to think that if a shop can have a "75% off" sale, on the whole, they're just in the business of ripping of their customers?

[wannaBe]

because lets face it, even when a shop has a sale, they still make a prophet. so if the sale is 75% off, then as a rule they must be making a mint. no?

and then theres the staff to pay for, the electric, heating, water, rent, coucil tax, phone bills, internet bills, erm no I don't think they are making a mint, if they are having a 75% sale, then they're only making a teeny bit of profit on the price of the item they've brought in at cost, which would indicate to me they're in trouble.

i believe 200% magins ae petty commonplace in etailing

but thee ae many stategic easons why a shop may choose to slash pices fo a sale

oh wannabe i love your typo in the first post

i wonder which prophet they are currently knocking up in the changing room and whether he will have gods backing to help them make a profit

I imagine - I don't work in retailing so I don't know - that they plan for sales

I mean big companies like DFS must know how many sofas they must shift at £900 and then half price at £450

the reality of the ideal price must be around £600 or something

but some people are dickwads who buy a sofa whenever they fancy, and thus can be charged the higher price, and some people are tightwads who like a bargain

and this way they get to sell sofas to both of them

It's bit more complicated.

Basically when you buy something in stock you don't expect every single item to sell, especially full price. You only have a limited time to sell it in before you will need the space for another item. Also some items will get damaged etc.

So profit margins allow for selling only a certain % of the items (no idea how much but for arguments sake lets say 70%).

So you price the item with a profit margin to allow you to sell 70% at full price and cover costs and make enough profit.

Any remaining stock is marked down just to sell quickly as they need space. The space is more valuable than the stock at that point as the stock has passed it's peak selling point.

I've heard people asking the same about video games. I know with these a lot of the price is to cover the huge development costs, once covered (and bearing in mind the product has a very short peak selling period - like clothes) the price drops. But noone could afford to sell it at that price to start with. It wouldn't cover costs.

My that was long winded

and some items have tiny profit margins while others have huge (partially to make up the difference).

Games consoles for example made at the time the xbox and ps2 were launched retailers made £5 on them (before costs such as staff/buildings etc). That's why you never really see anyone undercutting everyone else.

You make money on the peripheries- extra controllers, memory cards and a bit on games.

Though to be fair retailers are still making a lot of money on certain items at certain times - otherwise they wouldn't be in business.

Plus sales bring in customers that wouldn't normally shop there, so actually the shop may sell some items at a loss just to entice a wider range of people in, in the hope that they like the items and become regular customers.

I'm loving 'prophet'

thats the whole part in being in business, making a profit.