July 13, 2010

We got use to discounts. Many retailers run some form of sale all the time.  This probably works in attracting people, though I personally do not feel very good about it.  Especially I do not like single items discounts, such as Michaels running 50% off any single item.   What does it tell me ?  Well  either they have to sell me that item at loss (hoping I’ll buy more than one), in which case I kind of feel sorry for them, or their profit margins are so high, even 50% discounts allows them to do the good business, in which case I feel “tricked” by their general unfair prices.

I knew one guy who was shipping chairs from China to be sold in Europe.  The math was something like 5$ to produce,  2$ to  ship and there was the list price of  $75 per chair in the shops.  In such cases even 50% discount would allow for pretty good profit both for retailer and wholesaler.

Buying things I really would love to understand the breakdown – how much I’m paying for design, technology, materials and workmanship (which is all what adds up for product value) vs things as advertising, distribution chain etc which allows some people to make a living and do a business but does not provide me with any benefit.  Unfortunately such information is rarely available.

For electronics one way to do “guess” it is to do some shopping on Ebay –  you often can find things to be shipped to you from Hong Kong for such a small fraction of what you can find them in the shops.

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