Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Path: utzoo!utgpu!utcsri!utegc!utai!ubc-vision!watmath!looking!brad From: brad@looking.UUCP Newsgroups: can.politics Subject: Re: prices in Canada Message-ID: <828@looking.UUCP> Date: Sat, 4-Jul-87 21:46:35 EDT Article-I.D.: looking.828 Posted: Sat Jul 4 21:46:35 1987 Date-Received: Sun, 5-Jul-87 07:47:00 EDT References: <133@bby-bc.UUCP> Reply-To: @looking.UUCP (Brad Templeton) Distribution: can Organization: Looking Glass Software Ltd. Waterloo, Ontario Lines: 44 In article <133@bby-bc.UUCP> version B 2.10.2 9/18/84; site looking.UUCP looking!watmath!ubc-vision!fornax!bby-bc!john john@bby-bc.UUCP (john) writes: > > 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). So of course the markup is calculated based on the dealers true cost of the goods. A margin is a margin. At the higher prices our government kindly forces us to pay, the dealer sells fewer products. He needs to make proportionately more to make the same money for the same sales effort as an American dealer. 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) Also, more expensive goods require more expensive advertising, packaging and service. 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. Before you flame, *think* about why things are the way they are. -- Brad Templeton, Looking Glass Software Ltd. - Waterloo, Ontario 519/884-7473