When doing business with an ignorant or naive person, are there certain guidelines for setting prices?

Yes. It’s called morals. The payoff is making someone’s day by using your expertise, making a profit off of the commission, and getting a good noght’s sleep by doing the right thing.

How would that help me maximize the profit or prevent me from gaining less?

It’s called being a douche weenie.
The carpenter started the cheating by stealing coins from his customer and you kept up the theft by buying low and selling high.

This is why they say “buyer beware” but that doesn’t make it right.

@chyna

How do you know he stole the coins from the customer? How do you know he didn’t ask the client if he can keep them? Careful with assumptions and accusations. If you don’t have anything helpful to say then don’t say anything.

Did he ask the customer for the coins?

@Walgt: My assumption from the way you wrote your post was that the carpenter stole the coins. I guess a better way to word it, if they weren’t stolen, would have been “I know a carpenter who was given some coins that he found when he was remodeling a floor” or something like that. Maybe another way would have been “I know a carpenter who found some coins while redoing a floor. The customer didn’t know the value of the coins and let my friend keep them.”

Can you clarify?

@chyna, @jca

Of course he asked. He is a self-employed, licensed carpenter. You don’t commit petty theft to risk your entire established business. I thought that was common sense.

Neither the customer or the carpenter know the value of the coins. The carpenter assumed their might be some value in ancient items which is why he asked for the coins in the first place, but I found out that he doesn’t know their true value. I told him I collect old stuff and offered $5 (I don’t really collect old stuff).

The guidelines exist in the realm of ethics. Since you primarily speak about maximizing profit, that’s more in the realm of “every man for himself and the biggest sucker loses”.

Apples and oranges.

If your goal is strictly maximizing profits, it’s clear you don’t need ethics

It’s called don’t be a dick and according to you that is exactly what you were in these instances. If you want to succeed in business and have a good name then you’ll be honest first and foremost. Personally I give people little shit tests all the time where I potentially take a small loss and depending on how the other party behaves I decide if I will ever have anything to do with them again.

@Walgt: A scenario might be he found the coins in the floor, and they were hidden there, unbeknownst to the homeowner. My sincerest apologies for my egregious error.

@Buttonstc

For clarification, I’m curious to know if there is a detailed formula for setting the best possible price. I would like to know if I could have gone away with a 5000% increase instead of the 1000%? If yes, what kind of mechanism is involved for determining that?

@ARE_you_kidding_me

In all fairness, you only think it is a dick move because I told you what happened. Also, what exactly is the dick move? I was never dishonest during the deals. I set my own prices and they accepted. I am not obligated to tell them that my price is above or below market averages. I am not obligated to inform them that their item is worth a lot more or a lot less than market averages.

The carpenter and the buyer think they went home with a good deal. As far as they know, I am honest and both parties went home with a win. I would call that success in business.

@jca

No worries.

I know a carpenter who found some really old coins while remodeling the floors of his customer. I took a look at the coins and they’re worth thousands of dollars. I knew he didn’t know the value of the coins so I offered to buy the coins for just $5. After our transaction, I then sold the coins through an auction for $1500 a piece, minus a 10% deduction for the auction fee.
Actually, and maybe technically the guy was for hire by the client, or resident, he was not the owner so he had no claim to what was found anymore than if it were in a drawer. To not inform the owner of what is found on his property to give him the opportunity to dispose of it as he wishes, is stealing.

@Hypocrisy_Central

I clarified this already. See here link

No, it WAS a dick move. Obligation does not play a role. It’s best to inform the other party and offer a price that is fair. Profiting off ignorance is a shitty business move and will cost you more later if the other party finds out what you have done. You wreck your credibility as an honest person and you will potentially pay for that long into the future. In business you want to form relationships that last and that you trust.
For example: I had a vendor mark up a price on a part more than 300% While it was only a few thousand dollars profit for them they missed out on a a contract that could have made them five or six figures because I found out, informed our contract folks and they went with another supplier. We’ll probably never do business again.

What @Hypocrisy_Central said ^^ is exactly correct. By law, the coins belong to the customer, not the carpenter who found them. If it turned out that the coins were valuable, they should have been returned.
Otherwise, setting a price is simple: Whatever the market will allow. If the buyer is willing to pay the price, so be it. But purposefully gouging a ignorant or naïve person is unethical.

@ARE_you_kidding_me

Risk/reward is a difficult topic to talk about because it is different for everyone. In this case, I have a stronger tolerance for risk and I calculate potential reward and the opportunity costs different than you. I’m not going to say you’re wrong because there is truth in what you’re saying. It is just a different approach, not necessarily the best one. Whatever works, really.

The item involved changes perspectives entirely. As does the item’s availability, radius, and the person you’re dealing with.

@kritiper

Common now, this is the third time I have to do this. Clarification here link The carpenter asked the owner and the owner gave permission to keep the coins.

So you think it would be best if I raised the price by 5000% at first and if he would refuse, I should gradually lower it down until he accepts a price he is comfortable with?

@Walgt You can rationalize it anyway you want but it’s more than a simple risk/reward calculation. When you mature you will not likely take your integrity so lightly. This is a common juvenile mistake.

Cough Apple products Cough. You don’t see them in financial ruin and yet they rip off their customers every minute a sale made. Same reasons as the rest. The customer doesn’t know any better.

Well, under the Ferengi Rules of Acquisition,

“Never spend more for an acquisition than you have to.”
“Always exaggerate your estimates.”
“The best deal is the one that makes the most profit.”

And perhaps most importantly:

“When it’s good for business, tell the truth.”

That is, if your endgame is to be a Star Trek villain.
Otherwise, follow Wheaton’s Law: Don’t be a dick.

Thanks, but that is too vague. It doesn’t help in determining an actual price.

I’d say a finder’s fee of 5–10% of your sale cost is fair. I’d probably skew more if it were a friend. Never know when he’s going to find a $5 million Jackson Pollack under the next floor.

I meant price determination in business transactions, not finder fees. Normally, I start off with a high price and go down until the person agrees, but I would like to know what is the maximum highest price I should start off with so that I don’t miss out on potential gains.

That is the thing, everyone has a different definition of fairness. What you see as 5–10%, I see as 0% in this situation. The carpenter agreed on my $5 offer. He and I thought that was a fair price. Also, what formula are you using to derive a 5–10%?

No formula, just mentally putting myself in the situation.

If a friend had a thing that I saw value in, and I bought it off them for a pittance, and I later made major bank on it, I’d want my friend to share in the profit. Because they’re my friend, and because they are the reason I made the profit. I’d, personally, probably offer them half of the profit, actually, minus any costs incurred by my selling the thing.

I’d make a horrible Ferengi.

You sold the coins for 1500 per piece, which means you made a whole lot of profit. I’d say a friendly move would be offer your friend a cut. Did you tell him how much the coins sold for? How many coins were there?

This story sounds too good to be true. Carpenter finds coins while doing the floor and customer gives them to the carpenter. Carpenter sells them to the OP for 5 bucks. OP sells them at auction for 1500 per piece (granted we don’t know how many coins there were but it adds up nicely). OP makes out wonderfully, everyone else left in the lurch.

@Seek

He’s not my friend. Knowing him and friendship is something else, although, we have a different definition of friendship here as well. I see friends as entertainment. I don’t find it entertaining giving them money that is suppose to entertain me.

I still don’t see how the mental perception helps in determining a precise amount? Mentally, put yourself into an ignorant person with money who wants an item really badly, what price comes to your head? How was that price determined?

@jca

In regards to friends, see the response to seek. There were 5 coins.

Customer didn’t give the coins to the carpenter. The carpenter informed the customer of the coins and asked if he can keep them. The customer didn’t care and let the carpenter keep them. The carpenter isn’t very savvy with finding out value for such items and somehow determined he can only make $10 for the 5 coins. When he told me about the coins, I made believe that they’re just some silly coins and offered $5. He was convinced and took the $5. $5 for 5 coins is not bad of a deal at all.

There’s no set rules or guidelines, everything involved with these sorts of decisions is relative to the people involved. It’s not something you can get from a formula.

Ask your parents, separately. Tell them your hypothetical scenarios and ask them what you should do in each.

Their answers will be tempered with who they want you to be and who they think you’re capable of being. For most people, their best answer is probably somewhere in the middle of what their mother and father would tell them.

Your parents don’t want you to be broke or disadvantaged, but they don’t want you to be a sociopath either.

Nice you made $7,500 profit and the finder (carpenter) and the original owner (carpenter’s customer) made pennies.

So you told a bald faced lie to an acquaintance in order to profit off of his lack of knowledge.

I hope, someday, you’re charged extortionately for some minor household repair you can’t figure out on your own. Perhaps a plumber at midnight on Christmas Eve.

[…he can only make $10 for the 5 coins. When he told me about the coins, I made believe that they’re just some silly coins and offered $5. He was convinced and took the $5.
I guess we can add swindling to the mix. Let’s say you were having a yard sale, and you had a Frank Franzetta original (now I know you may not know who he is, so any value of his originals would be under your radar), I ask to buy the painting saying it looked like the illustration of a marginal college student knowing full well the value, and you believe it and sale me the painting for $3 dollars, then I take it to Christie’s Auction House and it sells for $170,000, do you think it would be fair to you because you did not know the real value you certainly had in your hand?

@funkdaddy

If that is the case, I guess I will experiment with it if the situation should come again.

Why such emphasis on parental influence?

@jca

I made $6750. 10% went to the auction fee.

Are you suggesting I owe them money? If so, for what? I never had a prior arrangement with the carpenter over a finders fee. I made an offer for something I wanted from him. That was it and I have no connection with the customer at all, so I don’t owe him anything either.

@Seek

You just admitted that it was a lack of knowledge on his part. How, then, can you accuse me of lying? All i did was offer a price for an item I wanted to buy.

You went out of your way to make him believe they were worthless trinkets. That is lying.

An honest person might have said, “Actually, they look like they might be worth something. I’d like to enter them into auction and see how they do. If you like, I’ll make the arrangements and pay the auction house, and give you, say, 30% of the cut?”

Yes, you would have less profit. But the acquaintance would be far more likely to come to you again the next time he finds something valuable.

@Hypocrisy_Central

During a criminal trial, is the argument I wasn’t aware of the law work as a defence? Obviously not. Why would you think it would work in business?

Holy smokes Bullwinkle, I had to Atta boy @Seek, better chalk it in your calendars.

Stranger things have happened, sweetie.

@Seek

I don’t consider that lying as much as bargaining. If I had shown my enthusiasm for the coins, I would have to pay more for it. Playing down the value of the item can lower the asking price. Psychology.

This guy is going to come to me again anyway because as far as he knows, we had a fair deal. If he hadn’t figured out the worth of the coins before the sale, he certainly isn’t going to figure it out after the sale. The same reason apple fans keep buying apple.

@Walgt During a criminal trial, is the argument I wasn’t aware of the law work as a defence? Obviously not. Why would you think it would work in business?
Not knowing there is no law in place such as you must tip 15% doesn’t mean you were not victimized by it if a server tells you that you have and when asked by the customer, is that a law, the server doctors the truth to make it appear as a law extracting a 15% tip from the diners.

You sound like a bit of a douche, to be honest, and worse – you’re proud of it.

I’m done here.

@Walgt – They’re a good fit

- you have parents, most likely
– it needs to be someone that has an idea of who you are
– it needs to be someone who has an interest in your success
– it needs to be someone you either respect, or trust, enough to listen. You don’t respect the people here.
– they won’t buy these stories you feed people

@Hypocrisy_Central

If I found out you sold the painting for 170k when I sold you it for $3 I would be pissed. What is your point?

@Seek

Ad-hominem. Indeed, you’re done.

@funkdaddy

My parents know about this. My mom didn’t know what to say. She sorta agreed with me but she didn’t feel good agreeing with me. That is how I perceived it.

My dad was ok with the situation. Didn’t consider any of it as wrongdoing.

@Hypocrisy_Central

Speaking of carpentry, my parents remodeled their floors almost 8 years ago. 8 years ago was the financial crisis (the great recession). One of the hardest hit during that time was construction. A perfect time to do business with that industry as desperation yields low prices. A job like that normally costs $10,000. My parents forced him to do it for $5000.

What do you think? Have my parents victimized the carpenter by paying such a low price for a premium project? After-all, the carpenter was probably pissed. Based on your previous responses, I am assuming you believe my parents should have paid premium.

What about the complaints of the underrepresentation of minorities in certain universities? Are they victimized by the whites and asians who got in? Should they give up their seat for a minority? You already know what I think of these situations.

My point here is that you’re trying to establish what is fair here based on your own understanding of fairness, only it isn’t up to you to decide what is fair and it certainly isn’t perceived the same way by others. We’re not going to get anywhere with fairness because it is arbitrary.

@Hypocrisy_Central

The same can be said about ethics. It too is arbitrary. With all the various ethical principles competing with each over what is considered right and wrong, you’re bound to be viewed as unethical by one standard or another. There is no equity in the various ethical principles. Pointless to have discussions about this.

Speaking of recessions, I got another question for ya. This is a good one. Is selling a man a home that he can’t afford victimizing the buyer? What about denying him the home because he is a financial risk? Does that victimize the buyer?

Before the fair housing act was enforced, poor neighborhoods and those that posed financial risk were denied mortgages (redlining). When the law were enforced, banks had to hand out mortgages to everyone, indiscriminately, which drum roll….caused the great recession. The gung-ho for fairness caused a mass victimization. Victims before the housing act and after the act. Arbitrary nonsense.

@Walgt people know Apple is ripping them off, it’s just the entry fee to be part of the cult.

Selling someone a home they cannot afford is predatory lending and was commonplace during the housing boom. The mortgages were not serviced by the people underwriting them. They were sold, sold again and again like a commodity. The great recession was caused by fraudulent banking and creative accounting. There are laws about transparency now such as sarbanes oxley because of the fallout.

@Walgt: It’s not clear why you asked a question if you’ve argued with every single person who answered in a way which does not seem to please you, which, by the way, is every single person who answered.

@ARE_you_kidding_me

The fairness police felt that redlining was victimizing the financially risky, Damned if you do, damned if you don’t.

@jca

Well, let see, I’m asking for a detailed formula or some form of methodology to determine the best price to set during a business transaction (i clarified this about 5 times now) and instead I get answers of accusations, assumptions of ownership, arbitrary morals, and dick moves. You don’t see anything wrong when no one here is answering the actual question? What kind of response do you expect from me?

Buttonstc, and funkdaddy gave an actual answer. I thank them for it.

Actually, it wasn’t an ad hominem attack on your argument, it was a comment on your character as a person. An insult. Those are not the same thing.

Here you go jca, prime example right here^^^

Good cover story seek, but scroll up to the sequence of events. We were arguing. I replied and you went for the Ad-hominem – marked by or being an attack on an opponent’s character rather than by an answer to the contentions made

Except that redlining had nothing to do with the financial crisis.

You didn’t make any contentions or any sort of argument. We’re not in a debate. This is a discussion about how to best reduce a human being to a math problem so you can exploit them more efficiently.

I think you might actually be upset you spent too much money on those coins.

Maybe you should have kicked the guy in the dick and just taken them.

@ARE_you_kidding_me

I never claimed it did?

@Seek

You’re done seek. Should have been clear the first time.

Yes you did: “When the law were enforced, banks had to hand out mortgages to everyone, indiscriminately, which drum roll….caused the great recession.”

@ARE_you_kidding_me

Yes, so what is the problem with that statement? In your previous response you agreed with me.
predatory lending was commonplace during the housing boom

Banks handing out loans indiscriminately is predatory lending…

Targeting poor people is not “indiscriminately”. It’s literally discriminatory.

Except that giving these loans out was not a result of anti-redlining legislation. It was just greed and exploitation of many of the same people who were previously victims of redlining and anyone dumb enough to take on a crazy loan.

Oh, I think I see why there is some confusion. I’m talking about the Community Reinvestment Act’s role the great recession. The act was enacted by Jimmy Carter for the purpose to stop banks from lending discrimination of low and moderate income neighborhoods (redlining). Predatory lending was basically made legal by this act.

Like I said before, the fairness police had a problem with redlining because of the financially risky folks being victimized and through the CRA they forced banks to give out loans to low and moderate income neighborhoods (predatory lending) which resulted in the great recession and created mass victimization. Hence the sequence of questions. Damned if you, damned if don’t.

Predatory lending has always been legal. The difference now is that loans are treated more like a commodity. A mortgage broker does not have to take a direct risk when underwriting a loan. They just have to make it look profitable enough on paper to sell it. This is what allowed all of the shenanigans to happen.

Predatory lending is too broad of a term. Fraud or misrepresentation is certainly illegal, however, most bankers stipulate in the contract that legal action against fraud or misrepresentation is illegal which means the borrow can only handle abuse through arbitration.

Na, it’s fitting. I get what you are trying to connect: gov’t intervention with business and negative fallout. This is frequently the case just not in this instance. I generally lean libertarian but some things do need intervention and gov’t safeguards. Certainly don’t need more of the fairness police though. Forcing lenders to make risky loans is bullshit but so is allowing them to snipe gullible borrowers.

He’s left the building. I think that fucker stole my wallet.

Will be back with a new name, new persona, same game.

^ Good call.