Vintage Silver Ring

Q: There was another that I saw before, which I cannot find now, that had it for about $9.00. What's this all about? Call me stupid, but if this was not scammish and hired by the original seller.. then why are these all so dramatically different in price?

A:Welcome to the world of retail markup variations in low priced items. Lets assume, and this may be reasonable, that the true, real, wholesale price of this ring is around $7.00. That's not at all out of line for a small silver ring with a relativly inexpensive stone, from a mass production manufacturer. Note that by wholesale, I mean the cost a retailer will pay to the manufacturer when they're buying enough to meet substantial minimum order requirements. That means true wholesale. NOT the typical wholesale to the public sort of thing. Usually, true wholesale also means you have to present some sort of evidence that you're actually in the business, such as a sales tax license, etc. There are lots of firms, especially on the net, claiming to sell at wholesale prices. It's very rare to find one that really is doing so. Anyway, in the real "brick and morter" world, it would be usual for an item with this kind of cost, to be sold for three to four times it's wholesale cost, ie somewhere in the 20 to 30 dollar range. Higher end stores may get substantially more. The price range you've found would be quite typical for the range of retailers from ritzy fashion shops down to discount sellers The thing to keep in mind is that any business must generate a given amount of total profit in order to pay it's bills, employees, etc. This is true for internet businesses as well as traditional stores. When merchanides costs a lot wholesale, the net profit from any given sale may be more, allowing the store to make the needed minimum amount of operating profit from a fairly low markup, on up to the traditional 2x markup or more. But when the cost per item becomes very low, the markup must increase if the store is to make any actual profit, unless there is such a high volume of sales that the volume of sales makes that minimum profit. Remember that though the cost per item may be low, the cost of processing the sale may not be any lower than for an expensive item. To Illustrate: If you go into many department stores, from places like K-mart to more expensive places, you may find racks of costume jewelry earrings selling for just a few dollars per pair. This may seem cheap, but often, the cost to the store for those things may be on the order of perhaps ten or twenty cents per pair, maybe less. In order for the store to justify putting that rack there, tacking up square footage, as well as to pay for the inveitable pilferage, and the time it takes a sales associate to ring up a sale, the stores usually need to charge markups on that type of merchanidse of anywhere from 8x the cost to considerably more. sometimes they just look at the things and "decide" what they can sell it for, not worrying whether this amounts to an enormous markup or not. What will, in the end, determine the retail selling price is what price level ends up generating the most total profit from that square footage the rack takes up. The price can go up until the sales volume goes down enough that profit then declines. If this sounds unfair or brutal, heck, girl, that's the economics of business. And the basic rules apply to almost any business you can name, though the end prices will vary a lot depending on the market, the type of store or business, and the type of merchandise. It's not as "obscene" as one might think, since in the end, if a store cannot generate enough profit to remain in business, then nobody will be there to sell the things at all, as the store goes out of business. And if the profit margin overall for the business os too high, then market competition will find some other seller willing to undercut the price and make a little less profit. it evens out in the end to price levels that generally pretty well reflect where they need to be in order for stores to remain profitable, competative, and still in business. Now, internet sales are a lot more variable. Merchandise may come to a seller by many different channels. Some of it may be new, some of it may be overstocks or closeouts from the manufacturer. Some retailers will have bought a lot, and thus at lower prices, and some folks selling on ebay may not be true retailers, but rather folks specializing in overstocks, merchanides from bankruptcies, estates, and the like. And some internet businesses are some little ol lady doing it from her kitchen for a little extra cash, while others are big operations needing to more carefully follow the normal rules of retail pricing.

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