When almost no one pays full price, what does “full price” even mean? From cars to college to health care, consumers today are surrounded by huge markdowns—which, when you think about it, wouldn’t exist if goods and services weren’t marked up so high in the first place. Why is the consumer landscape filled with prices that no one is really expected to pay? You know, the “original” or “compare to” prices, also known as “MSRPs,” which are typically listed right next to the actual purchase price. If almost no one pays a list price, isn’t it meaningless? Not entirely, says Kit Yarrow, a consumer psychologist and occasional contributor to Time.com. “People really aren’t very good at calculating the worth of a product or service,” she says. “It might seem like they should be jaded, but consumers still absolutely, positively rely on list prices to determine value.” Marketers love to use the concept of an “original” or “suggested” price as a way to convince shoppers they’re getting a can’t-pass-up bargain. As a result, we’re surrounded by initial prices that buyer and seller alike know are unrealistic and inflated, and yet that somehow serve a purpose—as a point of comparison, or as a starting point for negotiations. Life would probably be a lot less frustrating and confusing if fake “full” prices didn’t exist in many areas, including these: Health Care Anyone who has ever looked closely at a bill from a hospital knows that the health care pricing systems in the U.S. are completely absurd. In Steven Brill’s recent TIME cover story about overinflated medical bills and why health care in general has become so expensive, many hospital representatives admitted that the initial prices listed on bills—decreed by someone or something called the “chargemaster”—are basically meaningless. “Those are not our real rates,” one hospital spokesperson told Brill, flatly, when asked about prices listed on a bill. “I’m not sure why you care.” (MORE: Bitter Pill: Why Medical Bills Are Killing Us) The justification for such as system seems to be that it … Continue reading List Price = Joke Price: 4 Examples of How Original Prices Are Meaningless