A business owner has a problem.

[Swoop]

This business is a boatshop, which sells a whole range of items from bait and tackle, fuel, boats, accessories and everything boating.
This is a seven day a week business and the staff are rostered on to cope with demand.
Obviously it gets busier on the weekends since people have time off to go boating and enjoy the sea. The good thing is that a lot of profit can be made by the boatshop during the holiday time since they sell more products.
This is good for everyone:
The customer, since a service is provided to them 7 days a week; the business, to stay economically viable and make money; the staff, keeping them gainfully employed and even hiring extra staff if the demand is strong at certain times.

The problem is, should this boatshop increase its prices on busy days?

What are the thoughts of KB?

[Jantar]

should this boatshop increase its prices on busy days? Only if the owner is trying to tell customers that he doesn't want their business, that they are an inconvenience and that he'd really prefer that they go elsewhere.

Most businesses treat the average day as their bread and butter earnings, but the busy times are the cream to tide them over the slow periods. By discouraging customers from coming on those busy times the owner is starting the slide to going out of business.

[Karma]

The problem is, should this boatshop increase its prices on busy days?


Surely the only reason for taking on extra staff would be because of more customers, therefore more sales, therefore more profit. Any extra staff should only be taken on if the amount you pay them is less than the extra profit they are driving.

Short answer... no.

[Skyryder]

This business is a boatshop, which sells a whole range of items from bait and tackle, fuel, boats, accessories and everything boating.
This is a seven day a week business and the staff are rostered on to cope with demand.
Obviously it gets busier on the weekends since people have time off to go boating and enjoy the sea. The good thing is that a lot of profit can be made by the boatshop during the holiday time since they sell more products.
This is good for everyone:
The customer, since a service is provided to them 7 days a week; the business, to stay economically viable and make money; the staff, keeping them gainfully employed and even hiring extra staff if the demand is strong at certain times.

The problem is, should this boatshop increase its prices on busy days?

What are the thoughts of KB?\

You mean you have to ask?

"Hey guv, there's a que a mile long can I raise the prices? I need to have a slash."

Skyryder

[Winston001]

Personally I'd be a bit appalled to come across a business which put it's prices up on weekends and holidays. Some restaurants do it but I don't patronise them.

[Crasherfromwayback]

The problem is, should this boatshop increase its prices on busy days?

What are the thoughts of KB?

If this is your business, lord help the boating industry.:shutup:

[Steam]

As long as you pay your staff fairly and don't pressure them to work more than 40 hours, I don't really care. But if the prices go up in the weekend, imagine how your customers will perceive the company. 'Nuff said right there.

[sunhuntin]

nope...keep the prices as is. you hear how people bitch and moan when petrol goes up...imagine the bitching and moaning every weekend? plus itd be a major hassle to change the price tags/computer pricing once a week. not worth the time itd take to make things dearer.

[Lou Girardin]

It happens now in the restaurant business on public holidays.
But I'll only patronise them if there's no alternative.
I wonder if the extra 15% - 20% makes up for the loss of trade?

[stanko]

If you want to put the prices up, do it. But do it quietly and across the board leave them up 24/7. That way nobody will notice, your staff probably wont even notice. Your customers (boat people) are used to being screwed. In fact you would be doing them a favor by helping to dispose of their excessive disposable income. Its not like you are ripping poor people off is it ?

[KATWYN]

The problem is, should this boatshop increase its prices on busy days?

What are the thoughts of KB?


Your customers would have to know when are your busy days. I can imagine it may be a way of losing their custom.

Why don't you just increase everything in the shop just slightly so its hardly noticeable to your customers - and overall these subtle profits over time will cover all those additional expenses you now have.

[Motig]

At first read I thought you meant price increases on Public Holidays but your talking about normal busy trading days. So no you cant increase prices just for busy days as I would suspect that there would be a few Govt Depts wanting to have a word with you, plus you would have to change prices each time on your labelling/cash register etc etc, customers would soon find out and your busy days would dissappear altogether as well. So in short you would have to just settle on an increase and have it as your everyday price. And if its happening at a shop you use go some where else.
Just a thought- you could buy stuff on the low price days and take it back for a refund on the high price days:innocent:

[SwanTiger]

The problem is, should this boatshop increase its prices on busy days?
No, the business should not increase its prices on busier days of the week.

As a successful business owner, it is ones responsibility to be aware of changes within ones business and be able to brainstorm the opportunities for positive growth from those changes.

Instead of increasing prices, perhaps negociating cheaper prices on a larger order quantity of XYZ product from the supplier in anticipation for the busy period. This would have the same effect as increasing the prices as ones margins would obviously increase.

[onearmedbandit]

During quieter times of business it is better to put your prices up then down, ie if you want to increase price on the busy periods also do it during the quieter periods. It has been proven time and time again that the loss of customers due to the price increase is offset by the increased profit. People have more buying confidence in a business that doesn't instantly discount, rather holding on to their current price or even a slight increase.

[Ixion]

The question, and the responses, seem to demonstrate a profound lack of understanding of how to run a business in a capitalist market based economy.

Any business, if properly run, should always be charging the maximum price that the market will bear. There is a relationship between price and sales volume: increase price, and to some extent sales will fall, as potential customers either go elsewhere, to a competitor, forgo the purchase altogether, or modify their purchase . The extent of the decrease in sales with an increase in price will depend of course on many factors. But, in any business in any market there is an optimum price, that which maximises the product of sales volume and margin. Increase price, and the fall in sales makes the total profit less. Reduce price and also profit falls, since the increase in sales is insufficient to compensate for the lower margin

That is the way business works. The only exceptions are when the market is not free - a monopoly, price fixing by the government, a captive market etc.

Assuming that your hypothical shopowner is operating in a free market, if he is not already charging the maximum price , then he does not know his job. His task is to maximise his profit, not to , in effect, give money away by charging less than customers are willing to pay. And if he is already charging the maximum the market will bear , then charging more will see his profits diminish, not increase.

The assessment of the market maximum price should take into account trading on all days. Variation of price of different days is a perfectly valid sales technique, assuming that the maximum realisable price differs on different days ( eg perhaps because of different markets). This is more commonly done by setting the price based on the maximum attainable (which may or may not be the busy days) and giving some sort of discount of "freebie" on the days which will not support that price.

But the question always that must be asked is not "Should I increase prices" but "Am I able to increase prices withour suffering a nett loss in profit" .And if you can, of course you would.

In simple terms: The shopkeepers job is to screw the customer for the maximum he can get. If he is already doing that, he cannot increase prices. If he is not, he does not know how to run his business. That's mercantilism for you. There are better ways, but they must wait for the revolution.

[KATWYN]

The question, and the responses, seem to demonstrate a profound lack of understanding of how to run a business in a capitalist market based economy.


In simple terms: The shopkeepers job is to screw the customer for the maximum he can get. .

Gosh, hopefully no potential consumer knows which business you own Ixion, I certainly wouldn't shop in a business that carried the "screwing your customer for the maximum" policy :innocent:.

[Steam]

I certainly wouldn't shop in a business that carried the "screwing your customer for the maximum" policy :innocent:.

You do deal with those businesses already Katwyn; Every supermarket in NZ, Telecom, Telstra, every power company, petrol station, etc, the list goes on. Those places just attempt to put a nice face on it. If they are decreasing prices it's to increase their market share. That's all.

[KATWYN]

Those places just attempt to put a nice face on it. If they are decreasing prices it's to increase their market share. That's all.

At least they put a "nice face" on it to give a good feeling to the consumer, rather than create the opposite of a good feeling "we are screwing you Ms/Mrs/Mr consumer" (i.e., Empower giving a 10% discount if you pay the account by the 20th as opposed to Telecom slapping interest on if you don't pay by a certain date etc) despite what their agenda is, its a much nicer philosophy/policy to have and get across to potential customers...and good business sense.

Reward rather than punish. (an attitude of "screwing the customer" I would put in the punishment catagory)

In the end all those companies mentioned still have competition....

[BAD DAD]

[Reward rather than punish. ....This I agree with. If you are busy at all in the present economy then you are probably doing quite a few things right already.Loyalty should always be rewarded. Lost customers can take years to win back if ever.

[Jantar]

(i.e., Empower giving a 10% discount if you pay the account by the 20th as opposed to Telecom slapping interest on if you don't pay by a certain date etc) .... No Katewyn, this is exactly the same thing. Empower (and all other power companies) budget on the fact that 90% or more customers will pay by the due date. Its actually an 11% penalty for not paying on time. They just call it a discount to make it sound better.

[KATWYN]

No Katewyn, this is exactly the same thing. Empower (and all other power companies) budget on the fact that 90% or more customers will pay by the due date. Its actually an 11% penalty for not paying on time. They just call it a discount to make it sound better.

.....like I agreed with Steam- its a "nice face" - a nicer way of presenting something to the public. A thinly disguised veil (by way of what looks like a discount) ....its a heck of a lot better to look like the nice person to the public as opposed to the hard harsh approach. Either way the nice way gets good results- good business practice.Anyway, this is going off topic a bit so thats all i'm saying

[Jantar]

.....like I agreed with Steam- its a "nice face" - a nicer way of presenting something to the public. A thinly disguised veil (by way of what looks like a discount) ....its a heck of a lot better to look like the nice person to the public as opposed to the hard harsh approach. Either way the nice way gets good results- good business practice.Anyway, this is going off topic a bit so thats all i'm saying

Not really off topic at all. Personally I prefer the telescum approach, at least its honest, and I'd reather deal with a company that's honest to one that lies. I might add that I changed power companies because the one that is encumbent in our area lied to me everytime I asked about anything.

That is one of the reasons that the boat business at the start of this thread would lose customers. By putting up prices to the customers during busy periods thay are effectively lying about the true price.

[KATWYN]

Not really off topic at all. Personally I prefer the telescum approach, at least its honest, and I'd reather deal with a company that's honest to one that lies. I might add that I changed power companies because the one that is encumbent in our area lied to me everytime I asked about anything.

That is one of the reasons that the boat business at the start of this thread would lose customers. By putting up prices to the customers during busy periods thay are effectively lying about the true price.

I don't agree with any of it either (i.e., lying)....my observations are from a business perspective only of what appears to work.... and what probably doesn't work.

My own personal non business opinion is another take on it altogether its all BS

My comments stemmed from Ixions comment about "screwing the customer to maximise profits" my comments were that from a business perspective it may not be A good attitude to have toward your customers...thats all

[ajturbo]

supply = demand...simple

[Ixion]

Gosh, hopefully no potential consumer knows which business you own Ixion, I certainly wouldn't shop in a business that carried the "screwing your customer for the maximum" policy :innocent:.

Every business which you patronise is already doing exactly that. If they screwed you any more you would go to the competition. So either they are selling to you at less than you are willing to pay, or they are "screwing you to the maximum". Shopkeepers job is to raise the price for an given customer to just exactly that point immediatley before the customer goes to another supplier.

Of course, it is a societal model that I profoundly disagree with. But such as it is , it is what we have. Businesses are not philanthropic societies, disposing of goods at prices less than the market is willing to pay.

Mr Finn will perhaps explain it better than I do, he actually believes in it.

[KATWYN]

Every business which you patronise is already doing exactly that. If they screwed you any more you would go to the competition. So either they are selling to you at less than you are willing to pay, or they are "screwing you to the maximum". Shopkeepers job is to raise the price for an given customer to just exactly that point immediatley before the customer goes to another supplier.



I think I see see what you are saying Ixion. You were coming from the business persepective of how things actually are already, regardless of if you personally agree or disagree??

*Btw, my comment re shopping in your business was lighthearted hense my lil :innocent: *

[Ixion]

Well, I am a Communist. so i think that the price of goods should be set by the government, based on their social utility - ie basic foods, super cheap. Luxuries, uber expensive. So bread is maybe 20 cents a loaf. Ipods, $2000. People need bread. They don't need Ipods.

But that's a TOTALLY different societal model. What we've got , is mercantile-capitalist.And for that to work at all, everyone (except workers) must maximise his own advantage.

[Swoop]

It's interesting to see that most responses are of the opinion that putting prices up would be bad for patronage and that people would go elsewhere.
What would happen if the other boatshops did the same thing?

[Ixion]

That's called an oligopoly. And come the revolution you get put in front of a brick wall.

[Jantar]

What would happen if the other boatshops did the same thing? That is what is known as a cartel, and if you want the commerce commission to pounce then go ahead. There have already been a number of high profile prosecutions in NZ and a large number of smaller ones that don't really make the news.

However the penalties are often large enough to put a small business owner out of business.

[phantom]

There are concievably other reasons for running a business than maximising profit at the expense of other values you may have. There is some touchy feely expression for placing some value on the intangible things not related to money e.g. ethics, lifestyle blah blah blah. Sorry can't think any more, too many wines trying to salve my soul after another day at work trying to suck the customer dry