Originally Posted by Tom68
found some in pawn shop yesterday afternoon. a brick of white-box remington, plain jane lead bullet cartridges were $40; the clerk told me that the owner called the store that morning and told the staff to mark them up from $30, cause that's what he'll have to pay to replace them.
I understand supply and demand quite well, but like a lot of others I also recognize gouging. he very well may have to pay upwards of $40 for a brick next time, and price it accordingly... but he certainly didn't have to pay that for the stuff sitting on the shelf.
I bought three boxes of 50 instead, for $4 each. Still got gouged, but not as much. I can wait till sanity returns, and in the meantime I just won't shoot a lot of 22LR.
Think about his re-order. He bought a box of ammo fir say $10 and had it fir sale for $15. Say he sells it, retains $4 for expenses and profit and uses $11 to buy more boxes. Works fine as long as he can buy the next at $10 again.
But suppose his cost goes to $20 per box. If he sells his original box at $15 and uses $11 of it to re-order he cannot buy the same qty as before. Over time his inventory will dwindle and he goes out of business just when demand is greatest.
On the other hand, if he sells that original $10 box for $30 then he can use the same percentages and keep $8 while using $22 to buy more inventory.
So he has to sell it at the higher of his original cost or his future cost of replacement, plus his percentage for margin.