Price Points

I reached for the Raspberry Kefir in my Winn-Dixie store, then recoiled when I saw the price had gone up. Again. I bought it at Winn-Dixie for convenience even though when it was $3.50 there, it was $2.75 at Walmart. Last week, the price at my Winn-Dixie was $4.39. Today, the price was $4.55. I walked out without it. They had passed my price point. It isn’t something I need but, with my frequent stomach upsets with celiac disease, I like to try to repopulate the gut with happy, friendly bacteria. I want happy bacteria that are having a group hug with my intestines, not the hostile thug bacteria with tattoos that are threatening my intestines with a switchblade. However, I can substitute with yogurt, probiotic tablets, or kimchee. I can make my own sauerkraut for that matter.

I didn’t get milk, either. Winn-Dixie’s no-name milk (that was probably milked out of radioactive cows from North Korea) is $4.19 per gallon. Milk that comes from a dairy with name recognition (whose cows are probably not radioactive mutants) is much, much more expensive. It is in the “have you lost your freakin’ mind?” range of expense. Milk, cheese, and butter are things that I now buy on sale only.

I imagine a lot of people are reaching their own personal price points of one kind or another now. After all, you decide that you will accept a certain amount of money for doing a particular job, and you will not do it for less. As an employer, you have an amount that you can afford to pay for an employee.

President Obama has decided that $10.10 an hour is the least amount that people should be paid. By this, of course, he means that the sorriest excuse for an employee that can be scraped up out of the alley is worth $10.10 an hour. “Well, excuse me all to hell!” says the person that does more skilled labor that used to earn $12.00 an hour. “I don’t get much more than that, I’m a good employee, and I had to have training for this job, unlike Mr. too hungover to get out of bed on Monday morning. If that person gets a big raise, I deserve one, too!” President Obama has no knowledge whatsoever of economics or job markets. Or working, for that matter.

Of course, to pay all those increased wages, the prices that you as a business charge for your goods and services must go up. You go to your customers and tell them that you have to increase the prices due to new wage laws. You go to your suppliers and tell them that they have to sharpen their pencils and cut prices because you don’t have the cash to pay them as much as you used to because you have higher expenses. So your customers all say “Why yes, we’ll be overjoyed to pay 50% more for your services!”, right? Uh, no. They’ll say “Sorry, buddy, I have wage problems of my own, and I can no longer afford you. I’m going to go with either Ramon’s Truck of Illegals where there is no insurance or minimum wage, or outsource to a very cheap labor country.” Your suppliers will likely say “Sucks to be you. Sorry to lose your business. If that will be all, I have a meeting with Ramon in 20 minutes about a large order.”

At this point, you, the owner, have to decide whether it is in your best economic interests to shut down the business, radically downsize the business so that you and family members are the only employees, whether to substitute machinery for labor, or whether to go to cash only, not keep records, and escape all regulation. You could decide to keep on losing money in the hope that everything will eventually work, but math is a real bitch, and you’ll end in bankruptcy.

Doctor’s offices are facing the same dilemma for they are independent businessmen whose prices have radically increased via government regulation, and whose compensation has drastically declined. This is not good news for you. There will be fewer suppliers of medical care as many will opt to go out of business and retire. Others will decline to enter the market. Existing physicians may decline to take any insurance at all. The ones that do enter the market may not necessarily be the best and the brightest, but the dumber and lazier. You might want to start thinking about alternatives for medical care.

“But I thought this was about Winn-Dixie’s high prices!” you may whine. Well, you were right. It is, but it’s also about how people have a range of prices that they are willing and able to afford for goods and services but, once that ceiling is breached, they will no longer be in the market or will seek out competitors. Will Winn-Dixie earn more money from me by increasing the price of the Kefir? No, for they will earn no money from me, since I’ll just drive down the road to a competitor which is less convenient but where the prices are lower. If I’m in pain and the price of (legal) narcotics is too high, I’ll substitute illegal products. If taxes are too high, I’ll reduce my taxable income partially or completely.


6 Responses so far »

  1. 2

    jenny said,

    Your kefir is 2/$6 at publix right now….

    • 3

      swampie said,

      YES! I shall see if the Publix nearest ME has the same deal. No, of course not, at least not in their ad.

  2. 4

    kae said,

    Yes. Cadbury Chocolate reached a price and other point some time ago for me.

    Cadbury, an old favourite, made their 250gram block 200g and put them in a cardboard box so they looked bigger. They made this adjustment to all of their chocolate sizes. When I complained to the company they had the cheek to tell me it was for my health. Pfft.

    Cadbury also went halal, which is a big turn off for me. The icing on the cake was the size shrinking and the price still rising.

    Same with potato crisps. Packets which were 200gram originally shrank to 185gram and now they’ve shrunk more, to 165gram.

    No more chippies for me.

  3. 5

    kae said,

    As for the shrinking product/same price phenomenon, I wonder how small they will make the product before people will stop buying completely.

    • 6

      swampie said,

      Oh, definitely. 20 lb. bags of dog food are shrinking to 14 lbs. at a higher price. Sugar has gone from 5 lb. bags to 4 lb. bags in the local supermarket at a higher price. Instead of a pound of bacon, a lot of manufacturers are offering 12 oz. for a higher price. The common denominator seems to be less product for more money, and it is for your own good, so suck it.

      I did not know Cadbury had gone halal. What the hell do they kill to make chocolate?

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