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11/15/2007

Passing the cost

A forum writer complained about the rising property tax and that this should not be passed to the tenants. This is a hope that is futile and unrealistic. All the cost, business cost, will be passed to the consumers, including tenants. Commercial organisations, privatised, exist to make profits. There is a front page report in the Today paper about shoplifting and how all the cost to instal security equipment and staff will go towards to the price tag. And the consumers pay. Right, nothing new. It is only new cause people are talking back, discussing it openly in the media. Every single cent will be borne by the consumers. There is no escape.

2 comments:

Matilah_Singapura said...

> Every single cent will be borne by the consumers. There is no escape. <

Absolute crap.

The consumer is sovereign. The way (clearing) prices are generated in the market is by the consumer exercising his preferences in the market, using his money to "bid" for those preferences.

You may offer your fish for $10/kg. But if no one will pay (bid) more than $8.50/kg, you will be left with rotten fish unless you reduce your (offer) price to around 8.50.

Similarly, businessman will be businessman and try to pass on as many of his costs to the consumer. And also attempts to have huge margins as possible. However, it is the consumer who ultimately calls the shots in a DEMAND economy. He will bid the prices up or down on a particular good.

Now in S'pore, property is being bid UPWARDS by Sovereign Consumers. Only a few years ago the same consumers were bidding the market DOWN. Sellers asking for 1.2 for their semi D's had to contend with clearing prices BELOW 1 mill, for example.

So never be "afraid" of a greedy businessman trying to up the price of his goods. Just refuse to buy.

redbean said...

matilah,

you are talking like a child. getting younger everyday?

the consumer is king, upto to a point, is true. but all the cost will still be passed to them. no biz will sell at a loss except for clearing stock or loss leader. no matter how much discount or how special is the price, the cost and profit margin are marked into the goods or services.

when the seller cannot afford to sell with a profit he would fold up from the biz. this is simple biz logic. the consumer is king is a myth to make the consumer feels better.

then there are cases when there is no substitution. if you don't drive, it is either the mrt or the buses. take it or leave it. the consumer calls the shot? dreaming lah.

even in property prices, short of a crisis, whatever great discounts the developer is selling, it is still with profit. it is only firesales or those who bought very high and have to sell at a loss that the buyer can dictate the price to a certain extend.

the only point that you got it right is when you have the dole and refuse to buy.