Online price vs retail store price?

Discussion in 'NZ Computing' started by Squiggle, Dec 1, 2007.

  1. Squiggle

    impossible Guest

    So? In an open market, there will always be some other vendor willing to
    supply.
    Profits are maximised when marginal cost=marginal revenue. That's the price
    that vendors should post. If the price of an individual vendor is too high,
    that's a signal that their cost structure is uncompetitive. And yes, maybe
    they should go out of business. Are customers supposed to subsidise
    uneconomic vendors?
     
    impossible, Dec 4, 2007
    #41
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  2. Squiggle

    impossible Guest

    You'd prefer customers to subsidise them?
    I guess you do.
     
    impossible, Dec 4, 2007
    #42
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  3. Squiggle

    impossible Guest

    Profits are maximised when marginal cost=marginal revenue. If the vendor is
    willing to show me their cost schedule, I'll be perefectly happy to offer
    them my best price. Otherwise I'll just move on to the next store, where the
    vendor isn't trrying to fleece me.
    As posted elsewhere: you expect customers to subsidise uneconomic vendors,m
    and I don't. That';s the difference.
    Not at all. The most economic return for everyone is when profits as a whole
    are maximised: that is, marginal cost=marginal revenue. So long as no
    barriers are placed in the way of other vendors entering the market to sell
    at that optimally economic price, it's a fair arrangement for everyone.
    Individual vendors will undoubtedly fall by the wayside because their cost
    structure is uneconomic, the economy as a whole will grow. Shumpeter called
    that "creative destruction". Innovation is the key, not a secretive pricing
    schme that seeks to fleece unwitting buyers.

    [Lose the ridiculous signature].
     
    impossible, Dec 4, 2007
    #43
  4. Squiggle

    impossible Guest

    That's because you decided to dice up my paragraph to attack sentences out
    of context.
    If the advertised price isn't the real, that's fraud.
    Really!? So buyers are just supposed to take the vendor's word for it that a
    given price is fair? I don't think so. That's why we have markets rather
    than price-fixing oligarchies. Profits are maximised when marginal
    cost=marginal revenue. This means no barriers to entry for vendors who can
    sell below some other vendor's uneconomic cost structure.
    LOL!!!
     
    impossible, Dec 4, 2007
    #44
  5. Squiggle

    impossible Guest

    You're talking about monopolies and oligopolies -- not markets.
    Really?! And you're candid about that with **your** customers?
     
    impossible, Dec 4, 2007
    #45
  6. Squiggle

    Allistar Guest

    Yes, and they will be looking to maximise profits just like everyone else.
    Nonsense. Profits are maximised when the price for a product greatly
    outweighs it's cost including overheads. There is no such thing as "maximum
    profit" as there may be a buyer willing to pay 1 dollar more.
    No - they should post whatever price they want to post. It's their choice.
    And a buyer should choose whether to shop there or not.

    That's the thing about freedom: people do whatever they like without having
    someone tell them what they "should" do.
    No. Are vendors supposed to ensure customers get the best price for a
    product? Again, no.
     
    Allistar, Dec 4, 2007
    #46
  7. Squiggle

    Alan Guest

    That is exactly right, and yet you still don't seem to understand what
    it actually means.

    Profits are maximised when marginal revenue = marginal cost.

    Therefore, the vendor sells everything they can at each price point
    from the top down until such time as they are selling at marginal cost
    (MC = MR).

    Every sale except that last one (on which they make nothing) is at a
    higher price than the Marginal Cost.

    If they sold EVERY item at Marginal Cost (= Marginal Revenue) then
    they would lose money since the Gross Profit would be zero, and their
    overheads would all translate into losses.

    When you walk into a store and don't ask for a discount, you are one
    of the sales 'up' the curve.

    When I go into the store and ask for some discount, I am lower down
    the curve.

    The guy who goes in and haggles all the way down to the slimmest (or
    zero) margin is at the bottom of the curve for that vendor where MC =
    MR.


    --

    Alan.

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    Alan, Dec 4, 2007
    #47
  8. Squiggle

    Alan Guest

    I've posted up above correcting your misconception about profit
    maximisation, MC = MR. Repeated here:

    That is exactly right, and yet you still don't seem to understand what
    it actually means.

    Profits are maximised when marginal revenue = marginal cost.

    Therefore, the vendor sells everything they can at each price point
    from the top down until such time as they are selling at marginal cost
    (MC = MR).

    Every sale except that last one (on which they make nothing) is at a
    higher price than the Marginal Cost.

    If they sold EVERY item at Marginal Cost (= Marginal Revenue) then
    they would lose money since the Gross Profit would be zero, and their
    overheads would all translate into losses.

    When you walk into a store and don't ask for a discount, you are one
    of the sales 'up' the curve.

    When I go into the store and ask for some discount, I am lower down
    the curve.

    The guy who goes in and haggles all the way down to the slimmest (or
    zero) margin is at the bottom of the curve for that vendor where MC =
    MR.




    How about you set up in business selling everything at your marginal
    cost.

    We will all come along and buy from you (since you will, of course, be
    the lowest price available), and we will all be very happy, while you
    seem to believe you will be doing 'better' business than anyone else.

    We'll pick up the remainder of your stock from the receivers when they
    get called in.

    --

    Alan.

    The views expressed are my own, and not those of my employer or anyone
    else associated with me.

    My current valid email address is:



    This is valid as is. It is not munged, or altered at all.

    It will be valid for AT LEAST one month from the date of this post.

    If you are trying to contact me after that time,
    it MAY still be valid, but may also have been
    deactivated due to spam. If so, and you want
    to contact me by email, try searching for a
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    can use to find posts by me in a search engine:

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    Alan, Dec 4, 2007
    #48
  9. Squiggle

    impossible Guest

    Completely wrong.

    [Lose the ridiculous signature]
     
    impossible, Dec 4, 2007
    #49
  10. Squiggle

    impossible Guest

    Completely wrong for the second time.
    If you can somehow manage to forestall competition (through selective
    licensing arrnagements or price-fixing schemes) then your fantasy of
    fleecing the public will be fulfilled. But in a free market, competition
    drives prices down to the lowest marginal cost. Who would ever pay more?

    How about you set up business selling everything above marginal cost.

    We all shop elsewhere from competing vendors (since you will not, of course,
    be the lowest price available), and we will be very happy, while you seem
    to believe you will be doing "better" business than anyone else.

    We'll pick up the remainder of your stock from the receivers (at below
    marginal cost) when they get called in.
     
    impossible, Dec 4, 2007
    #50
  11. Squiggle

    Allistar Guest

    I didn't snip anything from your post. You implied that advertising a price
    higher that they will sell it for results in an uneven playing field. I
    don't see how it does.
    If the advertised price is lower than that which they are willing to sell it
    for then it is fraud, if it is higher then it isn't.
    What does "fair" mean? "Fair" is a price both the seller and buyer agree on.
    If I am happy to pay $120 for something, and you get it for $100, does that
    mean that I have been treated unfairly? Of course not.
    Price fixing is where competitors agree on a fixed price. I am not talking
    about that - I'm talking about a single retailer posting a price which is
    higher than they are willing to sell the item for.
    How is that relevant to a vendor listing a good or service for more than
    they are willing to sell it for?
    Again - I don't see the relevance.
    If you have an issue with what I have said then it would help this
    discussion if you actually said it.
     
    Allistar, Dec 4, 2007
    #51
  12. Squiggle

    Allistar Guest

    No, I'm talking about an individual retailer.
    My customers are happy because if they were not they would go somewhere
    else. That's all that matters. The fact that I charge $x per hour instead
    of a smaller $y per hour is irrelevant - they pay $x and that's what
    matter, Sure I could survive if I only charge $y. But I'm not in business
    to merely survive, I'm in business to maximise my profits against my
    efforts.
     
    Allistar, Dec 4, 2007
    #52
  13. Squiggle

    impossible Guest

    An individual retailer is not a market.
    I'm sure your customers are delighted to hear that. They would of course be
    thrilled to contribute.
     
    impossible, Dec 4, 2007
    #53
  14. Squiggle

    impossible Guest

    [restoring my paragraph intact, and in context....]
    A fair price is a competitive market price. Competitive markets create an
    incentive for producers and vendors to operate efficiently, thereby lowering
    the cost of their goods and services. Without that incentive, buyers waste a
    disproportionate share of their income subsidising opportunistic whimsy.
    The "isssue" I have is your penchant for reciting those textbook economic
    sophistries that even the most hard-core neoclassical economists think are
    ridiculous. Makes me laugh, sorry. Of course, if you'd actually like to
    offer up some evidence for that ridiculous claim, then we could get on with
    a discussion.
     
    impossible, Dec 4, 2007
    #54
  15. Squiggle

    Allistar Guest

    I never said it was.
    They are and they do. You see, they are quite welcome to get their services
    from someone else and they know it. But they choose to get them from me
    because they consider I provide them enough value to be worth it.
     
    Allistar, Dec 4, 2007
    #55
  16. Squiggle

    Allistar Guest

    A fair price is a price a buyer is willing to pay and a selling is willing
    to sell for. It's fair because there is no coercion in the trade - it's
    done by two consenting individuals.
    Which claim in particular? The claim that in an open contract between two
    individuals, the seller will try and maximise the sale price while still
    retaining the sale and the buyer will try and minimise the sale price, and
    that the price agreed upon is by definition "fair" because it came about in
    an open and free environment?

    The point you made that I have issues with is that the seller should always
    advertise the lowest possible price they'll accept for an item. I suggest
    that it's in their interests to advertise a price higher than that, and
    allow an open bartering situation to dictate the actual price. That what
    part of what a "free market" is about.

    A business that only sells things for the minimum price will soon go out of
    business as they find they cannot meet their costs and overheads. A
    business needs capital to expand, and capital is acquired by charging a
    markup on their products and services. I.e. by *not* charging the minimum
    possible price for something.
     
    Allistar, Dec 4, 2007
    #56
  17. Squiggle

    Alan Guest

    Bang on!

    I am still hoping that the 'Impossible Dream Emporium' gets set up,
    and we can all buy stuff from them at their Marginal Cost - at least
    until they go out of business due to making zero gross profit :-(

    --

    Alan.

    The views expressed are my own, and not those of my employer or anyone
    else associated with me.

    My current valid email address is:



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    Alan, Dec 4, 2007
    #57
  18. Squiggle

    ~misfit~ Guest

    Somewhere on teh interweb Alan typed:
    If it's named "Impossible Dream Emporium New Zealand" and gets into
    financial troubles maybe the government will bail it out?
     
    ~misfit~, Dec 4, 2007
    #58
  19. Squiggle

    Alan Guest

    ;-||)

    --

    Alan.

    The views expressed are my own, and not those of my employer or anyone
    else associated with me.

    My current valid email address is:



    This is valid as is. It is not munged, or altered at all.

    It will be valid for AT LEAST one month from the date of this post.

    If you are trying to contact me after that time,
    it MAY still be valid, but may also have been
    deactivated due to spam. If so, and you want
    to contact me by email, try searching for a
    more recent post by me to find my current
    email address.

    The following is a (probably!) totally unique
    and meaningless string of characters that you
    can use to find posts by me in a search engine:

    ewygchvboocno43vb674b6nq46tvb
     
    Alan, Dec 4, 2007
    #59
  20. Squiggle

    impossible Guest

    The claim that: "The very fact that a buyer buys something means they are
    happy with the
    price, otherwise they would not have bought the item." Wishful thinking
    unsupported by any study at anytime.
    That, too: Nothing is "by definition" fair. An environment can only be "open
    and free" if there is no monopolistic/oligopolistic domination and if the
    relevant information is freely available to everyone. Otherwise, you may
    have acquiescence to prices but not agreement. Petrol prices, come
    immediately to mind. But any other situation in which there is not a free
    and competitive market is also characterized more by corercion than liberty.
    The only circumstance in which that is a viable option for sellers is where
    (a) competition is limited, or (b) prices are more or less fixed by
    collusion. Neither characterizes a free market.
    A business that only sells things at a price where marginal cost=marginal
    revenue will make a healthy profit. The fact that you completely
    misunderstand this fundamental economic concept leads you hopelessly astray.
    You seem to like more the **idea** of a market environment than any of its
    real consequences -- chief among those being that the incentive for
    producers is to continually drive costs (and prices) down. Your preference
    seems to be to sit back and collect subnsidies from customers who have no
    choice but to take-it-or-leave it because the "market" you operate in is
    uncompetitive.
     
    impossible, Dec 5, 2007
    #60
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