victor809 wrote:Potato Potahto....
Margins disappear... that's kind of what they do in most businesses. Then you raise the prices when you can't handle the thin margins any longer, and the consumer pays a little bit more for the final product (after Mercedes or Louis Vuitton has already slapped a 300% markup on it....) I understand completely what you're talking about, my point is that even after all the various manufacturers have had to raise their prices to deal with the increased cost of doing business, your average american is likely not overly inconvenienced. A more salient way of looking at it is simply this, what percentage of your annual income are you spending on durable goods? TVs, computers, phones.... do you really buy that many a year that it's having an impact on your life if they become more expensive to manufacture? Compare that to how much you spend on latte's a year (or scotch, or some other high-markup consumable)...
I know when I look at my monthly expenses, at various times in my life the highest categories (after rent) are Starbucks, alcohol and restaurant expenses ... these are very high mark-up goods, and a slight increase in the COGS is not likely to impact the price by a high percentage, because direct COGS is not a large percentage of the price to begin with.
What a complete load of unmitigated Bull. Stick to big Pharma Victor. You're out of your depth here.
The reason why there is a THRIVING used car market out there has much to do with the price of a car. And the price of a car skyrockets when artificial costs are pumped into the price.
Costs like government regulations, to be specific. You know that the government has mandated that at one point, every new car will have a rear-view back-up monitor installed? Do you have even the slightest idea what adding that does to:
1) R&D Costs,
2) Warranty costs,
3) Vehicle development costs (because those things have to work nice-nice with the rest of the car),
4) After-market / service / maintenance costs (technicians have to diagnose and fix them),
4) Sourcing a supplier that will provide components that will meet federal requirements, and do so with low defects, and high volume,
5) Hours and hours of testing the component in various ways by multiple people.
You rack up MILLIONS of dollars of accumulated costs because of a slight change in one single government regulation. And it is artificial, and directly impacts margins. So costs of vehicles go up, up, and up.
Why do you think people lease these days as opposed to buy? It is, for the most part, because the price of vehicles has outstripped the consumer's ability to pay-to-own. So forced into this situation, car manufacturers lease the car on one side, then sell it used on the other to make up the difference.
So yes, the average American IS overly inconvenienced. Likewise, they are spending more for less. I could buy a car, run that thing for ten years. After five years, it's paid off, driving my cost over the remaining time (I usually keep my vehicles longer than 10 years) down with each year. Whereas if you lease each year, the cost for the lease goes up for the same basic vehicle because the cost of the vehicle artificially rises.
Likewise, my parents owned a retail store. I can tell you from direct experience, when prices rise, and wages do not rise proportionally, people spend less. Period. The made do with less. Any price increases - especially in retail markets - has a HUGE impact in sales. Hence the reason why some food manufacturers will reduce portion sizes in order to maintain the same price. Because the consumer first looks t the price of an item, not the volume /quantity for the price. Very few do that type of cost calculation on most purchases.
So, in short, you're completely full of it.
