On Thu, 13 Nov 2014 13:32:05 -0700, scarecrow
wrote:

SMS wrote:

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

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.
Actually, the margin on tires is QUITE slim. If you are going to get
rich selling tires, you will have to sell a lot of them. One place
where I worked we sold over 1000 sets of snow tires each winter out of
a 3 bay service station. I'm sure we made more on the installation
than on the tires back in 1969-71. The wholesaler might make a better
margin than the retailer - and Costco is, in effect, both so they can
afford to sell them for less than the average independent shop - for
sure.

If your argument is correct and tires really do last longer with
nitrogen then it appears that Costco is shooting themselves in the
foot since they would have less repeat sales over time, not more.

No, because people will buy tires from places that sell tires that
last - so the customer comes back to buy more tires if the tires stand
up well - they buy tires elsewhere if they do not - -with price being
a secondary consideration in many cases.
And the average car owner owns a car long enough to wear out about 1
1/2 sets of good tires.- so they will be in to buy the next set of
tires for their next car more likely than for this one.

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.

From what I've read so far you have no clue why Costco does what it
does. It's pure guesswork on your part.

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.

When I was a Costco member I could almost always find the same or
better deal on a high dollar item elsewhere. But the two stores near
me are always packed so what do I know. Or maybe it should be there's
one born every second?
Used to be there were great deals at costco in Canada - now I can
usually buy just about anything for less elsewhere if I look hard
enough. The advantage of Costco is they have EVERYTHING under one
roof.

I'm not a member any more - found it wasn't worth it for me.