Passing the Cost to the Consumer from a Business Owner's Perspective

a reply to: Sremmos80

That's where market forces come in. If one business takes liberties in pricing too far beyond the base overhead + modest profit? Others will undercut that to get the business they don't already have. The greedy one will fail and bankrupt. A story replayed across America every day in various forms.

If costs go up across an industry or area tho? Consumers then have two choices when business raises prices by necessity. Pay the higher rate or do without whatever someone really wanted or needed to start with.

I've never run a business with a public facing component. Not outside some consulting stuff I've done over the years. However, running an 18 wheeler as an Owner Operator was an education everyone ought to get some form of. There? You are everything and you're own best friend...as well as worst enemy. You are the boss, the employee and the annoying spender on 'feel good stuff' that makes the budget go boom. All working to cross purposes at once, or finding a way to balance cost with profit. Neither side of that will 'fudge' though, and numbers MUST balance..whatever it takes.

originally posted by: BuzzyWigs
I also understand the rewards of doing things for others or with others, to the benefit of all involved, and not just CEOs and shareholders.

I suppose I'm just 'flaky'....

Super flaky, but nothing wrong with that.

I do not want to have us confusing business with charity. They are two separate subjects. My success in my businesses have allowed to do charity. Both monetary and hands on.

originally posted by: Sremmos80

How do you operate a business with ever-increasing costs without passing them on? - See more at: www.abovetopsecret.com...

By planning for the ever increasing costs... in other ways then pass the cost off to the consumer that is facing the same ever increasing cost. From you now.... Ever heard of the 6 P's
You right, I am naive in the make money for me, screw every one else mentality that this country has adopted over the past 50 or so years.
I hope I stay that way.

The 6 P's as you like to mention have quite a bit of passing costs on.

I run a lemonade stand.
I know the prices of Lemons and Cups and Sugar will go up next week by 15%. I don't have the money to stockpile those supplies.

What do I do?

I can take a loan out to buy the products now, but that involves more costs, which, you guessed it get passed down to the consumer. Or I can just sell my product at a profit so low it makes it pointless to stay in business, regardless of how much I LOVE it. Or I can reduce either the size of the cup of lemonade or make it with more water, which tends to make people not want to buy my lemonade at the price I had for it.

What do you do? Market more? That costs money which can impact your profitability if not successful, plus you have to HAVE the money to do the marketing. If you don't run a good profit, you don't have that money to start. Try a new product? That takes trial and error, again, more costs. Move to a better/busier location? Well it will probably cost to do that.

I think the best solution is to have a government contract for making lemonade, that way I can get paid and not have to worry about passing my costs on to citizens....I'll just pass them on to the Government.

Unless you have been in a profitable business, I guess you will never understand all the issues we evil business owners have to deal with.

originally posted by: Sremmos80
Yes the costumer keeps the doors open, not you living in a fancy house with 5 cars.
The costumer does not need to lining your pockets, and taking on the cost's and taxes that come with owning a business..

Nobody forces you to shop somewhere, people are free to spend their money wherever they choose.

originally posted by: MrSpad
Coporate profits are their highest in history. Corporate taxes are at their lowest in modern history.

This is more a small business thread, but since you mentioned it, here is some interesting things about BIG Corporations and their profits. Why are they more profitable? You will be surprised by the answer I think.

Why Have Corporate Profits Been Rising As A Percentage Of GDP? Globalisation

The largest U.S.-based companies expanded their untaxed offshore stockpiles by $183 billion in the past year, increasing such holdings by 14.4 percent, according to data compiled by Bloomberg .

Microsoft Corp. , Apple Inc and Google Inc each added to their non-U.S. holdings by more than 34 percent as they reaped the benefits of past maneuvers to earn and park profits in low- tax countries. Combined, those three companies alone plan to keep $134.5 billion outside the U.S. government’s reach, more than double the $59.3 billion they held two years earlier.

The build-up of offshore profits — totaling $1.46 trillion for the 83 companies examined — is increasing because of incentives in the U.S. tax code for booking profits offshore and leaving them there. The stockpiles complicate attempts to overhaul the tax system as lawmakers look for ways to bring the money home and discourage profit shifting.

Businesses will ALWAYS go to the place where the taxes, materials and labor are the lowest mix, unless they are geographically limited by the business.

The taxes in the U.S. are higher than elsewhere globally...guess what, businesses moved their operations to those places.

I will give an analogy. In Michigan, we gave out tax credits for films to be made in Michigan. Studios flocked to Michigan to get movies made. Why? Because of our stellar weather? It must have been our built in movie workforce and sound studios? Travel costs must have been cheaper? Southern California has all of those advantages, yet a studio would go to Michigan to get their movie done. Why? Because of the lower taxes (well in this case the Tax Credit, but still a reduction in their overall taxes).

a reply to: BuzzyWigs

You really are blind to the fact that 501 3(c) are corporations who have board members who make profit off of donations don't you? Even your "charities" make bank and only operate if they are profitable plus rely on cheap or no expense labor to line the pockets of stakeholders. Sometimes it's nice to assume charities are really just there to help people but truth is, it doesn't work that way. It's a business just the same as a strip joint down the road or a soup factory.

a reply to: BuzzyWigs

My wife didn't do anything in my business. I took care of it all myself. She had a part time job and took care of the house and cooking, the daughter, and pets. She took care of our personal bills, I took care of the business bills and billing, paid the employees and did the accounting and paid the taxes. I didn't have to wash cloths back then, now I have to wash my own. At least she is smart enough not to let me wash hers.


I came from a family where everyone was working all the time. My parents had a cleaning contract, my father worked full time in a flooring mill, and we also had a farm where we stayed in the summer and grew a big garden, many acres of potatoes and many acres of strawberries. I had two cleaning contracts by the time I was fourteen. I had a charge account in two hardware stores when I was fourteen. I also worked with my parents on the cleaning job and at the farm since I was about ten. Some of us are workaholics, that is how we get what we have.

a reply to: pavil

Prior planning prevent piss poor performance...
Not sure where that involves passing the cost off to the consumer

Unless you already planned to account for that 15% increase with passing that cost to the consumer.
Or you can have the funds ready for the 15% increase that you already knew about apparently
You are making a profit right? Or since that money is now yours, you shouldn't have to put it back into the business?

originally posted by: Sremmos80
a reply to: pavil

Prior planning prevent piss poor performance...
Not sure where that involves passing the cost off to the consumer

Unless you already planned to account for that 15% increase with passing that cost to the consumer.
Or you can have the funds ready for the 15% increase that you already knew about apparently
You are making a profit right? Or since that money is now yours, you shouldn't have to put it back into the business?

Ever have a car break down unexpectedly?

You had your budget fairly well in check and then all of a sudden BAM! You have a 2k bill you weren't expecting?

Being that your money is now yours as you are applying that logic to a small business owner, how do you get your car fixed?

All it takes is a vote from a city government, a state government or the Federal government and suddenly a small business owner is faced with something they could have no way planned for.

Ask those whom are now facing closing their business due to the ACA or better yet, ask their employees how it feels to go from full time to part time.

I don't blame you for hating multi national corporations, but that isn't what the topic is about.

I wish you would just come out and say what your trying to say and quit dancing around the issue!

My complaint with raising prices is when businesses use the percentage increase. For example, an item costs them 5 cents to acquire and they charge a dollar for it. The price of this item jumps to 10 cents and they say their cost jumped 100%, but they're only raising the price 50% and charge 1.50 They make it seem like they're doing their customers a favor when they're not.

The place I work at does this all the time. We manufacture safety equipment, and labels are a large part of that. Paper prices went up 3 cents per square inch which was a .2% increase, yet we raised our prices 7%. That's not passing the cost to the consumer, that's just plain greed and it worries me because I have seen our business slow down in recent months.

Anyway, I hope that made sense

a reply to: seeker1963

And my mom would yell at me for not having the funds for an unexpected occurrence.
They say you should 15% of every paycheck in savings for just in case right?
And I would say use my own money to pay for my car, not crowd source my auto issue.
I am saying that they shouldn't be able to keep their profit while making the consumer pick up the new cost.

Why would we not hold a small business to the same finical responsibility.
You bring up votes, those don't happen over night. The owner would have been aware of it.

I agree the ACA forced the hand of many business owners, but that is rather new and a whole other issue

And feel free to call me out to what I am dancing around, I don't mean to dance around anything.

I don't think business should pass cost to the consumer based on the idea that it will eat into profits that could cover the cost without passing it to the consumer.

a reply to: Sremmos80

Wow you really are clueless, please tell me how your great planning doesn't invole extra expenditures without hampering your customers. In the example you gave, you assume I made so much profit I have a stockpile of cash, how did I get that stockpile? From making an excess profit that you know seem to think is now OK as long as I use it to now keep my costs down?!? Wasn't I making an obscene profit on those earlier customers? You are too funny, talking out of both sides of your mouth.

originally posted by: Sremmos80
a reply to: seeker1963

And my mom would yell at me for not having the funds for an unexpected occurrence.
They say you should 15% of every paycheck in savings for just in case right?
And I would say use my own money to pay for my car, not crowd source my auto issue.
I am saying that they shouldn't be able to keep their profit while making the consumer pick up the new cost.

Why would we not hold a small business to the same finical responsibility.
You bring up votes, those don't happen over night. The owner would have been aware of it.

I agree the ACA forced the hand of many business owners, but that is rather new and a whole other issue

And feel free to call me out to what I am dancing around, I don't mean to dance around anything.

I don't think business should pass cost to the consumer based on the idea that it will eat into profits that could cover the cost without passing it to the consumer.

The ACA is just another unsupportable burden on the "small business". Just like taxes that are raised because of local to federal government officials not being able to balance a budget!

I'll bet your all for raising the minimum wage?

Sorry, I have no problem with you bashing multi national corporations, but when attack the life blood of this country in the name of "You didn't build that." That bothers me! My first job at the age of 12 came from a small business. Way back then there weren't near the regulations imposed as there are now.

Rather than looking at this issue with blinders on and an attitude of a socialist, take off your blinders and look at the bigger picture!

Otherwise, the unemployment rate in this country will just keep getting worse. Then we get more people on welfare and as if our current debt isn't already unsustainable, things just get to the point the good ole USA becomes nothing more than a banana Republic.

I find it amusing that you used the example of your mother teaching you to plan ahead in case of an emergency, but yet here you are condemning a small business owner for doing the same thing?

a reply to: seeker1963

I find it amusing that you used the example of your mother teaching you to plan ahead in case of an emergency, but yet here you are condemning a small business owner for doing the same thing?

I guess I just have a problem with that planning ahead being "I will just pass that new cost off to my customer"

And I am for raising the minimum wage, well at least for companies in the fortune 500.

I don't mean to attack small business, just those that run one with only profit in mind, not with providing a service.

ETA: I did say that ACA is forcing the hands of some owners, I in no way agree with anything the ACA stands for.
IT was done compeletly wrong and just gave more money to big pharm and big insurance

originally posted by: Sremmos80
And my mom would yell at me for not having the funds for an unexpected occurrence.

Well I am sure you think your mommy gives wonderful and sound financial advice but it is totally irrelevant to how a business operates in the real world.

originally posted by: Sremmos80
a reply to: seeker1963

I find it amusing that you used the example of your mother teaching you to plan ahead in case of an emergency, but yet here you are condemning a small business owner for doing the same thing?

I guess I just have a problem with that planning ahead being "I will just pass that new cost off to my customer"

And I am for raising the minimum wage, well at least for companies in the fortune 500.

I don't mean to attack small business, just those that run one with only profit in mind, not with providing a service.

ETA: I did say that ACA is forcing the hands of some owners, I in no way agree with anything the ACA stands for.
IT was done compeletly wrong and just gave more money to big pharm and big insurance

What do you go to work for?

Money????

Your attitude that a small business owner should be happy to provide a service and work 80 hours a week just because it is something they like to do is ridiculous!!!

What about the service they provide to the community by employing people that need a job! ANY JOB?

We all work for one reason! MONEY! We need money to survive and live in this world!

Your logic is so twisted that I don't even know what to say anymore......

a reply to: AugustusMasonicus

To bad that was a response to a question about a car problem

And how does having money saved for an unexpected cost not relate to the business world?
Isn't this thread about unexpected cost and ways to deal with them?

a reply to: seeker1963

Yes they do it for money, that doesn't mean you can make other people pay YOUR expenses it takes to run YOUR business so you can make MORE money.

Why do I need to pay the companies taxes? You made the decision to open the business, you knew they could pass new laws that made new taxes.
Why do I need to pay for that?

I think some folks are missing an important distinction here.

"Businesses" on Wall Street (who received the most bailouts) are not designed like your local restaurant.

Your local restaurant owner makes a tangible product and hires people. Yes costs are all pass through pretty much but there is a balance on what a meal can cost so customers will still buy it and the owner can stay afloat producing it.

Wall Street is a government protected gambling house. Now a days it exists solely because if they lose, someone else picks up the tab. Profit has no connection to quality and/or effective management. There is no way a restaurant owner could run a place like that.

It seems the only folks who do not get bailouts are those who support it for both the poor and the connected wealthy.

originally posted by: Sremmos80
And how does having money saved for an unexpected cost not relate to the business world?
Isn't this thread about unexpected cost and ways to deal with them?

Seriously? You just had several posts were you let it be known that a business should not be profitable and forcing customers to incur cost of business expenses but now you say that it is okay if they are putting those profits aside for.....cost of business expenses in the future.

The sad fact is if you actually ran your own business the only place it would be run is into the ground.