Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP
Path: utzoo!utgpu!water!watmath!looking!brad
From: brad@looking.UUCP
Newsgroups: can.politics
Subject: Re: prices in Canada
Message-ID: <832@looking.UUCP>
Date: Mon, 6-Jul-87 22:39:03 EDT
Article-I.D.: looking.832
Posted: Mon Jul  6 22:39:03 1987
Date-Received: Wed, 8-Jul-87 05:47:07 EDT
References: <133@bby-bc.UUCP> <828@looking.UUCP> <137@bby-bc.UUCP>
Reply-To: brad@looking.UUCP (Brad Templeton)
Distribution: can
Organization: Looking Glass Software Ltd. Waterloo, Ontario
Lines: 88

In article <137@bby-bc.UUCP> john@bby-bc.UUCP writes:
>> > salesperson : no, we add our markup to the US list price after exchange
>> >	       and fst are added in.
>> > me : good day
>> 
>> You have made the mistake of assuming that profit margin or "markup" is
>> added.  It is multiplied.  If a dealer wants a profit margin of 25%, then
>> the price is multiplied by 4/3 (so that cost = .75 * selling price).
>
>You have made a mistake in assuming a particular meaning of the word
>"add", read it again treating it as a synonym for "apply".
>

If this is how you meant the word, then why does it make a difference 
to you whether they "add" their markup before duty and tax or after duty
and tax.  If you meant multiply, it wouldn't make a difference to you
where they "add" their markup.

>> At the higher prices our government kindly forces us to pay, the dealer
>
>How does it force us to pay higher prices?  Aside from 12% fst which
>I object to but don't blame the retailer for - I would pay 12% more
>than the US list (in Can. $) without griping to the retailer.
>

I thought I detailed this fairly well.  To put it in brief terms:  We
pay much higher prices.  If the government regulations were not there we
would pay the same prices they pay in the USA, except for currency exchange.
Conclusion:  The government is responsible for the higher prices.

This doesn't mean that business doesn't charge what the market will bear
-- of course it does!  But that price is higher strictly because of
our government.

Some factors are direct like duty and tax.  Others like currency difference
are the result of a complex pattern of economic factors supposedly
under the control of the Government.  The low price of the Canadian dollar
means a nice bonus for the exporter, but you, the importing consumer must
pay a penalty.

>I just can't believe that a 12% tax means sales srop so low the dealer
>has to charge 30%-50% more than US list and exchange and fst.

As noted above, there are other factors, like currency exchange.
Right now a dealer's cost on a product with 5% duty is 1.58 times the
US price plus brokerage and border hassles.  Thus you feel that a product
with a $100 US list price should have a price of about $160 CDN.  If
the US Dealer has a profit margin (markup-store expenses) of 15% he gets
$15 in the USA while the Canadian dealer gets $24.  But the price point
is set so that while you might sell 1,000 at $100 you will only sell
500 of them at around $160.

Thus the US dealer makes $15,000 (USD) while the Canadian dealer makes
$12,000 (CDN).  The Canadian dealer might sell 400 of them at $180 and
then makes almost $40 per sale (product costs are the same but store costs
increase with price) for a profit of $16,000 (CDN).  Not too bad, but still
below the $20,200 CDN that $15,000 USD is equal to.   Perhaps he can
sell 350 of them at $200 apiece with $55 per sale.  $19,250.  Almost as
much as the US Dealer!


>I doubt a
>single computer store in Seattle has a markedly different volume than
>a single computer store in Vancouver.

Becuase the prices are higher in Vancouver, the volume is much lower.
The Canadian Computer market is far less than 1/10th of the American market,
where you would think it would be by population.

>You mean Ford has to spend more on advertising it's multi-thousand$ cars than
>pepsi does advertising it's $0.60 drink?

Yes, it does, especially PER sale.  I never got a 16 page 4-colour glossy
brochure on a Pepsi.  Any Ford dealer will give you several if you ask.

> [Laserjet could be imported for] $2600. Now
>what is a fair increase to make a profit? Say 40%?  This would mean a profit
>of $1040 on a $2600 item, not bad.  So the retail price would be $3640.  So
>why am I quoted a price of $4700 as the Canadian list?

So if any Joe Schnutz can get a LaserJet for $2600 by importing and HP
dealers sell them for $4700, why are HP dealers making any sales?  Could
they be offering their customers something worth the difference?  Are
the customers stupid?  Or is there a barrier put there by a government
that mandates border hassles and useless duplication of distribution
channels, support facilities and warranty handling?
-- 
Brad Templeton, Looking Glass Software Ltd. - Waterloo, Ontario 519/884-7473