The Mudcat Café TM
Thread #82745   Message #1517261
Posted By: Uncle_DaveO
07-Jul-05 - 03:32 PM
Thread Name: BS: fair & UNfair prices- nominations
Subject: RE: BS: fair & UNfair prices- nominations
Bill D, in the opening salvo to this thread said,

NOT looking for just high prices or just for things which seem to be bargains, but rather for items whose everyday price appears to you to reflect manufacturing cost plus a reasonable markup.

"Manufacturing cost plus a reasonable markup" can't be the test, Bill.

There's at least these levels,
1. actual manufacturing cost and other overhead
2. manufacturer's direct sales cost
3. manufacturer's profit
4. shipping cost manufacturer to distributor
4. distributor's warehousing costs and other overhead
5. distributor's direct sales costs
6. distributor's profit
7. shipping cost distributor to dealer
8. dealer's direct sales costs and other overhead
9. THEN markup for the dealer

And I'm aware that I've left out a number of steps, or items that may be separate or subsumed in one of the above. One that I can't fit into a logical place in this sort of listing is the cost of working capital, which applies to all three of the levels above. Then there's adverting costs.   All of these must be covered in the ultimate price.

Which of course still leaves us with your basic question about what products seem out of line with the whole panoply of costs.

But "manufacturing cost plus a reasonable markup" is a way too simplified way of looking at the problem.

Dave Oesterreich