Cost has no bearing on what people will pay for products.

[citygator]

Here you go Nostra : you keep bringing up my statement that cost doesn’t determine price so here is it explained - geared to your fat bellied body. : )

You sell one product. Cheeseburgers. There are only 3 customers in the world.

Your cost is $0.69
Your price $0.99

At $0.99 all three customers by one every day. You make $0.90 per day selling 3 cheeseburgers. Congrats.

If you raise your price to $1.99, just because, no costs have changed, only one customer will still buy a cheeseburger per day. The other two will not. It doesn’t matter what the cheeseburger costs. Buying is a yes or no. It is a 1 or 0. It’s binary. The cost doesn’t matter to the customer. They will pay what it is worth to them until they won’t buy it. In this case you actually make $1.30 a day selling one cheeseburger, woo hoo, that’s better than making $0.90 selling 3 per day. Your cost didn’t determine what people will pay.

If the cost to make a cheeseburger becomes $2.50, no one will buy a cheeseburger. Your 1 customer will only pay $1.99. It doesn’t matter what it cost to make. No one will buy it.

All you can do as a seller is find out what price your customers will pay for an item. Your cost doesn’t drive what people will pay. Your retail price is all they care about. Your cost determines if you can stay in business and it changes the profit of various prices you can charge but it does not change what people will pay for your product. Two people will pay any price up to $0.99 for a cheeseburger and a third person will pay any price up to $1.99. Your cost won’t change any of that.

Economics 101 is over.

 

[saveliberty]

Price is determined by demand. Costs determine whether the product or service is produced.

 

[citygator]

Price is determined by demand. Costs determine whether the product or service is produced.

Thank you.

 

[White 6]

Here you go Nostra : you keep bringing up my statement that cost doesn’t determine price so here is it explained - geared to your fat bellied body. : )

You sell one product. Cheeseburgers. There are only 3 customers in the world.

Your cost is $0.69
Your price $0.99

At $0.99 all three customers by one every day. You make $0.90 per day selling 3 cheeseburgers. Congrats.

If you raise your price to $1.99, just because, no costs have changed, only one customer will still buy a cheeseburger per day. The other two will not. It doesn’t matter what the cheeseburger costs. Buying is a yes or no. It is a 1 or 0. It’s binary. The cost doesn’t matter to the customer. They will pay what it is worth to them until they won’t buy it. In this case you actually make $1.30 a day selling one cheeseburger, woo hoo, that’s better than making $0.90 selling 3 per day. Your cost didn’t determine what people will pay.

If the cost to make a cheeseburger becomes $2.50, no one will buy a cheeseburger. Your 1 customer will only pay $1.99. It doesn’t matter what it cost to make. No one will buy it.

All you can do as a seller is find out what price your customers will pay for an item. Your cost doesn’t drive what people will pay. Your retail price is all they care about. Your cost determines if you can stay in business and it changes the profit of various prices you can charge but it does not change what people will pay for your product. Two people will pay any price up to $0.99 for a cheeseburger and a third person will pay any price up to $1.99. Your cost won’t change any of that.

Economics 101 is over.

And you lowered your labor costs, as it takes you less time to produce at higher profit.

 

[fncceo]

Labor Theory of Value is a Marxian Economic theory that holds that the value of any good is equivalent to the "social necessary labor" that went into producing it.

Under LTV, a Picasso and a drainage ditch are equal in value.

 

[Moonglow]

Labor Theory of Value is a Marxian Economic theory that holds that the value of any good is equivalent to the "social necessary labor" that went into producing it.

Under LTV, a Picasso and a drainage ditch are equal in value.

Cops also..

 

[fncceo]

Cops also..

Cops are a lot less valuable than a drainage ditch.

 

[HereWeGoAgain]

Here you go Nostra : you keep bringing up my statement that cost doesn’t determine price so here is it explained - geared to your fat bellied body. : )

You sell one product. Cheeseburgers. There are only 3 customers in the world.

Your cost is $0.69
Your price $0.99

At $0.99 all three customers by one every day. You make $0.90 per day selling 3 cheeseburgers. Congrats.

If you raise your price to $1.99, just because, no costs have changed, only one customer will still buy a cheeseburger per day. The other two will not. It doesn’t matter what the cheeseburger costs. Buying is a yes or no. It is a 1 or 0. It’s binary. The cost doesn’t matter to the customer. They will pay what it is worth to them until they won’t buy it. In this case you actually make $1.30 a day selling one cheeseburger, woo hoo, that’s better than making $0.90 selling 3 per day. Your cost didn’t determine what people will pay.

If the cost to make a cheeseburger becomes $2.50, no one will buy a cheeseburger. Your 1 customer will only pay $1.99. It doesn’t matter what it cost to make. No one will buy it.

All you can do as a seller is find out what price your customers will pay for an item. Your cost doesn’t drive what people will pay. Your retail price is all they care about. Your cost determines if you can stay in business and it changes the profit of various prices you can charge but it does not change what people will pay for your product. Two people will pay any price up to $0.99 for a cheeseburger and a third person will pay any price up to $1.99. Your cost won’t change any of that.

Economics 101 is over.

Maybe for some of us.
The Wife and I can still afford the outrageous prices but others cant.

 

[Manonthestreet]

 

[Mac-7]

Here you go Nostra : you keep bringing up my statement that cost doesn’t determine price so here is it explained - geared to your fat bellied body. : )

You sell one product. Cheeseburgers. There are only 3 customers in the world.

Your cost is $0.69
Your price $0.99

At $0.99 all three customers by one every day. You make $0.90 per day selling 3 cheeseburgers. Congrats.

If you raise your price to $1.99, just because, no costs have changed, only one customer will still buy a cheeseburger per day. The other two will not. It doesn’t matter what the cheeseburger costs. Buying is a yes or no. It is a 1 or 0. It’s binary. The cost doesn’t matter to the customer. They will pay what it is worth to them until they won’t buy it. In this case you actually make $1.30 a day selling one cheeseburger, woo hoo, that’s better than making $0.90 selling 3 per day. Your cost didn’t determine what people will pay.

If the cost to make a cheeseburger becomes $2.50, no one will buy a cheeseburger. Your 1 customer will only pay $1.99. It doesn’t matter what it cost to make. No one will buy it.

All you can do as a seller is find out what price your customers will pay for an item. Your cost doesn’t drive what people will pay. Your retail price is all they care about. Your cost determines if you can stay in business and it changes the profit of various prices you can charge but it does not change what people will pay for your product. Two people will pay any price up to $0.99 for a cheeseburger and a third person will pay any price up to $1.99. Your cost won’t change any of that.

Economics 101 is over.

You overlook the fact that high gas prices drive inflation in uncounted ways and .69 cent cost is bound to rise

 

[citygator]

You overlook the fact that high gas prices drive inflation in uncounted ways and .69 cent cost is bound to rise

Hi… I’m your Uber. I just put premium gas in my car so I am charging you more than the other guy who wants to take you to the airport.

WTF? No one pays based on your cost.

 

[HereWeGoAgain]

Hi… I’m your Uber. I just put premium gas in my car so I am charging you more than the other guy who wants to take you to the airport.

WTF? No one pays based on your cost.

Bullshit.
If that were the case prices wouldnt go up. All companies pass on cost increases to the customer and rightfully so.

 

[citygator]

Bullshit.
If that were the case prices wouldnt go up. All companies pass on cost increases to the customer and rightfully so.

The people now paying more for higher cost products would have paid those prices before the cost increase. They aren’t paying more because of the cost increase. What raising price does is chase out those who won’t pay the higher price but you still capture the sales for people who will pay the higher price. Cost doesn’t matter.

 

[HereWeGoAgain]

The people now paying more for higher cost products would have paid those prices before the cost increase. They aren’t paying more because of the cost increase. What raising price does is chase out those who won’t pay the higher price but you still capture the sales for people who will pay the higher price. Cost doesn’t matter.

So a pair of shoes should cost what they did in 1920?

 

[Mac-7]

Hi… I’m your Uber. I just put premium gas in my car so I am charging you more than the other guy who wants to take you to the airport.

WTF? No one pays based on your cost.

Except that I will ride with the other guy

 

[Dadoalex]

Here you go Nostra : you keep bringing up my statement that cost doesn’t determine price so here is it explained - geared to your fat bellied body. : )

You sell one product. Cheeseburgers. There are only 3 customers in the world.

Your cost is $0.69
Your price $0.99

At $0.99 all three customers by one every day. You make $0.90 per day selling 3 cheeseburgers. Congrats.

If you raise your price to $1.99, just because, no costs have changed, only one customer will still buy a cheeseburger per day. The other two will not. It doesn’t matter what the cheeseburger costs. Buying is a yes or no. It is a 1 or 0. It’s binary. The cost doesn’t matter to the customer. They will pay what it is worth to them until they won’t buy it. In this case you actually make $1.30 a day selling one cheeseburger, woo hoo, that’s better than making $0.90 selling 3 per day. Your cost didn’t determine what people will pay.

If the cost to make a cheeseburger becomes $2.50, no one will buy a cheeseburger. Your 1 customer will only pay $1.99. It doesn’t matter what it cost to make. No one will buy it.

All you can do as a seller is find out what price your customers will pay for an item. Your cost doesn’t drive what people will pay. Your retail price is all they care about. Your cost determines if you can stay in business and it changes the profit of various prices you can charge but it does not change what people will pay for your product. Two people will pay any price up to $0.99 for a cheeseburger and a third person will pay any price up to $1.99. Your cost won’t change any of that.

Economics 101 is over.

Cost is a driver of price
If the seller is losing money the seller will stop selling or raise prices
If, at the higher price customers will not buy, the seller goes out of business.

 

[Dadoalex]

Labor Theory of Value is a Marxian Economic theory that holds that the value of any good is equivalent to the "social necessary labor" that went into producing it.

Under LTV, a Picasso and a drainage ditch are equal in value.

How about the Dado theory of labor?

Without labor it doesn't matter the price because there is no product.

 

[Dadoalex]

The people now paying more for higher cost products would have paid those prices before the cost increase. They aren’t paying more because of the cost increase. What raising price does is chase out those who won’t pay the higher price but you still capture the sales for people who will pay the higher price. Cost doesn’t matter.

Gasoline is a great example.

Production costs of oil, refining, and selling haven't changed but the retail prices have doubled.

Why?

Because it is a commodity we cannot live without.
What is the price level that would cause people to simply stop buying?
There is none.

THIS is why Carter was absolutely correct 45 years ago.

 

[citygator]

Gasoline is a great example.

Production costs of oil, refining, and selling haven't changed but the retail prices have doubled.

Why?

Because it is a commodity we cannot live without.
What is the price level that would cause people to simply stop buying?
There is none.

THIS is why Carter was absolutely correct 45 years

The cost to produce gas has not increased. That’s not what is driving gas prices up. That is exactly my point.

 

[Mr Natural]

They can charge whatever they want for gasoline. What are you going to do; not drive your car? Fat chance!