Mark ups - Reasonable or unreasonable?

Shadow54 on 01/09/2014 - 14:38

Seems there's a lack of information and understanding out there about mark-ups on goods; what is a reasonable mark-up and what is an unreasonable mark-up. Many folks who have never been in business seem to think, for example, that supermarkets are only marking-up say 10 percent or 15 percent (and relying on high volumes) , particularly on everyday items, like potatoes.

To follow the potato trail, supermarkets typically sell potatoes for an average price of around $2.50 per Kg.
Farmer's typically receive a price of 8c to 10c per Kg.

I'd be interested to hear your stories and observations about mark-ups………

General Discussion

Comments

  • Tafe on 01/09/2014 - 15:13

    Cost of bank dealing with a late credit card payment .50c

    Fee charged to customer - $35.

    Mark up - 7000%

    http://www.theage.com.au/business/banking-and-finance/anz-fa…

    • Shadow54 on 01/09/2014 - 18:13

      Hard to beat that mark-up! Is the ACCC chasing that bank?

  • SirFlibbled on 01/09/2014 - 15:36
    +4

    There is no such thing as an unreasonable mark up. Charge what the market is willing to pay.

    That being said, where a product in one market is marked up considerably more than a product in another market then people will question is and people will buy it from the cheaper market.

    • Shadow54 on 01/09/2014 - 18:19

      I appreciate what you say about no such thing as an unreasonable mark up. That being said, then Aussie retailers best shut up about overseas online retailers taking business away from them………buyers will eventually seek out the reasonable sellers and (hopefully) the unreasonable sellers will go broke. Market forces at play. My wife buys high quality fabric from the USA and even with postage pays half of average Aussie retail; the point is no Aussie fabric retailer has sold her anything for years. I buy books from the UK: same story, half of the Aussie prices.

      • SirFlibbled on 01/09/2014 - 19:38

        Which illustrates my point. But it's not the retailers who are marking up excessively. There's just too many people in the retail chain in Australia, each taking their little bit off the top.

        • Shadow54 on 02/09/2014 - 10:25

          Am I correct in thinking that what you're saying is that prices are what they are in Oz because there are often too many middlemen?
          To use the toaster example. KMart buys toasters direct from the Chinese facory for a landed cost of say $5 per toaster. Sells for $8.
          Downtown Electrical (fictitious small business) buys toasters from a "wholesaler" or an "importer" Pays $15 per toaster. So needs to sell above $20 to make any money (GST steals 10 percent). I get it.
          Over the years we have seen this same type of scenario with milkbars. Milkbar buys CC drink for $2 per litre wholesale. Big store sells same CC drink for $1.75 per litre (because screwing supplier). Milkbar eventually goes out of business.

        • SirFlibbled on 02/09/2014 - 11:39

          Mostly. From my understanding a good example are video games. The games can be sold by the UK retailer cheaper than that Australian retailers can buy them for from the Australian distributor. JB Hifi at one point was buying games from a OS retailer and on selling the games in Australia for less then they could buy them for from the distributor in Australia. This is usually the exact same product too as Australia is considered part of the UK by most game makers (sometimes due to classification issues this is not the same but that's rare).

          Basically the retailers are stuffed because of the high markups by distributors in Australia. Not much they can do about it, considering they also have to pay high rents and high wages as well.

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