Everything* I needed to know about economics I learned making leatherfoot haversacks

[Angelsyn]

Calm down.

It's a game. You're moving fictional items for fictional money. It is important to keep it in perspective.

Now, that said, if you see an item you want advertised in the newspaper at two different stores, one for $40 and the other for $39, which are you more inclined to buy? Do you go see a movie at the theater that charges $10 per ticket, or the one that asks $8.50?

Price does indeed sell items of all kinds. Finding the place where your business makes a profit acceptable to you, and out-sells your competition is the name of the game.

The point being made by the orignal poster is that he found such a price, and it is making him quite happy. Yelling at him, or yelling at someone else for "over-charging" or "under-cutting" is silly, pointless, and likely to get this thread closed.

If the store that is selling for $40 is one that I usually go to, then I'll buy for $40. I could get movies at Best Buy for less than I get them at Suncoast... but I like the service, selection, atmosphere, specials, etc. at Suncoast so much better that I buy from them 95% of the time.

If the seats in the $8.50 theater are uncomfortable, the sound quality is poor, the place smells bad, whatever... I'm gonna go to the $10 theater.

If I see someone in the Bazaar that I've bought from before, or who regularly buys from me, selling an item that I want for just a bit higher than the average... I'll buy from that guy anyway. If I see someone that overcharges on lots of the stuff I normally get undercutting others by only a small amount on one particular thing... I most likely won't buy it from him, unless I'm buying huge amounts and basically clearing out the Bazaar.

I get lots of repeat business in the Bazaar because I charge reasonable prices, rarely undercut (unless the market clearly needs correcting... like Night Terror Plate pieces not selling for 8 weeks!) and deal well with my fellow Traders. Also, I've been around a long time and been dealing well with people for a long time.

It's all about reputation.

[Railina]

I was trying to point out that the original poster potentially shot himself in the foot by not comparing to other comparable items, and although he's still turning a profit he finds acceptable, may have incured a significant opportunity cost for the oversight. It was meant as friendly advice from one trader to another, not a flame.

Now, that said, if you see an item you want advertised in the newspaper at two different stores, one for $40 and the other for $39, which are you more inclined to buy?

At risk of the analogy being overwrought, i consider this more akin to the "Only $39.95", the 1/10 of a cent per gallon shaved off of gas prices, and electronics stores and car dealerships offering prices of $**99.99. In my opinon, it's intellectual dishonesty and socially (if not morally) reprehensible behavior.

[Phantron]

McDonalds sell double cheeseburger for $1 on their dollar menu.

Burger King sells double cheeseburger for 99 cents as their value menu (sometimes).

I doubt anyone has ever chosen a McDonalds double cheeseburger over Burger King because McDonalds have the integrity to price it 1 cent higher than Burger King.

[Railina]

McDonalds sell double cheeseburger for $1 on their dollar menu.

Burger King sells double cheeseburger for 99 cents as their value menu (sometimes).

I doubt anyone has ever chosen a Burger King double cheeseburger over McDonald's because Burger King charges 1 cent less than McDonald's.

These are similar, but not identical products. The comparrison is flawed.

[KyrosKrane]

More to the point, people tend to have a brand preference regardless of price. Some people say they just like McD's better, others just prefer BK. Even if one were double the price of the other for a comparable product, people would still go there because they "like" it better.

[Saleani]

To derail the current derailment, in the movie Demolition Man, they mocked the "burger wars" and claimed the only survivor was "Taco Bell" which was why all restaurants were called Taco Bell. In reality, the $1 menu wars really pounded the profit margins of many chains. Long John Silver, for example, just closed their last (company) store here in Denver a couple months ago (all the franchise locations closed several years ago). The 99cent/1dollar menu items had a large impact on what people went out to eat. Many franchise chains went out of business due to that war.

McD's store operators protested last year(?, or 2 years ago?) to reduce the franchise fees on the dollar menu items. Last time I worked at a McDonald's, 17 cents of every dollar that crossed the counter went to McD's corp as a franchise fee. Since you purchase your ingredients from another McD's franchise holder, McD's knows exactly how many items you've sold: they counted the buns, patties and cups that went into your back door.

Chains that went with the dollar menu are currently hooked to it. The chains that didn't go for dollar menus are mostly gone. Any chain that defects (in the sense of the word that economists use it) from the dollar menu will probably lose 1/10 to 1/4 of their customers. So they can't give it up, even if the cost of making that burger/taco/fries exceeds the cost they can sell them for. In one sense, it also describes the situation that companies who supply walmart are in. Tell your biggest customer you need a raise (or even to keep the same price), and you lose them. Period. No saving throw. For most companies, that is a death sentence. Almost every company that loses walmart as a customer is in bankruptcy within 3 years.