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RandomAustralian | When something is on sale for far less than it's original selling price, who looses profit? |
If the object being sold is a CD for example.
Because a few weeks ago I went to buy a CD I've always wanted in a shop that finally had it in stock and saw it in the "3 for $25" section. This CD is worth about $30 alone. I went in ready to pay whatever it cost me and was shocked.
Needless to say I bought it along with 2 other CDs for $25 but had an unpleasant feeling in me all the while that I wasn't giving the band what they worked for. I know that sounds lame 'cause bands get a lot anyway but yeah...
So in a situation like this does the band or the shop loose profit? |
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Johnny Cash
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Well, the company would have bought the CD for $10 and it is selling it for $30. When people don't buy, the company will put the CD on sale for $20, still making profit, but not as much. The bands get a settled amount beforehand, regardless of the price the CD sells for. |
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rlshorty3
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To be honest probably neither of them looses profit because they sell CD's for a lot more then they actually paid to produce them. But in this situation it would be the store that looses money because they still have to pay the same amount to buy the CD's whether they go on sale or not. |
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angel_gyal4ever
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Well they usually jack up the price first, then mark it down, so they won't lose out.
Or they're just clearing out stock nobody wanted. So either way, they find a way to benefit themselves. |
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shaymayca1
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If the CD just came from the warehouse then the record company/supplier/store get less money. If the CD has been on the store shelf for a awhile before they marked it down, chances are that the store is the one losing profit. The store would have paid 'full price' for the item when it was new, so the Record company or Supplier has already been paid. After that, any markdowns or sales come out of the store's pocket.
Sometimes it's hard to tell what happened, but if it is clearance or dusty/beatup (as in old) that is a store loss. |
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paulcrsm
 |
Whenever something goes "on sale", the price is reduced along with the profit. The profit is the difference between what the store paid and what is sells it for. All along the "food chain", everyone takes their "cut". First the disc manufacturer gets paid for making the disc. Then the recording company sells it to the wholesaler. The wholesaler sells it to the stores or possibly to a distributor who then sells it to the stores. Normally, the discs get to the stores as fast as possible because once the CD is "old", it won't sell as easily. When this happens, the stores will reduce their price so that they won't get stuck with merchandise that won't sell. It is better for the stores to sell at a loss rather than get stuck with something that won't sell at all. To make this long story short, neither the band nor the recording company suffers loss, because their cut is written into a contract. So when you see a CD on sale, it's the store who takes the hit for losing profit. |
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Sherry H
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the bands or the performer get their royalties from the CD's being bought by the merchant. The merchant then can sell the CD for pretty much any price they want, they can give them away for free if they want. It doesn't affect the band or performer because they already got their royalty. So its the retailer that wins or loses here. |
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Kbeezy
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The store is the one losing profit. They buy it at a discounted price then re-sell it for profit. And generally, cd sales go to the cost of production. Most bands make money from advertising or concerts, etc... |
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Frankie
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The retailer loses some profit because they already paid for the CD. They paid allot less than you think. The markup is huge and they are probably still making a profit. |
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the giver
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the store or people that hold stock in that company loose the profit and the store marks the cd down or puts it on sale b/c noone wants to buy it or in some cases they uses a tease they jack the price up then say soo much percent off and really they only loose nickles and dimes but gain money on an item that isnt selling too well |
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Nina
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The store loses.
But they're hoping to make up for it next year.
HA. |
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Carl L
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Well it's either a "loss leader" or the actual cost to the retailer was below $8.33. The band didn't loose a thing if they have a good contract. Their profits come from bulk sales to the shops, not the individual customer. Most items like that are marked up 100% to 300% so if it sells for $30 it probably cost the retailer between $4.50 and $14. A "loss leader" sells items at a loss to get customers in the door so they will buy other items at full price. However I doubt that your 3 for $25 is one. |
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Joe Biden VP
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the store or it's stockholders |
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marci knows best
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The retailer looses. The cost of the merchandise, in this case a CD, is set by the distributor or wholesaler. The band gets a small percentage from that amount. The retailer then sells the CD for as much as people are willing to pay. |
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jojo
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i am not sure but that's a great question i also wonder, if you get a good answer email me jojokuria@yahoo.com thanks |
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