Just what, exactly, is a fair price?
Asked by
josie (
30934
)
July 29th, 2010
A local merchant does a radio ad, promising “a good product at a fair price”.
Now, I figure most people know that this is nothing but “market-speak” designed to manipulate those who imagine that everything is too expensive or a rip-off.
But I also suspect that to some people, the phrase actually has meaning, as if something actually makes a price “fair”.
Who or what makes a price “fair”.
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14 Answers
“fair” would be price that takes both the consumer and the producer into account
abc company makes widges and has a 400% markup,
xyz company makes the same widget and has a 150% markup, his costs are covered and he makes a profit, but isn’t greedy and continues to sell his widges
xyz company has a ‘fair’ price that gives the overall public access to his widges AND still earns him a profit
A price at which one is willing and able to sell and the other willing to pay.
@christine215 150% is pretty extreme. When I owned my business the lawn mowers were sold for no more than 20%. We didn’t have a choice because the damn manufacturers advertised their prices. Also, when you’re getting into a purchase for hundreds and thousands of dollars people tend to shop around.
On parts, though, eventually got to a 100% mark up. I started at MSRP of 20% but something wasn’t working. So, to be honest, I kept increase prices of the parts little by little until people started squeaking. After 100% they do. Now is that fair? No, not really. But did I need to do that to survive? Yes.
A fair price goes back to the concept of comparitive advantage, if you are familiar with that term. As long as both parties in a transaction come out ahead of where they would have without the transaction, the price is fair.
What constitutes a fair price has nothing to do with morality. A fair price is simply one that knowledgeable persons, knowing all relevant facts, agree on.
It’s defined as the price at which a buyer and seller are both satisfied where there was no unfair advantage or duress..
“What’s worth doing, is worth doing for money. If it’s a bad bargain, nobody gains, and if we do this deal, everybody gains”
Gordon Gekko
@Austinlad Oh, for heavens sake – quotes from a fictional character in an advertisement?
A fair price is where neither of you feel you just flushed money down the drain.
One that results in a win-win situation.
@Dutchess_III i have no idea of what a ‘decent’ markup is, i was just using those numbers compartively to one another
@christine215 From a small business owner, the mark up is whatever the customer is willing to pay. Can’t go too overboard because of competition, of course, but basically whatever you can get away with. MSRP in most cases is around 20%.
I ask the person, “what is it worth to you?”
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