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SMS

On 11/11/2014 2:41 PM, wrote:
On Tue, 11 Nov 2014 11:15:27 -0800, SMS
wrote:

On 11/10/2014 9:14 AM, wrote:

For years, Toyota lost money on every Hilux sold in North America, but
they sold them for what they could get for them to allow them to
import more Celicas, Coronas, and Corollas - models they could sell
all they could get and more.

The same has happened with virtually every other manufacturer/dealer
at one point or another.

Yep. Prices are usually set at "what you can get" not your cost plus
some fixed mark-up. There are some exceptions, but not many. A _LOT_ of
people don't understand this, not just djb. Now it is true that some
companies drop products if they are losing money on them and there is no
other reason to keep the product line (but often there are reasons that
make sense).

Costco prices would be no lower if they did not provide nitrogen. It's
just not they way retail works.
The only way Costco's regular prices would be lower is if someone
else was selling the same tire for less and they didn't want to loose
market share. If they can sell 100 at a dollar profit they make more
than selling 48 at 2 dollars profit

Remember, including nitrogen probably makes Costco far more money than
not including it, despite the small extra cost they incur for the
nitrogen generators.

The key is to adopt a strategy that increases volume. Including nitrogen
enables them to attract more customers and the extra profit from selling
more tires more than offsets the cost of nitrogen, especially because
the cost of the nitrogen generators is now amortized over more units.
There are side benefits of the nitrogen as well in terms of lower
warranty costs and lower labor costs.

There is a general ignorance, among those that have never taken any
marketing coursework, about pricing strategy.