I told you elsewhere in my reply, regardless of what others may be willing to pay, or be charging, if you sell them to me for $4, you are conceeding that at that moment for whatever reasons, the apples are only worth $4 to you, and you are “happy” with $2 net.
Maybe you have too many apples, maybe you think they will go bad before you sell them all, maybe you just like me, maybe you know or believe I only have $4 and $2 is better than rotten apples…
Sheldon
No, it would be a terrible idea.
Basically, what you’re ignoring is an important element of pricing, elasticity. The airlines aren’t serving one uniform market for travel. A sales representative who has an urgent need for a face to face meeting with an important customer is going to fly. A woman who wants to go visit her sister in another city will be far less inclined to fly unless she finds a bargain fare. The airline doesn’t want unsold inventory, i.e. empty seats.
One uniform fare doesn’t fit all. Where would it be set? One fare level would underprice the sales rep and overprice the woman going to visit her sister. The airline would end up with empty seats and lost income. The sales rep would go, but the woman wouldn’t get to visit her sister. This would lower her standard of living. Bad idea.
Under regulation, when one fare fits all was the rule, 45% of airline seats flew empty.
Elasticity based pricing is very necessary in transportation. That was even recognized by the dummies at the Interstate Commerce Commission. Think of the classification rates charged by Carolina Freight Carriers. One ICC failure (just one of them) was that they failed to recognize that elasticity changes.
[quote user=“greyhounds”]
ATLANTIC CENTRAL
Here is one of my pet peeves, reduced airline fares to fill planes. Buy your ticket today, it is one price, buy it 4 days later it is three times as much. Buy it from this guy it is cheaper as part of your “vacation package”. Yet if some other industries did that, there would be hearings in Washington. In the broad sense, strict price regulation is never a good thing…(edit for response)… BUT, fair pricing laws, like proventing airlines from selling one seat for $400 and the one next to it for $40 - that would be a good idea.
No, it would be a terrible idea.
Basically, what you’re ignoring is an important element of pricing, elasticity. The airlines aren’t serving one uniform market for travel. A sales representative who has an urgent need for a face to face meeting with an important customer is going to fly. A woman who wants to go visit her sister in another city will be far less inclined to fly unless she finds a bargain fare. The airline doesn’t want unsold inventory, i.e. empty seats.
One uniform fare doesn’t fit all. Where would it be set? One fare level would underprice the sales rep and overprice the woman going to visit her sister. The airline would end up with empty seats and lost income. The sales rep would go, but the woman wouldn’t get to visit her sister. This would lower her standard of living. Bad idea.
Under regulation, when one fare fits all was the rule, 45% of airline seats flew empty.
Elasticity based pricing is very necessary in transportation. That was even recognized by the dummies at the Interstate Commerce Commission. Think
i’d be losing $1. If market rate was $5 and Somehow settled for less, I’d be losing the concession I “gave” you.
BTW, I can find no empirical proof that uninsured drivers drive any less safely than insured ones, so I cannot accept that the requirements for additional coverage based upon the nature of the cargo, as they are written, are a safety regulation. The requirement mandating additional expediture for the purpose of risk management is purely an economic one.
I knew that would be your answer. How many businesses have run? You don’t have anything until you sell the apples, it is not a forgone conclusion that you will sell them, no matter the market rate. And apples are pretty “time sensitive”…
Just like the stock market, you don’t make or loose anything until you sell.
But what do I know, I was just running the train department in a hobby shop at age 19, managing multi million dollar construction projects by 24, ran my own MATCO tool truck for 8 years, have invented and marketed several products, own rental properties, and run a historic restoration and residential design/construction business. Been self employed for more of my 60 years than I have “worked” for a paycheck…
Sheldon
One very often sees reduced prices on “soon to expire” items in a grocery store.
So $2 profit is far better than a $2 loss when I have to dump those apples in the trash. Even if I sell them for $2 a bushel, I’ve at least covered the wholesale cost of the apples.
And you can’t forget the “loss leader” concept. I may make a dollar less selling the bushel of apples for $4, but I’m going to more than make that up when you buy caramel and sticks for candy apples, canning supplies (apple sauce), and baking supplies for pies and tarts (not to mention ice cream and some good, sharp cheddar), all at regular (and possibly even slightly increased) prices.
Well, you certainly have plenty of ambition. Good for you.
The argument that the apples are only worth what I choose to sell them for, sounds like the product of a liberal arts background? Assuming that the market rate is $5, wouldn’t I be charging others $5? By giving you a break (if I so chose) I would most certainly be losing the dollar I could have been charging others.
Or I could just donate the aples to the local soup kitchen, and write them off at full value against my other sales. So much for time sensitive.[:-,]
Absolutes are sticky critters. I try to avoid them whenever possible.
Anyone with ambition and access to capital can open a trucking business. And in the instances where that person is also a fool, can inflict serious harm onto legitimate operators. To the extent that regulation levels the playing field and shelters legits from the posers, it CAN serve a valid purpose.
Duplicate.
I’m retired from Allstate Insurance. The statistics I learned were that one out of eight drivers was uninsured, but that those drivers were involved in one out of six accidents. That makes an uninsured driver significantly more likely to be involved in an accident than an insured driver.
Driving without insurance is risky behavior. This predilection to risky behavior will spill over to driving habits. And to other behaviors such as use of credit.
My scanner is on 24/7, mostly for fire, but I listen to law enforcement as well (sometimes I can get a heads up on a fire response that way). I never cease to be amazed at the number of people who get pulled over that have a sometimes long list of previous offenses, and/or outstanding tickets.
As you say - those prone to risky behavior tend to participate in them. Ever notice the concentration of smokers in bars???
Well you missed the mark there, no liberal arts education here, if fact no college degree at all. Some college level education, but no degree past Severna Park High School.
Socially moderate regarding others, morally conservative in my own choices
Guys,
The apples are only worth what a serious buyer is willing to pay for them. [:D]
To my mind, you’re not losing money until you sell them for less than $2. At $4, you’re not making the full potential profit, but you’re not losing money. [2c]
No smoking in Bars in Upstate New York but the bars in Rural PA have there share of deplorables that smoke cheap cigs.
The concept is known as “the dollar left on the table”. It’s not a new concept. The question is sort of a litmus test in Entrepreneurship 101, to see where the student’s head is at. If you have an employee working for you in a position of responsibility who answers “you double your money”…you have a problem.
Do you think that if said individuals bought insurance, doing so would reform their personal behavior? (chicken vs egg)
Even so, the “$4 sale” DOES NOT set the value of the goods sold. Let me give you a real world example from my recent experiences.
Recently at an estate sale I purchased a vintage Marantz receiver for under $100. It comes from their golden era, and was one of the most powerful units they ever sold. And it was in cherry condition cosmetically.
I took it to a shop, had the pots cleaned, a complete diagnostic check performed, a little bit of repair work to the internal power supply…all together I have less than $250 into it.
They guy who serviced it offered me $2,200.00 for the unit.
Now the people who sold me the unit for less than $100 had zero impact upon the actual value of this unit. The seller’s ignorance about what they were selling cost them big time.
In the apple example which I shared with you, I’d be giving you $1 charity, assuming I had no ulterior motive.
Well, no. But that’s not what you said. You’re changing your tune.
You said: “I can find no empirical proof that uninsured drivers drive any less safely than insured ones”.
I pointed out that Allstate Insurance, a company that studies and analyzes accident rates in great detail, has determined that uninsured drivers have accident rates significanly in excess of insured drivers.
You’re now back with: “would buying insurance change behavior?” You’ve totally changed the issue.
That’s all great in the class room, how many years have you earned a living being self employed? Remember, I asked you in the beginning which answer you wanted. I know both answers and the thinking behind them. I also have 40 years experiance “on the street”.
Look at the model train market, prices are all over the map for the same products. Just like your stereo seller, some people pay too much, others will not buy except at the lowest common street price. So what is the “market” for a Bachmann 2-8-2? dozens will sell this week for a wide range of prices. The seller has to weigh a number of factors to determine where HE wants to be, how long he wants to tie up money, how much work he wants to do to make a sale. It is a lot more complex than just “the dollar left on the table”.
But again, what do I know…
Sheldon