| no spam 2007-05-30, 1:25 pm |
| >-> Don't know much about business do ya? If you have a consumable product
>that
> -> you can sell as much as you make all the time you can make a LOT more
> money
> -> by selling more of the product with less profit per item than you can
> by
> -> selling fewer at more profit per item.
>
> Then why do clever businessmen not reduce their profits to a billionth
> of a cent per item (whatever the item is)? By your reasoning, this
> would give them huge revenues.
Ever wonder why Wal Mart can sell a 50 pound bag of Purina dog food for $15
while your local market sells it for $20? Many reasons but one is the fact
that Wally World probably sells millions of bags per year therefore can make
enough overall profit by making say $2/bag. But your local market might
sell 100 bags so to make it a profitable item they have to have $5-$7/bag
profit before it makes sense to put it on the shelf.
Ever wonder why business have sales where they cut prices on items? Again
several reasons but one is the fact that an item sitting on a shelf cost
money. Think real estate, you set the price and wait. While you are
waiting you are losing money because you still have to pay for the property
(taxes, insurance, mortgage, etc). So you can either keep your price and
hope that someone will buy at that price or you can drop your price.
A business has to look at the cost of keeping a product on the shelf vs the
profit it will make when it sells.
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