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You are massively wrong here, most of what you say is propaganda, and is just not based in reality.
For corporations to invest and plan for the future, they need a strict profit margin goal. In turn they have price managers who assign costs based on overhead costs like labor payment.
The consumers have little to do with it as marketing and market placement is planned before hand, and prices do not freely fluctuate based on demand. If a product is not doing good, it is more likely to be pulled off the market, or limit inventory space as to keep up with projections.
If large businesses operated like you imagine, and cut prices based on demand, having clearance sales frequently, and allowing profits to massively fluctuate quarter by quarter, the company will go bankrupt by the end of the year as they have no cash base to invest in future production, inventory space, and overseas expansion/lower cost of shipping, etc.
Again, there is a reason economics and business are taught separately.
The business/accounting definition of revenue is pretty clear, but rather than admitting you are using terms incorrectly, you are misdirecting now by ineptly trying to steer the conversation to “profit margin goals, market placement..” And Product Managers/Price Managers assign prices based on costs and margins. The profit margins are dictated by what the consumer will pay based on supply/demand/competition, so your statement that “the consumer has little to do with it” is also false.
So I guess I have now experienced this “Winterfall Shuffle” I keep hearing about.
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,284 posts, read 8,443,687 times
Reputation: 16509
Quote:
Originally Posted by pittsflyer
Of course the mech is not making 80 hr but when a mechanic makes 20 hr and the bill rate is 80 you will never convince me the shop has 60 hr in over head even including a reasonable profit.
These are exploitive situations.
Of course over head is not 0 but there are things the owner can do to minimize these expenses. Because we live in an ever growing ruthless society anyone who has even slight leverage (maybe they own a metal building or what ever) they are going to fleece the crap out of would be entrepreneurs. I say build your own building but up your equipment stock and intellectual property. People going off half cocked will likely fail.
Well I know two owners of shops that tell me this. They are so far in they can't sell without taking a huge hit. otherwise they would. They'd rather work for another shop and get paid hourly. I had a photo studio and my overhead was nearly $50 an hour just to exist. That didn't include cost of materials once a client walks in the door. I didn't have nearly the capital invested those shops had as well.
I encourage you to open your own business and prove me wrong.
Do you have any idea what it takes to build your own building? Money, time?
Where are you going to get the money to buy the land and then build the structure? Who will loan you money with no proven track record?
The fact that you refuse to believe a shop can have $60 an hour overhead demonstrates you have no idea of how a business works. I'll bet if someone showed you the books and tax return proving you wrong your stubborn attitude won't accept that you could be wrong.
Once again start your own business. I'll bet you don't do it and if you do you will have lost everything in the first year.
That attitude insulates me from low paying degrading jobs, so I would say that's a good thing. Because I refuse to take mcjobs you are trying to twist it into a negative when I see it as a positive.
I will accept the appropriate job commensurate with my skills, experience and education as well as certs that are hard to get.
If I could leave my area I would have a good job, the area is the issue.
So if there is no food you starve and then you dont have to deal with these problems anymore. The Russians developed nukes so that they would have leverage in the future. Threat of ending the world is the only thing that gets peoples attention.
In your case, a McJob is better than no job, as I am not aware of any backup plan you might have.
What do you know about farming? Grazing, crops, what?
Anyways, do they (not you I presume) produce to meet their own needs, or for the sake of diversifying the market?
If the answer is number 2, that shows you just how distorted the market has become with the introduction of large food producers, chemical companies, and land owners.
Oh, but perhaps you like to make stuff up so you can use the eyeroll emoji. I expected no less from you CM.
Farmers who produce only for their own needs starve to death, because they have no means of getting money to buy other things they need. Without markets, the farmers are reduced to subsistence level survival, which is no way to live.
Quote:
Originally Posted by Winterfall8324
Revenue has to first be created by sales (or rent or whatever).
But that revenue must be planned, so that it can fulfill costs an get a profit from itself. So say one year a company had twenty workers, they expect to pay them a total of $1,000,000 that year. When it comes to price management, they factor in that cost to the price of what they are selling along with production capacity and that overhead cost.
For farmers and other folks who deal in commodities, revenue is not controlled by the source, but is based on market pricing that is completely outside the control of the selling entity.
Quote:
Originally Posted by Winterfall8324
You are massively wrong here, most of what you say is propaganda, and is just not based in reality.
For corporations to invest and plan for the future, they need a strict profit margin goal. In turn they have price managers who assign costs based on overhead costs like labor payment.
The consumers have little to do with it as marketing and market placement is planned before hand, and prices do not freely fluctuate based on demand. If a product is not doing good, it is more likely to be pulled off the market, or limit inventory space as to keep up with projections.
If large businesses operated like you imagine, and cut prices based on demand, having clearance sales frequently, and allowing profits to massively fluctuate quarter by quarter, the company will go bankrupt by the end of the year as they have no cash base to invest in future production, inventory space, and overseas expansion/lower cost of shipping, etc.
Again, there is a reason economics and business are taught separately.
Businesses charge what the buyers are willing to pay. That means that sometimes, profits are very high, and at other times profits become losses. The businesses may plan based on a projected price, but that often bears no relation to the ultimate reality.
Farmers who produce only for their own needs starve to death, because they have no means of getting money to buy other things they need. Without markets, the farmers are reduced to subsistence level survival, which is no way to live.
For farmers and other folks who deal in commodities, revenue is not controlled by the source, but is based on market pricing that is completely outside the control of the selling entity.
Businesses charge what the buyers are willing to pay. That means that sometimes, profits are very high, and at other times profits become losses. The businesses may plan based on a projected price, but that often bears no relation to the ultimate reality.
1. Firstly a person can survive based on crop yield and fresh water...
But that is besides the point. Yes people sell cash crops, the point is the seller is the producer, unlike the worker controlling the distribution of finished goods.
So yes you can have a market to sell your goods, but the price, if decided by the laborer, will reflect their labor output and needs, as the pay the labor costs directly and choose how much inventory they are willing to produce.
It's the labor theory value, which is a large factor. Big corporations have their own models, and they're not what you think.
2/3. These both are incredibly wrong. If a company relied on the mysterious hand of supply and demand/competition to make a profit they would go broke. In fact that was what was happening in the late 19th century when business leaders realized the lack of cohesive planning would crash the economy. So instead they decided to cooperate in market production and labor salary, rather than compete for the lowest prices along with highest salaries as that destroys potential profits. Profits are needed to plan future investments, expand to other markets, and stabilize the labor pool and suppliers by offering consistent wages (wages won't drop if profits didn't fluctuate too much) and paying overhead costs in general. That is why instead of following the delusional concept of supply and demand, and driving clearance sales when their doesn't need to be one, companies hired price managers to estimate overhead costs, and determined inventory demands by what the potential profits would be.
In the same way, farmers decide the price based on their own needs relative to what people will buy (production choice), and without large corporate farms to drive them out of business and buy their land, thereby monopolizing the market, things would be different:
The business/accounting definition of revenue is pretty clear, but rather than admitting you are using terms incorrectly, you are misdirecting now by ineptly trying to steer the conversation to “profit margin goals, market placement..” And Product Managers/Price Managers assign prices based on costs and margins. The profit margins are dictated by what the consumer will pay based on supply/demand/competition, so your statement that “the consumer has little to do with it” is also false.
So I guess I have now experienced this “Winterfall Shuffle” I keep hearing about.
No, again you are highly misinformed, which is fine. It has everything to do with revenue. If the costs for production, or overhead costs are known, then total revenue needs to be targeted higher than that price to offer consistent profit.
That is why companies have price managers to calculate total shipping and labor costs, and determining a price above that number, and using the hypothetical profit total to plan for future investments. If companies operated like you imagined, and let the market decide how much they made each year, their could be no guarantee for consistent salaries, no future planning, and changing abilities to pay off previous production costs. They would go out of business in fact. Instead, by the late 19th century, they decided marketing and cooperation with other market producers will help guarantee consistent profits. If a product is not selling well, or bellow expectations, they are more likely to pull them off the shelves than give a clearance sale to get rid of all of them at a massive loss.
Again there is a reason economics and business are taught separately.
Actually, it's interesting you bring up overhead costs. In fact labor all together is considered an overhead cost that must be paid off by the goods being produced.
That means the price a mechanic is paid precedes revenue.
In fact salaries determine revenue rather than the other way around. Read about price management in business.
So, now you’ve decided to show the world another subject that you know nothing about. Accounting isn’t your thing - you should stick to an easier subject. Like nap time.
Well I know two owners of shops that tell me this. They are so far in they can't sell without taking a huge hit. otherwise they would. They'd rather work for another shop and get paid hourly. I had a photo studio and my overhead was nearly $50 an hour just to exist. That didn't include cost of materials once a client walks in the door. I didn't have nearly the capital invested those shops had as well.
I encourage you to open your own business and prove me wrong.
Do you have any idea what it takes to build your own building? Money, time?
Where are you going to get the money to buy the land and then build the structure? Who will loan you money with no proven track record?
The fact that you refuse to believe a shop can have $60 an hour overhead demonstrates you have no idea of how a business works. I'll bet if someone showed you the books and tax return proving you wrong your stubborn attitude won't accept that you could be wrong.
Once again start your own business. I'll bet you don't do it and if you do you will have lost everything in the first year.
I know exactly how much it costs as I put a metal building project together, I could not build it at the time but I know that renting space out endlessly and being subject to wild rent swings is not the way to go.
In my mind they key is producing something niche that you can make anywhere and sell online.
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