Holiday sales specials. Shouldn't customers be mad?

[Monkeyleg]

I've been reading stories everywhere about how retailers are really cutting prices to pull in customers this holiday season. I also realized that I can't cut my prices any further, so I can't do any specials.

That got me to thinking, though: if the retailer can cut prices for the holidays, what about the rest of the year? Why aren't customers getting the best prices the other eleven months of the year, and why aren't customers mad about that?

[Balog]

Aren't those sale prices often loss leaders, or only on a very small amount of inventory? Not that I suggest most people realize that. :)

[BridgeRunner]

Well, in the computer hardware business--my only personal experience with retail selling--the headline deals are good, but on a very limited inventory.  And everyone thinks that there's fifty percent margin on everything and tries to haggle the stuff down all year long. 

[Perd Hapley]

Shouldn't customers be mad?

Why would they be mad? 

Maybe Americans aren't yet so brainless as to think they have a God-given right to low prices.  Maybe most folks still understand that prices are determined by supply and demand (unless oil is involved).

 

[Harold Tuttle]

maybe you could sell some derivatives:

What do you mean this HDTV is a "derivative?" Some of the holiday electronics with those low sale prices are derivatives, models that have a few less features than a standard model in that product line, said Dworsky.

The difference can be subtle. "The image contrast ratio might be 20,000 in a derivative model versus 30,000 in a standard model," he said. "Most consumers probably won't even notice the difference."

A report earlier this month in Consumer Reports called attention to HDTV models from Samsung and Sony advertised in Black Friday deals that appear to be "derivatives." The report said these one-off TVs "with unfamiliar model numbers" are usually cheaper than the standard model in their class.

Dworsky cautions that retailers usually don't advertise these models as derivatives. "There's no way the average consumer will know that the TV model they are buying is not the standard one unless they are savvy enough to compare their model numbers," he said

[lee n. field]

And everyone thinks that there's fifty percent margin on everything and tries to haggle the stuff down all year long. 

<scowl>  CDW can often sell stuff cheaper than we can get it from our distributor.</scowl>

[BMacklem]

I work for Milwaukee PC, and I can certainly tell you that our profit margin on just about everything these days is pretty slim, we've had to reduce our margins to remain competitive.
I'm looking to pick up an Acer aspire netbook (one of those really small notebooks) and I looked at our cost versus the retail price.... lemme tell you my employee discout basically covers the tax I'd have paid on the retail.
$319 retail on the unit, and after my discount with tax... $315 and change.
I was thinking our cost was a lot closer to $250 ish, but I was a bit off there.

[HankB]

Some of the biggest markups are on accessories . . . for example, Best Buy routinely charges around $50 - $100 for HDMI cables that ought to retail for a fraction of that, depending on length. The various AV forums have a lot of discussions on crazy markups on cables . . . unless you NEED an HDMI cable IMMEDIATELY, you're a fool not to buy from Amazon or some other on-line retailer.

So you buy a blu-ray player for $150, BB makes maybe $10 profit after factoring in things like inventory cost and overhead . . . and then you buy a $50 HDMI cable and BB makes $40 profit. So total profit on a $200 sale is $50. Not too bad.

[zahc]

monoprice.com for cables

[lee n. field]

Some of the biggest markups are on accessories

Ahh, yes.  Markup on LAN cables is at least 400%, and we're still less than Staples.

It galls me, too, when I hear some walk-in service customer complain "why are your power supplies $60?  I can get one for $25 at X."  Yeah, right.  Ours cost us pret-near twice what your special cost, and isn't made of Velveeta, tinfoil and dried snot.  They also weigh twice as much.  Think about it.

[BridgeRunner]

<scowl>  CDW can often sell stuff cheaper than we can get it from our distributor.</scowl>

Yeah, I was in that exact same situation a couple years back.  I don't miss those days.  Ingram Micro sucked almost as back as the reseller I was working for. 

Only thing I miss about that place was paying cost on cables.

Well, and getting incredibly drunk a couple times a week with my co-workers. That was fun.  Entertaining, too, for all concerned.   

[Jamisjockey]

Aren't those sale prices often loss leaders, or only on a very small amount of inventory? Not that I suggest most people realize that. :)

What he said. 

Loss leaders on a one or two day sale to bring customers in the store, and hey, look at this and that and while you're here...

[Declaration Day]

I find the best prices on cables at a computer show that comes to a local expo center once a month.  Sometimes it coincides with a gun show, so it's worth the 20 mile drive. Their prices are often 1/4 to 1/2 what I'd pay at Best Buy.  

[MechAg94]

<scowl>  CDW can often sell stuff cheaper than we can get it from our distributor.</scowl>

Yet, I often find that my local OfficeMax has the same stuff as CDW at the same price with no shipping.  CDW is supposed to be the people we use for electronics at work.  I am buying mostly just printer cartridges and  BS like that.

[KD5NRH]

It galls me, too, when I hear some walk-in service customer complain "why are your power supplies $60?  I can get one for $25 at X."  Yeah, right.  Ours cost us pret-near twice what your special cost, and isn't made of Velveeta, tinfoil and dried snot.  They also weigh twice as much.  Think about it.

Ah, so you reboxed the $25 one with a few pounds of fishing weights and jacked the price up.

[brimic]

I'm always amazed at what wholesale prices can be on things.

My father-in-law is the manager of a few retail stores, and gets catalogs from trade shows and suppliers. We've bought quite a few big ticket items (mainly appliances) from him at about 60% the retail cost- of course there's the minor inconvenience of having to pick the items up at some random warehouse.

As others mentioned, computers and a lot of electronics (except TVs) have a much tighter profit margin to them.

[Racehorse]

Retail markup of 50% is pretty standard. What I think a lot of people forget is that there are a lot of overhead costs beyond just the cost of the product. Store employees, warehouses, distributions networks, etc. cost a lot of money. The final bottom line after that 50% often ends up below 5%.

[erictank]

Some of the biggest markups are on accessories . . . for example, Best Buy routinely charges around $50 - $100 for HDMI cables that ought to retail for a fraction of that, depending on length. The various AV forums have a lot of discussions on crazy markups on cables . . . unless you NEED an HDMI cable IMMEDIATELY, you're a fool not to buy from Amazon or some other on-line retailer.

Try Monoprice.com - HDMI cables running in the SINGLE DIGITS, pricewise.  Been using them for a year and a half now for the living room entertainment center, and purchased more for the new downstairs setup this past summer (along with an HDMI switcher which I'm not ENTIRELY thrilled with (connections are a little finicky) - but the cables work just fine!).  They also sell other types of cables - USB, RCA A/V, component, stereo speaker, etc. - and pretty much everything is available in a wide variety of lengths.  I got several 2' and 4' cables to connect the downstairs Fios box, Blu-Ray player, XBox 360, and PS2 (via converter) to the HDMI switcher, and a 10' from the switcher to the TV (used 2 6' HDMI cables to connect the upstairs TV to the Fios box and the DVD recorder - no HD disc player on that setup). 

I mean, you *CAN* pay $70-100 for a box of Monster Cables at Best Buy (one set of component cables; not sure what they charge for HDMI, but I'm sure it's similarly usurious) - but I spent less than half that on half-a-dozen cables, a component-to-HDMI converter, a 5-into-1 HDMI switcher box, and shipping (which took about 48 hours from the time I placed the order to the time it showed up on my doorstep), leaving the remainder for movies, food, entertainment, whatever.  Given that I haven't seen a SINGLE unbiased review showing any substantive difference in quality, I'll stick with the $3 cables, and save my money for other fun stuff.

[RevDisk]

I mean, you *CAN* pay $70-100 for a box of Monster Cables at Best Buy (one set of component cables; not sure what they charge for HDMI, but I'm sure it's similarly usurious) - but I spent less than half that on half-a-dozen cables, a component-to-HDMI converter, a 5-into-1 HDMI switcher box, and shipping (which took about 48 hours from the time I placed the order to the time it showed up on my doorstep), leaving the remainder for movies, food, entertainment, whatever.  Given that I haven't seen a SINGLE unbiased review showing any substantive difference in quality, I'll stick with the $3 cables, and save my money for other fun stuff.

Monster cables are not only overpriced, but they're apparently also patent trolls.   If you want to read the best smack down of Monster, read http://www.audioholics.com/news/industry-news/blue-jeans-strikes-back   A general clue to Monster, if you want to branch out of the "acceptable quality, overpriced goods" market into extortion and racketeering, research your marks before trying to shake them down.  In this case, they tried to shake down a company run by a former lawyer who apparently quite knows his stuff and misses the fun of litigation. 

Beautiful part is Monster Cables doesn't own the designs of the cables they make, Monster Cable International, Ltd., in Bermuda does.  They use it to launder money to avoid federal income tax.