Crazy Accident

In article
<[email hidden]>,

Michael Press said:

In article
<[email hidden]>,

Mike Jacoubowsky said:

Quoted message said:

like the old SNL skit "the Change Bank"

In my opinion, one of their all-time best pieces of work. Even better than
New Super Colon Blow.

Quarry cereal?
Bass O Matic?
Big Red?
Jewess Jeans?
Spud Beer?

[Open on interior of hospital room. A patient is led into
the room by nurses]

Announcer: You've just had a heavy session of electroshock
therapy, and you're more relaxed than you've been in
weeks. [Patient climbs into bed] All those childhood
traumas magically wiped away, along with most of your
personality. Now is the time, time for Spud. [Nurse wheels
in bucket with cans of Spud Beer]

Singers: Ohhhhh, Spud!

Announcer: Filled with the full, rich flavor of potatoes.
[Patients begin smiling] Spud, the beer brewed for people
who can't taste the difference.

[Patients and nurses open cans of Spud]

Singers:
"When you say Spud, just put your mind on hold.
Do what you're told, and open a cold,
Refreshing Spud. Just watch your life go by.
No need to try. When you've got Spud. Ohhhhh Spud!"

Announcer: Spud, the beer that made Boise famous.

Replying to one's own post is a sign of ... Uh...
well anyway, what would _you_ do if you had left out

Poocharo!

--
Michael Press

shannon said:

Mike Jacoubowsky said:

Quoted message said:

>Why on earth should the shop pay for some idiot's actions.......

I agree with Mike.

Actually, I was the one who said that, not Mike.

Jasper

Qui si parla Campagnolo said:

Jasper Janssen said:

Qui si parla Campagnolo said:

A resonable $$ amount to cover the overhead is what the bike shop sells
the thing for anyway. Remember that in a bike shop the LOWEST margin
item is normally bicycles...

Restaurants/food, car dealership/cars, etc.etc. It pretty much goes for
any $THING store that $THING is the lowest margin item, and the money is
made on extras.

Quoted message said:

Not so for clothes, skis, jewelry...those margins are often double
triple the cost. Same for coffee.

Note that on all those things, there essentially *are* no extras. And in a
big clothing store I'd still bet that the skirts have a lower margin than
the scarves and the other accessories.

Jasper

Bill Sornson said:

Paul Cassel said:

Bill Sornson said:

Paul Cassel wrote:

Quoted message said:

Quoted message said:

> I think the LBS should sue GM for making crappy cars that crash into
> its customers.

Quoted message said:

Quoted message said:

Sure you're joking, but was there ANY indication that the fault
wasn't purely the driver's?

Quoted message said:

I was joking, but I do think GM makes crappy cars.

My pathetic Ford stock agrees!

My Jeep would have cleared the bike altogether. Think of the money
that could have been saved...

Mark Hickey
Habanero Cycles
http://www.habcycles.com
Home of the $795 ti frame

"Mike Jacoubowsky" wrote: (clip)there is a legit reason why margin must be
maintained. (clip) When you deviate from that,(clip) then you're redrawing
the marginal rate of return curves in a dynamic fashion. You're affecting
everything down the line.(clip)
^^^^^^^^^^^^^^^^^
I have clipped what you wrote in order to focus on what I think is your main
point. I hope I have preserved your intended meaning. I take it that you
NEVER have a sale???

Quoted message said:

"Mike Jacoubowsky" wrote: (clip)there is a legit reason why margin must
be maintained. (clip) When you deviate from that,(clip) then you're
redrawing the marginal rate of return curves in a dynamic fashion. You're
affecting everything down the line.(clip)
^^^^^^^^^^^^^^^^^
I have clipped what you wrote in order to focus on what I think is your
main point. I hope I have preserved your intended meaning. I take it
that you NEVER have a sale???

Hmm... actually, that's nearly true. We are probably the most
frustratingly-consistent retailer anyone will come across. It's worked very
well for us, but I wouldn't pretend that it's the best model for all.
Distressed merchandise would be a different issue, since the difference
between zero dollars/negative margin and anything better obviously adds to
the overall margin of all product.

--Mike-- Chain Reaction Bicycles
www.ChainReactionBicycles.com

Quoted message said:

Quoted message said:

Why should the bike shop take a loss on something that is not their fault
in
any way?

One point which seems to be missing from this thread is the concept of
the "lost" sale. If the supply of Bikes was finite, then selling the
replacement bike to the Customer who was hit for some price over the
marginal cost of the replacement bicycle would result in a loss to the
Bike Shop from the lost sale. If the supply of the Bikes was
infinite (which for the purpose of this situation is essentially the
case),

So by that token any special order (something that's not in stock) fits into
the same category of "inifnite" supply. Thus all special orders could be
done the same way. There are obvious reasons why this doesn't work... nearly
all of which come from the inconsistencies of doing business in two entirely
different fashions, one of which pays the bills, and the other which
doesn't.

Quoted message said:

then selling the replacement Bike to the Customer who was hit
for some price over the marginal cost results in more profit for the
shop in that making this "extra" sale will not cost the Bike shop
another sale. And it is good business because people talk and tell
there friends about "good" businesses and "bad". And when it doesn't
cost a business a dime to be a "good" business, it is foolish for the
business not to be the "good" business.

As I pointed out late in this thread, if this were treated as a marketing
expense, things are different. You still have a finite amount of marketing
dollars, and still need to view where your best return on investment is.
But, it gets you away from looking at profitability for a given transaction.

Quoted message said:

Maximizing profits at every turn and squeezing the Customer for every
last dime, does not, ultimately, result in greater profits unless
everyone else in your town engages in the same kind of conduct.

Hardly the case! It's not about "squeezing the customer." Rather, it's a
consistent way of doing business that treats customers fairly. Instead of
charging one customer more to make up for what you're giving away to
another, all customers get the fairest-possible deal. And if that means that
somebody else down the street may be offering a better package of goods &
services for a customer's dollar, then the customer will go there instead. I
doubt there are many towns where any two bicycle retailers have the same
ideas of how business ought to be done and where profit comes from.

--Mike-- Chain Reaction Bicycles
www.ChainReactionBicycles.com

On 13 Nov 2005 17:59:41 -0800, "Scott" <[email hidden]>

Quoted message said:

Frankly, I think what really motivated the judge to grant the full
award I requested in my original filing was that, while they (the UHaul
folks) didn't deliberately/maliciously throw my stuff away (it was a
misunderstanding of sorts) they went to great trouble to convince me
that because I didn't buy their insurance policy I wasn't entitled to
anything.

If it gets to court in the first place, one or both parties have almost
certainly been dragging their heels being unreasonable.

Jasper

On Mon, 14 Nov 2005 21:23:13 -0700, Mark Hickey <[email hidden]>

Quoted message said:

I think our basic disconnect here is that you're locked into thinking
that the profit margin reduction due to the large, lower-margin
incremental sale has to be used in setting future margin goals.

I, OTOH, am undisciplined enough that in a case like this I'd still
measure the business "minus the blue bird" and set goals accordingly.

And yeah, if someone wants to buy 1,000 frames from me with only 1/3
the normal markup I'll find a way to survive. ;-)

Real corporations regularly have annual reports where there are figures
'including special proceeds', and without. In that case it's generally
sale of part of the company, but there's no reason not to take a windfall
*if* it does not impact your ability to do your regular business. Having
to turn down regular clients in order to fulfill special orders, though,
is what puts you on the road to being a corporate slave to your special
customer.

Jasper

Mike Jacoubowsky said:

Hmm... actually, that's nearly true. We are probably the most
frustratingly-consistent retailer anyone will come across. It's worked very
well for us, but I wouldn't pretend that it's the best model for all.
Distressed merchandise would be a different issue, since the difference
between zero dollars/negative margin and anything better obviously adds to
the overall margin of all product.

How about overstocks? Those yellow BMX saddles in the cellar that you'll
never sell ((c) Sheldon)?

Jasper

Mike Jacoubowsky said:

Quoted message said:

"Mike Jacoubowsky" wrote: (clip)there is a legit reason why margin must
be maintained. (clip) When you deviate from that,(clip) then you're
redrawing the marginal rate of return curves in a dynamic fashion. You're
affecting everything down the line.(clip)
^^^^^^^^^^^^^^^^^
I have clipped what you wrote in order to focus on what I think is your
main point. I hope I have preserved your intended meaning. I take it
that you NEVER have a sale???

Hmm... actually, that's nearly true. We are probably the most
frustratingly-consistent retailer anyone will come across. It's worked very
well for us, but I wouldn't pretend that it's the best model for all.
Distressed merchandise would be a different issue, since the difference
between zero dollars/negative margin and anything better obviously adds to
the overall margin of all product.

--Mike-- Chain Reaction Bicycles
www.ChainReactionBicycles.com

Not us either. When asked if anything is 'on sale', we reply that 'yes,
everything is 'for sale'.

Mike Jacoubowsky said:

Quoted message said:

One point which seems to be missing from this thread is the concept of
the "lost" sale.

Quoted message said:

So by that token any special order (something that's not in stock) fits into
the same category of "inifnite" supply. Thus all special orders could be
done the same way.

I know at least one bike shop that did have that policy on special
orders. They charged a normal markup on their in-stock items but only
charged a 10% handling fee on special orders. A friend bought his
PX-10 there in the mid 70s using the 'special order' price. It did
strike me that the policy would encourage customers to avoid buying an
in-stock model and instead choose something that needed to be ordered.

BTW, the shop in question is still operating under the same owner (but
I don't know if he retained the special order policy) and my friend is
still riding his PX-10 to work.

Jasper Janssen said:

On Mon, 14 Nov 2005 21:23:13 -0700, Mark Hickey <[email hidden]>

Quoted message said:

I think our basic disconnect here is that you're locked into thinking
that the profit margin reduction due to the large, lower-margin
incremental sale has to be used in setting future margin goals.

I, OTOH, am undisciplined enough that in a case like this I'd still
measure the business "minus the blue bird" and set goals accordingly.

And yeah, if someone wants to buy 1,000 frames from me with only 1/3
the normal markup I'll find a way to survive. ;-)

Real corporations regularly have annual reports where there are figures
'including special proceeds', and without. In that case it's generally
sale of part of the company, but there's no reason not to take a windfall
*if* it does not impact your ability to do your regular business. Having
to turn down regular clients in order to fulfill special orders, though,
is what puts you on the road to being a corporate slave to your special
customer.

Agreed on all counts. And yes, I'd have to special-order a "few
frames" to fill that theoretical 1,000 frame order. ;-)

Mark Hickey
Habanero Cycles
http://www.habcycles.com
Home of the $795 ti frame

Quoted message said:

Quoted message said:

What I'm saying is that you do not actually LOSE money if you sell a bike
at the invoice cost.

An economist will surely disagree with you - more so for a desired item
like a $2,000 bicycle. The loss is known as an opportunity cost.

The fallacy in your reasoning is that the shop's serivce is not finite
though. It requires time and effort to order and prep the bike. That's
resources that could be used towards other retail sales.

Sir said:

Quoted message said:

Quoted message said:

What I'm saying is that you do not actually LOSE money if you sell a bike
at the invoice cost.

An economist will surely disagree with you - more so for a desired item
like a $2,000 bicycle. The loss is known as an opportunity cost.

True indeed. If you loan me $1000 today and I pay you back $1000 next
week, you lost the ability to put that money to work for a week. In
the scenario we're discussing, there would certainly be incremental
costs associated with buying, assembling, adjusting, transporting,
storing and delivering another bike.

Mark Hickey
Habanero Cycles
http://www.habcycles.com
Home of the $795 ti frame

The fallacy in your reasoning is that you are assuming that all of the
time and effort are currently used. If this is the case, then yes,
those are resources that could be used for other retail sales. But if
this is not the case, then the "time and effort" to prep this sale, at
least for purposes of this sale, are in fact infinite.

Well assuming the the shop owner is acting rationally, then all of his
time and effort is fully consumed with more lucrative pursuits. That
would answer the question, "Why should the bike shop take a loss on
something that is not their fault in any way?".

Firstly, under my described scenario, the bike shop is not "taking a
loss", they are taking a lower profit, or at worst case, breaking even.
I had suggested that it be set at a price which covered their costs.

Secondly, the assumption is that the shop owner is going to have enough
employees to be "responsive" to customer demands. This means that he
is not going to have every employee working at the maximum work load
all of the time. If he does this, he will lose Customers because of
his inability to service the market during periods of higher demand.
The setting up of the "additional" Bike can be done by Jimmy during the
time in the middle of the week that he normally sits around talking to
Jane while waiting for the Customer to come into the store. As someone
who worked in management in small businesses (Used Bookstore) and had
to schedule and direct workers, I understand exactly the concept of
using time and effort of employees. (The Store made record profits
during my time with them, and went out of business several years after
I left).

As for your question "Why should the bike shop take a loss on
something that is not their fault in any way?".

The answer is quite simple. Because a lot of Customers like to
purchase things from stores that display a degree of humanity and
compassion in their method of operation and do not like to patronize
stores that maximize profits at the expense of the community at large.
(Although, as the success of certain large national Chain stores has
demonstrated, lots of people will buy solely on price and do not care
it the large National Chain Store practices essentially destroy the
downtowns of small Cities, pay wages and benefits which are very low,
and do not participate in the normal civic activities that responsible
business owners engage in.

Well it's obvious not an attractive enough deal for the shop to engage
in. For whatever reason it is, I'm not going to second guess. He could
be a savvy business man or maybe a just a complete SOB. Who know?
Doesn't amtter - it's besides the point.

Since the customer will be fully reimbursed for their loss with the
insurance claim, there's no reason why the shop should sell him the bike
at cost. The only person profiting from that transaction is the customer.