Talk:Pricing: Difference between revisions
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::Yes, exactly. Look up [[The Big Carrot]] organic supermarket in [[Toronto, Canada]]. Or equivalent chains in the USA. Carrot spent about four man years finding out if something in their store had [[GMO]]s in it. If it did, they took it out of the store. They can probably charge an extra 2-3% for their products every year now, since they are the only store in Toronto that can say for sure "no GMO". Nice [[profit margin]] given that most supermarkets exist only on 1-3% margins to begin with. | ::Yes, exactly. Look up [[The Big Carrot]] organic supermarket in [[Toronto, Canada]]. Or equivalent chains in the USA. Carrot spent about four man years finding out if something in their store had [[GMO]]s in it. If it did, they took it out of the store. They can probably charge an extra 2-3% for their products every year now, since they are the only store in Toronto that can say for sure "no GMO". Nice [[profit margin]] given that most supermarkets exist only on 1-3% margins to begin with. | ||
:::Umm. Now where do you get that profit margin figure of 1-3%? Technically profit margin is gross profit divided by net sales which means that either the gross profit is really low or the net sales figure is really high in retailing. Sure the cycle in a food store is high, like a loaf of bread is sold in approx. say three days which makes the capital vested in stocking the bread cycle >120 times/year. I'm no economist but looking at profit margins seems less useful then looking at return on vested capital. I suppose that is what [[SRI]] and other investors are looking for. | :::Umm. Now where do you get that profit margin figure of 1-3%? Technically profit margin is gross profit divided by net sales which means that either the gross profit is really low or the net sales figure is really high in retailing. | ||
::::In food retailing in urban supermarkets, yes, the gross profit is really low and the net sales figure is really high. | |||
:::Sure the cycle in a food store is high, like a loaf of bread is sold in approx. say three days which makes the capital vested in stocking the bread cycle >120 times/year. I'm no economist but looking at profit margins seems less useful then looking at return on vested capital. I suppose that is what [[SRI]] and other investors are looking for. | |||
::::There are a bunch of measures. But you are right that the stocking and sale of that bread, which probably moves in more like one or two days in most supermarkets, and faster than that in the largest ones, turning over 200-300 times per year, is the return for that shelf space and baking equipment. So even a 1% profit being made 200 or 300 times in that year adds up to a lot, 200-300% the price of the whole loaf. If that is US$1, then, US$200-300 has been earned off 1/20000th of a bread oven and baker's annual salary, and off about 10cm of shelf space... Hmmm... | |||
:Offering some morally inferior products may have it's advantages as the consumer can get better kicks from [[SRC]] when s/he can see what inferior product s/he did not choose? | :Offering some morally inferior products may have it's advantages as the consumer can get better kicks from [[SRC]] when s/he can see what inferior product s/he did not choose? | ||
::True. Maybe a really bad product can be offered on the shelf with just a picture, saying "we will order this for you, but we'll have to tell your mother." | ::True. Maybe a really bad product can be offered on the shelf with just a picture, saying "we will order this for you, but we'll have to tell your mother." | ||