Originally Posted by
kebosabi
Ideally true, but in corporate America run by number crunching MBAs and bean counters, it's all about nickel-and-diming the customer in order to recuperate lost revenue/recover assesed risks.
It's not an ideology - it's how the free market works. The
number crunching MBAs and bean counters are precisely the ones who understand what I've said -- that is, they can only charge what the market will accommodate, not what they
would like to be compensated. They set the price on what the market and their competition allows.
The corporate bean counters cannot create profit by increasing the price above the optimum price, unless they're a running charity and can convince goodwill customers to pay more to help out a good cause. Having fraud losses do not qualify as a "good cause", and having systemic security costs to prevent fraud loss does not count as a "good cause" either. If the cost is due to a publicized donation to the american heart association (for example), only then does it work to charge more than market value.
US customers don't care about the price of rice in China -- they care about the price of rice in the US.
Originally Posted by
kebosabi
Inevitably, rising skimming fraud would just put more pressure to the banks and merchants, which in turn just gets passed down to the consumer.
Countless many costs get passed to the consumer. The consumer only cares about the end price (which is a function of aggregate cost, not just one cost). It's the lesser of sums that matter to the buyer, not how it's composed. How it's composed only matters to the merchant, who must minimize the sum.
Originally Posted by
kebosabi
I work in the food industry. Cost of food for consumers because of rising fuel prices. Do you think the grocery stores are eating up the price of rising fuel that is inclusive to bring groceries from the farmland to your neighborhood grocer? No, grocers just pass along the cost of rising fuel to their customers.
If store A has $50 in fuel costs per pallet of rice, and store B has $500 in fuel costs per pallet of rice because they are ten times further from the distribution point and a fuel increase amplified the difference, fuel costs are in fact eaten by the store. If they passed the $500 in fuel costs on to the customer, they would sell fewer units, and lose profit. Store B cannot charge higher than market price simply because they have more costs.
Originally Posted by
kebosabi
And in the end, market forces does drive the rest of the competitors to follow suit to reduce their losses too. Just look at all those baggage fees for the airlines.
They're not at all driven to increase costs. There's no incentive. The drive is the opposite, choosing the path of lesser cost (to maximize profit).
Originally Posted by
kebosabi
Just put yourself in the merchants' shoes than thinking from the consumer standpoint. Imagine you have a restaurant. You became a victim of a fraudulent customer who used a skimmed cloned credit card at your restaurant, so you have to foot the $100 bill. Imagine that happened to your restaurant five times this month already and you're $500 in the red now. What are you going to do? Charge the customers more.
Nonsense. The restaurant can't move the price higher than market, or they'll lose even more than the $500 they already lost. Competitors control the price, not incurred expenses. If a mom and pop store were to increase the price on the basis of their cost, they need a better bean counter because it's a naive business judgment.
Originally Posted by
kebosabi
Or, put into another perspective, why do you think a can of Coca-Cola from a convenience store in Thailand costs less than 50 cents when it costs over a buck at a 7-11 stateside? Do you think 7-11 in the US is eating up the cost of higher labor cost, material prices, transportation fuel cost, and other costs associated with bringing that can of Coke from the factory in the US to your neighborhood 7-11 as opposed to the Coke factory in Thailand to the Family Mart in Bangkok? The majority of the extra 50 cents or more we pay for a can of Coke is pretty much passed down to the American consumer.
It's different markets. Different market places have different market forces. Coke can charge a dollar if their competitors aren't forcing them to charge less. The market is less tolarant in impoverished areas. BMW doesn't charge more for their cars in Germany than Spain because of costs -- in fact the cost of getting their cars on the showroom floor is less in Germany than Spain. They charge the Germans more because
they can. And they don't need to justify it by making some claim about internal cost.