ZiNgA BuRgA Wrote:

Assassinator Wrote:As for why I was talkiing about demand at the start... The cost of operation is a fixed cost, how high the prices you need to set to offset that cost will depend on how many sales you make. Low sales » higher fix costs accounted into each sale » forces higher sale price.

Not really.  Shops don't order heaps of these higher end products, and they come shipped along with the lower end products.  If you distribute the fixed costs evenly amongst products, most of it would be on the cheaper goods.  True that they can distribute it more on the expensive products, but that would only work in a monopolistic situation (and thus the issue is a monopoly one, not about fixed costs).

But each descision should looked at seperately, rather than on a whole. It's like the marginal cost vs average cost argument. You order this extremely hard to sell high end item, you would require more premium on it than the normal items, because this thing is harder to sell, thus more risk from both losses due to depreciation and loss due to the unability to sell it (this is exactly what I was saying in the 1st post). And this higher required premium mean it's prices need to be much higher, which means it's even likely to sell, and a negative spiral... That's why most stores won't stock an item like that.

ZiNgA BuRgA Wrote:Really much less of an issue these days, especially amongst tech enthusiasts.
And would you still pay ~$4000 more for this security?

Er.... ... ... ... I have no idea how to respond.

But then again, what normal person spends that much money on a processor anyay...

SchmilK Wrote:From my experience building computers over the past 10+ years.  A physical store can NEVER compete with an online vendor!

Not exactly never.

MSY for example here, comes pretty close. It operates on one of these low profit high volume low cost sort of business model. They have massive lines that take 1/2hr to wait, yet still refuse to hire more than 2 people in the shop. The shop is pretty much a counter at the front where everyone lines up, no displays, no whatever. Crappy customer service and everything, but the prices are quite competitive.

Large quantity of sales lets them make cheap wholesale deals, being super cheap lets them cut operational costs and reduce prices, and low prices pulls sales volumes and allow them to compete with online stores. Especially when none of these online stores are physically located in Australia, and you will incur shipping costs.

(This post was last modified: 26/05/2009 04:26 AM by Assassinator.)