Tariffs trip up the all-American RV industry
Tariffs trip up the all-American RV industry
Forum Discussion
WTP-GC wrote:DallasSteve wrote:
I saw the same story this morning and I thought about starting a thread like this one. I'm actually hoping for a big recession soon. Sorry about that. It would probably help me since I am retired and planning to buy an RV next year. I'm not working so losing my job is not a worry and RV prices would probably be cut - simple economics. Too much supply, not enough demand. It would also probably reduce the number of RV park visitors and drop those prices.
Which brings me to:pianotuna wrote:
I'm a small business man. If I buy an item to resale and it costs me $10 then I sell it for $20. So if there is a 25% tariff it would cost me $12.50 and I'd sell it for $25.00.
That represents quite a large jump in price to my client.
Mr Small Business Man, as a former CPA I have a question. Why would your price go to $25.00 instead of $22.50? At $25.00 your profit jumps 25%. That's a jump that would make a hospital CEO blush. At $22.50 you cover your increased cost and you get the same $10 profit. If I'm your competitor that's what I would do and most customers would come to me.
Edit: I see that Schlep beat me to this observation by 3 minutes. Good work Schlep.
Steve
As a retired CPA, why don’t you see profit as a percent instead of a number? $10 item sold for $20 is 100%. $12.50 item sold for $25 is 100%. Exposure and risk increased, so the profit should follow suit. The margin didn’t increase. By your logic, a $10 profit is equitable on a $10 good the same as a $20 good or a $2000 good.
Again...profit is a MARGIN of cost, not a fixed number.
WTP
Profit is not "MARGIN of cost". Profit is revenue minus expenses. I promise you. Part of getting my bachelors degree in Accounting required 2 semesters of Economics. If he has a monopoly he can charge what he wants, but in the real world he probably has competitors and if they could make a good profit with a $10 markup before, they can make a good profit with a $10 markup after, and they will undercut his $12.50 markup.
Steve
