ltd, 10 August 2011), the price of £665 had been scored through and text stated “Save £16.00 Now £649.00”. The ASA considered that readers would understand from the way that prices were displayed, that the initial price was one at which Ebuyer had sold the product for a significant period of time immediately preceding the price reduction. This was not the case and so, information about the period during which the initial price had been offered, should have been included.

28 consecutive days

Where the basis of the comparison is not explicitly set out, a price used as a basis for a comparison should have been the most recent price available for 28 consecutive days or more. So, if the previous higher price was charged for only 14 days, the ad should make this clear.

A genuine reference price is likely to be a price at which you reasonably expect to sell a significant number of products at that price, a significant quantity of the goods were placed on sale and for a sufficient period of time.

In January 2014, TM Lewin included an original price and a reduced price for products on its website. Although some products were available at the higher price for 28 days, they had been available at the discounted price for almost two months. Because the date range for the higher advertised prices was not stated, when those could have been charged for significantly less time than the discounted prices, the ad breached the Code (TM Lewin & Sons Ltd, 22 January 2014).

In another case, (Argos Ltd, 30 October 2013) in the absence of a time period of the offer being stated in the copy, the ad was misleading because the basis of the price comparison was not made clear.

No more than 6 months ago

BIS guidelines (1.2.1 (b)) recommend that comparisons with a marketer’s own previous price should generally use, as the basis for comparison, the most recent previous price for the product. This should have been available for at least 28 consecutive days and last offered no more than six months earlier. And, the period of time for which the new lower price would be available should not be more than that for which the higher price had been available.

In a case involving French Connection (London) Ltd (27 February 2013) the ASA considered the claim, “SPOTLIGHT DRESS at £120, reduced from £125” implied that the promotional price was short-term. However, the item had been on sale at £120 for almost five months. This time frame exceeded the period at which the item had been available for the higher price and therefore the ad was considered misleading.

Making a series of reductions

If you’re making a series of reductions, the highest price and other relevant intervening prices should be quoted, as well as the current selling price, unless, the basis of the comparison is explicitly set out.

In the COIN Furniture Ltd ruling (18 December 2013), the £995 price for a sofa was scored and the new price of £299 was stated. The ASA considered the pricing history should have been made clear in the ad because the sofa had been on sale for an intervening price of £499 immediately before the lower advertised price of £299.

For more information, please read our rules on Pricing, our guidance on Prices and our Help Note on Retailers’ price comparisons.

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