S/O Dave Ramsey question: Is it wrong to ask more because you know they can afford it

[LisaKinVA]

All revenue on a small business is flow-through for s-corps, LLC, partnerships and sole proprietorships. I mis-typed - small businesses make up 40-50% of the economy - they don't all take home $250K or more, but a good deal do.

 

I have yet to meet a small business owner who actually takes home this amount. Even a McDonald's Franchise owner does not make that much, unless s/he has multiple locations.

 

Most single-location small-businesses are netting well UNDER $100,000. I think the average "income" in our industry for the owner of a business making $1,000,000 in revenue (not net revenue, just revenue) was $30,000. They also average 60-hour work weeks.

 

The industries I am most familiar with are fast food, and arts and crafts. I was in the arts and crafts industry for well over 10 years, fast food for 8, and direct marketing for 12. I made the most money on direct mail, but even when I had revenue exceeding $80,000, I never "took home" more than $45,000

[Laurie4b]

:iagree: This is just called "marketing." An identical product can be marketed to two different demographics and at two different prices. It happens ALL THE TIME.

 

I personally sell Lionhead rabbits (among other farm animals!). The price depends on my market at the time. If I'm at the county fair in my podunk town, I charge $20. If I am at Lionhead Nationals and I drove across country to get there, I charge much more, maybe even $100 for the SAME rabbit! Because at Lionhead Nationals, they are willing to pay more for what they want. (They may be wealthy or not, I don't always know.) If some one calls me on the phone having found me on the internet looking specifically for a Lionhead rabbit, my price will be somewhere in the middle. And if a 4H kid comes to look at my rabbits, I might just give him one for free. There's nothing wrong with adjusting your price to the market at hand. I AM trying to make money.

 

If I were marketing hand made items it would be the same. There may be some craft sales in the big city that could support a higher price. (And that would clearly be because there would be more people there from a higher income bracket.) At a small town county fair, I'd charge less. Makes sense to me.

 

This is a good point.

[lionfamily1999]

We don't. We've even had higher offers because people could afford to pay more :p

 

I wouldn't, because it doesn't feel honest TO ME. All the same, I know it's a common practice and a practical business model. We are usually only selling labor services. Now, if they want to tip later we accept it :lol:

 

ETA

Edited December 18, 2010 by lionfamily1999

[Meriwether]

No, it would not be right to ask more (or less) for an item based on the buyer's percieved amount of wealth. The only situation this works in is an open auction where the person willing to pay the most wins-but anyone can bid.

 

I wouldn't overcharge someone just because they could afford it, but I would sell an item for less than I want if someone couldn't afford it at the price I want.

[Tohru]

I'm guessing most people who would want to do this wouldn't admit to it.

 

Say you are selling something and you hear someone who has much money is interested in it. Nobody knows what you are asking for it. Is it *wrong* to decide to ask more than what you considered because you know they'll pay and the difference in price won't matter?

 

 

 

Oh my! Who thinks like this? What kind of person assumes that people do this kind of thing?

[PinkInTheBlue]

Oh my! Who thinks like this? What kind of person assumes that people do this kind of thing?

 

Well, I don't know. I guess that means to me I should be asking you exactly what kind of person it is you think I am. I know in my experience and even many times on conversations here I hear so many times how the rules of ethics to the "rich" aren't quite the same as the demand for ethics for the "poor". I truly am glad you have not experienced this, truly. I have.

 

The easiest but not only examples do often occur here in tax conversations. Such things as "Since they make more they should giving more in percentage back to take care of everyone else." Or if someone makes a significant amount of money they are absolutely obligated not to buy that ridiculously overpriced car/house/etc because they should be focused on giving their extra to everyone else.

 

I truly am glad you haven't seen this. I see it a lot. Even among some of our long time friends and family.

[lionfamily1999]

We don't. We've even had higher offers because people could afford to pay more :p

 

I wouldn't, because it doesn't feel honest TO ME. All the same, I know it's a common practice and a practical business model. We are usually only selling labor services. Now, if they want to tip later we accept it :lol:

Actually, dh pointed out we do! Don't I feel small.

 

See, dh does a lot of free work for neighbors, friends, friends of friends, friends or neighbors, family and friends of family, and sometimes aquaintences of all of the above. When they can't afford it, he doesn't charge them labor (although most will leave us with baked goods or small tips).

 

Turns out we do charge more to people with more money. I just never thought of it that way.

[Pretty in Pink]

Huh? No. Why would it be fair to charge more just because you know they can afford it? I've not encountered that mentality. Maybe I'm just naive. :001_huh:

[lionfamily1999]

Huh? No. Why would it be fair to charge more just because you know they can afford it? I've not encountered that mentality. Maybe I'm just naive. :001_huh:

Check out my post above yours. Dh pointed out that we do this very thing, but I hadn't even considered it the same thing :p He has a price for labor, but he'll give people a break (or do work for free) if they're in need. So, are we immoral because he doesn't do all work for free? Would it be more morally sound to NOT do work for people who could not afford it?

[AndyJoy]

I will freely admit that dh and I set our prices for things we sell (not necessities) based on what we perceive that the customer is willing to pay. I think this is simple marketing and see nothing immoral about it. We charge what "the market will bear"--what the customer will pay, even if this varies by individual.

 

If I have 100 items to sell that cost me $5 each, and I can sell all of them immediately for $7, 85 percent of them for $9 (and the rest at $7), or 20 percent of them at $15 (and the rest for $9), isn't it just good sense for me to seek out the people who will pay me more for my item? Why should my profit be limited just because someone else would be willing pay less?

 

If you believe capitalism itself is immoral, then I can see how you would have a problem with charging people more than you "have" to (super arbitrary number). However, in our country this is how companies actually continue to exist. They convince people who have money (or are willing to overspend their income) that they need to buy their brand or product and can't settle for a lower priced option. Then, they even sell their products under different labels to people who don't care about the brand, but just want/need the item.

 

For example:

 

As a teen, I bought a $15 tie-dyed shirt at Kmart. I saw the same shirt for $85 at the mall.

 

While in college I owned a pair of tennis shoes that I LOVED. They were stylish, extremely comfortable, and long-lasting. I paid $15 for them at Walmart. A girl in my hall owned the exact same pair of shoes except they were branded Sketchers and cost $55.

 

Now if we are talking hypothetically about charging the government more than private businesses just because the wasteful beaurecrats will pay it without batting an eye, that's a completely different scenario. In that case, we the people are the customer through our taxes but have little to no say in how our "rich" (ha, ha) government is overcharged. It's like charging a little old lady twice as much because you know her lazy son who she appointed to manage her money will pay it without consulting her. THAT I have a problem with.

Edited December 18, 2010 by AndyJoy

[Elaine]

I'm guessing most people who would want to do this wouldn't admit to it.

 

Say you are selling something and you hear someone who has much money is interested in it. Nobody knows what you are asking for it. Is it *wrong* to decide to ask more than what you considered because you know they'll pay and the difference in price won't matter?

 

Maybe I've become cynical but I really believe people have become a majority who think taking as much as they can from the wealthy is acceptable. I've been in both financial positions and the emotion the not wealthy often have against the wealthy often flabbergasts me.

 

What do you really think?

I can't imagine doing that, because when I sell something I am upfront concerning the price.

 

When we lived in NC I used to go to this used furniture place where nothing was priced. The owner made up the prices as he went along. Later I found out he made up the prices based on the kind of car you drove and how you were dressed. I could not do business that way, but he could and that was his prerogative. It was also my prerogative to not shop there anymore. I didn't make moral judgments about him, just took my business elsewhere.

[Sophia]

I can't imagine doing that, because when I sell something I am upfront concerning the price.

 

When we lived in NC I used to go to this used furniture place where nothing was priced. The owner made up the prices as he went along. Later I found out he made up the prices based on the kind of car you drove and how you were dressed. I could not do business that way, but he could and that was his prerogative. It was also my prerogative to not shop there anymore. I didn't make moral judgments about him, just took my business elsewhere.

 

This post just reminded me...I had a friend who borrowed another friend's junker car to go garage sale'ing (sp?)

She said she always got better deals that way.

 

Hmm...

[Elaine]

This post just reminded me...I had a friend who borrowed another friend's junker car to go garage sale'ing (sp?)

She said she always got better deals that way.

 

Hmm...

 

I am a serial yard saler.:D I drive a gas guzzling, earth killing SUV and I usually do well. I am fair when I haggle, though, and I think people respect that.

[Mejane]

This post just reminded me...I had a friend who borrowed another friend's junker car to go garage sale'ing (sp?)

She said she always got better deals that way.

 

Hmm...

 

My il's used to park their Lincoln up the street so no one would see it. Anything to save a nickel. :rolleyes:

[NicksMama-Zack's Mama Too]

OOO, I've got one, what about the car dealerships that WON'T tell you the price of the car, and instead ask, "what do you want your payment do be?" :glare: We actually had that happen at a housing development too. We asked the price of the house, and were asked, "what we wanted our payment to be" Made me wonder if the price/loan rate of the house changed based upon my acceptable payment range.

 

I'm not sure about them not giving you the price of the car, but may I suggest that they ask, "what do you want your payment to be?" because some people just want to spend a specific amount of money each month due to cash flow and don't care what the final price is going to be. They just want to be able to fit that payment into their budget.

 

I know a few people who reason that they will always have a car payment and they figure out an amount that they are willing to spend each month and try to find a car that will fit within their budget.

 

Just my .02 cents.

K

[lionfamily1999]

So, are companies that give away goods or services to charity immoral? They are charging more to the people that can pay.