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How reliable is the cost figure in the warehouse and shop
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Riloth Heldwall RJ: Shadowy Mollusc Post Rating: 0 + / - Total Posts: 16 Karma: 51 Joined: Apr 9, 2012 |
Posted on Apr 10, 2012 Does the cost listed in the warehouse and store pages accurately keep track of exactly how much was actually spent in making a product, including costs like buying resources from b2b or imports instead of making it in-house?
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eric scott RJ: Erik Scott CO: Sappo Post Rating: 0 + / - Total Posts: 130 Karma: 29 Joined: Apr 5, 2012 |
Posted on Apr 10, 2012 Someone else can chime in I'm sure... but from my time here it seems to be pretty accurateIf you calculate manually the cost should show up to be the same I have noticed when spending a few more dollars per unit on a component product, it does indeed increase the resulting products 'cost' Which is the biggest problem I had when starting out, paying wayyyy too much for component units and having a completed product that was 20% more expensive to produce than most people were selling it for on B2B |
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Scott (Admin) RJ: Ratan Joyce CO: Ratan Joyce Post Rating: 0 + / - Total Posts: 1175 Karma: 5083 Joined: Jan 13, 2012 |
Posted on Apr 10, 2012 (Last edited on Apr 10, 2012) It should be 99% trustworthy (the other 1% due to rounding).The number is lower than your real cost now due to salary and maintenance, but will be trustworthy again once I factor those into costs by converting time into $. |
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eric scott RJ: Erik Scott CO: Sappo Post Rating: 0 + / - Total Posts: 130 Karma: 29 Joined: Apr 5, 2012 |
Posted on Apr 10, 2012 I do wonder though, while thinking this over.For instance lets say I am producing a product that requires water, elect, and 2 other components. I of course purchase my water and elect on B2B. The other components I also purchase on B2B, as being a small company I don't have the finances to produce my own yet. So my costs are slightly higher than one of the huge conglomerates... since they will probably produce all the components required in the production process, resulting in a much cheaper product than I will produce. BUT... why is it then that it seems like everyone is trying to get a massive 300-400-500% profit out of everything? I might spit out a product for say $30/unit, and sell it for $100-120/unit. But when looking at the B2B and 'average price' in my store, it is usually up around the $240 mark (reading from current numbers pulled) So while I am content with making 3 times over the cost of the product to produce... Why are others putting huge markups and 'trying' to make almost 6 times the cost?? (keeping in mind it will probably cost them alot less than my $30 to produce said product) Is it simple greed, not understanding profit margins, or something else? |
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Josh Millard RJ: Tex Corman CO: J. Quaff Arabica Post Rating: 0 + / - Total Posts: 167 Karma: 231 Joined: Apr 3, 2012 |
Posted on Apr 10, 2012 Whatever the market will bear. If folks are mispricing their goods, they won't sell or the margin will suck. If the stuff is selling, it's selling.An example of where it's rational behavior all around: I'll buy some items at five or six times the base cost in those cases where it profits me more to buy at an inflated price and turn the merch around in my store than it does to decline to buy. Someone producing a good that's in an underserved market likely knows that, and they list at a significant markup because experience has shown them that there are B2B customers like me who will pay them a lump for something if I can get my own lump out of it after. As long as you're beating the import market on price point, you've got potential customers. If there IS no import market for a given good, all the better for the supplier who wants to pull a high markup. So: - sometimes it's simple greed, but greed's not always simple - sometimes it's bad pricing - sometimes it's aggressive but totally justified pricing - sometimes it's a sign that maybe you can beat them at the pricing game if you're willing to spend the money and time to get into the market they're currently exploiting |
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eric scott RJ: Erik Scott CO: Sappo Post Rating: 0 + / - Total Posts: 130 Karma: 29 Joined: Apr 5, 2012 |
Posted on Apr 10, 2012 Yeah I can see those points.Which is why I am in the product market I am currently... It is in the lower supply/demand ratio of 40%, and it looks like everyone is overpricing their products (using the numbers I quoted above) So I am able to come in and sell for less, in much higher quantity. But as someone earlier posted in another thread with ties/watches... all it takes is for someone else to bust in with a much higher quality product, and all of a sudden the customers stop buying from me |
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Josh Millard RJ: Tex Corman CO: J. Quaff Arabica Post Rating: 0 + / - Total Posts: 167 Karma: 231 Joined: Apr 3, 2012 |
Posted on Apr 11, 2012 Well, they're not going to stop, they're just going to buy less. And that's business; if you want to guard against having someone eat your lunch with a higher Q product, put an emphasis on your R&D space to close the potential quality gap.
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eric scott RJ: Erik Scott CO: Sappo Post Rating: 0 + / - Total Posts: 130 Karma: 29 Joined: Apr 5, 2012 |
Posted on Apr 11, 2012 Hehe. As reading this... Someone just jumped my product by 30 Q points... Good bye profit!
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