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From: john@bby-bc.UUCP
Newsgroups: can.politics
Subject: Re: prices in Canada
Message-ID: <137@bby-bc.UUCP>
Date: Sun, 5-Jul-87 15:12:33 EDT
Article-I.D.: bby-bc.137
Posted: Sun Jul  5 15:12:33 1987
Date-Received: Mon, 6-Jul-87 03:37:03 EDT
References: <133@bby-bc.UUCP> <828@looking.UUCP>
Distribution: can
Organization: Burnaby, British Columbia, Canada
Lines: 85

> > me : but you don't pay the list price you pay wholesale and add exchange +
> >      fst to that price and then add your markup.
> >
> > 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".

> 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.

> sells fewer products.  He needs to make proportionately more to make
> the same money for the same sales effort as an American dealer.

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.
The US list already includes a healthy dealer markup - then our dealers
markup the markup!!  The price in the US seems to be
list = wholesale "plus" markup
From what dealers here tell me the price we pay is really
Can. list = wholesale "plus" US markup "plus" exchange "plus" fst "plus"
	    transborder costs "plus" Can. markup

rather than
Can. list = wholesale "plus" exchange "plus" fst "plus" transborder costs
	    "plus" Can. markup

> What's worse is that the US price was chosen to maximize the
> (sales*unit profit) figure.  The US manufacturer sets this price, so it
> is set to maximize this amount down there.  If you have priced your
> product correctly, then doubling the price produces sales of LESS than
> 50%, and halving the price produces sales of LESS than 200%.  (this
> simple example is falsely based on a zero price of goods)

They choose their wholesale price based on their total volume.  They
choose their list price based on dealer volume.  This is a *very*
healthy increase based on very low volume at individual outlets (see
how much a large volume discounter can cut off the price).  I doubt a
single computer store in Seattle has a markedly different volume than
a single computer store in Vancouver.

> Also, more expensive goods require more expensive advertising, packaging
> and service.

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

> What this means is that the Canadian dealer gets screwed, and the price
> point to maximize profits will not be equal to:
> 
> (( whoesale cost * duty factor * FST factor ) + customs hassle) * U.S. margin
> 
> (which is what a customer thinks it should be equal to)
> The price is higher, so we all pay, thanks to our government.  If our dealers
> didn't have all these rules, duties and taxes to worry about, they would
> follow the same economics that any US dealer follows.

Just as an example - in the worst case a retailer here could pay Us retail
price for a LaserJetII from a discounter. To get it landed here in Vancouver
all expenses paid (fst,exchange,brokerage, shipping) would cost $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?


As a final argument, let me reiterate: not all companies do this there
are a wide variety of goods (some of them computer stuff) that are sold
at what you would expect (not hyper-inflated) so why can't computer
companies do it too?

> Before you flame, *think* about why things are the way they are.

I did. That's why I am pissed off.

> Brad Templeton, Looking Glass Software Ltd. - Waterloo, Ontario 519/884-7473