May 24, 2010, 4:33 PM

A pricing error costs sister site more than $1.6 million

An employee’s error caused nearly all of's products to be priced at $49.95.

Because of an employee’s error entering data into the pricing engine on Inc. sister site, the site accidently priced nearly all of its products at $49.95 on Friday for six hours, from midnight to 6 a.m.

The retailer says it will honor all purchases that took place on the site while the pricing was incorrect, a move that will cost the company more than $1.6 million.

“While we’re sure this was a great deal for customers, it was inadvertent, and we took a big loss (over $1.6 million—ouch) selling so many items so far under cost,” wrote Aaron Magness, director of brand marketing and business development at Zappos, in a blog post.

Among the items available at a steep discount was the Humminbird 1155C Chart Plotter NVB GPS system the site typically sells for $1857.85.

An employee error caused incorrect prices to appear, wrote Tony Hsieh, CEO, in a blog post. “We have a pricing engine that runs and sets prices according to the rules it is given by business owners,” wrote Hsieh. “Unfortunately, the way to input new rules into the current version of our pricing engine requires near-programmer skills to manipulate, and a few symbols were missed in the coding of a new rule, which resulted in items that were sold exclusively on to have a maximum price of $49.95.”

Items sold on both and were not affected by the glitch.

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