What if?

[MWB]

Would it work if the whole world cut the price of EVERYTHING in half but kept wages, etc the same?

[Buenchico]

If a shopkeeper gets all of his stock at half the present wholesale prices and then sells everything at half of his current retail prices, he'll only make half as much gross profit. If he then tries to pay himself and his staff the same amount as he does now, he'll go bankrupt.

Chris

[Quoi]

Depends if he is making obscene profits in the first place - he could probably cope.

You need to look to the start of the supply for the real problems because if the product was labour intensive you wouldnt be able to make it. no supply.

[Pippa68]

Retail prices are not double the price of cost prices though..so Chris is right.

[Quoi]

No pippa they are not - in some cases they are much higher - depends on how many middle men.

Clever business is to sell at the price the market will stand not double the cost.

[mibn2cweus]

What if the whole world kept the same prices and wages but cut the standard of living in half? YEOUCH!

[rojash]

Back in the days before I semi-retired we used to sell computers. For a retail home machine, the gross margin was twelve to fifteen percent, and from that you had pay your overheads and staff costs, make a profit and cover the cost of the free technical support that everyone seemed to expect (a bit like buying a car and expecting free driving lessons). On the other hand the electrical chains would sell TVs at a gross margin of 30 to 55 per cent, and all they had to do was deliver the box and forget it.