Shouldn't there be a glut of cartridges?

[Will Hewland]

Nice idea however that only works if the shop is closing down after selling them, but not if they want to restock them as the new price will then have to be paid by the shop, which if the cartridges go up 10% and the shop makes 5% means the shop now has sold at a loss or zero profit and now needs to find the extra money to replace the stock.

does a petrol station wait until they have sold all the petrol they have in stock before any price increase? No.

What? Nonsense. You sell all stock at a profit and simply increase the price when the dearer / newer supply comes in. And yes, petrol stations pull this scam as well. 

 

[FESkent]

What? Nonsense. You sell all stock at a profit and simply increase the price when the dearer / newer supply comes in. And yes, petrol stations pull this scam as well. 

But if the new price increase is greater than the profit on the old stock you have sold at a loss, I would not call that nonsense but a fact. 

Hence why the old stock goes up in price, so you still have the capital to replace the stock and then make the same profit you will make when you then sell the new stock.

 

[Will Hewland]

But if the new price increase is greater than the profit on the old stock you have sold at a loss, I would not call that nonsense but a fact. 

Hence why the old stock goes up in price, so you still have the capital to replace the stock and then make the same profit you will make when you then sell the new stock.

Just, what?? Have you seen that Facebook video where the girl tells her boyfriend not to cut the pizza into 12 slices as she can only eat a pizza cut into 6 slices as 12 are too many?

Do please explain where it falls over: A shop buys 1000 cartridges for £180 and sells them for £200. Then, later, the shop replaces the stock, which has now risen to £195 and sells them for £217. Where is the issue? Maybe a small affect on cashflow to fund the higher wholesale price, but that’s normal. 

If the price of goods in the future affected present sales, then every business would fail. Mars bars used to cost 10p and now they are probably £1. The shops selling them are still in business. 

We all hate inflation but actually it gently promotes business. People purchase now to avoid rises later. Deflation is an economic disaster because new goods being cheaper than stock in retailers causes real losses and difficulty as customers will defer or even avoid purchasing.

 

[jwpzx9r]

It is simple folks it is up to the shooter... if he refuses to buy... he cannot shoot... its a stand off who is going to blink first

 

[FESkent]

Just, what?? Have you seen that Facebook video where the girl tells her boyfriend not to cut the pizza into 12 slices as she can only eat a pizza cut into 6 slices as 12 are too many?

Do please explain where it falls over: A shop buys 1000 cartridges for £180 and sells them for £200. Then, later, the shop replaces the stock, which has now risen to £195 and sells them for £217. Where is the issue? Maybe a small affect on cashflow to fund the higher wholesale price, but that’s normal. 

If the price of goods in the future affected present sales, then every business would fail. Mars bars used to cost 10p and now they are probably £1. The shops selling them are still in business. 

We all hate inflation but actually it gently promotes business. People purchase now to avoid rises later. Deflation is an economic disaster because new goods being cheaper than stock in retailers causes real losses and difficulty as customers will defer or even avoid purchasing.

Tell me what shop do you own or run? As in practice shops especially small shops like the the majority of RFDs will raise the price on high ticket small margin goods as soon as their supplier does. Your small affect on cash flow could be anything but and have consequences.

think of a petrol station with say 100,000 litres of petrol in stock selling for a £1 per litre they purchased it for 95p per litre so are making 5p per litre profit they get a price increase of 10p per litre.

so it now costs them £1.05 to replace the petrol but by you logic they carry on selling at £1.00 so the have now lost the £5,000 profit and need to find £10,000 to replace the petrol to be able to carry on selling it. Great business logic.

 

[Will Hewland]

Tell me what shop do you own or run? As in practice shops especially small shops like the the majority of RFDs will raise the price on high ticket small margin goods as soon as their supplier does. Your small affect on cash flow could be anything but and have consequences.

think of a petrol station with say 100,000 litres of petrol in stock selling for a £1 per litre they purchased it for 95p per litre so are making 5p per litre profit they get a price increase of 10p per litre.

so it now costs them £1.05 to replace the petrol but by you logic they carry on selling at £1.00 so the have now lost the £5,000 profit and need to find £10,000 to replace the petrol to be able to carry on selling it. Great business logic.

I don’t have a shop, but I have a manufacturing business that purchases a great deal of stock and raw materials. 
 

I’m dumbfounded. It’s the other way around. They may have 100,000 litres in stock, purchased at 95p. If the retail price goes up, then they can increase to new selling price (a bit naughty) on their old stock and make a LARGER profit for a while, until new stock comes in. The simple premise is that you never sell the stock for anything but a profit and that may be double profit if you have old stock. One of us really isn’t grasping this. But really not looking to have any friction here. Let’s all enjoy our shooting and hope all elements of the industry and its customers have a good 2021

 

[MartynB]

Do please explain where it falls over: A shop buys 1000 cartridges for £180 and sells them for £200. Then, later, the shop replaces the stock, which has now risen to £195 and sells them for £217. Where is the issue? Maybe a small affect on cashflow to fund the higher wholesale price, but that’s normal. 

Also let’s not forget that any retailer  with any sense is not paying for goods on delivery . It’s quite possible that with bulk commodities like cartridges the big retailers such as shooting schools are shifting their stock before the due date on the invoices for said goods . At which point the price  becomes unimportant  only the margin that they make .   
 
 

 

[FESkent]

I don’t have a shop, but I have a manufacturing business that purchases a great deal of stock and raw materials. 
 

I’m dumbfounded. It’s the other way around. They may have 100,000 litres in stock, purchased at 95p. If the retail price goes up, then they can increase to new selling price (a bit naughty) on their old stock and make a LARGER profit for a while, until new stock comes in. The simple premise is that you never sell the stock for anything but a profit and that may be double profit if you have old stock. One of us really isn’t grasping this. But really not looking to have any friction here. Let’s all enjoy our shooting and hope all elements of the industry and its customers have a good 2021

It’s only double profit if you do not replace the stock.

so when your raw material cost go up say by 10% do you put up the price of the item you are manufacturing or take a reduction in the profit you expected to make? And what if the increase in material cost was more than the profit you were going to make?
would you still make the item for a loss? 

same principle in action.

problem with cartridges is the margin for the shops is very small so we have to increase the old stock or sell at a loss.

Not such a problem on a high profit item where you could still sell at the old price albeit for a little less profit, but still a profit.
Nobody is in business to sell at a loss or they are not in business for very long.

enjoy your shooting.

Also let’s not forget that any retailer  with any sense is not paying for goods on delivery . It’s quite possible that with bulk commodities like cartridges the big retailers such as shooting schools are shifting their stock before the due date on the invoices for said goods . At which point the price  becomes unimportant  only the margin that they make .   
 
 

Most trade accounts are 30days or one month and yes that is the ideal situation you buy £10k of cartridges sell for £12.5k before the account must be paid and you keep the £500 or after vat £400

However given the wide range of cartridges, that is in practice unlikely to happen, especially in last 12months. 

it is lack of cash flow rather than profit that brings a business down especially the big ones with massive overheads.

 

[El Spavo]

Nah, that's completely arse about face fella, Will is correct in principle.

so when your raw material cost go up say by 10% do you put up the price of the item you are manufacturing or take a reduction in the profit you expected to make? And what if the increase in material cost was more than the profit you were going to make?
would you still make the item for a loss?

There's a huge flaw in your argument here: if you're having to buy the raw materials AFTER an order is placed as you don't have it in stock, THEN the price would be higher as it's reflective of what you're having to outlay. If, however, you already own the materials, then you price it to make a profit on that price that you bought the materials for whenever it/they were purchased, and subsequently (unless you're a bit of a scammer/chancer and hoping the customer is a mug) it will possibly/probably be lower, if nothing else to make it an attractive quote.

One question which sprung to mind immediately based on your model of how commerce works...

If a company is concerned with a new price increase, and charges the higher price they will soon be using on old stock simply to compensate for their prospective new repurchasing price ... how did they ever get the materials in the first place? At some point, that company took a hit to get stock in the warehouse, etc. in the first place otherwise they'd have nothing to sell!

Just to reiterate, this is OLD STOCK, CURRENTLY PAID FOR AND OWNED we are all talking about here, not a hand to mouth business where a company gives a quote for something they don't currently own.... that would be bonkers as they buy it at point of quote, which is whatever the current market value at that second is.

Ironically, I literally had this exact same 'argument' this morning when buying cartridges, pre price increase. Shop owner (always been a bellend) said he'd heard a price increase was imminent but nothing concrete. Asked if I came in next week if I could have them at today's rate, just to play safe as he had thousands in stock. He said no problem. Called Gamebore, out of curiousity who said price rise is from March 8th. Called the shop back to let him know, out of courtesy and that it would affect him, trying to help him out... his response was to say that I'd better get in before the price rise as he'll put them up! So basically, he's a greedy f**ker who wasn't going to honour a conversation less than 5 minutes previous after I'd gone out my way to let him know something that would affect him. I said this to him and he grudgingly said he'd do the decent thing, but still left a sour taste in my mouth. Great customer service right there.

As it turns out, I could make it this morning, so after a moral wrangling with whether I wanted to even give him my business and money, I got 1000 Velocity along with the satisfaction that he's going to put the prices up come Monday for nothing more than pure profit and I've taken a tiny chunk of that off him! Needless to say I'll be going to William Evans from now on instead.

So, in essence, nobody is selling at a loss if the products you CURRENTLY OWN were purchased for less than what you're selling them for, especially if the margins are the same regardless of price increases. I'm sure Will can walk anyone through that again if needs be, it's a tricky concept.

 

[Aris]

Most trade accounts are 30days or one month and yes that is the ideal situation you buy £10k of cartridges sell for £12.5k before the account must be paid and you keep the £500 or after vat £400

However given the wide range of cartridges, that is in practice unlikely to happen, especially in last 12months. 

it is lack of cash flow rather than profit that brings a business down especially the big ones with massive overheads.

I think many RFD's are missing a trick here.  Take pre-paid orders at an extraordinarily good price.  Make your order with the vendor - 30 days (or see if you can get an additional discount for cash, as it is paid up front).  Do this quarterly in a sort of 'cartridge club'.  Minimum order 1000 carts.  All in and out the door with no risk.

 

[El Spavo]

Most trade accounts are 30days or one month and yes that is the ideal situation you buy £10k of cartridges sell for £12.5k before the account must be paid and you keep the £500 or after vat £400

However given the wide range of cartridges, that is in practice unlikely to happen, especially in last 12months. 

it is lack of cash flow rather than profit that brings a business down especially the big ones with massive overheads.

Yup, but selling items on a shopfloor is never going to be the same trade context as a builder, etc. where you price up and THEN pay for materials at market price so that's fairly irrelevent in this discussion of price increases. If it's not a business you're prepared to have to shell out first in, you're stupid to start up as you'll never do anything other than fret and worry.

 

[FESkent]

Yup, but selling items on a shopfloor is never going to be the same trade context as a builder, etc. where you price up and THEN pay for materials at market price so that's fairly irrelevent in this discussion of price increases. If it's not a business you're prepared to have to shell out first in, you're stupid to start up as you'll never do anything other than fret and worry.

Plenty of fret and worry running a business especially one with all the legislation around the gun trade.

 

[FESkent]

Nah, that's completely arse about face fella, Will is correct in principle.

There's a huge flaw in your argument here: if you're having to buy the raw materials AFTER an order is placed as you don't have it in stock, THEN the price would be higher as it's reflective of what you're having to outlay. If, however, you already own the materials, then you price it to make a profit on that price that you bought the materials for whenever it/they were purchased, and subsequently (unless you're a bit of a scammer/chancer and hoping the customer is a mug) it will possibly/probably be lower, if nothing else to make it an attractive quote.

One question which sprung to mind immediately based on your model of how commerce works...

If a company is concerned with a new price increase, and charges the higher price they will soon be using on old stock simply to compensate for their prospective new repurchasing price ... how did they ever get the materials in the first place? At some point, that company took a hit to get stock in the warehouse, etc. in the first place otherwise they'd have nothing to sell!

Just to reiterate, this is OLD STOCK, CURRENTLY PAID FOR AND OWNED we are all talking about here, not a hand to mouth business where a company gives a quote for something they don't currently own.... that would be bonkers as they buy it at point of quote, which is whatever the current market value at that second is.

Ironically, I literally had this exact same 'argument' this morning when buying cartridges, pre price increase. Shop owner (always been a bellend) said he'd heard a price increase was imminent but nothing concrete. Asked if I came in next week if I could have them at today's rate, just to play safe as he had thousands in stock. He said no problem. Called Gamebore, out of curiousity who said price rise is from March 8th. Called the shop back to let him know, out of courtesy and that it would affect him, trying to help him out... his response was to say that I'd better get in before the price rise as he'll put them up! So basically, he's a greedy f**ker who wasn't going to honour a conversation less than 5 minutes previous after I'd gone out my way to let him know something that would affect him. I said this to him and he grudgingly said he'd do the decent thing, but still left a sour taste in my mouth. Great customer service right there.

As it turns out, I could make it this morning, so after a moral wrangling with whether I wanted to even give him my business and money, I got 1000 Velocity along with the satisfaction that he's going to put the prices up come Monday for nothing more than pure profit and I've taken a tiny chunk of that off him! Needless to say I'll be going to William Evans from now on instead.

So, in essence, nobody is selling at a loss if the products you CURRENTLY OWN were purchased for less than what you're selling them for, especially if the margins are the same regardless of price increases. I'm sure Will can walk anyone through that again if needs be, it's a tricky concept.

been out of the engineering game awhile now but several years back when buying non ferrous the quotes on brass and bronze from the stockist were valued for that day  only, the price of them was increasing that rapidly as determined by the LME.

On many jobs yes you brought the material in after the customer accepted the quote and they could take days or weeks to accept a quote.
Far to many different types, grades and profiles of engineering material to ever be able to keep all in stock, that’s where the many and various stockist come in.
So yes you could find the material costs between quotation and getting the job had gone up. Non ferrous became a nightmare, quotations had to have disclaimer on them that is was only valid for the LME on the day of the quote.
Even if you had the material in stock you always costed it out at the current price of replacement, because that is what it was going to cost you to replace.

I really am failing to get the concept across.

but your rfd has to increase the cost of the cartridges he has in stock, he is not profiteering but ensuring he makes a profit from the cartridges held in stock and has the money to replace them.

As he then has to buy the replacement stock at the new price, so the extra profit as you see it is not his to keep but must be passed on the company he is buying the new stock from if he intends to replace them.

If he did not put the price up of the cartridges in stock and continues to sells at the old price and was say making £5 profit. when he then goes to buy the replacement stock they have gone up £15 so now he did not make a profit on the last lot he sold but affectively a £10 loss. He ten continues to sell the new stock again for a £5 profit.

So needs to sell three lots before he would recoup his £10 and make again £5 profit. 

Consider that on the likes of Jc with 1 million cartridges in stock and they decided to wait until all 1 million were sold at the old retail price before putting up the prices due to the replacement costs going up £10 per 1000.
They have lost £10,000 in income, which they now need to find from their own pocket (but fortunately they have exactly that £10k profit from previous sales in their bank) when they buy the replacement stock.
And if they sell 250,000 cartridges a month at the same £5 profit they will not recoup that £10,000 for 8 months. Still the staff don’t need paying as they work for free and the bills can wait.

 

[El Spavo]

Yes, I understood your point perfectly well before you wrote the above, I just don't agree with it, as it is simply profiteering on the dealer's part.

Let me put it this way using your figures...

He sells the existing cartridges at the current price, makes 5 quid per thousand. When he gets in new stock at the higher price, he sells them for whatever margin is needed to make £5 on those too. He TEMPORARILY has a slightly higher outlay for that new stock, and that is for a single, one off time, but he's not and never will be selling the old stock at a loss as he makes the money on the higher priced new stock WHEN HE'S SOLD the new stock.

If he was to stop trading, his last sale of cartridges would be when he makes the money.

That's pretty much how business works... You buy something, you make a profit on it, you buy more, and make profit on that too. What the local bellend I bought off today would be doing if I paid next week's price is make a double profit. He's always going to recoup his instant outlay by selling the stock. We all know that any company which trades over the counter starts up with an amount of capital with which to buy stuff to sell on, and they take into account they are down before they sell and make profit. Look at dragons den mateys when nearly all companies make a loss in the first few years, and that's expected, but they don't stop trading, it's just how you build momentum. 

Not quite sure why that's so tricky to grasp?

A company is ALWAYS going to be in debt on anything they hold and propose to sell UNTIL they sell their stock, that's how it works. And also why the dragons den folk again go nuts when people have huge stockpiles as that's where the money is. 

Glad I'm not your accountant!

 

[antse7en]

Nah, that's completely arse about face fella, Will is correct in principle.

There's a huge flaw in your argument here: if you're having to buy the raw materials AFTER an order is placed as you don't have it in stock, THEN the price would be higher as it's reflective of what you're having to outlay. If, however, you already own the materials, then you price it to make a profit on that price that you bought the materials for whenever it/they were purchased, and subsequently (unless you're a bit of a scammer/chancer and hoping the customer is a mug) it will possibly/probably be lower, if nothing else to make it an attractive quote.

One question which sprung to mind immediately based on your model of how commerce works...

If a company is concerned with a new price increase, and charges the higher price they will soon be using on old stock simply to compensate for their prospective new repurchasing price ... how did they ever get the materials in the first place? At some point, that company took a hit to get stock in the warehouse, etc. in the first place otherwise they'd have nothing to sell!

Just to reiterate, this is OLD STOCK, CURRENTLY PAID FOR AND OWNED we are all talking about here, not a hand to mouth business where a company gives a quote for something they don't currently own.... that would be bonkers as they buy it at point of quote, which is whatever the current market value at that second is.

Ironically, I literally had this exact same 'argument' this morning when buying cartridges, pre price increase. Shop owner (always been a bellend) said he'd heard a price increase was imminent but nothing concrete. Asked if I came in next week if I could have them at today's rate, just to play safe as he had thousands in stock. He said no problem. Called Gamebore, out of curiousity who said price rise is from March 8th. Called the shop back to let him know, out of courtesy and that it would affect him, trying to help him out... his response was to say that I'd better get in before the price rise as he'll put them up! So basically, he's a greedy f**ker who wasn't going to honour a conversation less than 5 minutes previous after I'd gone out my way to let him know something that would affect him. I said this to him and he grudgingly said he'd do the decent thing, but still left a sour taste in my mouth. Great customer service right there.

As it turns out, I could make it this morning, so after a moral wrangling with whether I wanted to even give him my business and money, I got 1000 Velocity along with the satisfaction that he's going to put the prices up come Monday for nothing more than pure profit and I've taken a tiny chunk of that off him! Needless to say I'll be going to William Evans from now on instead.

So, in essence, nobody is selling at a loss if the products you CURRENTLY OWN were purchased for less than what you're selling them for, especially if the margins are the same regardless of price increases. I'm sure Will can walk anyone through that again if needs be, it's a tricky concept.

Where was that if you don’t mind sharing? 

 

[ColinD]

I doubt after calling him a bellend he'll want to divulge it

 

[El Spavo]

I doubt after calling him a bellend he'll want to divulge it

What he said. He might be a bit of a knobend but I may have to use it again as its vaguely convenient.

 

[El Spavo]

I have had an interesting little chat with another cartridge manufacturer before. They said that they need to be reeeeally careful when putting up prices if they need to to cover costs and make a profit:. If they put them up too much in one hit, they become comparably overpriced, and if they don't put them up enough and need to put them up again cos they got it slightly wrong, they look greedy.

 

[jwpzx9r]

A lot of huffing and puffing going on here over something that is fundamental to the game... if you don't like price hikes don't do shooting. It is an expensive game and everybody who does it knows that before they fire a shot. If a shooter uses 200 cartridges a week his costs have gone up by £5 if he was paying £250 a thou ... hardly earth shattering.

 

[FESkent]

El Spavo, what you say about a temporary higher outlay is correct and not a problem if a big business, but lots of RFDs are far from big and will not want a temporary higher outlay to replace the stock. Hence why the price of the in stock cartridges will go up. Really is that simple.

Let’s just get back out and enjoy shooting again.