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In Memoriam Comment by John McCain on July 14, 2014 at 13:22

Correct Steve-Just saying that although MAAP should apply, retailers, even SMKW, can afford to break even on or lose money on a well known product to drive sales on their other products to  drive the perception that their other products. which are quite profitable, must also be bargains--I have worked for several MAJOR retailers over the years and also know what my MAJOR competitors were paying for their product-This may not be fair, but it is the REAL world of business- Corporate giants like Walmart used to sell baby formula for a fraction of what it cost and I was a direct competitor with the same source for product- Fair- hardly, dirty pool- maybe, good business practice for Walmart- definitely-Small mom and pop pharmacies could not hope to compete, and tough for even a major retailer to withstand the blow-Walmart's strategy- Mom's need formula, which we lose money on, but we make it all back when they buy diapers, baby food,  groceries.etc

In Memoriam Comment by John McCain on July 14, 2014 at 12:47

I don't want to jump in the middle of a mom & pop (love ya Terry) vs. online stores, garage sellers, etc.However, after 40+ yrs. in retail mgmt. and buying experience I can offer some scenarios- A)Retailer offers a an item at or below cost ( Buck 110 or a gallon of milk) where the retail is widely known and might convince a consumer that their other prices must also be low- B) A large  retailer gets a huge price reduction because the manufacturer or wholesaler is behind on quota and is trying to get his superiors off his back- The retailer can either enjoy the extra profit or pass the savings on to the consumer for the above reasons C) - Backroom deals happen in the retail world with major retailers- IE- A mfg. in California ships trailerloads of product across the country to support a major retailer's ad- For various reasons, it arrives too late and retailer refuses order-Mfg. can either ship it back home and out again at triple shipping costs, or unload it to another area retailer at a drastically reduced cost-Retailer B then has the option of  either enjoying the extra profit or driving his competition crazy with a price they can't match-  I have even had Coleman coolers sent to me at .01 cost per unit to atone for a past mistake. The coolers normally retailed for $29.99- I sold them for $19.99 which pleased my customers and succeeded in driving my local competitors nuts- Cutthroat tactics aren't always pretty, but they are an ingrained part of the business world- Same scenario, with me on the short end of the stick has also happened many times- 

Comment by James Cole on July 13, 2014 at 16:09

Jan, Everything you said is true.  Whether a janitor or a CEO we all sell our services in the job market for a profit. 

Jim

Comment by Jan Carter on July 13, 2014 at 15:05

Jim, I am very sorry to hear that.  Business owner is not all it is cracked up to be.  Profit is not a dirty word.  It is the reason we all get up and go to work, even the business owner.  The business owner doesn't leave it at the office or go on vacation without worry.

They have to be aware of what their competitors are doing and MAAP is supposed to help with that.  In some cases it does

Comment by James Cole on July 13, 2014 at 14:53

Thanks Steve.

To anyone following this thread.  If you think you want to become an independent business owner, send me a private message and we can talk about it.  I won't attempt to discourage you, but I will provide you with my knowledge and experience.  No cost.

Jim

Comment by James Cole on July 13, 2014 at 14:33

Steve,

Sad, but true.  And I didn't even address variable costs such as replenishing inventory, wages, payroll taxes, and workers comp.

After more than 12 years of running my own company, I am now unemployed.  The owner of my leased building sold the property and I wasn't able to find a kitchen to move into, so I closed the doors.  It is difficult not having somewhere to go when you get up in the morning, but it was even harder saying goodbye to my employees.

Jim

Comment by James Cole on July 13, 2014 at 14:05

First, I think MAAP is ”Minimum Allowable Advertised Price” as set forth in the manufacturer's MAPP “Manufacturer's Advertised Price Policy”.

Here is a paragraph explaining what the MAPP is:

Some manufacturers place into effect "Minimum Advertised Price Policies" or MAPP.

The purpose of this policy is to promote and protect their brand image.

MAPP Policies prevent retailers from advertising below the MAPP Price.

This does not, however, prevent the retailer from selling the product for less.

Regardless of what the business books may say there are only three reasons for a company to be in business 1. profit, 2. profit, and 3. profit. Now before someone comments that profit is a dirty word; no company can stay in business without making a profit.

The big difference between Terry's business and someone selling knives out of their garage it a thing called “overhead” and no that's not the ceiling. It includes lease/rent, some utilities, business licenses, special assessments, liability insurance, fire/loss insurance – well I think you get the idea, these are known as fixed costs. He pays these amounts whether he makes a sale or stays home in bed. I sell on ebay, (I don't really) what is my overhead? Zeeroo.

The cash flow/profit and loss model is; revenue - cost of operations = profit

Staying with Buck 110 knives at $36

and using a cost of operations of $1000

we see that Terry needs to sell 28 Buck 110s to finally make a profit of $8

My cost of operations is limited to my variable costs i.e. whatever the credit card company or Paypal takes, so my profit begins on the first knife I sell.

In Memoriam Comment by Terry Ray on July 13, 2014 at 10:19

As I did read Jeff but thanks for your help

Comment by jeff on July 13, 2014 at 10:04

if you read my comment, it wasnt talking bad about the mom and pop stores, i was just saying that IF a small store advertised a low- ball price.. it made the guys who were buying the large quantities, and selling for a certain price, mad. read ... before you resent !

In Memoriam Comment by Terry Ray on July 13, 2014 at 9:41

And to add , my cost on the 110 is 36.00 so I can buy it from smkw
Cheaper than from buck knives ... Ain't I glad ima buck dealer...

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