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If Amazon builds their card processing fees into their pricing - which they presumably do - consumers don't get $1 of value, they get value somewhere in the neighborhood of 98 cents.
What is "value"? It's not a fixed quantity. Value is an adjective. Value is relative.
If I buy an item from Amazon for $1, you say I'm only getting 98c value because it covers a processing fee but if I buy the exact same item from another retailer for $1.25 that incurs no processing fees, what "value" am I getting? By your logic, it would be $1.25. But how can that be? How can I be getting more value by overpaying?
By definition, if a good only provides 98 cents of value to a consumer yet is priced at $1, no transaction will take place and no value will have been created.
If the consumer does not pursue his due diligence with pricing, or there is misleading advertising and/or fraud, this may not hold.
What is "value"? It's not a fixed quantity. Value is an adjective. Value is relative.
If I buy an item from Amazon for $1, you say I'm only getting 98c value because it covers a processing fee but if I buy the exact same item from another retailer for $1.25 that incurs no processing fees, what "value" am I getting? By your logic, it would be $1.25. But how can that be? How can I be getting more value by overpaying?
When I spend a dollar online I (presumably) get a product worth 98 cents. It's not worth a dollar because 2 cents went to cover card processing fees.
When I spend a dollar online I (presumably) get a product worth 98 cents. It's not worth a dollar because 2 cents went to cover card processing fees.
So you buy the same thing locally and you might pay more local/state sales tax and might have to use the metro or your own transportation and gas. And pay more for the same item because it costs more to ship that item to your local store, or your store doesn't do much volume and has to pay more per unit wholesale than Amazon.
^^^ +1 ^^^ great post. Can't rep you though without being more promiscuous with my repping.
I'm seeing opportunities to answer multiple posts with a single response.
My perspective is that the product received is worth 98 cents and 2 percent is a frictional transaction loss. (I said frictional, not fictional LOL. I saw that one coming.)
SOMEONE, at some point, is going to resolve that loss and make a fortune doing so.
I look forward to being able to say I Told You So. I'm just disappointed that Someone Else will be laughing all the way to the bank.
Put down the Froot Loops. Or take an actual Econ course. The prices of everything reflect all costs of production, including marketing, sales, and shipping costs. There is nothing "frictional" about any of this. Value is meanwhile a perception of the consumer. If he sees monetized value as exceeding a stated price, a sale may occur. Otherwise not.
When I spend a dollar online I (presumably) get a product worth 98 cents. It's not worth a dollar because 2 cents went to cover card processing fees.
Worth is the point at which a buyer is willing to pay for it and a seller is willing to part with it. If you buy an item for $1, it was "worth" a dollar to you. What goes into the final price of a product is none of your business and not something you can determine anyway. If you're going to subtract card processing expenses from what you consider "value of the product", then why stop there? Be sure to subtract legal expenses, warehouse insurance, employee labor, interest, taxes, etc.
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