Does anyone have any idea of the origin, or earliest use, of the term "keystone" to indicate a retail price that is determined by doubling the wholesale price?
At various times during my long life I have "been involved in marketing," which to me means selling something. I've never heard of keystone pricing by name, but the doubling of the wholesale price to calculate the retail price is common, especially in the jewelry business.
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Posts: 6708 | Location: Kehena Beach, Hawaii, U.S.A.
I have to say it seems a very casual, even careless way of going about pricing. I suspect it might be a rather old idea, going back to the days when people thought that there was some kind of direct connection between costs and overheads (of which the wholesale price is just one) and marketing tools (of which price is just one).
I know of no modern organisation in my own field (travel) that uses "cost plus" pricing, of which this is an example (It is price = cost plus 100% of cost).
Richard English
Posts: 8038 | Location: Partridge Green, West Sussex, UK
OH. And welcome, Carol! I hope you'll like it here. I won't be around on this forum for a few days as I'm off to the USA and then Canada in a couple of days.
Richard English
Posts: 8038 | Location: Partridge Green, West Sussex, UK
Originally posted by Carol S.: Does anyone have any idea of the origin, or earliest use, of the term "keystone" to indicate a retail price that is determined by doubling the wholesale price?
I've received an answer from a reference librarian, so I thought I'd pass it along: The term keystone, meaning that 50% of the stated price should be considered to be the wholesale price, comes from the jewelry trade. It was originated in 1896 by Keystone magazine, a predecessor of Jewelers' Circular-Keystone, after subscribers had complained about the showing of dealer costs in a publication that customers might see on jewelers' counters.
The name of the magazine, Keystone, probably comes from the keystone cut, a fancy diamond cut whose outline is that of a keystone. (A keystone is the central, wedge-shaped stone at the top of an arch that locks the arch together.)
Originally posted by Richard English: I have to say it seems a very casual, even careless way of going about pricing. I suspect it might be a rather old idea, going back to the days when people thought that there was some kind of direct connection between costs and overheads (of which the wholesale price is just one) and marketing tools (of which price is just one).
I know of no modern organisation in my own field (travel) that uses "cost plus" pricing, of which this is an example (It is price = cost plus 100% of cost).
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As an aside, the term keystone approach was a sales method for undertakers coined by W. M. Krieger of the U. S. National Selected Morticians Association. It means that the customer is first shown the most expensive and then the cheapest coffin in a range, which causes most people to buy a coffin of an intermediate price even if the cheapest was really desired. (This is from the Dictionary of Jargon by Jonathon Green, 1987.)
I, too, have never heard of the term, and, like Richard, feel it seems a remarkably casual way of arriving at a retail price. I assume the 'keystone' price indicated by the Keystone magazine was always 'undercut' by jewellers so that it appeared that the customer was getting a bargain. I think such practices are outlawed in many countries nowadays - consumer protection laws insist that an item has been actually offered for sale at the quoted price or similar.
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My experience is admittedly limited, but I had thought that keystone pricing was the default pricing model for small retail stores. When my wife was selling Polish boxes like these to museum stores and other places in the 1980s, they would typically mark them up 100% from the price she got.
quote:
I think such practices are outlawed in many countries nowadays - consumer protection laws insist that an item has been actually offered for sale at the quoted price or similar.
I don't follow your reasoning here. It seems to me that the jewelry store would have been happy to sell the item at the quoted price.
It seems to me that the jewelry store would have been happy to sell the item at the quoted price.
I'm sure they would. If they could find a buyer.
I'm talking about the practice of making up a (ridiculously high) price, quoting it to the customer, then offering to sell with a percentage off. That is illegal in England and the EU; I think the US has similar legislation. The goods must actually have been on sale at that price for a certain minium period. Another such trick, also outlawed here, is to advertise something as "worth £100", say, when selling for £50, and it has never been sold at the higher price.
The Latin tag caveat emptor doesn't often apply nowadays; in fact, what with the proliferation of consumer protection laws, it might now be re-stated as caveat vendor.
Build a man a fire and he's warm for a day. Set a man on fire and he's warm for the rest of his life.
I'm talking about the practice of making up a (ridiculously high) price, quoting it to the customer, then offering to sell with a percentage off. That is illegal in England and the EU; I think the US has similar legislation.
I'm not aware of any US consumer laws like this, but I'm not a lawyer.
Last time I saw one of those silly marketing channels on television, they used the old "A $500 dollar, yours for only $300 if you act now" spiel. I think caveat emptor is still appropriate in the USA.
I must confess that when I saw the name of this thread, I thought of the old "Keystone Cops" movies! They were pretty cheap!
Good to have you abord, Carol! Welcome to the madhouse!
I've received an answer from a reference librarian
Delightful! Aren't librarians the best?
(I'm a librarian, of course )
I got distracted by one of the siteslinked by Z because it's a blog that I occassionally read about knitting. Interesting post about keystoning AND about price-fixing.
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I'm not aware of any US consumer laws like this, but I'm not a lawyer.
I get the impression the US consumer protection laws are less stringent than English ones.
As I have said previously, in England it is illegal to offer any foodstuff for sale unless its quantity and price is clearly shown in such a manner that the prospective purchaser will know what it is before deciding to buy. In England no barmen would be able to accede to a request for "a beer". Cask and tap beer in England must be served in exact fractions or multiples of an Imperial pint, the price of which must be clearly displayed at the point of sale. In the USA I have been served with both US and Imperial pints, often with a head that is maybe 15% of the drink. In England it must be an Imperial pint and the head, if any, must be less than 5%.
Bottled beer can be sold in any quantity, but the quantity in the bottle must be shown on the label, in metric units (although an Imperial equivalent can be shown additionally).
Richard English
Posts: 8038 | Location: Partridge Green, West Sussex, UK
By law, I meant that food must be labeled with the ingredients and weights. I wasn't talking about how full a beer glass is filled.
I was also referring to the Law here that says prices and quantities must be clearly displayed on a list that can be seen by potential customers before they decide to purchase (or not).
Furthermore, in the USA, when asking for a pint, it seems to be a gamble as to whether one receives an Imperial or a US pint. That would also be illegal in the UK.
Incidentally, CAMRA is lobbying to try to get legislation that a pint of beer should contain 100% liquid (as would be the case with any other liquid sold - it must contain 100% of the quantity specified; a gallon of petrol cannot be less than a gallon). However, so far the Government have bowed to the pressure of the brewers' lobby (who claim, falsely, that it is impossible to guarantee that every pint served will be 100% liquid) and the Weights and Measures Inspectorate have been told not to prosecute any anyone for short measure providing the dispense is at least 95% liquid. This lobby exists to ensure that brewers can maximise their profits by routinely giving short measure and, whereas 5% might not seem a lot, it is 12.5 pence (about 25 cents) per pint - and that amounts to a lot of cash considering the millions of pints sold in the UK every day. 12.5 pence is, incidentally, around the price I paid for TWO PINTS of beer when I started drinking.
Richard English
Posts: 8038 | Location: Partridge Green, West Sussex, UK
Odd that there is an Imperial pint versus a pint. I say this because I was told that pint and pound had the same origin since a pint equals a pound of water. So was I led astray about the origins of pint?
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A pint is a pound the whole world around - providing the world is the USA;-)
US pints are smaller than Imperial pints by a significant margin although, as I understand it, the US pint is the older (and probably more logical) measure.
Richard English
Posts: 8038 | Location: Partridge Green, West Sussex, UK
So, Richard, let's say you have a recipe that calls for a pint of milk or water or something. Does that mean 20 ounces in England, but 16 ounces here? That could cause confusion! If I recall, it used to be 16 ounces to a pint in England, but they changed it. Am I correct about that? I seem to remember a post about that of Shu's.
An imperial gallon is defined as the same volume as 10 pounds of water whereas in the states it is 8 pounds. Living at one time in Michigan, we became aware of the difference whenever we would buy gas across the border in Canada which also used imperial measures.
Myth Jellies Cerebroplegia--the cure is within our grasp
The measures are different in many respects. A US pint is 16 fluid ounces, true, but even the fluid ounces aren't the same. I'd be inclined to stick with the metric measures which, I assume, are shown on US recipes.
If not, don't try to mix US and UK fluid measures - they vary in many ways. And, to make matters worse, the USA has different volumetric measures for liquids and solids; one US gallon is only 0.8594 of a US dry gallon (which is confusingly, near to, but not the same as, an Imperial gallon).
Richard English
Posts: 8038 | Location: Partridge Green, West Sussex, UK
Right. If you follow the fluid ounce link in my last post, you'll see that an Imperial fluid ounce is "about 1.734 cubic inches or 28.4130625 millilitres" and that an Imperial fluid ounce "of water weighs very nearly 1 avoirdupois ounce (it is the volume occupied by one ounce at 62 F (16.7 C), weighed in air with brass weights)". But, an US fluid ounce weighs "exactly 1.8046875 cubic inches or 29.5735295625 milliliters" and weighs slighly more than an avoirdupois ounce. A US fluid ounce is 1.160467 ml larger than its Imperial cousin.
Sorry to drag etymology into this fascinating description of the utter otherness of UK and US measures, but the word ounce is from the Latin word uncia (which also yielded inch) 'one-twelfth part', because a Troy ounce is one-twelfth of a pound. The Latin is from the PIE root *oino- 'one', which also gives us union, onion, and only. Uncia is also related to one of my favorite Latin words quincunx 'five-twelfths' which is also the name of the pattern of dots on the five face of a die.
The words "normal distribution" in that Wikipedia article are underlined. Clicking on them brings up all (and probably more than) you need to know about normal distribution.
However, that is a red herring. The quincunx, aka the bean machine or Galton box, was a device invented by Sir Francis Galton to demonstrate the law of error and the normal distribution. Why it was given that name I have no idea.
Build a man a fire and he's warm for a day. Set a man on fire and he's warm for the rest of his life.
I'm amazed to see where the responses to my question about "keystoning" has taken your community!
I thought you might like to know that the answer I got from the research librarian was accepted as accurate, and the $250 that I won has been presented to the Madison Public Library (Wisconsin) Foundation.
I came across another retailing term I thought you might enjoy, and will include it in the story by a Madison resident who wrote it:
"BLACK HORSE"
Years ago, I lived in a town in the far north of California. There was a store/auction house there that specialized in furniture and tools. It was a furniture store/ hardware store during the week and, every Saturday, they had an auction of the same things they sold in the store. It was unique in my experience in that you could dicker with the sales people over the prices of everything in the store.
Each item, in the store and at the auction, had a tag attached to it that listed the asking price. Right below the price there was a row of letters. These letters were a code for what the store had actually paid for the item. Somebody where I worked knew what the code represented and also knew that the salespeople would bargain down to 10 per cent above the store's cost.
The code was BLACKHORSE. With the B standing for 0, the L for 1 and so on down the 10 letters. Apparently, the BLACKHORSE code wasn't all that unusual. It has 10 letters, none of which are repeated and its easy to remember.
I bought quite a few things in that store over the years I lived there and I always "blackhorsed" the employees. We would both stand there after I had made my offer, with our hands behind us, silently blackhorsing on our fingers to see what the bottom dollar was. I knew what the clerk was doing but he didn't know I was doing the same thing. I didn't always succeed in getting them down to the ten percent but I always knew exactly where I stood when I agreed. Aside from that, it was amazing to learn the difference in price between items, tools, for example, that the store bought and yet sold for exactly the same price. Obviously, it worked well in the auction as well. You knew just when to stop bidding. At work, our conversations would include things like "What did it blackhorse out at?" Or, "It blackhorsed at - but I got it for-" Blackhorse became a verb!
I just noticed this 2 year old thread and wanted to say that "Keystone" and even "Triple keystone" is still very much alive in the jewelry and gift marketplace.
At wholesale gift shows and wholesale showrooms where buyers go to shop for their stores you will see signs saying "Prices are Keystone" or "Prices are Retail" or "Prices are cost."
There is nothing tricky or underhanded about Keystone pricing. It an easy way to premark products at a suggested retail that is twice the basic wholesale price allowing a retailer to put the products out without additional marking.
Some suppliers print prices in a catalog that is intended to be used on the stores counter (a counter catalog) and be seen by the customer. These counter catalogs are often priced at Keystone or Triple keystone so the salesperson can sell at the indicated price or, in these days of discounting, strike a deal with the customer. Most retail stores need at least a 2x markup on products to keep the doors open.
My own business has sold at wholesale with keystone pricing and also bought for a former retail store from keystone marked suppliers since the 1970's.
Of all the retailers, I think jewelers' prices are the most fluid. It is unsettling for the buyer because you never know if you're paying too much. I'd rather have firm prices.
In many ways keystone pricing provides firm pricing. A manufacturer or jobber premarks the goods and sells them to many different retailers who sell that at the same suggested retail price.
But I do understand your meaning. Jewelry has so many variables that a given look can be made in several qualities and therefore sell at very different prices.
How does the term relate to the original usage? Sure, gems are stones, and one "keys" prices to a set pattern, but that seems a pretty clumsy back-formation to me. Oh, yeah, good to have you aboard - welcome to the asylum!
Back in the beginning of this thread Carol S wrote:
quote:
The term keystone, meaning that 50% of the stated price should be considered to be the wholesale price, comes from the jewelry trade. It was originated in 1896 by Keystone magazine, a predecessor of Jewelers' Circular-Keystone, after subscribers had complained about the showing of dealer costs in a publication that customers might see on jewelers' counters.
The name of the magazine, Keystone, probably comes from the keystone cut, a fancy diamond cut whose outline is that of a keystone. (A keystone is the central, wedge-shaped stone at the top of an arch that locks the arch together.)
That makes it appear that it was made up so advertisers could list prices without "giving away" the cost if customers saw the magazine on the counter. I'm not sure there was an "original" or previous usage. The "Keystone Magazine" used their name to name this pricing process.
I'm not old enough to remember where the magazine got their original name. The answer Carol posted doesn't quite sound right to me. I guess I should ask the current JCK Magazine (formerly called Jeweler's Circular-Keystone magazine)which may still have offices in Radnor, PA - which does happen to be in the "Keystone State." The Jewelers Circular magazine was first published in 1870 and later merged with the Keystone magazine.
, Carol S. You are invited and urged to add extensive autobiographical information in your profile. 
