OK, BwanaBob, I’ll take a shot at convincing you. By the way, did you notice that every single person who’s posted a response has disagreed with you?
Let’s say you’re a frequent customer of the gas station on the corner, and a crisis happens. This guy, being an associate of yours and like-minded, doesn’t raise his prices. In fact, none of the gas stations raise their prices. It’s a crisis, and you really need some gas so that you can take your family out of the danger zone. You go to your buddy’s station on the corner, only to discover - he’s sold out! You say “BwanaJim, how could you do this to me? Why didn’t you raise your price to a level that would smooth out demand? Now only the hoarders have gasonline, and my family really needs some, but none is available!”
Now I ask which is the morally right way to price it. Do you get it?
The idea that there is some “fair” price for things is just nonsense. How do you know what something is worth to me? Only I know that. An heirloom which is of great sentimental value to me may be worthless to you. An item which is worth little to me normally may be worth a lot in an emergency. Ice is worthless in northern Sweden but valuable in central Africa. The price system in a free market is what transmits the information of what things are worth in each place and time and to each person. Hayek explains it very well in his article The Use of Knowledge in Society where he explains that the prices of things in a free market act as a regulator and medium for the transmission of condensed information when this information is spread out among millions of producers, consumers, processors, etc.
The value of things is in constant change and it is the added effect of all the forces that compose the market which determine what things are worth to people.
Your “built in” perception is based on what you are used to paying for a particular product, how much of a dent it puts in your wallet and your knowledge of the market for that product. You’ve never hear someone say “In my day we only used to pay $0.10 for a burger”?
There is…in communist Soviet Union. It didn’t work.
Um…yeah. That’s what people do. He has the choice of selling his gold at a loss or waiting for the price to go up (which it generally does).
Welcome to the wonderful world of “options”/“futures”. People speculate on the future price of a particular good all the time.
That’s some keen negotiating skills you have. Realize that the market does not revolve around YOU. If someone else is willing to purchase that stupid lamp for $20, then it was a good business practice. Especially if it alienates “undesirable” customers - ie people who wander in, don’t buy anything and then tell the manager to “fuck off”.
[Insert favorite group here] has a rare and talented gift of creating music that people enjoy. How much is listening to that music worth to you?
Price Gouging is when merchants take advantage of inefficiencies in the market to jack up the price. You know that a bottle of water generally costs $1.00 so it is obvious that a merchant at a concert is price gougeing by selling it for $5.00. He is taking advantage of the fact that he has a local monopoly over the bottled water supply at the concert.
The free competitive market is really the best way to allocate resources. What is freeer than sellers charging what they want and buyers pay what they want? It only works so long as there are relatively few barriers to entry and the market is allowed to stay competitive.
Unfortunately many people (especially those with little or no understanding of economics) have a self-centered childish view that if the are below the “S curve” that somehow the price is “unfair”.
I concede that I did not nor do I fully understand the market place.
A few of you had constructive posts that were illuminating (John Mace gets the gold star).
Others who I won’t bother to name are obviously knowledgeable but are classless boors who resort to insults when “explaining” why someone’s viewpoint is wrong.
I’m no angel either. I probably shouldn’t have told those two merchants to fuck off; but as the saying goes, you had to be there. When someone smugly tells you that the price you saw the other day is invalid and you know damn well they jacked it up because you expressed interest in it, I cannot believe some of you high-and-mighty Adam Smiths would have cheerfully accepted the situation.
Now I’ll go get myself a basic economics theory book and start reading.
That, and generally the cost of carrying excess inventory results from inventory costs and the loss in value of inventory over time. Antiques are a different story- they typically appreciate in value over time, so having a large inventory may actually help out on the guy’s balance sheet. Also, I doubt that the actual costs of carrying one dusty old teapot is much different than carrying a whole store packed full of them, so again, it’s to his advantage to have as much crap in there as he can.
That’s price discrimination for you. That’s what car salesmen do every day- except that they start high and it’s your job to negotiate them down. That’s why retailers & manufacturers offer rebates and coupons- they realize that there’s a segment of the population that’s more price-sensitive and will trade some degree of convenience for a lower price.
Either way, they make money- obviously the rebated/discounted price is still profitable. But they make even more money per unit on the people too lazy to get the rebate/clip the coupons. And the kicker is that they sell more by having the rebates/coupons than without- all the people willing to pay the higher price buy it at list price, and the more frugal ones buy with the rebates. Sure, they could sell them all at the lower price, but what would be the point? They wouldn’t make as much money since there are people out there willing to pay the higher price.
I bet the antique dealer sized you up when you went in, and figured you were good for $20, and raised the price either after you left, or after you called. That’s pretty much the way price discrimination works- however, if you waited, he’ll probably drop the price. Or, try this- wait a while so he forgets you, and get some clothes at Wal-Mart. Wear the cheapo clothes in on the next trip, and he’ll be less likely to raise the price on you if you look like you have less money to go around.
One more thing- just what do you think is a “fair” profit margin? You do know that a 50% gross margin is pretty much standard in most things, right? (i.e. they charge about double what they paid for the goods)
Interestingly, there was a word used in Orwell’s 1984 along the lines of this thread: “bellyfeel”. The OP strikes me as an appeal to emotion (trying to glom onto some vague sense of unease that a merchant or corporation is cheating us when they sell us things) instead of basic logic.
I go with my hunches occasionally when buying products, but I simply don’t expect to impose a limit on the profits a merchant can pursue based on some vague concept of “fairness”. The thread premise sounds like the Politics of the Lazy: since you won’t expend the effort to shop around for a lower price or negotiate for a lower price, you’re calling for the government to force lower pricing on your behalf.
Well, your point is useless, since everyone’s perception is different. Part of the Politics of the Lazy is assuming every feels (or should feel) about a subject the same way that you do, and if they don’t, it’s because they are ignorant or evil or something and need legislation to protect them from themselves.
No problemo. It’s there, but you read the subtext, which is hard to spot if you’re only “skimming”:
In the United States, rights are defined by constitutional issues. When you start speaking of “rights” but add a “but”, it implies you’d like to see the consitution modified in some fashion. In this case, there is no existing legislation defining a “fair and reasonable” profit margin, so it sounds to me like you’d like to create it, giving government additional powers.
It’s a subtle subtext, I’ll admit, but I’m naturally skittish of anyone who says or implies that there oughtta be a law about something that offends him personally.
Your more directly stated position is the correct one: that if prices strike you as inappropriate, you should withhold your purchase or shop elsewhere. It will become clear that “the market” (or at least the smidgen of the market that is under your control), will not bear such pricing.
At the risk of covering something someone else already said, I’ll answer this last question. The station owner needs to charge a price that allows him to buy next week’s gas - if he doesn’t sell today’s gas at a price high enough to do so, he will be out of business, or will need to take out a loan to get that higher priced gas.
caveate emptor, really means, never give a sucker an even break.
If I can hide info from you and rip you off it is YOUR FAULT.
I keep telling people to trash Microsoft and switch to Linux. The UNIX people like making the OS complicated and mysterious though. A “less” command to view a file. The VI editor is an insane joke.
