Wednesday, May 17, 2006

Ex carnaval of the capitalists

Mover mike asks whether gold dealers should price according to cost of the gold origionally or the market price of gold.

I think, in as far as it defines your cost structure, you should charge according to the current price of gold. My assumption is that you are planning on operating an ongoing business. The reason for this is that each sale commits you to a purchase in order to keep the "pipeline" filled.

But what is even more important is "market price" - it is silly to have a margin of 100% if the store right next door charges 80% or if your prices have reached the point where there is a sudden drop in the number of people willing to pay them. In other words, if you have time to price in a complex manner, charge as much as you can consistently get away with.


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