[Jewelry making - Article 00590] - Re: [Orchid] The cost of holding out

[MillsGem]

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    David, The inherent danger in simplistic logic is that it is often
    based on assumptions. 

    You assume that those customers who go along with increased prices
    will always come back whereas, in reality, many of them won't. One
    of the reasons that people will go along with a high price is that
    they are too embarrassed to take issue or to admit that they might
    not be able to afford the higher price. Others will go along with it
    until they learn from someone else that a much better price can be
    had elsewhere. 

    I know a medical professional who uses hypnotherapy to treat smoking
    addicts. He consistently claims a 95% success rate....the only
    problem is that he has no way of knowing whether the patient
    relapses. The mere fact that they don't return or that they don't
    communicate the relapse doesn't prove anything. 

    There are also people who don't quibble over prices because they
    erroneously assume that a higher price means a higher quality
    service. This is akin to assuming that Dole brand bananas are better
    than others or that a higher priced banana is superior to cheaper
    bananas. 

    Your line of thinking has a strong odor of price fixing......."if we
    could only eliminate competition we would all be better off"
    Malarkey ! Competition is what the market place is all about.
    Competition encourages quality as well as productivity. American cars
    today are better precisely because the Japanese set higher standards.
    We formerly were captive of a marketplace in which planned
    obsolescense was the keynote. It still plays a role, especially with
    regards to style, but we now have cars that will give us three times
    as much longevity De Beers still operates as a monopoly, but cartels
    are not legally sanctioned in America and this is precisely why De
    Beers is forbidden to operate directly in America. We also do not
    sanction price fixing. I wholeheartedly support rational
    determination of profitability and I would agree that there are those
    of us who might benefit from upwardly adjusted prices, but I
    certainly do not agree that all of us should charge as much as we can
    possibly milk from the customer. This kind of thinking is ultimately
    counterproductive and self destructive. Furthermore, it is all about
    overhead and overhead varies astronomically depending on personal
    circumstances and inherent regional variations. A snobby marketplace
    might not give a whit about price whereas a workingman's neighborhood
    would be very price sensitive. Rents in urban areas may be twenty
    times higher than in small towns. Utility costs vary substantially.
    Wages also vary regionally. A good benchman is going to get twice as
    much pay in an urban setting. No guidebook is ever going to be able
    to rationally fix prices across the board throughout the nation.
    There are just too many variables.A much better approach would be to
    establish guidelines for establishing a system which allows a jewelry
    entity to analyze its' unique operating parameters. I think it would
    be perfectly reasonable to team up with an accountant and analyze
    your personal circumstances. In any event, I strongly urge you to not
    send a copy of your book to the Federal Fair Trade
    Commission........ 

Ron at Mills Gem, Los Osos, Ca.



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