Could someone please explain...

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JerrySambrook

JerrySambrook

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I think it is rather ironic people can complain about the price of something when they cannot make it themself. Or complain of the cost when they do not understand what might go into making of that something.
Or the fact that the cost of running a business is now greatly controlled by things like taxes, workers comp, osha, epa, etc.

It really is uncomprehensible to me.

Can someone please explain?
 
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Nope.......This is just a drag over form another thread because you got mad at what someone said and i think its kind of dumb...............Just let it go:bulgy-eyes:
 
That's just it! They don't know what goes into making it! They are looking for a deal. It takes a lot of craftsmanship to make a pen, albeit it is a small item. But fortunately, there are people who like one of a kind things, especially handmade things.
 
What is this forum for, if not to ask questions? Maybe I'm missing something here??
 
When I owned my dive shop, folks always wanted me to sell stuff at cost, or just over...

Where did they think I was getting the rent from?
 
Justin,
Yes, it is very similar, but maybe, just maybe, you have to look back on what was said both there and here. And as for stirring the pot, yes I do at times because I too have my convictions. And just like YOU are doing now as well???:wink:

But this removed all of the personal reference that was in the previous thread, to try and understand something.
 
Price is what the market is willing to pay for a product or service. Price should have nothing to do with cost. (Marketing 101)

Cost is an accounting concept and reflects the total cost of delivering the product or service - materials, labor, inventory, shipping, insurance, etc.

There are many people who believe that there should be a fixed relationship between cost and price. That believe is based primarily on ignorance.
 
This is actually an interesting question, it will stir up emotions, but ultimately there is no answer.

The buyer will always want the best deal. The seller will always want the higher price. That being said there are silly extremes on both sides. It is just the nature of the beast called doing business.

I forgot to add that both sides will complain when they don't get what they want.
 
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Simple - it doesn't represent the same value to them that it does to you. They value it ~somewhat~, or they wouldn't even take the time to complain. But, they don't value it enough to pay ~your~ price. They wish it meant more to them, or that it didn't mean as much to you, because then they could buy it at a price that fit the value they assign.

I wouldn't pay 50 cents for an abstract painting for my wall. I just don't get it. Doesn't mean it isn't worth a million to somebody else.
 
In my experience, there are people who understand the cost of doing business, and there are the others, those that I choose to call "ragpickers", and they are offended when I suggest they might be able to find what they are looking for at a "yard sale" or Wally World!
 
InvisibleMan said:
Simple - it doesn't represent the same value to them that it does to you. They value it ~somewhat~, or they wouldn't even take the time to complain. But, they don't value it enough to pay ~your~ price. They wish it meant more to them, or that it didn't mean as much to you, because then they could buy it at a price that fit the value they assign.

I wouldn't pay 50 cents for an abstract painting for my wall. I just don't get it. Doesn't mean it isn't worth a million to somebody else.
Click to expand...
THat may be the best answer possible to the original question. Well said.
 
monophoto said:
Price is what the market is willing to pay for a product or service. Price should have nothing to do with cost. (Marketing 101)

Cost is an accounting concept and reflects the total cost of delivering the product or service - materials, labor, inventory, shipping, insurance, etc.

There are many people who believe that there should be a fixed relationship between cost and price. That believe is based primarily on ignorance.
Click to expand...

I have never understood this as a business practice. It puts the cost of
merchandise at the will of the most ignorant customer. This kind of avarice
is what causes things like housing or dot com bubbles. What do we do? Keep raising our price each time a new group of suckers come along?

And I certainly have no faith in the 'experts' who teach this. These are the
same kind of thinkers who have driven manufacturing out of the US and
into other countries who DO NOT do business this way.

I'll never get rich. I understand this and I'm OK with it. But I will always
figure out my cost of goods, figure in what profit I think is appropriate,
and then that is my price. I don't care what someone else charges, their
costs may be different than mine. Or perhaps they majored in "101"
themselves. But I can sleep at night (and not with one eye open) and
I still have a conscience.
 
The craftsman is worth his pay. The same goes for the artist. I have and will continue to, buy what I feel is worth the price asked for an object. If that object attracted my attention, there was something there that I liked and or appreciated. If the owner likes it more than I do, then I complement the object and go on my way. the cost of doing business contains many hidden things of which many people have no idea. If there is a person which wishes to degrade my work hoping to get a better price, that person is SOOL. Do not try to dicker with me over price, because the price goes up by at least the amount that was taken off in the counter offer. That always brings forth a startled response, whereupon we can agree on the original price or they may leave. The actual cost of material is irrelevant to the final price of a piece of art, the perceived value is what sets the final price whether it be a chunk of wood or a Old Master's painting. My $0.02.
Charles
 
my 2cents its not that people don't understand what it takes to make something or cost associated with it but why they have to pay when they don't have to work and get everything else for free, its the work to support oneself that's a mystery to them
 
Jerry:

It's an age old question. And a lot of good answers above.

Many years ago I had a friend who owned a Glass and Mirror shop who took a booth at the local spring home show. He asked me to fill in for him one day. In the booth he had an 8 ft. mirror wall made up of beveled strips. A man came by and liked what he saw and asked some questions, one being the price. When I told him the suggested price he asked if I was crazy (with several expletives thrown in for good measure).

Later on another man came up and was interested in the wall and again the question came to price. Hesitantly I told him the price. His answer was "That's it!!!. My wife is looking at wallpaper more expensive than that and I like this." You never know.

Real
 
Not Quitew

monophoto said:
Price is what the market is willing to pay for a product or service. Price should have nothing to do with cost. (Marketing 101)

Cost is an accounting concept and reflects the total cost of delivering the product or service - materials, labor, inventory, shipping, insurance, etc.

There are many people who believe that there should be a fixed relationship between cost and price. That believe is based primarily on ignorance.
Click to expand...

Price is what a willing and able buyer is willing to pay and a willing and able seller is willing to accept for a good or service. The market is where the transaction takes place - the market does not buy or sell anything.
 
price

People will "complain" about the price because they feel like it. Just like people complain about taxes. We don't need a reason. And, just like our complaints having little effect, if any at all, on taxes our complaints about prices also have little effect, if any at all, on them. Generally speaking we do not live in a barter world, the seller sets a price and the buyer either pays it, takes his business elsewhere or waits for it to go on sale.

People selling pens are in a slightly different position because in many, if not all, of their venues they are in a "barter" world. In that world, most prices have a "bargaining" margin built in, just as most people list a house for sale at a higher price than they are willing to accept. It is a supply and demand situation and has Zero to do with cost. Cost only determines whether or not a seller will produce the item - if the price won't cover the cost the seller won't produce it. So let it be with pen makers, if you can't sell them at a price that cover's your cost of production, you are in the wrong business.

I am brought to mind of a camping lot that I bought in the Poconos several years back. The asking price $6500 - my offer $2000, and it was accepted (actually I was a couple of hundred dollars higher than I should have paid). The seller hoped, of course, that someone would just "not question" his price.
 
As I understand it from my marketing course. It has to do with "Implied Value." What is to you, for the infamous widget, the cost to manufacture includes Labor, Insurance, utilities, Patent pending filing cost. All in all, those cost are what makes your widget $60 Per unit. You have to sell them, to provide for more material components to make more widgets, pay investors, etc, so forth and so on for a price of at least $175 (That will get you Ramin noodle dinner.) $200 is the Suggested Retail.
NOW having state all that. This buggered economy with the pockets of area's that your widget fly's off the shelf and other area's that they are on close out at a dollar store gathering dust.
NOT to mention, some operations will counterfeit your widget and rake it all in.
It is all about money, some have it to spend others don't. and If joe schmoe can get it for less, they will. If they can creatively get you to bring down the price, they may return to do it again like a feral cat if you leave out food. or you may never see them again.
 
Economics 101

If you are a manufacturer of pens and you are smart, you want to sell your pens for the greatest total return. That might or might not be the highest price you can command for a single pen. Assume you can produce 500 pens to your quality standards a year at a cost of $100 per pen.

Assume the following average price line:
Say at $1000 you can sell 50 pens. Total return $50,000 [profit $45,000] and your facility is under utilized.
At $500 you can sell 200 pens. Total return $100,000 [profit $80,000} and your facility is still under utilized.
At $300 you can sell 500 pens. Total return $150,000 [profit $100,000] and your facility is fully utilized.

What average price will you want to sell your pens at? In most cases the answer would be $300 but for pens since you are your only employee the answer might be $500.00 and you would have more time to do other things. Rarely will it be the highest price and never at a price where you can't meet the production volume needed.

Buyers are rational, they will pay the lowest price they can get a suitable product for....and probably complain that it is too high.
 
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JerrySambrook said:
I think it is rather ironic people can complain about the price of something when they cannot make it themself. Or complain of the cost when they do not understand what might go into making of that something.
Or the fact that the cost of running a business is now greatly controlled by things like taxes, workers comp, osha, epa, etc.

It really is uncomprehensible to me.

Can someone please explain?
Click to expand...

I have no idea why people complain about and bemoan certain things...Complaining about price, however, - the price of anything - is just human nature...

We complain when the coffee store raises the price of coffee or Timbits by a dime...we complain when taxes go up, or gas skyrockets...we complain when contractors charge mileage when they live a block away...

Sure, some complaints about cost might stem from ignorance of the other built-in costs that are hidden...but all to often, we complain because deep-down, we think we can make it cheaper, or better, or that we can find it cheaper elsewhere with a bit more effort.

We complain because money is precious, and you have to work hard to get more...complaining about overspending is just a fact of life.
 
I also think that those of us trying to run our own businesses tend to think we need to try to appeal to everyone and anyone. That's just not possible. Some people just don't understand what it takes to run a business and therefore don't understand the costs of running a business. So what? There will always be those who think everything is overpriced no matter what it cost. Is it really worth it to worry about those kind of people taking their "business" elsewhere? How can you cater to those kinds of people and keep your business from going bankrupt? You can't, so don't try. We need to start being more creative in how we advertise our products and who we advertise our products to.

As a side note: It never ceases to amaze me how much money people spend on entertainment and then complain about the price of something that will be of use to them for years and years.
 
Yep

Willing to drop $100 across the bar on Saturday night with nothing to show for it but a headache Sunday morning....yet think something that takes more time and effort to make is only worth $1.00. But, that's life in the real world.
 
Jerry, when you find any thing that resembles a reasonable answer let me know, I had a guy bring me a project that was a Bit-h I knew the guy slightly so I offered to do it for 400.00. Keep in mind my shop time on a machine is 65.00 Per hour and this looked like an 8 or 9 hour job, The guy called me every thing except to dinner, told me I was trying to rip him off and that crap. I almost threw him out of the shop, but he left on his own (fortunately).
A couple of days later he came back with this sheepish look on his face and wanted to know if would still do it for the 400 I'd quoted me before the cussing started.
Try and guess where I told him to stuff the job and the 400 dollars!!!
 
Maybe

ctubbs said:
The craftsman is worth his pay. The same goes for the artist. I have and will continue to, buy what I feel is worth the price asked for an object. If that object attracted my attention, there was something there that I liked and or appreciated. If the owner likes it more than I do, then I complement the object and go on my way. the cost of doing business contains many hidden things of which many people have no idea. If there is a person which wishes to degrade my work hoping to get a better price, that person is SOOL. Do not try to dicker with me over price, because the price goes up by at least the amount that was taken off in the counter offer. That always brings forth a startled response, whereupon we can agree on the original price or they may leave. The actual cost of material is irrelevant to the final price of a piece of art, the perceived value is what sets the final price whether it be a chunk of wood or a Old Master's painting. My $0.02.
Charles
Click to expand...

That is true Charles only to the degree that what the craftsman or artist is producing a product that is worth that much to a buyer or buyers. If there is no market for what a craftsman or artist produces it is worth nothing regardless of how well it's done or how long it takes. There are two sides to the equation the seller and the buyer and it is when those two sides are in agreement as to value that a sale is made.

If I tried to price the value of my time into the things that I sell here, I'd never sell a thing. Is my time worth nothing because it is not "artist or craftsmans" work. Well let me assure you that buyers (artists and craftsmen) think it is worth exactly that. None even cares if I make a profit at all - most only buy from me when I have a sale and make even less than a normal mark-up. That's not a complaint, if I wasn't happy doing it I wouldn't, it is just a fact of life. And, those facts apply to folks turning pens when they sell the pens as well as when they buy the components.
 
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I like NewLondon's comment.
But my opinion, and only an opinion as there can be no absolute, greed occurs when the price is fixed at what the market will bear or fixes the market to accept that price for a required commodity.
 
JerrySambrook said:
I think it is rather ironic people can complain about the price of something when they cannot make it themself. Or complain of the cost when they do not understand what might go into making of that something.
Or the fact that the cost of running a business is now greatly controlled by things like taxes, workers comp, osha, epa, etc.

It really is uncomprehensible to me.

Can someone please explain?
Click to expand...
Every time that I fill up the Jeep, I complain about the price of fuel. The mere facts that I 1) cannot make my own gasoline, 2) do not fully understand how to make gasoline, and 3) do not know the ins and outs of running an international petrochemical companydoes not change the simple fact that I believe that gasoline is really expensive.

I hope this helped you comprehend how some people can be dissatisfied with prices that they perceive to be high.

NewLondon88 said:
monophoto said:
Price is what the market is willing to pay for a product or service. Price should have nothing to do with cost. (Marketing 101)

Cost is an accounting concept and reflects the total cost of delivering the product or service - materials, labor, inventory, shipping, insurance, etc.

There are many people who believe that there should be a fixed relationship between cost and price. That believe is based primarily on ignorance.
Click to expand...

I have never understood this as a business practice. It puts the cost of
merchandise at the will of the most ignorant customer. This kind of avarice
is what causes things like housing or dot com bubbles. What do we do? Keep raising our price each time a new group of suckers come along?

And I certainly have no faith in the 'experts' who teach this. These are the
same kind of thinkers who have driven manufacturing out of the US and
into other countries who DO NOT do business this way.

I'll never get rich. I understand this and I'm OK with it. But I will always
figure out my cost of goods, figure in what profit I think is appropriate,
and then that is my price. I don't care what someone else charges, their
costs may be different than mine. Or perhaps they majored in "101"
themselves. But I can sleep at night (and not with one eye open) and
I still have a conscience.
Click to expand...
I have been one of those 'experts' that taught that bit to my students.

This pricing theory does not put pricing at the will of the most ignorant consumer. It puts pricing at a point where profits are maximized. If the price is lowered, then more people buy, but at a reduced overall profit. If prices are raised, a higher profit is made per unit, but the reduced number of buyers yields a lower overall profit.

Another benefit of pricing with this method rather than pure costing is that cost efficiencies are a reward to the seller, not the buyer.
 
Hmmmm

bitshird said:
Jerry, when you find any thing that resembles a reasonable answer let me know, I had a guy bring me a project that was a Bit-h I knew the guy slightly so I offered to do it for 400.00. Keep in mind my shop time on a machine is 65.00 Per hour and this looked like an 8 or 9 hour job, The guy called me every thing except to dinner, told me I was trying to rip him off and that crap. I almost threw him out of the shop, but he left on his own (fortunately).
A couple of days later he came back with this sheepish look on his face and wanted to know if would still do it for the 400 I'd quoted me before the cussing started.
Try and guess where I told him to stuff the job and the 400 dollars!!!
Click to expand...

And, yet when you bought your last new (or used) car ... did you pay the asking price?

If you are like most car buyers you offered less then the seller was asking, it might have been accepted or rejected or the seller might have countered with another price.

You might have pointed out to the seller all the things he already knew needed to be fixed and mentioned how much it was going to cost. But in the end you settled on a price. At times I have bought cars where that was a LOT less than the asking price at other times it was very close to the asking price.

You probably neither knew nor cared what he paid for the car, how much it cost to build and whether or not he made a fair profit.

The real question is why do people feel that when they sell the rules should be different than when they buy?
 
i hear yah!! for every complaint there will be a customer who will be appreciative of the time and effort that goes in to the product cherish that moment when your hard work is admired for its beauty! and put cottom balls in your ears for the complainers!! lol
ken
kenspens
 
Smitty37 said:
bitshird said:
Jerry, when you find any thing that resembles a reasonable answer let me know, I had a guy bring me a project that was a Bit-h I knew the guy slightly so I offered to do it for 400.00. Keep in mind my shop time on a machine is 65.00 Per hour and this looked like an 8 or 9 hour job, The guy called me every thing except to dinner, told me I was trying to rip him off and that crap. I almost threw him out of the shop, but he left on his own (fortunately).
A couple of days later he came back with this sheepish look on his face and wanted to know if would still do it for the 400 I'd quoted me before the cussing started.
Try and guess where I told him to stuff the job and the 400 dollars!!!
Click to expand...

And, yet when you bought your last new (or used) car ... did you pay the asking price?
Click to expand...

Actually LeRoy I did, the guy shot me a price of 4500.00 and I paid it. I don't have time to haggle when I see what I need, and the price is reasonable.
 
Unusual

bitshird said:
Smitty37 said:
bitshird said:
Jerry, when you find any thing that resembles a reasonable answer let me know, I had a guy bring me a project that was a Bit-h I knew the guy slightly so I offered to do it for 400.00. Keep in mind my shop time on a machine is 65.00 Per hour and this looked like an 8 or 9 hour job, The guy called me every thing except to dinner, told me I was trying to rip him off and that crap. I almost threw him out of the shop, but he left on his own (fortunately).
A couple of days later he came back with this sheepish look on his face and wanted to know if would still do it for the 400 I'd quoted me before the cussing started.
Try and guess where I told him to stuff the job and the 400 dollars!!!
Click to expand...

And, yet when you bought your last new (or used) car ... did you pay the asking price?
Click to expand...

Actually LeRoy I did, the guy shot me a price of 4500.00 and I paid it. I don't have time to haggle when I see what I need, and the price is reasonable.
Click to expand...

Well that would be unusual....I have sold cars for the asking price but never without the buyer at least trying to get it lower. I have never paid the full asking price personally but there were times when I would have if the seller didn't move.
 
sbell111 said:
This pricing theory does not put pricing at the will of the most ignorant consumer. It puts pricing at a point where profits are maximized. If the price is lowered, then more people buy, but at a reduced overall profit. If prices are raised, a higher profit is made per unit, but the reduced number of buyers yields a lower overall profit.

Another benefit of pricing with this method rather than pure costing is that cost efficiencies are a reward to the seller, not the buyer.
Click to expand...

I guess the litmus test would be for the manufacturer to ask himself:
"Would I pay this much for this product?" If not, then they have placed
themselves in an adversarial position with the consumer.
And when I say 'the most ignorant consumer' I mean uninformed. There
are people who will pay unrealistic prices for products. Those people are
part of the market, and if they will pay an unrealistic price, then this is
what the market will bear. Ergo, the pricing (what the market will bear)
is at the will (actions) of the most ignorant (uninformed) consumer.

Cost efficiencies SHOULD be a reward to the seller (manfacturer) but
first we need to define 'efficiencies'. Are we talking about finding better
ways of containing costs? Great. Streamlining the manufacturing process?
Wonderful. But if we're talking about lowering the quality of the product
and keeping the price the same (or more likely, raising it anyway) then
this is where the consumer is likely to talk with their wallet. It is one of
the reasons companies are losing what used to be known as 'brand
loyalty' .. and archaic term, now. And the business climate has changed
so drastically in the last several decades that many companies do not
consider the customer .. only the consumer. There is a much greater
remove than there used to be.. so much so that when a company really
DOES take care of their customers, it stands out as being unusual.

And often these kinds of 'efficiency' decisions are made my people who
know it's a bad move, but they'll make their quarterly numbers, get their
bonus and move onto the next company before anyone catches on .. but
that's a whole different discussion..
 
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NewLondon88 said:
sbell111 said:
This pricing theory does not put pricing at the will of the most ignorant consumer. It puts pricing at a point where profits are maximized. If the price is lowered, then more people buy, but at a reduced overall profit. If prices are raised, a higher profit is made per unit, but the reduced number of buyers yields a lower overall profit.

Another benefit of pricing with this method rather than pure costing is that cost efficiencies are a reward to the seller, not the buyer.
Click to expand...

I guess the litmus test would be for the manufacturer to ask himself:
"Would I pay this much for this product?" If not, then they have placed
themselves in an adversarial position with the consumer.
And when I say 'the most ignorant consumer' I mean uninformed. There
are people who will pay unrealistic prices for products. Those people are
part of the market, and if they will pay an unrealistic price, then this is
what the market will bear. Ergo, the pricing (what the market will bear)
is at the will (actions) of the most ignorant (uninformed) consumer.

Cost efficiencies SHOULD be a reward to the seller (manfacturer) but
first we need to define 'efficiencies'. Are we talking about finding better
ways of containing costs? Great. Streamlining the manufacturing process?
Wonderful. But if we're talking about lowering the quality of the product
and keeping the price the same (or more likely, raising it anyway) then
this is where the consumer is likely to talk with their wallet. It is one of
the reasons companies are losing what used to be known as 'brand
loyalty' .. and archaic term, now. And the business climate has changed
so drastically in the last several decades that many companies do not
consider the customer .. only the consumer. There is a much greater
remove than there used to be.. so much so that when a company really
DOES take care of their customers, it stands out as being unusual.

And often these kinds of 'efficiency' decisions are made my people who
know it's a bad move, but they'll make their quarterly numbers, get their
bonus and move onto the next company before anyone catches on .. but
that's a whole different discussion..
Click to expand...

That's not quite the way it works. A maker of widgets is in business to make the most profit - that is rarely at the highest price some widgets might sell for. It is also rarely at the price that would move the largest number of widgets. The fact that one person or even a few are willing to pay too much for an item will have very little bearing on its market price.
 
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