On Thursday, November 13, 2014 2:26:35 PM UTC-5, SMS wrote:
On 11/12/2014 4:22 AM, 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.

You keep making the error of believing that price are set based solely
on the retailers costs, when so much more goes into pricing strategy.

You keep making the error of not reading what I post and making wild
assumptions. I never said any such thing. In fact, I explained via
economics why adding costs to a product results in higher prices. And
it's not by the strawman process that you keep going back to, ie just
adding a fixed markup to costs. Economics 101 says businesses don't
just add a fixed markup. They maximize profits.



Look at gas stations. Right now you can buy a gallon of top tier
gasoline in my area for $2.80 or $3.60. There is essentially no
difference in the quality of the gasoline. The retailers are buying fuel
from the same refinery and the wholesale cost is almost the same.

Why does a station charge 80¢ per gallon more, knowing that they will
sell far less volume? There are valid reasons for this that have nothing
to do with their costs.

No **** Sherlock. Do any of those stations sell premium for the same as regular? Now think about that in context of adding nitrogen to tires. There
are folks out there like you who believe nitrogen has extraordinary utility
beyone regular air. You told us it extends tire life, results in less
blow outs, less returns, saves lives, less need to check/ refill the tires, etc. That results into some
folks being willing to pay higher prices for tires with nitrogen in them.
Hell, if I believed even half of that stuff, I'd be willing to pay $10+ a tire
more. That creates a new demand curve for those tires, at higher prices. That
is economics 101.