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