The Economy of a Price Mistakes on your eStore

So I recently tried to partake on someone else’s error.  I tried to jump on some Mushkin DDR3 (3x 2GB) RAM.  I found the deal through Slickdeals naturally.  It’s no real surprise that Mushkin isn’t honoring the hot price.  Especially considering they easily have 2000+ orders.  Sure since they are a manufacturer they aren’t paying the same price as some online retailers have it for sale for but you can pretty much bet it’s still somewhere north of $120 per set.  So a cool $80,000 or so would be lost by honoring the deal.

What to do if you have a price mistake…


You can bet 99% of estores on the web have disclosures basically protecting themselves stating they they have discretion to cancel orders for any reason they seem fit to do so.  So on a legal standpoint the retailer is within the right to cancel an order.  And potential lawsuits would be pretty frivolous and not very likely due to the cost of court fees and hiring a lawyer.

Goodwill approach:

You can honor the price mistake.  Hopefully it won’t eat your lunch and make you lose money for the quarter/year.  There may be a good reason so maybe only a handful of people go in on it.  Potentially they are longtime customers.  However, don’t delude yourself into thinking that these kinds of customers will potentially be repeat customers.  In general price mistakes make the rounds on the internet like a hot video on Youtube it gets passed around like it’s on fire.  It is very likely you’ll have a flood of new customer’s and very likely 95% have not ordered from you previously.  However, just because you honor the deal this time doesn’t mean they will return, at least not until your next price mistake.  At best your looking at 10% of the customer base even looking at your website ever again.

Compromise approach:

You admit to your new customer base of the error.  And offer them the product at a higher but still reduced price (one where you are still making money).  Some customers will obviously resent this action but you make actually have some takers on the deal.  So long as your making something on the transactions the customers whom follow through may have a good feeling in their mouth about you and actually be a return customer.

Slash and Run approach:

You can be a Republican and never admit an error and simply cancel the orders and go about your day.  Don’t do this at least tell your customers in a nice email that you are not honoring the order.

The I’m asking for chargeback hell approach:

You put in the orders at a higher price and charge their cards for the normal price.  This violates just about every credit card merchant agreement and your asking for pissed off customers, chargebacks, and potentially a lawsuit.

Admit mistake and move on:

This is the most popular in that it costs the least amount of money.  Just admit mistake send a nice email and then cancel the orders.

Tags: , ,

This entry was posted on Wednesday, March 17th, 2010 at 12:50 am and is filed under biz. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Leave a Reply