Dan Richardson
Member
The price of gas and fuel has come down a lot. Why has lube oils and hydronic flu it not followed suit?
- Thread starter Dan Richardson
- Start date
Our hydraulic oil is half what it was 9 months ago but part of the answer to your question is the stocks of those products move much slower so retailers are reluctant to lower the price of something they bought at a high price even though prices are lower for what they will buy back.
rd 2N in mo
Member
or I paid the price to make the profit.
Just because something in the line goes down
in price doesn't mean I have to give you
all the profit does it?
Just because something in the line goes down
in price doesn't mean I have to give you
all the profit does it?
Tom in TN
Well-known Member
- Location
- Southern Middle Tennessee
rd
I'm not trying to be a smart alec and I don't mean to imply that I know anything special. You probably already know this, but at the risk of stating the obvious, here goes.
When a retailer prices his inventory, he generally uses one of two methods. The two most common methods for valuing inventory are called "First In, First Out" (FIFO) or "Last in, First Out" (LIFO). If he is using the FIFO method, The COST of the stuff that he sells is based on what he paid for it when he bought it, possibly a long time ago. His profit then, is based on what he sold the merchandise for today, minus the cost of the merchandise, possibly from a long time ago. If he bought it cheap and sold it for a high price, he made a profit. If he paid high when he bought the stuff and sold it low today because that's the market, he lost money.
If he uses the LIFO method, the COST is what he paid for the most recent merchandise that he bought for resale. If he bought some stuff last week and sold it today, his profit will be based on the difference between what he paid for the most recent purchase of merchandise minus what he sold it for today.
So, I guess what I'm trying to say is, the business of buying and selling merchandise is not simply a matter of what something is costing to buy for resale today versus what the merchant is selling it for today.
But you probably knew all of that and more. Please forgive me if I've come across as a "know-it-all." The truth is I'm actually a "know-almost nothing-at-all".
Tom in TN
I'm not trying to be a smart alec and I don't mean to imply that I know anything special. You probably already know this, but at the risk of stating the obvious, here goes.
When a retailer prices his inventory, he generally uses one of two methods. The two most common methods for valuing inventory are called "First In, First Out" (FIFO) or "Last in, First Out" (LIFO). If he is using the FIFO method, The COST of the stuff that he sells is based on what he paid for it when he bought it, possibly a long time ago. His profit then, is based on what he sold the merchandise for today, minus the cost of the merchandise, possibly from a long time ago. If he bought it cheap and sold it for a high price, he made a profit. If he paid high when he bought the stuff and sold it low today because that's the market, he lost money.
If he uses the LIFO method, the COST is what he paid for the most recent merchandise that he bought for resale. If he bought some stuff last week and sold it today, his profit will be based on the difference between what he paid for the most recent purchase of merchandise minus what he sold it for today.
So, I guess what I'm trying to say is, the business of buying and selling merchandise is not simply a matter of what something is costing to buy for resale today versus what the merchant is selling it for today.
But you probably knew all of that and more. Please forgive me if I've come across as a "know-it-all." The truth is I'm actually a "know-almost nothing-at-all".
Tom in TN
Pair-a-dice farm
Well-known Member
No need to apologize for lending good information. That accounting lesson is one of the 1st you are taught in business school. Whether it is learned or not depends on the student.
old
Well-known Member
- Location
- Camdenton Missouri
I have noticed that in my local Orscheln's that the 303 UTF was up around $39 but last time I got some it was on sale for $19.99. Then the other day I noticed it is now $24.99 so at least it has gone down. Motor oil is still the same
Tom, as matter of fact your FIFO or LILO is flawed. Most retailers use either a standard mark-up based ON THE COST OF GOOD OR ONE BASED ON A PERCRNTAGE OF RETAIL. You are correct in that they will not lower their price immediately when their cost goes down because they are trying to recover some of their investment in the inventory. However, the retailer can not hold his higher price for very long as he [could be she] would be viewed as an expensive place to shop.
In some cases the wholesaler will work with the retailer and help save them from a severe loss. These same wholesalers also help the retailers have a price reduction sale by lowering the cost of those goods sold during the sale. Oh yes, I do have a college degree in marketing. Happy farming
In some cases the wholesaler will work with the retailer and help save them from a severe loss. These same wholesalers also help the retailers have a price reduction sale by lowering the cost of those goods sold during the sale. Oh yes, I do have a college degree in marketing. Happy farming
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