On 23/11/2011, at 10:18 AM, Nick Andrews wrote:
> That's why we felt like we were getting screwed here in these USA. A
> product which cost less than $3 to manufacture, a few $ to license
> content and then retail markup. At $20 or more for a CD, that's a
> 200% profit for the store if it's a big chain. Smaller stores got
> lesser discounts, so maybe were only marking up 100%. I was listed as
> a retailer for a few years with my resale tax license in NM and bought
> cds from smaller labels at wholesale for myself and friends in the
> early 90s. Why would I go to Musicland and pay $22 when I could get it
> for $9 at my smaller discount?
Here's the gist: If you pay it, it will continue to cost that much. No-one on
the planet will sit in their office and say "Hey, peeps are paying $20 for a
CD. What will we do? I know! Let's cut the price by $5, which is a 25% discount
for the consumer, and a 50% cut back for everyone else in the food chain. Price
drops when demand drops. End of story.
Also, when consumers look at mark up in a retail setting, they rarely take into
consideration on-costs. How much is the rent for that store? How much do the
staff need to be paid? What about insurance? Gear for the kiddies to listen to
the latest Eminem CD?
All of these costs need to be paid, even if you don't sell a single CD. So most
stores (who wish to stay in business) will project costs on a daily, weekly,
monthly and annual basis: We need to make $X in December because we'll make $0
in January, etc.
Then there's the shareholders, who want more than 3% return ('cause I can make
that in the bank, or whatever).
And you can't even say that web-based businesses cut out those on-costs. They
still have to pay "rent" for their website, they have staff to monitor orders,
pack orders etc.
Most consumers never think this through. I remember watching a "scandal" on TV
where restaurants were "outed" for making a horrific mark up on wine. They were
charging more than twice the retail for a bottle of wine. No-one said "Well,
you are also paying for us to buy the glass, wash the glass, pour the wine." No
thought went into that piece, and it was obviously a slow "news" week.
On top of all this people want to make money. Simple, bottom line, we live in a
capitalistic regime (well most of us, anyway). Will you go out, work 8-12 hours
a day for $5.50 an hour when you could work somewhere else for $8.50 an hour
doing the same job? No? Will you sell a CD for $15 when the same person will
buy it for $25? No?
There's your answer.
Dan.
