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Old 03-19-06, 11:10 AM   #1
Ziemas
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Is it right for a shop to up the price of NOS to the current catalog price?

I was a bit shocked when I went into a local outdoors shop/LBS to pick up an Ortleib outer pocket for my panniers. After a bunch of searching they found the pocket, handed it to me and started to ring up the sale. I noticed that the pocket was a bit old, with the old Ortleib logo. No problem. What was a problem for me is that they hiked the price by $8 (or nearly 40%) to reflect the current catalog price. I found this out by peeling off the price tags off to look at the ones underneath. When I asked the sales guy about this he told me "it's a political issue." I find it to be price gouging. If they could have made a profit off it at the original price, what other reason do they have to hike the price?

Do you think this is fair or ethical?
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Old 03-19-06, 11:30 AM   #2
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Originally Posted by Ziemas
Do you think this is fair or ethical?
I don't see a problem with this.... The shop owns the product before they sell it to you, so they are free to sell it at whatever price they see fit. If they had used a lower price to mislead you beforehand, then that would've been a different story.
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Old 03-19-06, 11:37 AM   #3
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I think this practice is fair because if you can mark a price down, you can also mark it up.

On the other hand, I do not think it is an ethical practice. How much profit is enough? Granted, most LBS's are not getting rich by selling bicycles, but the profit margin was sufficient before.

Another perspective is that you agreed to the marked price when you purchased the item. I would have researched the prices before going in to buy the item and made a decision before paying.
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Old 03-19-06, 11:41 AM   #4
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Quote:
Originally Posted by edp773
I think this practice is fair because if you can mark a price down, you can also mark it up.

On the other hand, I do not think it is an ethical practice. How much profit is enough? Granted, most LBS's are not getting rich by selling bicycles, but the profit margin was sufficient before.

Another perspective is that you agreed to the marked price when you purchased the item. I would have researched the prices before going in to buy the item and made a decision before paying.
They are the only shop in the country which sells the product which I wanted, so it's a moot point looking at other places. They also rarely, if ever mark a price down.

BTW it's more of a high end outdoors shop than an LBS.
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Old 03-19-06, 12:21 PM   #5
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Stores do not set the selling price of an item. Stores PROPOSE a price. Customers then say "yes" or "no". If customrs say "no" to a proposed price, the store must chose between keeping the item forever, or proposing a new price.

Don't like the proposed price? Just say "no".
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Old 03-19-06, 12:23 PM   #6
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Quote:
Originally Posted by Ziemas
They are the only shop in the country which sells the product which I wanted, so it's a moot point looking at other places. They also rarely, if ever mark a price down.

BTW it's more of a high end outdoors shop than an LBS.
I did not look at your location, which does not alter my opinion. Even if they have the monopoly on Ortlieb, I still believe it is fair but not ethical to raise prices. If the price had been higher than current catalog prices, then I would consider that price gouging.

I am sorry to hear that your options are limited though.
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Old 03-19-06, 01:24 PM   #7
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Quote:
Originally Posted by alanbikehouston
Stores do not set the selling price of an item. Stores PROPOSE a price. Customers then say "yes" or "no". If customrs say "no" to a proposed price, the store must chose between keeping the item forever, or proposing a new price.

Don't like the proposed price? Just say "no".
Unfortunately that doesn't work in a monopoly system.

I've seen many stores here choose to keep an old, outdated item rather then sell it at a lower price. The 12w Cateye headlight with the dead Ni-Cad battery I saw for $200 last year comes to mind.....
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Old 03-19-06, 03:16 PM   #8
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I think its okay because if I bought a bike for x dollars and 5 years later it was worth twice as much I wouldn't be expected to sell it for less than its current value. Why should the store sell an item for less than current value? Also if the selling price went up his wholesale price probably did as well and it will cost him more to replace his stock. I have gone to stores that don't markup existing stock so if you look through you can find identical items priced differently.
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Old 03-19-06, 03:50 PM   #9
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Hmmm,they have you over a barrell-just like the oil companies-gasoline refiners have us.Yeah,we can say NO-and walk.They have a near monoply.Mailorder-pass on the item- or pay their price-not much you can do.I don't really see any ethical problem in their selling it for whatever they want.It isn't a necessity,nothing that would ruin your economy etc.Maybe you can have some here-in the USA-buy it mailorder and ship to you?I don't know what your duties are like-France has-had-some really high duties on various things coming from the USA.Luck,Charlie
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Old 03-19-06, 04:04 PM   #10
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So turn it around. If the catalogue price went down what should the seller do?
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Old 03-19-06, 11:49 PM   #11
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So turn it around. If the catalogue price went down what should the seller do?
I think the seller should sell the item at their standard markup, unless they are having a sale.

This is the same shop that sold me a pair of XT shifters that were mispriced and tried to get me to pay the difference the next time I went in. Needless to say I refused. I don't live in America and the American form of capitalism isn't very common here. There are a speciality few shops which care about their customers and don't over inflate their prices, but most speciality shops due because they know they have a monopoly.

I live in a country with high inflation, a 40% increase in cost on a part that has been sitting on a shelf for four or five years (they should be happy to get rid of it at the original price after having it for so long) is just insulting. When I asked the kid working about it he was very embarrassed, and muttered something about it being a "political issue."
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Old 03-20-06, 04:08 AM   #12
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Quote:
Originally Posted by edp773
I think this practice is fair because if you can mark a price down, you can also mark it up.

On the other hand, I do not think it is an ethical practice.
This doesn't make sense to me. It seems to me that calling an action "fair" includes morality and moral rightness by definition. Fairness is really about justice, and I can't think of any unjust actions that might somehow also be ethical. I find it even harder to picture a just (or fair) action that is somehow simultaneously unethical. If you want to say that this mark-up is legally permissible, or makes sense in the context of how the store is performing in the marketplace, or is somehow a logical action in some other way, I'm right along with you, but it can't be both fair and not okay.

By the way, I wouldn't normally consider this kind of mark-up unethical, just inconvenient, but the fact that this is the only source for the product in the country complicates the issue. I'll plead the fifth - after all, I don't know the exact circumstances surrounding the issue. It is aggravating to be a customer in that position though, and I'm right along with you there, Ziemas. From your most recent post, it sounds like they practice poor business, at the very least, and that it may well be on the line or even fully into unfair territory, especially since they are in the enviable position of being the only retailer for this product. Bummer .
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Old 03-20-06, 09:11 AM   #13
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The consumer price of an item is never fixed (except in the case of price fixing, manufacturers minimums, etc, beyond the scope of this thread)

Consider the market of used or collectible goods, and the pricing structures surrounding scarceness and condition, as well as supply and demand maxims.


I guess the real question is, are you happy with your pockets even though you feel you paid what you feel is an inflated, possibly dishonest price for them?
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Old 03-20-06, 09:44 AM   #14
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Fair and ethical, IF it's the same as the item in the current catalog. Their price is still tied to their replacement cost of inventory. Now, if the current catalog is offering better design or materials, clearly, they are in the wrong.
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Old 03-20-06, 03:18 PM   #15
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Therer are many things that fluctuate in price, and now that almost everything has its price linked to a UPC code you will never know if there was a prior higher or lower price. Gasoline, orange juice, milk, dog and cat food, and many other things float in price from week to week.
Personally if I had an item for a while the price would be what was on the label, which would be based on our cost of the item. We would not move it up or down.
However when I buy something I base my purchase price "feeling" on how much I want it and whether or not it does the job. It does not matter if it were priced differently at some point.
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Old 03-20-06, 03:51 PM   #16
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Their pricing conduct is fair under a free market system. That doesn't make it good and smart business, though. They're failing miserably on that point. Rev. Chuck has the right idea though: everything is a comodity with a fluctuating value. High local inflation just makes the matter even worse.
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Old 03-20-06, 03:52 PM   #17
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Many stores sell based on their replacement cost. When I worked in a book store we priced books at the current manufacturer's cost + markup. If we had leftover stock and received a new order, the old stock (identical to the new stock) got repriced at the new stock's price. This usually wasn't a whole lot different, and occasionally was a LOWER price (so the store made less margin on that particular item).

I think the question is whether you look at it as the "flow" of items or the buy/sell of each item in particular. If you look at the buy/sell of one item, the margin could be fixed based on the original purchase price. However if you are simply concerned with moving lots of items at "approximately" the margin, you can just keep the current retail price equal to the current wholesale price plus your margin. In general that means the store's more likely to make a higher margin, but on the other hand, the store had to pay for lighting, air conditioning, etc. that item for the months it sat on their shelf.

I'd say it is only unethical when they use the promise of a lower price to entice you into the store, but won't sell it at that price. Or when they have a captive audience for a staple item and mark the price up more than is reasonable for a profitable business. I don't think it really applies to non-staple items like bike accessories however... I mean, even if he asks $2000 bucks for a little bag, it isn't like you have to buy the bag... it's not like it's food or something. You can keep using your backpack or whatever.

If they advertised the lower price and you came in and the price was higher, that's unfair. If you saw the lower price last week and left and came in this week and the price is higher, that's fine. You should have bought last week.
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Old 03-22-06, 11:59 AM   #18
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1) the idea that ethics has anything to do with has no basis. The only measure of what is the "fair" price, is the price upon which a willing buyer and seller agree.

2) your point about inflation clearly gives the rationale for the store to ask a higher price. At a 40% rate of inflation, the currency the store used to buy the item was worth 40% more than the currency with which you were paying. If the store didn't raise prices over time in a environment with such hyperinflation, they'd be out of business pretty quick.
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Old 03-22-06, 01:58 PM   #19
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[QUOTE=Ziemas]Unfortunately that doesn't work in a monopoly system. QUOTE)

Note: I am not a bicycle dealer:
But I would argue that it does work in a monopoly. Based on my limited understanding of economics, the maximum price that the store can charge is the highest amount the customer is willing to pay for it, regardless of whether or not they are the only supplier. Being the only supplier only means that they can likely capture more of the consumer surpluss (the difference between a given price and the absolute maximum the customer would pay for the item). Nonetheless, an item is only worth a given amount to any given customer, even if it is only available from a single source.

I have to admit that I think it fair and ethical according to our economic model. I often have to remind myself that I cannot be frustrated when I am outbid on ebay. Someone else was willing to pay more and that is the driver of the sale.

Another thing to consider is the time value of money that the owner has tied up in the item. Consider that the owner might have paid $4 for the item and kept it for 3 years. Due to inflation, the dollars that he is bringing in buy selling the item are worth roughly 9-12% less than they were when he bought the item. But that is not all. He also had his dollar sitting tied up in the item for 3 years when he may have been planning to sell it at 1 year. So he has two years opportunity cost of not being able to place his money somewhere else. Yes, it is his fault for not judging the market better. But these facts lead me to believe that he is not unethical for capturing as much money back from the item as he possibly can given that the item is of the same quality as the current model and that no-one is being tricked/fooled IMO.
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Old 03-23-06, 06:56 AM   #20
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Suppose they had been able to remove the old price tag completely and you could not have seen that the price was increased $8.00?

Would you still be unhappy with your purchase?

Prices change around here all the time. Things go on sale for a reduced price, then they go off sale and the price goes back up.

You made a decision to purchase at the price it was offered. Be happy with your purchase if it meets your needs and quit beating yourself (and the store) up.
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Old 03-23-06, 09:57 AM   #21
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It is not only fair but is good business pratice to sell ALL inventory
at current prices , NOS or not.

There is a factor in business accounting called......"Inventory Holding
Cost". Which is the cost to the business to let items set idle while all
other sales support the profit line. If there is a business loan to by
inventory ,which there often is, then the interest is part of the holding
cost also. Factor in inflation, devaluation of the dollar, lost profit and
you have a soup of loss that the business must cover to stay in business.

If the NOS were to be sold at MORE THAN the current price then that would
be gouging.
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