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That's not really how pricing works. A retailer sets the price that maximizes their revenue, not based on their costs. If jason_shah stopped doing that it'd pro
by waffle_ss 14y ago
That's not really how pricing works. A retailer sets the price that maximizes their revenue, not based on their costs. If jason_shah stopped doing that it'd probably just mean a (very small) increase in their profit margin.
How do their operating costs not factor into their revenue? Are you saying that when gas prices go up, retailers just absorb the extra shipping costs and don't pass it on to consumers? I was always taught that's not the case. Genuinely curious as I only took ECON101.
- deleted 14y ago[deleted]
- icebraining 14y agoOften they don't, 'though gas prices are a special case since they affect every retailer, and their margins are often razor thin as they are. But consider Kindle vs paperback prices on Amazon for the same book. If costs were the most important thing in setting prices, the former would never be more expensive than the latter; but we see it often is, because demand sets the price, not cost.