4 ms·
I have heard the opposite: that the higher price of name brand goods means more profit for everyone. It would be good to know what the truth is.
by TorKlingberg 6y ago
I have heard the opposite: that the higher price of name brand goods means more profit for everyone. It would be good to know what the truth is.
- bkav 6y agoWhere I work, store brand gives us a huge margin, even at a low sale price. There’s not a single middleman trying to extract a profit.
- gumby 6y agoSo why is the store brand not in the prime spot rather than the bottom shelf. Is the major brand paying for placement?
- anomaloustho 6y agoYes, it’s called a slotting fee. https://en.m.wikipedia.org/wiki/Slotting_fee https://en.m.wikipedia.org/wiki/Slotting_fee
- gumby 6y agoClasic economics would say therefore the lower profit margin + slotting fee should equal the higher margin of the house brands. I wonder if that's roughly true? I could imagine both yes and no. Classic economics, sort of by definition, can't take real world edge effects into account.
- sct202 6y agoI think it's 2 conflicting things going on. An owned brand/private label has higher % gross profit, but a name brand will often have a higher $ gross profit per unit. There's a balance for total profit between the whole set of products, because some people are brand loyal and others will switch depending on the price difference and options.