Economic Insights

            ‘Tis the season of sales, a joyous time when a wide variety of items may be purchased for a fraction of their cost. Of course, most people are too delighted by the sales to stop and think about what the sales actually mean.

            When purchasing that wonderful item with the 50% off tag, it’s hard to think about anything other than how lucky you are. However, if you pause to consider the implications of that discount, you may come to realise that the store you are buying from is still making a profit. Not as much profit as before, but a profit, none the less.

            The fact is that most products in stores have at least a 100% markup from the wholesale price. This means that if you’re buying something for $100, the store paid $50 for it. This might seem unreasonable and horribly unfair, but it’s a necessity for the economy. When you purchase from a store, you aren’t only paying for the item – you’re paying for the space it has in the store, its availability in the store, the other items in the store that never sell, heating and power for the store, employee wages, and, of course, C.E.O. and investor income. That’s on top of the shipping and manufacturing costs.

            However, taking that all into account, sales still happen – and turn a profit. How? Increased sales. If a store buys ten of something and only sells half, at a 100% markup they are only breaking even. On the other hand, if they throw it on sale, people come in droves and all ten sell – perhaps they sell for less, but they sell for enough to turn a profit.

            Yet, what we see are the sales – a chance to save a few dollars. But, we aren’t really saving money, are we? We’re just paying less than we’re used to, when we’re paying for the excessive number of items produced. If we really wanted to save money, we’d refine the system to produce what is needed. We’d cut down on waste, excessive profits, and everyone would save money (making the people earning the excessive profits less desperate to have so much money).

            What I think would help the most, though, is if everything we purchased had a breakdown of where the money is going – like the nutritional information on food. That way we’d see where our money was really going. I bet that would really quickly change what people (who can be bothered) are willing to spend money on.

Click here to find the charity anthology containing a couple of my short stories.

Also, make sure you check out my wife's blog and her life coaching website.


If there's any subject you'd like to see me ramble on about, feel free to leave a comment asking me to do so.