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Unread 09-06-2013, 03:26 PM   #19
Haveuseen1?
On the road to being a farker
 
Join Date: 08-10-12
Location: North Alabama
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Prices......How does a business come up with the prices they will charge? Well simply it needs to cover the cost of the item, and all associated secondary costs. Secondary would be labor, freight, utilities, limited shelf life, insurance, carrying cost, etc... Last factory in what the potential customer will agree to pay. Pretty much that all is the long definition of "Supply and Demand".

Someone had mentioned their Wal-Mart does not carry brisket. You can guarantee that if that Wal-Mart had a "real" demand for them, they would carry them.

Brisket 1.99/lb in TX vs 6.99/lb elsewhere. Maybe the demand in TX is greater. Maybe both locations have good demand, but the TX location has more locations to buy for and can split a much larger buy between multiple storefronts.

It is not rocket science to figure a cash and carry in TX will buy way more brisket than Joes Butcher Shop in LA or even Atlanta.

Retail is not set up in a way that the retailer is just ripping off the customers, although you see that thrown around all the time from people who really are just not in tune with the full picture. Just because a person and their 3 freinds want brisket,this does not create a "demand".

Chain stores have buying groups. They can work together to make substantial purchases and then split the delivery among multiple locations, thereby limiting the risk of any one location. Your mom and pop stores unless they are in a buying co-op just dont have this option.

There are also regional influences on pricing. Price fresh fruits and veggies in Canada, and Alaska. Price Lumber in Hawaii. I live a few miles from a fruit farm. We buy Asian Pears for 2.00 a basket. The basket usually has 10-12 pears. If we go an hour south and price them at a grocery store, they can be 1.00/ea or more.

Math you can see and realize....
item cost 5.00
Add some freight to get it to you.
Add some labor to receive it.
Add some labor to put it out on display
Add some insurance to cover any potential loss
Add carrying cost ( usually around 3% a month )
Add the labor to sell the item
Add the labor for any value added service you may do to the item ( repackage, cut, trim,etc..)
Add any cost of materials involved if you do repackage item
Add the packaging to allow customer to take item home
Add the labor to buy new item plus any needed supplies associated with the item.
Repeat process

So the fool they buys it for 5 and sells if for 7 or even 10 is not making much if any money. The one that buys for 5 and sells for 12.50 is starting to make some money.
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