9 Everyday Products With the Biggest Markups

bottled water bottles
By Kyle James

Products with ridiculously high markups exist because somebody, somewhere, is willing to pay that price. Whether it's because of convenience, perceived value or simple ignorance, is up for debate. The good news is that with a little forethought, most of these markups can be avoided, or at the very least lessened. Here are nine of the biggest, along with some common sense solutions and workarounds.

1. Bottled Water. If you're buying designer bottled water brands like AquaDeco or Fine, you're getting nailed by an unbelievable 280,000 percent markup. Although, if you're reading Wise Bread, I'm guessing you probably don't buy designer brand water. But you probably do buy bottled water from the grocery store or warehouse club on occasion, in which case you're paying a 4,000 percent markup compared to tap water.

Solution: Buy a Brita water filter pitcher and filter your tap water from home. You can then take the filtered water with you when you're on-the-go by using a reusable BPA-free water bottle.

2. Pre-Cut Vegetables/Fruit. Veggies and fruit that are cut up and ready to go are definitely convenient, especially for busy families. But did you know that you're easily paying a hefty 40 percent markup on the pre-cut varieties?

Solution: Shop your local farmer's market and grocery store for deals on fresh vegetables and fruit. Solve the convenience aspect by cutting them all up at once and store them in Ziploc bags. This is a great way to save money and have healthy snacks ready to go for school lunches and quickly-thrown-together family meals.

3. College Textbooks. According to CollegeData, the average student spent over $1,000 on textbooks and supplies for the 2014–15 school year with markups hovering around 200 percent for brand new textbooks.

Solution: If you plan on reselling your textbooks at the end of the semester, you should consider renting, instead of buying, from websites like Chegg an TextbookRentals. Also, if you plan on buying them, always ask for used textbooks at the college bookstore, or buy them in gently used condition from websites like AbeBooks.com and Half.com. (See also: 20 Places to Buy or Rent Textbooks)

4. Designer Handbags. The average name brand handbag carries a markup of well over 100 percent. Brands such as Coach, Dooney & Bourke, Kate Spade and Michael Kors have built a luxury brand reputation based solely on consumer perception.

Solution: Always buy handbags on sale. Because of the 100 percent markup, you'll often see 50 percent off sales on handbags at department stores. Also, shop at discount stores such as T.J. Maxx and Marshalls for name brand handbags at heavily discounted prices. You might not find Coach or Louis Vuitton, but you'll still find very high quality brands at good prices.

5. Designer Jeans. According to The Wall Street Journal, designer jeans often come with a markup in the 260 percent range. For example, the fact that someone would spend $208 on a pair of jeans from 7ForAllMankind, tells me that for some people, being fashionable at any price is the number one priority when it comes to covering your legs with denim.

Solution: Shop discount clothing stores and thrift shops for denim. On several occasions I have found designer denim on the rack at thrift stores for pennies on the dollar. Sure, they were a little worn, but most of the designer jeans bought brand new are quite worn, or even have holes in them. Some even have paint all over them like these $575 jeans from Neiman Marcus.

6. Prescription Drugs. Prescription drugs can be incredibly expensive, especially if you have sub-par health insurance and get stuck footing most of the bill. According to AHIP Coverage, the price markup on prescription drugs is at a whopping 443 percent.

Solution: Ask for free samples while at the doctor's office. A few years ago I was prescribed Lamisil, an expensive prescription drug, which at the time cost $30 a pill and had no generic equivalents. On a whim, I asked the nurse on the way out of the office it they had any free samples. She went and looked and returned with a bag full of Lamisil samples. She told me to come back when I ran out as she didn't have enough for a full treatment plan. Simply by politely asking she saved me over $500 on prescription drug costs.

Also, when approaching the pharmacy window, always ask about generic alternatives to your prescription. Often times the doctor will unknowingly prescribe the name brand drug, and by switching to the generic, you can save significant money.

7. Eyeglass Frames. Eyeglass frames have a ridiculously high markup in the 500 percent range. I recently discovered this when I needed a new pair of glasses and decided to buy them directly from the optometrist as my vision insurance was going to pay for them. But after looking through my choices, and the hefty price tags, I quickly realized that you'd be crazy to buy directly from the doctor if you have little or poor insurance. The frames I eventually chose were close to $350, and after doing some research, I could have gotten them online for $125.

Solution: To avoid the markup as much as possible, always shop eyeglass frames and lenses online as well as warehouse clubs including Costco and BJ's Wholesale.

8. Coffee and Tea. When you hit the Starbucks or local coffee shop, know that you're getting hit by a 250 to 400 percent markup. Sure it's a nice treat from time to time, but visiting everyday can really be a budget buster.

Solution: Start brewing at home and take your morning cup of joe with you.

9. Furniture. According to CBS Money Watch, most furniture stores markup their prices about 80 percent. This is especially true at boutique shops and high-end department stores like Macy's and Nordstrom.

Solution: Because of the high markups you should always try to negotiate a deal, even if the price is already discounted, as the majority of furniture stores have plenty of room to come down in price and still make a profit. This is especially true if you're paying with cash as the store won't have to pay credit card fees.

By knowing what products have the highest markups, you can learn to avoid them whenever possible. Sure, you'll get stuck buying a $5 bottle of water on occasion, or splurge on a $4 cup of coffee, but by developing smart long-term spending habits you can really save significant money. Money that can serve you much better by paying down debt, building that emergency fund, or saving for retirement.

What product markups drive you crazy and how do you avoid them?
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