john@bby-bc.UUCP (07/21/87)
After a long pause to do some work I have time to reply to Brad.
:>> > 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.
Well you were both being picky and missing the point so I thought I
would "add" least correct your mistaken assumption.
Why does it matter that they are multiplying? It doesn't - what
matters is that they are, in effect, marking up a price that all ready
includes a 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 sounds a lot like circular reasoning.
"Assume X causes Y. Y exists. If not(X) then not(Y).
Conclusion: X causes Y"
Not at all convincing.
:This doesn't mean that business doesn't charge what the market will bear
^^^^^^^^(1)^^^^^^^^^^^^^^^^^^^^^
:-- of course it does! But that price is higher strictly because of
^^^^^^^^^^(2)^^^^^^^^^^^^^^
:our government.
(1) This sounds curiously like greed.
Funny because that was my original statement which resulted in all
these objections and unfounded hypotheses.
(2) As much as you would like to believe this you have provided no
evidence to substantiate it. You should avoid stating opinions
as if they were facts.
: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.
Gee but what about the over-inflated wages we keep hearing Canadians make;
doesn't this offset the exchange rate?
:>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.
But I have already allowed for currecny exchange in my "argument".
[ simplistic explanation of price-volume calculations deleted for
brevity]
While your model might hold in some circumstances you have yet to
demonstrate that that it is valid for the situations uder discussion.
:>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.
:
I still want to know why you can assume that a retail store in a Canadian
city of population N will sell less of an item than a retail store in
a US city of size N. Please do not use the argument: "they will have to
charge more thus they will sell less - since they sell less they must then
charge more".
:>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.
Well you have deleted the portion of your paragraph I was responding to.
You claimed they have to spend more on advertising an item if it is
expensive - you did not claim that they have to spend more on a relative
cost per unit basis, e.g. $spent /(cost of item * # of items)
Pepsi does not give out glossy brochures. They just buy about (rough guess)
1 hr of advertising time per day on the US networks. Gee, at only $50000
per minute I guess they can't afford brochures.
An additional point: the two products I was discussing (LaserJet, MultiScan)
recieve little or now advertising effort in Canada; quite the opposite of
the US. Maybe we should be getting them cheaper here than in the US since
the Canadian side doesn't have these huge advertisng bills you calim drive
the price up.
2nd additional point: most consumer goods producing corporations allocate
<10% of their budget for advertising I have been told.
:> [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
Well I believe I answered this in my previous posting(s) but I guess
you didn't read them. Most people are very leary of sending off money
somewhere - they want to see what they are buying right in front of them.
Sears is now the only national company offering catalouge sales - the
other dept. stores found there just wasn't the demand - nothing to do
with the border since it's all in Canada. Most people also want someone
local they can go yell (or cry) at if something goes wrong.
Personally I think it is not worth worrying about the warranty unless
it is of substantial duration. Most computer stuff seems to have a
90 day warranty after that you are going to have to pay a local dealer
anyhow. They choose the warranty period based on how long they think
a product will function before it malfunctions. My personal experience
is that it is unusual for something to malfunction during the warranty
period.
:that mandates border hassles and useless duplication of distribution
:channels, support facilities and warranty handling?
Again, you obviously want to believe this but you haven't substantiated
your claims.
As a final note: if your arguments were true then the majority of things
imported into Canada would be more expensive than in the US (aside from
exchange, fst). This however is not the case. Only select items are
outrageously priced. Develop an argument that explains why some companies
need these high prices and others don't, when they all exist under the
same set of rules.
:--
:Brad Templeton, Looking Glass Software Ltd. - Waterloo, Ontario 519/884-7473
j-j-j-j-johnbrad@looking.UUCP (07/22/87)
In article <148@bby-bc.UUCP> john@bby-bc.UUCP (john) writes: >: >:If this is how you meant the word, (add == apply) 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. > >Well you were both being picky and missing the point so I thought I >would "add" least correct your mistaken assumption. > >Why does it matter that they are multiplying? It doesn't - what >matters is that they are, in effect, marking up a price that all ready >includes a markup. I'm ready to give up. I can't believe that you are unaware of the simple arithmetical fact that wholesale * duty * fst * markup == wholesale * markup * duty * fst IT DOESN'T MATTER ONE WHIT IF YOU FACTOR IN THE MARKUP BEFORE THE TAXES OR AFTER SINCE MULITPICATION COMMUTES!!! Profit margins are multipled in, they are not added. > >: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 sounds a lot like circular reasoning. > "Assume X causes Y. Y exists. If not(X) then not(Y). > Conclusion: X causes Y" >Not at all convincing. So I assume then that you are doubting the claim that "If the government regulations were not there, we would pay the same prices as they pay in the USA, except for currency exchange." You are suggesting then, that in the presence of complete free trade and no border impediments, a computer store in Niagara Falls, NY would charge $2600 for an HP LaserJet and a store in Niagara Falls, Ontario would charge $3500 in US funds? I finally understand! You think there is a national conspiracy of computer vendors, and they would maintain the high prices even under free trade. I am surprised you have been brave enough to reveal the details of the conspiracy to us in public, for surely they will deal with you now! We all know that there is no conspiracy, ha ha. I not even going to bother answering your other points. If you can come up with some other explanation as to why computers would still cost more after the removal of duties, taxes and border hassles, then I will answer your points. -- Brad Templeton, Looking Glass Software Ltd. - Waterloo, Ontario 519/884-7473