Price gouging vs supply and demand...

[Teggy1]

Re: Price gouging vs supply and demand...

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: pawprint2</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: herro prease</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: CASDB</div><div class="ubbcode-body">The market hasn't been free since the first law was passed to protect so-and-so, or to bail out these select people. "Too big to fail" ring a bell?</div></div>

Perhaps. But if it wasn't for .gov, the demand for these things wouldn't be so high, resulting in the supply being so low, resulting in the price being so high.

There is no regulation on AR-15 pricing. Their market value was driven up solely due to basic economic factors. Anyone who chooses to sell anything below market value right now is a fool.

Some of this stuff's pricing is going up because of increased costs - there are shops running around the clock, which instantly results in higher costs to operate and pay employees overtime and double-time. Should those manufacturers sell to you at the regular cost, and not make their profit margins due to increased costs, all because someone might not think it's fair? </div></div>

Wow! This is an eye-ooopener!! I have never heard that if a business gets so busy, they must run extra shifts that their profit margins get smaller. I have always thought the fixed costs per hour would decrease, but you are telling me, if a business must increase production, add shifts "running around the clock" that they actually make less money per piece, even if they are charging more money. This must me the "New Economics", something that must now be- being taught in school-I know millions of kids are taking "Ritalin" and like drugs, but I never thought it would change the basic way a business was able to make a profit. The more profitable business runs slower-one shift, doesn't have a line around the block to buy their good, and isn't able to charge "very high prices" for their goods. The less profitable business, runs around the clock, can't keep up with demand, even if the price of the goods increased %100 or more, they still make less money. This is news to me, but thanks for helping us understand how this works. </div></div>

Um, NO. Re-read the post

The sentiment was, if one is paying overtime to employees, every product that employees handles/assembles/packages/ships/bills out, etc. etc. has to be priced higher to maintain margins.

He said nothing of increasing prices leads to less revenue.

 

[pawprint2]

Re: Price gouging vs supply and demand...

QUOTE, """Some of this stuff's pricing is going up because of increased costs - there are shops running around the clock, which instantly results in higher costs to operate and pay employees overtime and double-time. Should those manufacturers sell to you at the regular cost, and not make their profit margins due to increased costs, all because someone might not think it's fair?
Running around the clock, whick instantly results in higher costs to operate and pay employees overtime and double-time."""""
Well, if you are operating a business "around the clock", this means 24/7, that is 21 working shifts per week-you have at least three shifts of full time employees. No way are you working your current employees "around the clock", people must sleep-eat-etc.
In the old days, when a business had to put on extra employees, sold all they could make (even with 100%+ price increases in the sale price of the finished product), profits went up, not down.
The statement, "the sentiment was...." demonstrates an understanding not easily understood by the reader, as the statement was in FACT: "Operating a business around the clock". Nothing was said such as- if a business must pay overtime to some employees because business is so good.....
Re-reading the post is good advice!

 

[herro_prease]

Re: Price gouging vs supply and demand...

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: pawprint2</div><div class="ubbcode-body">Well, if you are operating a business "around the clock", this means 24/7, that is 21 working shifts per week-you have at least three shifts of full time employees. No way are you working your current employees "around the clock", people must sleep-eat-etc.
In the old days, when a business had to put on extra employees, sold all they could make (even with 100%+ price increases in the sale price of the finished product), profits went up, not down.
The statement, "the sentiment was...." demonstrates an understanding not easily understood by the reader, as the statement was in FACT: "Operating a business around the clock". Nothing was said such as- if a business must pay overtime to some employees because business is so good.....
Re-reading the post is good advice!</div></div>

Right. Because you're going to go from a machine shop regular one shift staff to three by hiring two more complete shifts of trained machine shop workers out of thin air. I don't know what old days you come from, but I know from experience that you can't even find two shifts worth of dishwashers in this country anymore.

You're dead wrong. These companies, especially the smaller machining companies, are tapping their existing resources because the time frame limits the amount of resources that can be brought on. And they are running around the clock at increased cost not only because of personnel costs, but also increased tooling and maintenance - and these things are also not guaranteed to be readily available. Further, they know that this bubble will end soon one way or the other - with demand dropping as supply catches up, or with the market expiring because a ban is passed and their product cannot be manufactured anymore.

Increased cost == decreased profit margin. Add into that, that some of these tooling and machine setups are dedicated to making things that are the direct targets of the upcoming legislation, and these guys stand to take an enormous hit if something passes. Paying off tens of thousands of dollars of machinery can take years, and now, this ROI period potentially could be cut down to months, if that. Since you're obviously a genius when it comes to business, I don't have to tell you that that means that a weapon-related manufacturing investment is shot and they could easily lose an entire business.

I recommend you take some of the Ritalin you mentioned in your prior post, and work on your reading comprehension while you chill out.

 

[pawprint2]

Re: Price gouging vs supply and demand...

Those businesses that have a quarterly profit statement (publicly held) will give us the answer, you may be correct, increased sales+higher selling price may in fact equal lower profit margins.
I will wait and see what the actual profit reports look like! If I am wrong, I will be man enough to post on this very string how correct you are and wrong I have been. On the other hand, we will see if the same holds true if I am correct. The profits of those required to report by SEC regs will give us the answer in Dollars. We will be able to compare those figures to the previous quarter and Bingo there will be our answer. No problem understanding what has been written here, I do, however; have a problem with understanding -- what was written isn't actually what was meant, as I have misplaced my crystal ball.

 

[hatidua]

Re: Price gouging vs supply and demand...

Three weeks ago, everything was in stock at reasonable prices. Anyone whining about price gouging should have bought THEN.

My sympathy level for procrastinators doesn't even register on the meter.

 

[pawprint2]

Re: Price gouging vs supply and demand...

Agree with you, same holds true for other legal sales, gas, food, shelter etc. It's strange how huge increase in sales, along with at least 100% increase in price could cause a business to make 'lower profits'. But, as I posted, we will find out real quick, if in fact the gun mfgs have made more or less this quarter over last quarter, or this quarter and the last quarter of last year, in either case, I hold, we are going to find an increase in profit. But 'herro prease' may in fact be right-on with his 'special buiness knowledge', and they [gun mfgs] are now making less profits. We Shall See. And based on who has the guts to post on this very string that they were wrong or right- it will tell alot about one of us.

 

[herro_prease]

Re: Price gouging vs supply and demand...

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: pawprint2</div><div class="ubbcode-body">Agree with you, same holds true for other legal sales, gas, food, shelter etc. It's strange how huge increase in sales, along with at least 100% increase in price could cause a business to make 'lower profits'. But, as I posted, we will find out real quick, if in fact the gun mfgs have made more or less this quarter over last quarter, or this quarter and the last quarter of last year, in either case, I hold, we are going to find an increase in profit. But 'herro prease' may in fact be right-on with his 'special buiness knowledge', and they [gun mfgs] are now making less profits. We Shall See. And based on who has the guts to post on this very string that they were wrong or right- it will tell alot about one of us.</div></div>

Well, I'm sorry to hear this is now a contest of who is more manly. To be honest, I'm just defending what I see as manufacturers running honest businesses getting crapped all over by loony-ass politicians. In any case, if I am wrong, I have no problem with that.

But, just an increase in profit margin does not necessarily imply anything. Some manufacturers are knowingly inflating this because they have fear of ROI costs not being met before a ban, as I previously mentioned. Take this quote from Troy Industries, for instance, directly off of their website when purchasing their polymer magazines:

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">****Due to impending federal legislation, Troy Industries has increased magazine pricing to absorb the expenditures outlaid on R&D, tooling and production costs. Our initial pricing strategy was based on a 7-year sales forecast which is threatened by the determinations to be made by Congress in the next few days.

We apologize to you, our valued customers for this increase. Please know that we are monitoring the issue, and hope to reduce the cost once the future of this product line has been determined.
Furthermore, due to the high increase in orders of this product, availability is extremely limited.

This product is available for retail sale only. No dealer or distributor discounts are available.****</div></div>
http://troyind.com/%20/plastics/magazine/troy-battlemag-3-pack

Because of this, I do not believe that just an increase in profit margin necessarily "proves" anything. If you thought you were going to potentially lose your business, but the current market situation was enormously inflating the value of your product, would you not want to hedge your bets?

 

[pawprint2]

Re: Price gouging vs supply and demand...

This is a new twist! Your original post indicated that having to add workers, due to the hugh demand, was some how costing these businesses profit {see your own post}. Now, you seem to have changed your mind, and in fact, as saying because they may not be able to produce in the future is the primary reason for the price increase, and in fact they ARE making more profit now, as a way to 'hedge their bets'.
Are you now saying that gun mfgs are making higher profits now than they were last quarter, even if they have had to add new employees to keep up with the demand? That is a 180 degree turn!
I have thought about your first post, and realized, everytime McDonalds adds a new location, their profits must decrease, I wonder how much they are now loooosing on each Big Mac?
Your statement, "..I do not believe that just an increase in profit margin necessarily "prove" anthing". Actually it does! It proves your early assertion that adding workers due to High Demand for ones product does NOT Decrease profits!
Now, you have added the cost of new equipment, that has nothing to do with your original statement. I doubt that any Equipment MFG, had CNCs(for example) loaded up on trucks along with Scrape in crews ready to head to gun mfgs, in anticipation of that terrible, school shooting (God Bless all those hurt in the School), ready to roll, and In less than 24 hours, they had already sold this new equipment (to gun mfgs) and had it running. That may explain the overnight increase in prices, but I don't think so, no rational person would actually consider this as sane, but rather the Free Market Set the Price, and the Free Market Alone.
The Free Market Sets the Price for firearms (even if our market is not free, If we Allowed the Chinese to export to the USA weapons and ammo I think we would see a price decrease, but that's just me).
I hope McDonald's does not go 'tits up' before I get a 1/4 pounder later, I understand they have added some more workers.

 

[herro_prease]

Re: Price gouging vs supply and demand...

Wow - caught in my own web of lies...And I would have gotten away with it too, if it werent for you meddling kids!

 

[W54/XM-388]

Re: Price gouging vs supply and demand...

Normally the forces of supply and demand work very well to even a lot of stuff out. The problem right now is that the whole issue has been suddenly created by evil politicians and nobody really knows for sure what will happen so everybody is pretty much having to place their bets on supply based on what the forces of evil may be able to get away with.

Right now everybody wants everything in a very very short supply window because lots of people want to not get stuck on the wrong side of something the evil people push through. This presents some unique challenges.

Companies can try to ramp up production, but there are limits to what they can do due to time constraints. In addition it is next to impossible to plan for the future as a company because you could suddenly wake up to find that evil has triumphed and all your investments are now worthless.

Hiring and training more people takes time and investing in more equipment / space / materials / people is very dicey till people know what the end result is going to be.

The latest news coming out of the White House today is not going to help prices come down at all and probably not help anybody want to invest either.

Generally prices rise and fall based on costs partially and then partially what the public is willing to pay which is often dictated by supply.

On the seller side, if you are at a level start with all back orders filled etc. You have x amount of stock, suddenly it is in short supply & people will pay 3x the normal price, then most likely you will raise your prices to what the market will bear and take a bit of money off the table, especially if you predict lean times ahead or even possibly a major part of your business being suddenly wiped out.

On a buyer side, if you found somebody wanting to sell you the exact same thing for a lot less than somebody else is, you will go for the lower price usually and have no qualms about it, so with the internet driving it, most of the prices usually tend to be in a similar range for a similar product.

Price hikes during shortage are the free persons, capitalist way of rationing things. (As opposed to the communist model of government saying who can have what and how many).

Right now what we are seeing is given a short time window and uncertian future, how badly does each person want a given item & what bets are being taken?

It works both ways, if you look at lots of the local gun stores, they have seen a lot of their normal priced inventory get sold and supply slowly trickle in from their normal sources. Then there has been a big influx of consignment items as people who had extras, decided the price was just too good and they would rather have money for other things than spares, as well as those making bets that the forces of evil would fail.

Given the time frame that the forces of evil are pushing their plans along, I don't think production will be able to catch up with demand in the short term so prices are subject to wild swinging.

I think however this is only the warm up as the battle for our Second Amendment rights is only just getting started and the forces of good and evil are lineing up to take their starting positions. Expect things to change drastically depending on who wins the battle. If evil wins, you will most likely see prices go crazy high, if good wins, you will see prices pretty quickly plunge back to normal levels. Either way there will be winners and loosers depending on who bet what way with their money.

Right now (which may change very soon), nobody is being forced to buy or sell at a price they don't like, but those who waited to the last moment to stock up are paying a high price for wanting to get in the game really late, (and yet they pay it for fear of being possibly shut out of the game for an undetermined time).

 

[EddieNFL]

Re: Price gouging vs supply and demand...

This reminds me of a fellow posting about a an ebay sale he missed out on. Seems he put in the opening bid and for a week no one else bid. At the last minute someone entered a higher bid and he lost.

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">For a whole week it was mine and then someone intentionally waited until the last minute to outbid me! </div></div>

I left out the name calling.

Proposed 28th Amendment to the Constitution:

The right of the people to enjoy low prices shall not be infringed.

 

[herro_prease]

Re: Price gouging vs supply and demand...

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: pawprint2</div><div class="ubbcode-body">This is a new twist! Your original post indicated that having to add workers, due to the hugh demand, was some how costing these businesses profit {see your own post}. </div></div>

I didn't say anything about adding workers. I specifically mentioned overtime and double-time, which in no way implies new workers, but rather existing. I even clarified that for you in a later post.

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">Now, you seem to have changed your mind, and in fact, as saying because they may not be able to produce in the future is the primary reason for the price increase, and in fact they ARE making more profit now, as a way to 'hedge their bets'.</div></div>

not even close. see last comment. your reading comprehension is seriously compromised.

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">Are you now saying that gun mfgs are making higher profits now than they were last quarter, even if they have had to add new employees to keep up with the demand? That is a 180 degree turn!</div></div>

no. I'm saying that with increased efforts, personnel costs, maintenance, and tooling, profit margins will decrease. so, costs must go up to match. other factors will result in prices going up, such as fear of loss of ROI. all of this is obvious to those who can reed gud and do other stoff gud 2.

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">I have thought about your first post, and realized, everytime McDonalds adds a new location, their profits must decrease, I wonder how much they are now loooosing on each Big Mac?</div></div>

right. because a franchised restaurant adding an entirely new location is perfectly analogous to an non-franchised machine shop overutilizing the _same_ location, personnel, machinery, and tooling. *facepalm*

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">Your statement, "..I do not believe that just an increase in profit margin necessarily "prove" anthing". Actually it does! It proves your early assertion that adding workers due to High Demand for ones product does NOT Decrease profits!</div></div>

*double-facepalm*

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">Now, you have added the cost of new equipment, that has nothing to do with your original statement. I doubt that any Equipment MFG, had CNCs(for example) loaded up on trucks along with Scrape in crews ready to head to gun mfgs, in anticipation of that terrible, school shooting (God Bless all those hurt in the School), ready to roll, and In less than 24 hours, they had already sold this new equipment (to gun mfgs) and had it running. That may explain the overnight increase in prices, but I don't think so, no rational person would actually consider this as sane, but rather the Free Market Set the Price, and the Free Market Alone.
The Free Market Sets the Price for firearms (even if our market is not free, If we Allowed the Chinese to export to the USA weapons and ammo I think we would see a price decrease, but that's just me).
I hope McDonald's does not go 'tits up' before I get a 1/4 pounder later, I understand they have added some more workers.</div></div>

and this is completely unintelligible gibberish. great work.

 

[pawprint2]

Re: Price gouging vs supply and demand...

Enough said, I give up! You are right, the working around the clock to fill orders is lowering the profits of the Gun Mfgs, however; publicly held companies will publish thier quarterly profit statements, and one of us will be right, one will be an idiot. If it is I, I will man up, how about you?

 

[E. Bryant]

Re: Price gouging vs supply and demand...

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: pawprint2</div><div class="ubbcode-body">Wow! This is an eye-ooopener!! I have never heard that if a business gets so busy, they must run extra shifts that their profit margins get smaller. I have always thought the fixed costs per hour would decrease, but you are telling me, if a business must increase production, add shifts "running around the clock" that they actually make less money per piece, even if they are charging more money. </div></div>

Well, this thread has shown us who has some real-world business experience beyond their junior high econ class.

The first step a business takes when increasing production is to add overtime, since it's expensive to add headcount in a temporary situation. Overtime, of course, pays time-and-a-half. That cascades beyond the direct labor to things such as maintenance labor costs, material handling, etc. So, a modest increase in production can indeed cost money.

Let's go a bit further and add additional shifts to this mythical production line, since we think the additional demand might be semi-permanent. That gets our direct labor costs back in line with our original assumptions, but now we may need to add a whole additional shift of management, HR, maintenance, material handling, etc. If this is the only production line running on this particular shift, all those additional costs can severely cut into the profit of the product being run on that line. The math gets worse if I bring in these people as temps instead of direct hires, because the temp agency gets a cut.

Also note that, if I'm buying non-standard parts to assemble this product, then my suppliers will face the same problems, and further compress my margins.

This is why a manufacturer may need to increase prices for either a drop in volume <span style="font-style: italic">or an increase in volume</span>. This isn't some theoretical exercise where more volume always leads to lower costs. Spend some time in the real world and shit gets more complicated than when sitting at a chalkboard.

 

[Guest]

Re: Price gouging vs supply and demand...

Any time volume goes up, margins go down, that is fact. The "New" bottom line normally tic's up, but not at the percentage of prior or what most would think.
The question I have is this, if you don't have it, whats it worth if you have to have it.
Until 1974, and remembering want Bill Gates said, hardware does not matter, the money/control is in the software.

Like controlling the gas in 74,... times have proved Gates right, and I believe this time the back door, will be ammo.

 

[Sean the Nailer]

Re: Price gouging vs supply and demand...

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Gunfighter14e2</div><div class="ubbcode-body">Like controlling the gas in 74,... times have proved Gates right, and I believe this time the back door, will be ammo. </div></div>You have no idea how much I pray that this is not going to happen. The bastards have already screwed up the works with the 'lead ban',,,, now all we have to watch out for is some bullshit issue with 'copper'.

The only thing in this Universe that they haven't screwed up yet is the Lord's Prayer, but they have simply turned it off.

 

[pawprint2]

Re: Price gouging vs supply and demand...

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: E. Bryant</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: pawprint2</div><div class="ubbcode-body">Wow! This is an eye-ooopener!! I have never heard that if a business gets so busy, they must run extra shifts that their profit margins get smaller. I have always thought the fixed costs per hour would decrease, but you are telling me, if a business must increase production, add shifts "running around the clock" that they actually make less money per piece, even if they are charging more money. </div></div>

Well, this thread has shown us who has some real-world business experience beyond their junior high econ class.

The first step a business takes when increasing production is to add overtime, since it's expensive to add headcount in a temporary situation. Overtime, of course, pays time-and-a-half. That cascades beyond the direct labor to things such as maintenance labor costs, material handling, etc. So, a modest increase in production can indeed cost money.

Let's go a bit further and add additional shifts to this mythical production line, since we think the additional demand might be semi-permanent. That gets our direct labor costs back in line with our original assumptions, but now we may need to add a whole additional shift of management, HR, maintenance, material handling, etc. If this is the only production line running on this particular shift, all those additional costs can severely cut into the profit of the product being run on that line. The math gets worse if I bring in these people as temps instead of direct hires, because the temp agency gets a cut.

Also note that, if I'm buying non-standard parts to assemble this product, then my suppliers will face the same problems, and further compress my margins.

This is why a manufacturer may need to increase prices for either a drop in volume <span style="font-style: italic">or an increase in volume</span>. This isn't some theoretical exercise where more volume always leads to lower costs. Spend some time in the real world and shit gets more complicated than when sitting at a chalkboard. </div></div>
When your goods double(or more) in their sales price, almost overnight, while your costs remain almost level, your profit margin increases by (in the case of AR's) 1,000%. If you spent some time in the real world, you would understand this basic fact. All the weapons in the system, had a sales prices double or triple overnight, even parts such as uppers and lowers doubled-overnight. Let's give a simple example, 1 'rack grade' AR, sales price $600.00, over night the price went to $1,500.00 (this btw is real world). If the mfg was making a profit of 20% on $600 he made $120.00 per weapon. Now at the new selling price of $1,500.00 his profit rose to $1020 per weapon, his margin just increased from $120 to $1020 per piece, around 900% increase. Even if he had to pay all his workers double time, 4 hours a day, his profits would still (and they will be by on quarterly profit reports-real world, not a chalk board, not a key board) be huge!
Now, let's looks a couple of facts, running "around the clock" means 21 shifts per week, you couldn't work anyone that many hours, humans need to sleep, the safety issues of working around and with machines would keep anyone from working their people 16 hours a day or more 7 days a week. So, let's be clear, in a 24 hour period the current value of the stock in hand more than increased by 100%, this "value" was and is established by the Free Market. The profits did not decrease during this time, but in fact have increased. Real world Data, from quarterly reports of American Gun MFGs will tell us who is correct and who is not.
Another example would be the Gun Shop that had 100 ARs in stock at this time of the price increase, their profits per weapon increased 800-1000%, and they sold all they had (most without adding more workers). In this case they may have made an Extra $100,000.00 (above and beyond the normal profit for the sale). This is the real world, just check around at the selling price of AR's around the nation. The idea that because the MFG's could not keep up with demand, even when profits per piece have increased 800-1000%, are keeping them from making a windfall is not going to be supported by the Real World Numbers as reported IAW SEC rules and regulations. WE shall See.

 

[Teggy1]

Re: Price gouging vs supply and demand...

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: pawprint2</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: E. Bryant</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: pawprint2</div><div class="ubbcode-body">Wow! This is an eye-ooopener!! I have never heard that if a business gets so busy, they must run extra shifts that their profit margins get smaller. I have always thought the fixed costs per hour would decrease, but you are telling me, if a business must increase production, add shifts "running around the clock" that they actually make less money per piece, even if they are charging more money. </div></div>

Well, this thread has shown us who has some real-world business experience beyond their junior high econ class.

The first step a business takes when increasing production is to add overtime, since it's expensive to add headcount in a temporary situation. Overtime, of course, pays time-and-a-half. That cascades beyond the direct labor to things such as maintenance labor costs, material handling, etc. So, a modest increase in production can indeed cost money.

Let's go a bit further and add additional shifts to this mythical production line, since we think the additional demand might be semi-permanent. That gets our direct labor costs back in line with our original assumptions, but now we may need to add a whole additional shift of management, HR, maintenance, material handling, etc. If this is the only production line running on this particular shift, all those additional costs can severely cut into the profit of the product being run on that line. The math gets worse if I bring in these people as temps instead of direct hires, because the temp agency gets a cut.

Also note that, if I'm buying non-standard parts to assemble this product, then my suppliers will face the same problems, and further compress my margins.

This is why a manufacturer may need to increase prices for either a drop in volume <span style="font-style: italic">or an increase in volume</span>. This isn't some theoretical exercise where more volume always leads to lower costs. Spend some time in the real world and shit gets more complicated than when sitting at a chalkboard. </div></div>
When your goods double(or more) in their sales price, almost overnight, while your costs remain almost level, your profit margin increases by (in the case of AR's) 1,000%. If you spent some time in the real world, you would understand this basic fact. All the weapons in the system, had a sales prices double or triple overnight, even parts such as uppers and lowers doubled-overnight. Let's give a simple example, 1 'rack grade' AR, sales price $600.00, over night the price went to $1,500.00 (this btw is real world). If the mfg was making a profit of 20% on $600 he made $120.00 per weapon. Now at the new selling price of $1,500.00 his profit rose to $1020 per weapon, his margin just increased from $120 to $1020 per piece, around 900% increase. Even if he had to pay all his workers double time, 4 hours a day, his profits would still (and they will be by on quarterly profit reports-real world, not a chalk board, not a key board) be huge!
Now, let's looks a couple of facts, running "around the clock" means 21 shifts per week, you couldn't work anyone that many hours, humans need to sleep, the safety issues of working around and with machines would keep anyone from working their people 16 hours a day or more 7 days a week. So, let's be clear, in a 24 hour period the current value of the stock in hand more than increased by 100%, this "value" was and is established by the Free Market. The profits did not decrease during this time, but in fact have increased. Real world Data, from quarterly reports of American Gun MFGs will tell us who is correct and who is not.
Another example would be the Gun Shop that had 100 ARs in stock at this time of the price increase, their profits per weapon increased 800-1000%, and they sold all they had (most without adding more workers). In this case they may have made an Extra $100,000.00 (above and beyond the normal profit for the sale). This is the real world, just check around at the selling price of AR's around the nation. The idea that because the MFG's could not keep up with demand, even when profits per piece have increased 800-1000%, are keeping them from making a windfall is not going to be supported by the Real World Numbers as reported IAW SEC rules and regulations. WE shall See. </div></div>

Here is the problem, your building an argument that is false.

You are assuming it is the manufacturer making huge profits. In reality it is not, the retailer is.

Do you buy directly from Magpul? I just checked an AR manufacturers website for pricing. It is in fact nearly the same price as they had been. Retailers are making increased profits, yes. Manufacturers don't seem to have raised prices yet, at least not significantly. In fact, if you care to check Magpuls website, a Pmag is listed at $13.95.

Your understanding of how the market works seems to be a little askew. If you want to discuss retailers margins, that is one thing, entirely separate from the manufacturer.

 

[E. Bryant]

Re: Price gouging vs supply and demand...

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: pawprint2</div><div class="ubbcode-body">The idea that because the MFG's could not keep up with demand, even when profits per piece have increased 800-1000%, are keeping them from making a windfall is not going to be supported by the Real World Numbers as reported IAW SEC rules and regulations. WE shall See.</div></div>

A few things:

1) As someone else already pointed out, the jump in transaction price of product already on the shelves benefited the retailers, not the manufacturers.

2) Despite all your fancy words, you fail to realize that a large number of firearms manufacturers are privately-held and thus not required to disclose financial information. Good luck looking for it, though.

3) If the holders of tens or hundreds millions of dollars in physical capital and inventory want to make a profit before their market window permanently closes, why is this a bad thing? Are you always opposed to the idea of capitalism? Or are you only a fair-weather friend?

 

[pawprint2]

Re: Price gouging vs supply and demand...



SPRINGFIELD, Mass. (AP) — Smith & Wesson Holding Corp.'s shares jumped in after-hours trading Thursday after the firearm maker said its fourth-quarter net income soared on strong sales, particularly of its polymer pistols and modern sporting rifles, and it gave forecasts that beat expectations.


Businessweek

More About "Smith and Wesson's fourth quarter profits"


Stock Picks: Aflac, Amazon.com, FedEx, UPS
Thu July 01, 2010, 11:40am EDT

Earnings: Beyond That Big Fourth-Quarter Spike
Fri January 15, 2010, 2:54pm EST

SAP Posts 13% Net Gain in Fourth Quarter
Wed January 28, 2009, 10:42am EST
Its shares soared more than 15 percent after hours on the news.

The company earned $12.5 million, or 19 cents per share, for the quarter that ended April 30. That's up from $1.1 million, or 2 cents per share, in the same quarter last year. From continuing operations, the company said it earned 27 cents per share, versus 7 cents per share last year.

Analysts polled by FactSet anticipated earnings from continuing operations of 17 cents per share on revenue of $128.6 million. Smith & Wesson's total quarterly revenue grew 28 percent to $129.8 million from $101.7 million.

During the year, Smith & Wesson, based in Springfield, Mass., paid down $30 million of debt and increased its manufacturing capabilities. It said that growth helped lay a solid foundation for the new fiscal year.

In the current quarter, it expects to earn 16 cents to 19 cents per share on revenue of $125 million to $130 million. Analysts are anticipating earnings of 12 cents per share on revenue of $112.6 million for the period.

For the 2013 fiscal year, it forecast earnings between 60 cents per share and 65 cents per share on revenue between $485 million and $505 million. Analysts are expecting the company to earn 50 cents on revenue of $466 million.

For fiscal 2012, the company reported net income of $16.1 million, or 25 cents per share, compared with a loss of $82.8 million, or $1.30 per share, last year. From continuing operations, it earned 41 cents per share, compared with 13 cents per share last year. Its revenue rose to $412 million from $342.2 million last year.

The stock jumped $1.04 to $7.93 after hours; it had ended regular trading down 15 cents at $6.89.

 

[pawprint2]

Re: Price gouging vs supply and demand...

Ruger will post its 4Q Jan12, 2013, my guess is it will have seen a huge increse in profit during the 4thQ, as is S&W (as compared to 3 quarter of 2012 or 4q of 2011). The really smart guy that pointed out- you can't get data from the private firms, thanks I think you are the only one that knew that, however; Between Ruger and S&w one can make Fact Based observations regarding the MFGs. Let's quit this stupidity, as the FACTS are published by the Gun MFG, IAW SEC regs, we will all be able to see what is and has been going on.

 

[pawprint2]

Re: Price gouging vs supply and demand...

To E. Bryant: I have stated many times I am 100% behind the Free Market, no fair weather friend here. I have just doubted and still doubt that huge price increased along with hugh demand has caused MFG's to make less money (they had to pay over time,hahaha). This flew in the face of reality, not on a chalk board, but rather the Big Board. I'll post Ruger's 4q, after they publish it. Not looking good for the "Super Duper Expert Economist here"! As, the facts just aren't backing up the rediculous assertions about the MFG's having to pay over time etc. and aren't making as much money etc. Check your own reading skills, try re-reading the string, get help if necessary.

 

[Teggy1]

Re: Price gouging vs supply and demand...

No one is doubting increased profits from firearms manufacturers.

It is NOT from price increases, as was already stated, it is from volume.

Correlation does not imply causation.

You are trying to say increased revenue is from increased prices from manufacturers. While Manufacturers may have increased prices to cover additional costs, the retail prices are NOT the reason for increase MFG revenue.

 

[pawprint2]

Re: Price gouging vs supply and demand...

Teggy1, yes there have been doubts about the profits of firearms mfgs, but, let's say your are correct, reason: the firearms mfgs do not sell retail. OOOOOPs, I just went up Bushmaster's home page, and DMPS's home page, and guess what? These two, sell retail, direct, everything but lowers(or complete guns), so I guess, strickly speaking their profits at this time are not just from increased volume, but from increased retail sales! I know a couple of months ago I ordered around $500.00 worth from Bushmasters retail sales, when my CC bill came it was billed to Remington, it took me a minute to figure out the charge (DAA). But nonetheless, Many of the AR MFG'S sell retail, (everything but the lowers and complete guns). These prices are usually very high compared to what others are selling for, thus they are supporting their MSRP (or the like). In short they are (historically) the most expensive place to buy from. I ordered because no one had exactly what I wanted, I didn't mind the extra cost. Which at this time seems like the buy of the year.
So once again, There are those doubting the increased profits from firearms mfgs (read the string), due to overtime etc.
Many of the AR mfgs are and have been selling everying but those parts that require an FFL at full retail for years, go to their webpages, easy to do.
Finally, please read the string, and then re-read the string, you have missed me state several times, the FREE MARKET is setting the price, not any magic dust, I'm not trying to say anything else, so I shall repeat: THE FREE MARKET IT SETTING THE PRICE. Old fashion supply and demand. BTW I would not be surprised if the MFG'S don't have a price increase (announced) real soon.
One last time: Bushmaster and DMPS and others sell retail everything they make, save those parts that require an FFL, so they too are retailers.

 

[Teggy1]

Re: Price gouging vs supply and demand...

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: pawprint2</div><div class="ubbcode-body">Teggy1, yes there have been doubts about the profits of firearms mfgs, but, let's say your are correct, reason: the firearms mfgs do not sell retail. OOOOOPs, I just went up Bushmaster's home page, and DMPS's home page, and guess what? These two, sell retail, direct, everything but lowers(or complete guns), so I guess, strickly speaking their profits at this time are not just from increased volume, but from increased retail sales! </div></div>

How much has Bushmaster jacked up the prices on their online store? Which is the premise of your argument.

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"> I know a couple of months ago I ordered around $500.00 worth from Bushmasters retail sales, when my CC bill came it was billed to Remington, it took me a minute to figure out the charge (DAA). But nonetheless, Many of the AR MFG'S sell retail, (everything but the lowers and complete guns). These prices are usually very high compared to what others are selling for, thus they are supporting their MSRP (or the like). In short they are (historically) the most expensive place to buy from. I ordered because no one had exactly what I wanted, I didn't mind the extra cost. Which at this time seems like the buy of the year.
So once again, There are those doubting the increased profits from firearms mfgs (read the string), due to overtime etc.
Many of the AR mfgs are and have been selling everying but those parts that require an FFL at full retail for years, go to their webpages, easy to do.</div></div>

Once again you are wrong. My FFL ordered multiple complete AR's, and several individual components, like triggers, and pins. NEVER once did he pay what website shows. FFL's/dealers, at least through Rock River, get a price break.

Their (as well as every othermanufacturer) prices are/always have been a lot higher than what you can buy for elsewhere, not a sudden jump in prices which is the base of your argument. THUS NOT A SIGNIFICANT SOURCE OF INCREASED REVENUE!

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">Finally, please read the string, and then re-read the string, you have missed me state several times, the FREE MARKET is setting the price, not any magic dust, I'm not trying to say anything else, so I shall repeat: THE FREE MARKET IT SETTING THE PRICE. Old fashion supply and demand. BTW I would not be surprised if the MFG'S don't have a price increase (announced) real soon.</div></div>

Your sentiment seems to be one of sarcasm, and snide remarks regarding pricing, or "gouging" as you put it. It seems your trying to walk back what what your previous posts indicated.

Here is an example of what I consider snide remarks,from the previous page:

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"> but in the end profiteering is the right and correct thing to do! I just wonder why the "old" and well thought of businesses, as is Brownells, doesn't see the light, and start sticking it to their customers? These guys must not know what they are doing! I hope they read these strings (they run some good ads on this board)and get with the program, hate to see them miss out on this chance.</div></div>

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">Wow! This is an eye-ooopener!! I have never heard that if a business gets so busy, they must run extra shifts that their profit margins get smaller.</div></div>

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"> This must me the "New Economics", something that must now be- being taught in school-I know millions of kids are taking "Ritalin" and like drugs, but I never thought it would change the basic way a business was able to make a profit.</div></div>

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">But 'herro prease' may in fact be right-on with his 'special buiness knowledge', and they [gun mfgs] are now making less profits. </div></div></div></div>



<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">One last time: Bushmaster and DMPS and others sell retail everything they make, save those parts that require an FFL, so they too are retailers. </div></div>

Yes, everyone knows that, not usually the place to buy, as it is generally more costly. It is unlikely this is the primary income stream.

Your arguments and position seems to change as frequently and fast as a washing machine, trying to cover your ass on both fronts.

I'm done wasting my time trying to explain basic principles to someone who already knows it all.

 

[E. Bryant]

Re: Price gouging vs supply and demand...

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Teggy1</div><div class="ubbcode-body">I'm done wasting my time trying to explain basic principles to someone who already knows it all.</div></div>

PP2 joined less than three weeks ago, and has pretty much done little except toss bombs. Ignoring him sounds like a good approach.