Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Path: utzoo!utgpu!utcsri!utegc!utai!ubc-vision!fornax!bby-bc!john 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