I dislike this term. It’s equivalent to “I’ll charge whatever I feel like and if you’re stupid enough to pay it I’ll laugh all the way to the bank”.
What’s unsaid is that there’s an implicit understanding that a person has a right to make a profit and a living but that the profit margin should be fair and reasonable (I can already hear some of you saying “fair to whom”).
People today have a little more savvy about things. Like we know soda costs pennies per serving at fast-food restaurants; that plastic toys cost next to nothing to be pressed out in China.
Knowing this, when we pay $1 for a soda at McDonalds we don’t flinch. Considering labor costs/overhead/etc this seems “reasonable”.
But what happens when the market learns that the wholesale cost of something drops dramatically?
Is it reasonable to expect the retailers to drop their prices; that is to share the savings?
I believe that when someone doesn’t do this that they are breaking the implicit contract stated above.
Recently we saw a major music conglomerate drop its wholesale CD prices by a good percentage. This is “supposed” to lead to the dropping of retail prices and boost sales and fight piracy.
But would it be wrong if all music retailers decided not to pass this savings on, thus boosting their own bottom lines?
I say yes it would be wrong.
What do you all think?