World, Writing, Wealth discussion

61 views
Wealth & Economics > Where the markup is the biggest?

Comments Showing 1-29 of 29 (29 new)    post a comment »
dateDown arrow    newest »

message 1: by Nik (new)

Nik Krasno | 13438 comments Unless it's something charitable, liquidation, foreclosure and other special occasions, all products, services, works are traded with a markup. The more expensive one can sell something the better. Competition and supervision, where applicable, can be a restraining factor, other than that anything goes.
When working in a student's night club as a student, I remember the bar manager telling me they sold beer seven times more than its cost.
Media claims Gillette's markup on razors may exceed 4,000 % : http://www.thisismoney.co.uk/money/bi...
And I remember shaving market studies reported very high manufacturer's loyalty rates.

And of course, there are industries where a markup is only a few percent.
Perfume, printer toner also probably enjoy a decent markup.
Not relying on market forces to regulate the pricing, some states envisage supervision on prices limiting them to cost + __% for basic survival products.

Where in your experience the markup is the biggest? Should markup always be unlimited in your opinion?


message 2: by Scout (new)

Scout (goodreadscomscout) | 5332 comments I want to grow some summer squash. I went to a retailer today and found a plant priced at $5.49. I then went inside and bought a packet of 20 seeds for $1.29. Seems like a big markup to me, even considering labor and materials and a jump on the growing season.


message 3: by Marie Silk (new)

Marie Silk | 1020 comments Medical and dental. IMO there should be regulation on how much of a markup is allowed in these industries.

Then there's higher education where textbooks run in the hundreds of dollars...


message 4: by Ian (new)

Ian Miller | 9477 comments Textbooks are priced ridiculously. The problem is, every academic wants to have his/her name on one as an author, and most of them are just re-hashes of others. It would be a lot better if the relevant society could coordinate an optimal textbook for basic teaching and get the appropriate experts to write it.


message 5: by Nik (last edited Aug 07, 2019 01:30AM) (new)

Nik Krasno | 13438 comments Any more items, where costs and sale prices are light years apart?


message 6: by Philip (new)

Philip (phenweb) Fastest way to see profits and hence markup is public accounts from firms e.g revenue 1 billion, profit 200 million tells you there's a 20% markup at least going on
at the most valuable end - Apple $290 Billion revenue with $101 billion profit in 2018

However I suspect high end fashion and jewellery to have higher markup e,g, clothes handbag made in sweatshop for few $ end up at several thousand at retail


message 7: by [deleted user] (new)

Beverages at restaurants. When I worked at one, people would complain about being charged $4 for "water with a few pennies' worth of flavoring."

Of course, the managers claimed that the rest of the menu prices barely covered the operating costs, and the profit was in the drink sales. And if I wanted a raise, I needed to sell the most expensive beverages.

If someone said she just wanted a cup of coffee, the managers expected me to ask if she'd rather have the 500 mL reservoir of caffeine instead.


message 8: by Nik (new)

Nik Krasno | 13438 comments Philip wrote: "However I suspect high end fashion and jewellery to have higher markup e,g, clothes handbag made in sweatshop for few $ end up at several thousand at retail..."

Wonder whether presence of Arnault and Ortega (both coming from fashion and brands) in the world's richest 10 can be an implicit corroboration of your assumption.
In case anyone is not acquainted with Mr. Fashion, let me introduce him now -:):
https://www.businessinsider.com/lvmh-...


message 9: by Scout (new)

Scout (goodreadscomscout) | 5332 comments Drug have a huge markup. Bernie took some diabetics to Canada to prove the point.

https://www.cbsnews.com/news/bernie-s...

Insulin that cost $1000 there would have cost $10,000 in the U.S. Big markup.


message 10: by Nik (new)

Nik Krasno | 13438 comments As the prices go up, maybe rebounding from the lost year or maybe signifying return of the inflation, where the margin btw the cost and sale price is the biggest?
I remember a pub proprietor told me he made 7 to 1 on buying kegs and selling draft beer, but that maybe modest compared to some other stuff. So what's most lucrative?


message 11: by Philip (new)

Philip (phenweb) UK inflation rate up again
Petrol costs certainly higher
Restaurants are higher based on 2 visits in last 2 weeks (first in 12 months)


message 12: by Barbara (new)

Barbara | 153 comments Nik wrote: "As the prices go up, maybe rebounding from the lost year or maybe signifying return of the inflation, where the margin btw the cost and sale price is the biggest?
I remember a pub proprietor told m..."


I once read an article about bringing a drug to the marketplace. From the time someone thought of the drug until it was available for sale could take up to 15 years, though the average was6-10 - this included FDA trials and approvals which accounted for half the time. All that time, the drug company is paying for the testing facilities, personnel, products, insurance and then they have a short window after they put the drug on the market before the formula is reverse engineered, the patents hijacked and the drug is produced outside the US by countries that don't have to go through the expense of R&D. Unfortunately, drug companies also have to factor in liability - you have only to turn on TV to see ads for law firms that want to know if you've taken this drug and telling you that you might be entitled to money. That kind of liability doesn't exist in a lot of other countries.


message 13: by Ian (new)

Ian Miller | 9477 comments From what I heard from an insider in a major US pharma company, most of what Barbara say is correct, except it is only a minor part of the costs. By far the major cost is marketing - enticing the various medical people to prescribe YOUR drug, as opposed to the competitors' equivalents. Generally the drugs are not "reverse engineered" - patents are strong in the US and the generic drugs do not turn up until patents expire.

The reason why drugs are so cheap in NZ is because there is a single buyer, they buy in bulk, and the marketing costs are eliminated so the companies can sell at a much lower price and still make a good profit. If they couldn't, they wouldn't sell. They do not run charity organizations and are very rich. The reason drugs are so expensive on the US is they charge what the market will bear and spend big on marketing.


message 14: by Philip (new)

Philip (phenweb) Ian wrote: "From what I heard from an insider in a major US pharma company, most of what Barbara say is correct, except it is only a minor part of the costs. By far the major cost is marketing - enticing the v..."

NZ replicated in UK where NHS purchases drugs - some marketing to doctors etc but most is decided by what is on the paid for list. AZ vaccine is at cost price globally because of UK Gov NHS agreement with AZ. Pfizer on the other hand is 10x more expensive because Pfizer refused to sell at lowe prrice.


message 15: by Scout (new)

Scout (goodreadscomscout) | 5332 comments Ian said, " The reason drugs are so expensive on the US is they charge what the market will bear and spend big on marketing."

Well, that sucks. Seems like there's a simple solution. Why doesn't Joe do something about this? I'd really like to pay less for drugs.


message 16: by Ian (new)

Ian Miller | 9477 comments Scout wrote: "Ian said, " The reason drugs are so expensive on the US is they charge what the market will bear and spend big on marketing."

Well, that sucks. Seems like there's a simple solution. Why doesn't Jo..."


Who donates to Joe's election campaigns? You think he is going to risk that big amount of cash?


message 17: by Nik (new)

Nik Krasno | 13438 comments Add to this that as far as I read, the big pharma is sometimes caught not exactly competing, rather anything but like price-fixing, bid-rigging and what not:
https://www.justice.gov/atr/division-...


message 18: by Ian (new)

Ian Miller | 9477 comments Big pharma like to make its profits :-) Cooperation in raising prices is in each of their interests - but not the patient's


message 19: by Scout (new)

Scout (goodreadscomscout) | 5332 comments Right. Everything comes back to money. That's not the way things are supposed to work in elective governments, but what can you do? Are politicians going to stop the money train? No way to force them to do so. We're screwed.


message 20: by Barbara (new)

Barbara | 153 comments Ian wrote: "From what I heard from an insider in a major US pharma company, most of what Barbara say is correct, except it is only a minor part of the costs.

Marketing in the sense that they invest in TV and online ads is an expense, but for every one of those, I see an ad from a law firm that's threatening to sue the maker because of some adverse reaction. A doctor told me that years ago, his office would book one or two drug reps a month to come in at lunchtime, he or she would bring lunch for the office and give the doctor a pitch on that drug, sometimes leave some things like pens, notepads, mouse pads with their logo as freebies, but the doctor told me this was outlawed and they can't even give the doctor a free pen anymore and that the profession of "drug rep" is shrinking.



message 21: by Barbara (new)

Barbara | 153 comments I was listening to the radio yesterday and they were talking about prices going up due to inflation, they went through the normal candidates - meat, prescription drugs, hardware - but said the biggest markup was used cars. That surprised me.


message 22: by Ian (new)

Ian Miller | 9477 comments Used car prices will probably go up here because the government is increasing taxes on new ones to encourage electric cars. As an effort to combat climate change, this is a joke because they are burning extra coal to make the electricity.


message 23: by Lizzie (new)

Lizzie | 1622 comments Despite the additional miles, the value of my Miata went up 40% between December and June.

Articles I read stated -
Used cars and trucks were 10.5% more expensive in June than in May, which is the biggest increase since the Bureau of Labor Statistics started tracking in 1953. Reports state that used car prices increased over 40% this June as compared to a year ago. A semiconductor shortage has led to a shortage of computer chips needed for new car manufacturing.


message 24: by Ian (new)

Ian Miller | 9477 comments According to an article i saw in Time magazine (I think) the chip shortage is because the car makers stopped chip ordering when Covid came along and did not reorder until they needed them. What they overlooked was the chip makers stopped the production line when they stopped ordering, and it takes several months to make new chips.


message 25: by Philip (new)

Philip (phenweb) Ian wrote: "According to an article i saw in Time magazine (I think) the chip shortage is because the car makers stopped chip ordering when Covid came along and did not reorder until they needed them. What the..."

Same news here and sold my Audi Q5 for an excellent price higher than offer in January. Car manufacturers also stopped production leading to shortages of new then blamed chip manufacturers. Also COVID disruption of just in time supply for just about everything.


message 26: by Lizzie (new)

Lizzie | 1622 comments Ian wrote: "According to an article i saw in Time magazine (I think) the chip shortage is because the car makers stopped chip ordering when Covid came along and did not reorder until they needed them. What the..."

Yes, The shortage is up the line and the result of the cancellaton of orders by retailers.


message 27: by Scout (new)

Scout (goodreadscomscout) | 5332 comments Now cell phones are going to be more expensive.


message 28: by Lizzie (new)

Lizzie | 1622 comments I am in shock as the most recent blue book has my car at almost double the value it was last December. The M240 is safer and has so man conveniences, but I sitll can't let go of the Miata, With the value being only 25% less than what I paid for it in 2012, my brain says put it on the market, but ... nope.


message 29: by Philip (new)

Philip (phenweb) Big Pharma getting a rap across knuckles

https://www.bbc.co.uk/news/business-5...


back to top