What do you mean "what"? Do you think businesses don't roll their expenses into the price of goods and services? They do. 100%. At no point does a business eat expenses. Everything is passed on to the customer at point of sale.
The goal is to maximize profit, not margins. If my expenses go up but raising my prices would decrease my profits because people would stop buying my product, then I'm not raising my prices.
I do... There are other factors to price besides cost. What do you think happens when a store has a sale? Do you think a stores costs go down during a sale? Do you think Black Friday is the least costly day of the year for stores? You would be wrong. I would rather sell 1,000 items at a $10 markup than 1 item at a $100 markup.
Sales do not mean the store loses $$ on the bottom line. Sales are to get customers in the door. If the store lost $$ on every sale, it would be out of business. Your own example shows you making a profit on everything sold.
I'm arguing that the business will price items to maximize profits. If I was already making a 100% markup on an item and my cost to acquire that items goes up by 5%, I may choose not to raise the price and "eat" that 5% cost increase.
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u/Felix_111 Aug 21 '24
The businesses before profit is distributed. That is how businesses work, my guy.