A “was $100, now $60” price is only honest if $100 was a real price your store charged to the public for a reasonably substantial period. The Federal Trade Commission’s pricing guides treat an inflated “former price” as deceptive. The cheapest protection for a small seller is a dated price log, plus a margin check before every discount.
What do the FTC pricing guides say about “was” prices?
The Guides Against Deceptive Pricing (16 CFR Part 233) are guidance on how the FTC views price claims, not a price list. Section 233.1 says a reduction from your own former price is legitimate when that was the actual, bona fide price at which the item was offered to the public on a regular basis for a reasonably substantial period of time. A former price is fictitious when it was inflated mainly to make a later reduction look like a bargain.
Two details matter in practice:
- The guides do not set a number of days. Their own example of a price held for only a few days shows that a short window is likely to be treated as fictitious. Treat “reasonably substantial” as something you must be able to defend.
- The reduction has to be meaningful. The guides use a “Reduced to $9.99” claim against a $10 former price as an example of a misleading savings impression.
The guides give a simple example: a seller’s pens cost him $5 and his regular price is $7.50. He briefly lists them at $10, sells few or none, then advertises “Were $10, Now Only $7.50!” The bargain is false because the $10 price was never genuine.
Can you compare against other stores’ prices?
Yes, under section 233.2, but the higher price must reflect what other sellers in your trade area really charge. The guides’ example: if the principal retailers regularly sell Brand X pens at $10, “Price Elsewhere $10, Our Price $7.50” is fine. If only a few small outlets charge $15 while most charge about $7.50, a “Retail Value $15” claim is deceptive. Comparing with a “comparable value” product requires an essentially similar item that a reasonable number of principal outlets actually sell at that price.
How to run an honest sale, step by step
- Start a price log now. Screenshot each listing weekly with the date visible, or export price history from your platform. Keep one folder per product.
- Pick your reference price from the log. Use the price you actually charged, openly, in recent weeks. Not a price that lasted a day.
- Calculate the real discount. A $50 item moved to $42.50 is a 15% discount, not “up to 50% off.”
- Check the margin at the new price. Say the item costs you $20 in total, fees and shipping included, and sells for $50: profit $30, a 60% margin. At $42.50, profit is $22.50 and margin is about 52.9%. Your profit per unit fell by a quarter, so you need roughly a third more units to earn the same total. Compare with your own sales history before deciding.
- Keep fees in the math. Marketplace fees often have a fixed part that does not shrink with the discount. See Amazon seller fees and eBay selling fees for how those add up.
- State the terms in the listing. Dates, quantity limits and coupon rules, in plain words.
- Honor what you advertised. Run out of stock and the listing should say so, not keep advertising the deal.
Is raising a price before a sale illegal?
Nothing in the guides says you cannot raise prices. They focus on whether the claimed former price was real. If your costs went up, keep the supplier invoice. If you tested a higher price for a short time, do not use it as the “was” price.
What if a competitor or a customer calls out your price?
Pull up the log. A dated history of the real price answers most complaints in one reply. If the history does not support your “was” price, change the listing instead of arguing.
Who should not rely on this guide?
Anyone selling on a marketplace should also read that marketplace’s own pricing and promotion rules, which can be stricter and are not covered here. A lawyer is the right person for a specific case. If you want to size the ad spend that will support a sale, check what ROAS is and your break-even number first.
Frequently asked questions
How long must a price stand before it counts as the “was” price?
The FTC guides do not give a number. They say “a reasonably substantial period of time” and show that a few days looks fictitious. Keep the price long enough that you could comfortably defend it.
Do I need sales at the old price?
Not necessarily. The guides say a former price is not fictitious just because no sales were made, but it must have been openly and actively offered in good faith in your regular course of business.
Can I advertise “up to 50% off”?
That is outside what the sections above cover, so check the full guides and your platform’s rules. The safest practice is to show the discount for each product and make sure the reference price is real.
Are the FTC guides binding law?
They are administrative guides about how the agency views pricing claims. Treat them as the standard to meet, and ask a lawyer about your specific case.
