"Lock in 2008 price for one year" deals -- sign of coming deflation? (borrow, money)

[Lulu101]

I've seen some commercials lately (Nutrisystem is one) where you can lock in today's prices for an ongoing service. I think that they're really betting on further deflation, while capitalizing on people's fears of inflation.

[tallrick]

They will lose then, as deflation cannot exist under our system. Perhaps they are just trying to assure that they have customers in the future at any cost so they can borrow more money to do business.

[Lulu101]

Maybe, but I can't believe that they would offer this deal if there was a possibility that they would lose money by inflation

Originally Posted by tallrick

They will lose then, as deflation cannot exist under our system. Perhaps they are just trying to assure that they have customers in the future at any cost so they can borrow more money to do business.

[yachtcare]

Originally Posted by Lulu101

Maybe, but I can't believe that they would offer this deal if there was a possibility that they would lose money by inflation

I think the profit margin, to begin with, has a lot to do with it.
Best example I can think of off the top...A pizza costs 12.95 to have delivered to your door. There is a total of maybe .50 worth of ingredients, another 1.50 in labor and energy cost, and a few bucks in delivery.

If there is any message in the "lock in plan" it is probably that you have been paying a grossly inflated value to cost ratio all along. There's plenty of room to "lose"(erode profit margin) money before an actual loss is realized.

[lchoro]

This is the time of year when health clubs, diet services, etc. get the most number of new members. T

They can lock in prices from their suppliers so they're covered against price increases.