On 2006-08-03 04:53:11, Sybren Stuvel wrote: >> Pretty much every production cost increase gets in the end paid by >> the consumer. With some localized changes, you may be lucky and >> don't buy any products that are affected, but with such a widespread >> change as this would be, it is more likely that almost everybody is >> affected close to average. > > You still don't tell me how I could be affected by a production cost > increase at a company I'm buying nothing from.
You don't buy your gas as crude from Saudi Arabia oil well, do you? :) Their production cost increases may affect you nevertheless. There are very few products you buy that are only affected by costs generated in one company. Usually that's dozens, if not hundreds of companies in the chain. (That's not to say that all of them are relevant, price-wise, but it's more than one that's relevant, usually.) Take your pick, anything, and try to find out the price building chain. You may be surprised. Besides, you probably don't know whether it's not one of your direct suppliers who's affected. You're sure you don't buy from anybody running a Windows system? I'd bet against that, and I only bet when I know I win :) I'm not talking about something obvious like a 10% increase. An overall (average) 1% increase is easy to dismiss as not relevant -- but it's still 1%, if you add it up. (I'm not claiming it would be 1% though. Just an example number.) >> With that is also mostly the pressure gone to not increase -- >> because so many are affected that the few who are not happily >> increase the prices with the others. > > Either my English isn't as good as I thought, or that's simply > incomprehendable. Possibly the latter... I'll try again :) When there's a change in the cost structure of some companies, they try to pass that on through their prices. That's just natural. If the cost structure of a whole sector changes, that's easy, because all of them will want to increase by the same margin, and the cost structure of the whole sector remains the same. (See gas prices.) If almost all of a sector are affected, this still doesn't change (usually): the ones who are not affected often just go with the crowd and increase nevertheless, figuring they can gain more by increased margins than they would gain by increased market share due to lower prices. (There are all kinds of factors that affect this; not always a lower price gets reflected in a higher market share.) But they (or some of them) could also decide to stay at their lower price to gain market share. But if the production cost for 80% of a sector goes up, it may be that the 20% who don't have that cost increase stay low, but the average price of that sector still will go up. (Not everybody will move to the suppliers now with lower cost.) With that, the average production cost for companies that depend on that sector will go up. So there's an average hike anyway, even if some or all of the ones who don't have to increase actually don't. Gerhard -- http://mail.python.org/mailman/listinfo/python-list
