Coffeehouse Thread

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US Dolar sinks, what do you think?

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  • User profile image
    ScanIAm

    phreaks wrote:
    
    ScanIAm wrote:
    
    Dr Herbie wrote:
    
    ScanIAm wrote:
    
    Yes, but most people don't realize that this is how it works.  They think that a 5 dollar stepstool at Walmart is a value.  It's actually 5 dollars worth of labor from someone.



    Getting off topic a little, but:

    No, no, no.  First rule of sales : the price of something is unrelated to the cost of it's production, it is set at the value customers are willing to pay.

    Herbie


    The product costs x amount based on what the manufacturer pays to make it plus the markup.  If the retailer sells it for more, then the difference is the labor of the sales dept, marketing, etc.

    It's all labor, but labor is defined by each step along the way until you purchase it.


    Not exactly, but anyway
    .. And Services.... ?


    Services are labor.

    Think about it this way:  Gasoline is free.  It exists in the ground, and if you had a magical fairy who would pull it up out of the ground and refine it for you, you'd have free gas.

    But, the reality is that someone has to drill for it, refine it, and ship it to you.   Those costs are labor and they add up to the amount that you pay for gas.

    Services are the same.  You are paying for someone to provide that service through their labor.  Or, they are providing that service by leveraging the labor of someone else.  Their ability to leverage that labor is their own labor and that is what you are paying for.

    Name me one purchased product, service, or whatever, and I guarantee that you can find the sub-pieces that are based on labor.

  • User profile image
    Dr Herbie

    ScanIAm wrote:
    
    Dr Herbie wrote:
    
    ScanIAm wrote:
    
    Yes, but most people don't realize that this is how it works.  They think that a 5 dollar stepstool at Walmart is a value.  It's actually 5 dollars worth of labor from someone.



    Getting off topic a little, but:

    No, no, no.  First rule of sales : the price of something is unrelated to the cost of it's production, it is set at the value customers are willing to pay.

    Herbie


    The product costs x amount based on what the manufacturer pays to make it plus the markup.  If the retailer sells it for more, then the difference is the labor of the sales dept, marketing, etc.

    It's all labor, but labor is defined by each step along the way until you purchase it.


    Most salesmen I've talked to about this say:

    'Product will sell for X amount (based on research and experience and guesswork), and is estimated to cost Y to produce. 

    If X-Y < threshold then we won't bother with that product.
    If X-Y >= threshold then we will proceed.'

    It's all in the phrase 'what the market will bear' which I've heard bandied about by sales types.
    Basically: it doesn't matter how good the product is, if the public aren't willing to pay more than it cost to manufacture, it will not get made. Cost is only a factor in profit, not in setting the price.

    Herbie


  • User profile image
    ScanIAm

    Dr Herbie wrote:
    

    Most salesmen I've talked to about this say:

    'Product will sell for X amount (based on research and experience and guesswork), and is estimated to cost Y to produce. 

    If X-Y < threshold then we won't bother with that product.
    If X-Y >= threshold then we will proceed.'

    It's all in the phrase 'what the market will bear' which I've heard bandied about by sales types.
    Basically: it doesn't matter how good the product is, if the public aren't willing to pay more than it cost to manufacture, it will not get made. Cost is only a factor in profit, not in setting the price.

    Herbie




    The stuff in bold is equivalent to: 

    If it is worth my time to sell, then I'll sell it.

    Again, the salesman is setting his labor cost.  I'm not using the word labor in the "digging ditches" sense of the word, although at the root of any physical product, there is probably going to be some of that. 

    Maybe a better word to desribe it is 'time'.  As in "time is money".

    I view it as labor, though.  I'm willing to work a certain number of hours for a certain amount of money.  I'm willing to do very similar things for free or, in the case of, say, video games, pay. 

    The part where I get paid is done in the service of another.  The part where I pay puts me in their position.

    Bah...it's all just semantics.

  • User profile image
    Massif

    ScanIAm wrote:

    Bah...it's all just semantics.



    Well, not quite, because if something is rare, then demand often outstrips supply. Which can lead to very little labour being required to sell something at a high price.

    Whereas something which requires the same labour, but which is common, tends to sell at a much lower price.

    You're kind of assuming that things can be produced given sufficient labour, but if they're rare, then no amount of labour will produce more of them.
     
    (I sense you're about to argue that labour is required to find a rare resource. But this doesn't make sense if you consider two artists, one who is fashionable and demands high prices for his art (fashion is generally arbitrary in art, and doesn't reflect talent or craft gone into the production), and one who isn't and can't. Or if you consider a natural resource that is only present in one place, as no amount of extra searching labour will find any more of it.)

  • User profile image
    ScanIAm

    Good point. 

    I'm not making the claim that all labor is done for equal pay, either.  The rarity of a gem, for example means that it is much harder to obtain.  If, in the extreme case, diamonds were as common as sand, then they wouldn't be expensive. 

    A fashionable artist decides that the time he spent painting will be added on top of the cost of the raw materials and he's decided his time is worth a lot.

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