Normal Inflation (if there is such a thing)

[dusty]

Y'all are ignoring a couplea things.

Supply/demand.

Ya 'charge what the market can bear'.

The item's price history both before the earlier price and the current price.




Consider the recent double tilt price increase. I think the original price was a 'goof'!


Few things are simply a one parameter animal.

I don't. The original factory price of $289 is reasonably close to the price of items they replace. The current price of $389.10 is, IMHO, excessive for the time period (1 year). Yes, the demand level may contribute to that. If there is a great demand for an item, the price tends to be a little higher. Does this mean that the demand for double tilt upgrades are out-of-site.

The factory price for a Mark 7 one year ago was $3899. Today, that price has increased to $3979. Maybe all of the cost increase for a Mark 7 is in the double tilt parts.

Yes - some people do charge "whatever the market will bear". I want to believe that is not the case here.

[anmius]

Y'all are ignoring a couplea things.

Supply/demand.

Ya 'charge what the market can bear'.

The item's price history both before the earlier price and the current price.




Consider the recent double tilt price increase. I think the original price was a 'goof'!


Few things are simply a one parameter animal.

I totally agree. Price has absolutely nothing to do with cost. Price is what someone will pay for a product or service under the circumstances...and many times can be negotiated (in other countries it is usually negotiated). Cost bears, in many circumstances, no relationship to price. Very few companies today are using "cost based pricing." If they are sharp, companies are doing "market based pricing."

[heathicus]

Dusty, here's another calculator from the US Government's Bureau Of Labor Statistics:

http://www.bls.gov/data/inflation_calculator.htm

According to that, a $74 item in 1996 should cost $108.58 in 2012. Not too far off from your $110.

That ONLY calculates inflation. It doesn't take other factors into consideration such as supply & demand, more efficient production/distribution, etc.

But while I tend to distrust government data as they work the information to make things look better than they really are (just look into how they manipulate the unemployment rate), that does pretty much match your given example.

Does that mean it's OK, the inflation is "normal" and nothing to be concerned about? No...

[Ed in Tampa]

Yep, I'd agree that wages are stagnant. I work for the state government and we used to get a roughly 3% raise every year.

That was universal in most businesses but it made absolutely no sense other than price the US out of the world market.
If everything was done correctly, wages would never increase nor would prices. A man could make more if he increased production, likewise he would make less if he decreased production. Prices would only increase not because of production costs but because of demand cost and likewise prices would fall as demand fell.

Instead we have this artificial method of setting prices and wages based mostly on greed, "I'm going to get or make as much as I can and who cares about the rest of you."

[dusty]

I totally agree. Price has absolutely nothing to do with cost. Price is what someone will pay for a product or service under the circumstances...and many times can be negotiated (in other countries it is usually negotiated). Cost bears, in many circumstances, no relationship to price. Very few companies today are using "cost based pricing." If they are sharp, companies are doing "market based pricing."

And thus we have today's record high prices.

Maybe things have changed and I am totally unaware but in my past life (which I try not to dwell on), I was a member of the contract pricing team. Absolutely every number that we put in a cost proposal was based on the real cost of materials to be used in production. The final number was never based on what we thought the "market would bear".

Now the profit margin was another discussion all together but "profit" was negotiable with the consumer while the "cost to manufacture" was a real (what we called hard) number.


Maybe I am living so far in the past that "those days are gone forever".

[heathicus]

That was universal in most businesses but it made absolutely no sense other than price the US out of the world market.

Totally agree. I don't think the "automatic 3% raise" every year was sustainable or realistic. Reality finally caught up with that. (Of course, the Governor's staff and other "higher ups" still get their raises.) When is reality going to catch up with our Federal Government where increasing a department's budget by 2% rather than the 4% they want is considered a "draconian" spending cut?

If everything was done correctly, wages would never increase nor would prices. A man could make more if he increased production, likewise he would make less if he decreased production. Prices would only increase not because of production costs but because of demand cost and likewise prices would fall as demand fell.

Production costs could very well impact prices. If production becomes more expensive, then production will decrease which lessens the supply which increases the price. If production gets cheaper, then it increases which increases the supply which lowers the price. All assuming demand is constant.

[fredsheldon]

Way back when I was much younger I was a service advisor for a car dealership. I was paid commission only. I got paid 5% off the bottom of the ticket. I worked very hard to identify any work needed on each car I wrote a work order on while it was in the shop. I was able to make twice what I would finally make later as a programmer when I got out of college. That's because my pay was based on my production and I did produce. If I was on salary, I would have not have had the incentive to call the customer to sell additional work that they didn't orginally ask for. Since then I have always been on a salary with very little incentive to produce more lines of programming code. If I got paid by the lines of code generated I would have really fired up my fingers and turned out programs must sooner. A win/win for the company but never to be.

[Ed in Tampa]

Way back when I was much younger I was a service advisor for a car dealership. I was paid commission only. I got paid 5% off the bottom of the ticket. I worked very hard to identify any work needed on each car I wrote a work order on while it was in the shop. I was able to make twice what I would finally make later as a programmer when I got out of college. That's because my pay was based on my production and I did produce. If I was on salary, I would have not have had the incentive to call the customer to sell additional work that they didn't orginally ask for. Since then I have always been on a salary with very little incentive to produce more lines of programming code. If I got paid by the lines of code generated I would have really fired up my fingers and turned out programs must sooner. A win/win for the company but never to be.

What you are describing is the invention of the legalize the legal language. Lawyers were paid by the number of words the used. Hence instead of saying NO! They learn to say, "after much examination of the evidence and considering all the testimony, and a thorough study of the law books, they have found that such decisions made by the courts in the face of all of this was usually in the negative toward the party of the first part but rarely if ever in regards to the party of the second part, hence they are required by conscience, duty and the law to renders also a negative and therefore the must say the answer is No they think!:D

[Ed in Tampa]

Totally agree. I don't think the "automatic 3% raise" every year was sustainable or realistic. Reality finally caught up with that. (Of course, the Governor's staff and other "higher ups" still get their raises.) When is reality going to catch up with our Federal Government where increasing a department's budget by 2% rather than the 4% they want is considered a "draconian" spending cut?



Production costs could very well impact prices. If production becomes more expensive, then production will decrease which lessens the supply which increases the price. If production gets cheaper, then it increases which increases the supply which lowers the price. All assuming demand is constant.

That is true but what drives up production costs? Usually Labor.
Look at the Ford assembly line as production costs came down so did product costs until labor realized Ford was getting rich and they were just making a living. They then demanded more money and the price of cars have skyrocketed ever since.