Re: Why is the factory price higher?

[P3D Ronald J Beck <rbeck@xxxxxxxxxxxxxxxxxx>]

photo-3d@xxxxxxxxxxxxxxx said:
> >Also, why is a cassette's price "slightly higher" when ordered from 
> the >manufacturer, eliminating the middle-people???

> In many cases the manufacturers sell goods at "suggested retail 
> prices" while the retailers discount them further.  How does that 
> make sense is beyond me... I have just accepted it as one of those 
> "facts of life"... ;) 

Well, think of it this way.  A retailer places an order with the 
manufacturer for, say, 200 cassettes.  I would expect the manufacturer to 
sell these to the retailer at a wholesale price, and possibly even a 
quantity discount.  Ever see those office catalogs that say "$2.50 1-4 
items, $2.25 5-9 items, $2.00 10+ items"?  Same thing here.  

Now, for example, the retailer may have purchased these at a unit cost of 
$3.00.  He then has the option of charging the Manufacturer's Suggested 
Retail Price (MSRP), or any price he chooses, either above or below his 
initial unit cost.

The manufacturer, on the other hand, has no incentive to sell single units 
to us, their adoring public, at any price other than their MSRP.  To do 
otherwise would undermine their retailers prices and possibly cause their 
retailers to stop ordering large quantities.

This is why stores can get away with having 25% discount sales.  They 
bought the items at 50% (or more) below the MSRP of the product, and set 
their retail price to the public at twice what they paid for the items 
(the MSRP).

Hope this clarifies the free enterprise system :-)
Ron


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