[QUOTE=Liberal]
I think I plainly stated what I meant. Twice. If someone else pays your fine, you haven’t been fined at all. If they are to go out of business for committing fraud, it should actually hurt. Them, not their victims.
[/QUOTE]
But no one else pays their fine. They do. Directly. Now, yes they can raise their prices and perhaps make it back up. Or perhaps not. However, they could raise their prices anyway. What do you suggest as a way of penalizing a Corp?
[QUOTE=DrDeth]
But no one else pays their fine. They do. Directly. Now, yes they can raise their prices and perhaps make it back up. Or perhaps not. However, they could raise their prices anyway. What do you suggest as a way of penalizing a Corp?
[/QUOTE]
If I answered that, it would become a full-blown hijack. Suffice it to say that I don’t believe a corporation should be a rights-bearing entity; rather, the officers should be responsible for how it is operated. And they should not be allowed to use either their victims or their shareholders as shields against personal damage by price-increase/dividend-decrease manipulations. As I said already, if a Nigerian scam is busted, it isn’t allowed to scam more people just so it can pay its fine. There also should be criminal penalties for fraud; it is, after all, a coercion. To bring things back on topic, I think the officers of Best Buy (assuming a fraud has been committed) should, at the very least, have to pay — out of their own pockets — to restore their victims.
[QUOTE=Liberal]
If I answered that, it would become a full-blown hijack. Suffice it to say that I don’t believe a corporation should be a rights-bearing entity; rather, the officers should be responsible for how it is operated. And they should not be allowed to use either their victims or their shareholders as shields against personal damage by price-increase/dividend-decrease manipulations. As I said already, if a Nigerian scam is busted, it isn’t allowed to scam more people just so it can pay its fine. There also should be criminal penalties for fraud; it is, after all, a coercion. To bring things back on topic, I think the officers of Best Buy (assuming a fraud has been committed) should, at the very least, have to pay — out of their own pockets — to restore their victims.
[/QUOTE]
Two things:
That said, I think I agree with you about somethign here. I don’t like the idea of corporations having rights, and I would be all about jail time for the officers of corporations when those corporations commit crimes. Commit a small crime? That’s cool, you’ll only go to jail for a month.
Daniel
If you weren’t chemically addicted to their poison, an addiction that happened in part because of their fraud, then yes, it would be. But an addict can no more choose to deny himself a fix than a man with a gun to his head can choose to deny me his wallet. They were coerced into smoking. Yes, a given addict on a given day can recover, sometimes without more than a hint of difficulty. But for many people, the addiction to nicotine is so strong that they still smoke even when they are painfully dying from its effects. Superficially, yes, smokers are choosing to pay the higher prices, and that line of reasoning works out well for those who committed the fraud. But those who make that choice are thanking the torturer for slapping them and begging him please to give them another. It seems to me that something is wrong with that picture.
Government. That’s what it’s for — to stop criminals from profiting from their crimes. I do understand that they are allowed to raise prices and otherwise compensate themselves to mitigate their fines. What I’m saying is that, in my opinion, they ought not to be allowed to do so.
[QUOTE=Liberal]
To bring things back on topic, I think the officers of Best Buy (assuming a fraud has been committed) should, at the very least, have to pay — out of their own pockets — to restore their victims.
[/QUOTE]
At which point you will see CEO contracts amended to compensate them for fines incurred related to corporate activities. Back to square one…
Want to make it hurt, forced closure of stores. BB in city x is prosecuted and found to be guilty of crime X.
Penalty store locked down for 24-120 hours, whatever is appropriate to the crime, akin to alcohol licence violations which sometimes pack 30 day lockdowns IIRC. That way, the scale of the fine will always match the scale of the business. Lock my business down for 2 days it would still hurt but it would be more like $400 loss. BB being locked down for a day could probably kill $10K in net revenues and $100K in gross receipts not to mention customer ill will showing up to find the store closed by order of the local courts.
[QUOTE=drachillix]
At which point you will see CEO contracts amended to compensate them for fines incurred related to corporate activities. Back to square one…
[/QUOTE]
Square one, as far as I’m concerned, is that they can’t do that. It cannot (or ought not) be legal to sanction coercion with contracts. If you contract with me to rob a house for you, stipulating that you will bail me out and pay my fines if I am caught, you should be just as culpable as I am in the eyes of the law. I don’t know whether our system works that way, but I believe it should.
[QUOTE=Spezza]
I work in a furniture store, so I will comment on this practice. First, if the store does sales like this in general - bundling items to make a sale - DON’T buy from them…(snip) (They are) looking for cash, not profit.
[/quote]
They are looking for cash, not profit. They are looking for cash, not profit. Nope, no matter how many times I say it, it still doesn’t make a lick of sense.
Hint: You are BOTH looking to make a profit. That’s why you’re in business! Profit is measured in CASH. It doesn’t matter if you bundle 5 items together or if you sell them piece by piece only; the formula remains the same:
Profit = sales price less your cost.
You typed that with a straight face, didn’t you?
You seem to asserting that quality products aren’t discounted, but then you admit that you DO offer discounts…after you make a nice, tidy profit of $5k.
Listen closely: How much your store marks up an item has NOTHING to do with quality. Whether you discount a product has NOTHING to do with quality. Whether you bundle furniture to sell more furniture has NOTHING to do with quality.
The quality of furniture is 100% dependent on the manufacturer.
Why? Because YOUR store doesn’t do it that way? YOUR business model is the only one that makes sense? Dude, get your nose out of the corporate training manual and start tuning into your common sense.
Scenario 1:
You sell a dining room table for $5000. Your cost is $2500, leaving you a $2500 profit.
Sales price: $5000
Discount: $0
Profit: $2500
Scenario 2:
Competitor sells same dining room table (retail price: $5000). He then offers a 20% discount on the entire order if the customer also orders 6 chairs (retail price: $500 each) and a china cabinet (retail price: $8000).
Sales price: $12400
Discount: $3200
Profit: $4400
By bundling it and offering a discount, not only did the store sell more furniture, which helps them earn them favored status with the manufacturer, but at the end of the day, they made more money. Even at a 30% discount, they’d end up making more money than if they just sold 1 table at a 100% markup:
Sales price: $11,200
Discount: $4800
Profit: $3200
If you want quality, find a reputable manufacturer (e.g. dovetail drawers, solid wood) and then order it off the internet. Then you don’t have to listen to idiot salespeople who try to convince you that them offering you a discount off their 100% markup is somehow degrading the quality of the merchandise.
[QUOTE=Duggy Fizzle]
Last week I was looking to purchase an HD DVD player. Looking online I saw that I would get three free DVDs with the purchase of the Toshiba. The next day I went to BB to buy the Toshiba and told the sales clerk about the deal I saw online, but I didn’t mention how many DVDs I was supposed to get. He told me he wasn’t aware of any such deal and left to go check on it. I became suspicious, but when he came back he said, “you’re right. You get four free DVDs with the Toshiba.” I just kept my mouth shut and picked out my four DVDs.
[/QUOTE]
So, they can’t rip *you *off, but it’s cool if you rip *them *off. :dubious:
[QUOTE=PunditLisa]
They are looking for cash, not profit. They are looking for cash, not profit. Nope, no matter how many times I say it, it still doesn’t make a lick of sense.
[/quote]
While he made little sense, your numbers are a little overly simplistic and a little more detail might be in order to better explain how such tansactions can be discounted effectively.
Drac’s Furniture sells $500 chairs using formentioned 100% markup. Over time I have budgeted out that my costs to sell that chair are:
$250 cost of chair from my source
$53 employee labor (assembly and sales)
$37 store lease
$32 in advertising costs
$7 in misc expenses related to operating my business.
Total cost to me: $379 This is my breakeven point, zero profit.
I have a 20% off sale meaning I sell my chairs for $400, profit $21.
Where discounts kick in, is sales labor. If sales labor is $23 of the $53 and a customer wants 2 chairs I can make an extra $23 profit or offer additional incentives to purchase additional items.
Buy 4 chairs and get $30 off on top of the 20% and even after the discounts I profited $42 on one transaction instead of $23.
The cost of the chairs themselves is pretty much irrelevant, because the real details a business owner has to worry about are the final transaction details. There is still ony $42 leeway between making money and losing it even on some pretty large transactions. Of course the cost of the chair after taxes is more like $200 so you can recapture some additional profits from tax offset.
If we really want to get crazy we can start depreciating…
[QUOTE=drachillix]
The cost of the chairs themselves is pretty much irrelevant, because the real details a business owner has to worry about are the final transaction details.
[/QUOTE]
The cost of the chairs is absolutely relevant because how much I owe the manufacturer, plus overhead, determines the “break even” point, no?
I didn’t bring up overhead because I didn’t want to complicate the matter. Except for the salesman’s commission, a large part of the store’s overhead remains the same whether they sell 1 chair or 3000 . They still have to pay for the lights, for the property taxes on the building, to lease the warehouse, etc. The percentage of profit *per chair * is not nearly as important as total sales volume. Bottom line is that they have to bring in enough money to cover those fixed costs. That is why volume is very important and why discounting and bundling make perfect sense.
[QUOTE=Liberal]
If I answered that, it would become a full-blown hijack..
[/QUOTE]
Too late!* 
Wow, you guys are arguing over lessons I learned in 8th grade playing Lemonade Stand on an Apple IIe. It’s microeconomics at it’s most basic level.
You know, the supply vs. demand vs. price graphs.
[QUOTE=PunditLisa]
That is why volume is very important and why discounting and bundling make perfect sense.
[/QUOTE]
In principle yes, it is possible to discount yourself out of business. Bundling tends to increase the size of the order but the only real shift in the value to the business is moving more product in a shorter period of time than budgeted for. The cost of the product is irrelevant because that is pretty much the one cost you can control and plan for. If nobody comes into the store, you can’t effectively plan. If I knew for a fact my merchandise would sell well without bundling, there is no real reason to do it.
In the example I gave above ( a fairly realistic one ) even on a $2,000 order the profit margin is only about 2% above all costs. Many furniture stores spend alot of time collecting dust. Without the bundling discount I threw in that margin climbs to around 3.5%. Throwing away 40% of your profit margin is rarely a prudent business strategy. More volume does not always = bigger profits, sometimes it just moves product.
Here’s what I suspect is happening:
Customer takes product to checkout where it is scanned; computer kicks out the high price; customer yells; clerk calls up internal site and sez, “See here, it’s right.”
Granted, the price in the computer associated with the bar code could be wrong - mistakes do happen. But that mistake and the clerk mistakenly calling up the wrong “website” sure sounds like deliberate fraud to me.
Note in the OP that, a month back, a company spokesman was saying there was no such “website”.
[QUOTE=BJMoose]
Here’s what I suspect is happening:
Customer takes product to checkout where it is scanned; computer kicks out the high price; customer yells; clerk calls up internal site and sez, “See here, it’s right.”
Granted, the price in the computer associated with the bar code could be wrong - mistakes do happen. But that mistake and the clerk mistakenly calling up the wrong “website” sure sounds like deliberate fraud to me.
Note in the OP that, a month back, a company spokesman was saying there was no such “website”.
[/QUOTE]
That’s because there isn’t. See my previous post.
It’s not fraud, it’s simply that the price varies from store to store, and “the Internet” is a store in the Best Buy system. Store #960, in point of fact.
Would you be shocked to find that the prices in a Best Buy store in Times Square were different from those in Waukesha, WI? If you expect the store price to match the online price, then you are expecting Best Buy to sell the same product for exactly the same price in every store in the United States, regardless of different demand and cost for actually having it there.
You’re free to expect that, but I hope you realize that it’s not a *realistic *expectation.