- Capitalism and Alternatives -

Your buddy is ripping people off.

Posted by: MDG on December 15, 1999 at 21:17:06:

In Reply to: I got this buddy... posted by Stuart Gort on December 13, 1999 at 13:29:28:

:Today he [Kevin] has a two year backlog, sells to celebrities, exacts roughly $4500 per instrument, and makes 5 instruments a month at a cost of $500 per instrument. Kevin will never have anyone working for him, as he is quite unlikely to find another person of his caliber.


Kevin is charging people 9 times what it cost him to make those guitars! That's obscene. He is entitled to compensation for his labor, of course, but 9 times? The only reason he can get away with it (as they say, what the market will bear) is because he's selling his guitars to filthy-rich celebrities.

Allow me to offer an alternative scenario: Kevin wants to make a good living; fine, let him charge $1500 for his guitars. That's $5000/month profit pre-taxes for the five guitars, or $60,000 yearly. That's not bad, but if he needs more to live the good life, let him charge $2000 per guitar, that way he'll make $90,000/year. That's terrific, far more than most people make.

If I had my way and there was a maximum wage in the USA, plus higher minimum wage, a yearly salary of $50,000 would be plenty. But onward:

You might say, why should this master craftsman sell his wonderful guitars for $2000 when so-so guitars also sell for $2000. The answer is, if Kevin's guitars are the best for that price, people will buy his, not the inferior guitars. Quality sells.

I think your friend Kevin is ripping people off, but then again, anyone who has $4500 to spend on a guitar has too much money to begin with.

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