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Old 10-27-2019, 06:46 PM
Hoppy Hoppy is offline
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Join Date: Jul 2010
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Default Re: What's up with head prices going through the roof?

Originally Posted by longjohn View Post
I have worked in the wholesale musical instrument & electronics industry here for over 40 years so I am more than aware of the price structures in OZ. I Have to say, many wholesalers & the ensuing retail margins down here are scandalous by any standards.

How many of those folks are living in mansions and driving Ferraris? I can bet that it isn't very many considering the system as a whole (meaning, lots of folks are getting paid working wages to the relatively few who are getting that high "executive" pay).

Back in the day I had a re-sellers license and saw that many musical manufacturers had a simple "50/30/10" pricing scheme. That is, the price a retailer paid for an item was 50% off MSRP, if the invoice was paid off in 30-days and additional 10% discount was applied to the pricing (plus some incremental volume discounts).

So, if I have an item with an MSRP of $100, and I paid $40 for it, then I put it on the sales floor for $100, it results in having a mark-up of 150% from what it cost me the retailer... But me being Generous Joe the retailer I decide to give you a break and provide a 20% discount off the MSRP, allowing you to purchase the item for $80... this still means I have made a 100% profit on the item. Is that egregious?

It's easy to think you're getting ripped-off because that item on the floor just provided me with a 100% profit and I've got to be running to the Ferrari dealership with the profit. It's especially easy to think this when you merely look at one single item and don't consider the reality of gross and net profits. What does it cost me to run Generous Joe's musical instrument store for a given month? What's advertising, employees, insurance, lights/heating/AC, theft, etc. costing me? How much capital have I deployed into merchandise that may stay on the floor for months/years versus days/ weeks?

I am not afraid to expend some energy in search of the lowest possible price for an item... I guess some would even call me a skinflint.. I like saving a buck like anybody else (maybe even more so), but at some point it has diminishing returns for my time spent in search of that discount. I guess the real point I'm driving at is that I don't begrudge somebody from trying to make a living... it ends up being pretty reciprocal when you shake it all out.
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