On 11/12/2014 9:03 AM, scarecrow wrote:
trader_4 wrote:

I would be surprised if Costco didn't know to
the penny how much their cost is to install a tire, including the nitrogen
and they keep that in mind when setting the price.

I'm late to the party so maybe someone's also mentioned this, but
perhaps Costco figures if someone is dumb enough think they have to
drive miles to top up their tires instead of doing it in the comfort
of their own garage they might also, while there, go in and buy an
impulse flatscreen.

Tires are very high margin items, like mattresses. You want to maximize
your sales volume. Prices are set to maximize profit, they are not set
by calculating expenses and then adding some percentage to that.
Costco's strategy is to maximize profit by increasing their market share
by pricing things competitively.

Costco also seems to have a corporate philosophy of not being sleazy.
They never charged separately for valves or road hazard and they never
set tire prices artificially low and then tried to make it up with high
mounting and balancing prices. Even now you see tire stores advertise
that they'll meet Costco's tire prices but when you see the total price
it's much higher even though they meet the basic price per tire.