Ed Leafe wrote: > On Sep 28, 2007, at 12:38 PM, Charlie Coleman wrote: > > >> Here in a local town, the son of a... oh... a-hem..... the politicians >> decided to hike the local city corporate tax. I believe the bump was >> something like 0.25%. Pretty much the day that tax went into >> effect, every >> fast food restaurant bumped the prices of their products - in some >> cases >> like 2% or more. I noticed the prices in stores rose as well - not >> sure of >> percentage there, but I'm sure it more than compensated for the >> additional >> tax amount. >> > > That's pretty funny. You mean that these corporations who only exist > to maximize profits could have raised prices and didn't? Obviously > the 2% rise didn't cut into sales, so perhaps they should raise the > prices by 3 or 4% - maybe even higher? > > Companies charge the maximum that they can possibly charge in order > to maximize profits. Just because the cost of doing business > increases doesn't mean that consumers will happily pay more; if they > wouldn't buy it for more than the current price before, they aren't > going to magically accept the higher price now. > > -- Ed Leafe > -- http://leafe.com > -- http://dabodev.com >
I believe Ed is on the right track. Looking at the sales module from an economic point of view, the producer of goods and services has to be very conscience that there is a relationship between how much it cost to product the goods and services, and how much can be charged for the goods and services to maximize profits. We live in a competitive world, so in theory, the company that produces a goods or services at the lowest cost, can sell the product at a lower sales price to maximize profits, and gain a competitive edge over other who sell similar goods or services. However, if a company is able to achieve a monopoly, all the capitalistic economic principles of competition and a relationship between cost to produce and sales prices charged, etc no longer apply, and the monopoly can extract exorbitant prices for its product to its heart's content. So far as making a budget is concern, the sales price should be set based on the direct labor and materials need to produce the product, (e.g. direct costs), to arrive at a per unit profit per sales. Then enough units must be sold to recover indirect cost to produce the goods or services like the cost of offices, supply, utilities, indirect payroll, etc. The indirect cost do not vary and are pretty well fixed over broad ranges of activity. Direct cost increase and vary in relation to each additional unit produced. At some point the number of units sold would cover indirect cost, (e.g. the break even point), and any additional sales would increase profits to be divided between the corporation and go old Uncle Sam. Regards, LelandJ > > > [excessive quoting removed by server] _______________________________________________ Post Messages to: [email protected] Subscription Maintenance: http://leafe.com/mailman/listinfo/profox OT-free version of this list: http://leafe.com/mailman/listinfo/profoxtech Searchable Archive: http://leafe.com/archives/search/profox This message: http://leafe.com/archives/byMID/profox/[EMAIL PROTECTED] ** All postings, unless explicitly stated otherwise, are the opinions of the author, and do not constitute legal or medical advice. This statement is added to the messages for those lawyers who are too stupid to see the obvious.
