Genuine questioning about capitalism

[Siyano_v1legacy]

Not sure if capitalism is really the best word but I'll explain my confusion

I have been working for a board game retailer and heard the real price of ordering from the distributor and the price the box are put on the shelf. My concern at some degree was, why should I pay a 20-40% margin for just someone being a intermediate. I know you can get that box for 30$ but I have to pay 50 or 60? I there something I just don't get?
And please don't talk about the concept of someone else making money for their living or paying their store, that not the concern here and more about why the crazy difference, because they have to make money.
I guess some may say, they offer a service and you have to pay for that.

My second concern is about platform such as Kickstarter. I may misunderstand the concept but they keep around 5% of a founded project? All the did was being a platform and a name, yes I obviously know about all the protection and such, again, my concern is not here.

Anyway, I hopes my confusion was comprehensible.

 

[Zontar]

For the first, it's due to your ability to actually the product to market coupled with a need to actually make a profit. Pretty much all board games found in speciality shops are ones you wouldn't be able to find in normal retail due to their being niche products, so for the regular consumer it's hard to come across them easily. On top of that you have store upkeep. I know for a fact the comic book/card/board game shop next to my collage only JUST got out of the financial red last month (I know of this since he game myself and several others who are regulars a discount as a result) and he'd been in business for 5 years.

As for the second, Kickstarter is a business, a business is out to make a profit and getting people and projects together is Kickstarter's business. They have people who work for them, servers to upkeep and on occasion refunds to give out. Taking a 5% cut is not only to be expected, not taking a cut would be suspect given the economics of it.

 

[KyuubiNoKitsune-Hime]

Not sure if capitalism is really the best word but I'll explain my confusion

I have been working for a board game retailer and heard the real price of ordering from the distributor and the price the box are put on the shelf. My concern at some degree was, why should I pay a 20-40% margin for just someone being a intermediate. I know you can get that box for 30$ but I have to pay 50 or 60? I there something I just don't get?
And please don't talk about the concept of someone else making money for their living or paying their store, that not the concern here and more about why the crazy difference, because they have to make money.
I guess some may say, they offer a service and you have to pay for that.

My second concern is about platform such as Kickstarter. I may misunderstand the concept but they keep around 5% of a founded project? All the did was being a platform and a name, yes I obviously know about all the protection and such, again, my concern is not here.

Anyway, I hopes my confusion was comprehensible.

Simply put? The objective is to make money, nothing more and nothing less.

As for markups? Well a large percentage of the mark up on any product is what helps keep a business paying all it's bills, employees, and making a profit each fiscal quarter. There are only two options to turn a profit. Either make a sufficient margin on each product sold, or move a sufficient volume at a lower margin, basically the difference between a specialty shop and Wal*Mart for example. Profits don't all go into the owner's pocket either, they cover against bad quarters, where profits are down, or there are none at all, while also allow capital for expanding the business when possible. So basically it boils down to weather the business can make more profit moving a small volume at a high profit margin say 30-90%+ profit, or if they can do it lower margin like 5-30% profit by moving significantly more product. The reason that this is doable is based on the willingness of the consumer to pay for the product at the listed price. Any item isn't worth what it costs to make, market, and retail it, it's worth what the consumer is willing to pay.

As for Kickstarter? That 5% that is taken from each founded projects is the cost of using Kickstarter as your platform. Because Kickstarter is now a well known name, people are willing to take a small percentage hit to have greater odds of success when it comes to funding a project. Simply put it's the rules made by Kickstarter and if you don't want to pay that price, then you can go someplace else.

 

[Siyano_v1legacy]

I understand the concept of markup and such, but still I don't get why I have to pay some one else a profit for technically nothing they did, rather than just being a intermediate between me and something bigger that don't deal directly to people.
What prevent me for not just getting my own "insert object" from the distributor? just because I'm not worth it? what the different from my local board game retailer that order just 1 or 2 game from a specific. That where I have a hard time to draw a line. I don't mind paying for a service or similar thing but when you basically did "nothing" I feel like its hard for me to understand why I have to pay the higher price so an intermediate can do business

 

[KyuubiNoKitsune-Hime]

I understand the concept of markup and such, but still I don't get why I have to pay some one else a profit for technically nothing they did, rather than just being a intermediate between me and something bigger that don't deal directly to people.
What prevent me for not just getting my own "insert object" from the distributor? just because I'm not worth it? what the different from my local board game retailer that order just 1 or 2 game from a specific. That where I have a hard time to draw a line. I don't mind paying for a service or similar thing but when you basically did "nothing" I feel like its hard for me to understand why I have to pay the higher price so an intermediate can do business

One of the reasons that businesses get lower prices is they buy in larger volumes than the consumer will. A retailer doesn't buy one or two of something, to get a low overall price, they have to buy it by a bulk case, which means buying dozens of the thing. That's the thing. Beside that the retailers do something, not nothing, it's actually a job they have. They market and advertise products, because with out such advertisement, the consumer won't know that a product even exists. Aside from that they also serve as a location where you can purchase a product, along with having to eat the cost if you decide to return a product because you don't like it. The retailer does all of the leg work of end user marketing and supply. You could go to the manufacturer, but I doubt you want a case of a identical items for that particular product, most suppliers only sell in bulk. That's generally why the prices are lower.

 

[Zontar]

I understand the concept of markup and such, but still I don't get why I have to pay some one else a profit for technically nothing they did, rather than just being a intermediate between me and something bigger that don't deal directly to people.

But that's exactly what is happening. The markup is a result of being that intermediary, without which being said intermediary is impossible.

What prevent me for not just getting my own "insert object" from the distributor? just because I'm not worth it? what the different from my local board game retailer that order just 1 or 2 game from a specific. That where I have a hard time to draw a line. I don't mind paying for a service or similar thing but when you basically did "nothing" I feel like its hard for me to understand why I have to pay the higher price so an intermediate can do business

There's nothing stopping you from going directly to the distributor, but one problem with that is the fact most people don't know who the distributors are, and if they do they often can't manage the bulk deals retailers can afford. There's also the convenience factor due to the hassle distributors create.

For a real life example of both: I don't go to BurgerKing or KFC, but I eat their products on a semi-regular basis. The reason for this is because I know who their distributor is (by virtue of working for one of the subsidiaries the have, though it's open to the public). The price is lower then retail, but it's inconvenient since I have to go to a location 40 minutes away and buy in bulk with all meat being in orders of 4 kilogram units. Most people will never go right to the distributor because even if they know about it it's far out of their way, it doesn't have the convenience of fast food (takes half an hour to prepare instead of 5 minutes), the bulk deals require a lot of refrigerator space and it's generally more time consuming and a hassle.

The service industry is built on providing a service for a profit, and retail is built on making that profit on making it fast and easy for people to find what they're looking for. Without that markup there is no retail, which means people have to go directly to the distributors, which we overall don't want to due to the inconvenience of it all. People pay for convenience, that's a fact of life.

 

[Siyano_v1legacy]

One of the reasons that businesses get lower prices is they buy in larger volumes than the consumer will.

I understand the concept of bulk purchase, but I know for a fact that for my the place I work they rarely buy in bulk. as for big board game, one or two at most unless it the new one

They market and advertise products, because with out such advertisement, the consumer won't know that a product even exists.

I am not sure what you are referring to. beside the "advertisement" of being a specific retail, I don't see how you can't know if a product exist, if you are looking for it, you know it exist?

 

[KyuubiNoKitsune-Hime]

One of the reasons that businesses get lower prices is they buy in larger volumes than the consumer will.

I understand the concept of bulk purchase, but I know for a fact that for my the place I work they rarely buy in bulk. as for big board game, one or two at most unless it the new one

That's why they have such a high margin on the games they sell then, if they're buying in small volumes than the supplier they're working with deals in small volumes anyways. So the profits to be made at each level are in less volume and higher margin. That is patently specialty shop behavior. Like how it costs more than twice as much to get a Japanese market model kit from a semi-local hobby store, compared to an online retailer who sells the kits at less than half the price, but make up for it in the cost of shipping. So I pay the extra to have the kit same day and not pay international shipping.

They market and advertise products, because with out such advertisement, the consumer won't know that a product even exists.

I am not sure what you are referring to. beside the "advertisement" of being a specific retail, I don't see how you can't know if a product exist, if you are looking for it, you know it exist?

Well in this case, say a kit for Warhammer 40k comes out, but you didn't hear about it in advance, you'd learn about it seeing it on display at a local specialty shop at least. Not everyone knows that all products in a specific franchise, or line exist, so retailers function in part as end consumer marketing. That's why places like GameStop/EB Games have the store papered in promotional posters and such.

 

[Siyano_v1legacy]

Well in this case, say a kit for Warhammer 40k comes out, but you didn't hear about it in advance, you'd learn about it seeing it on display at a local specialty shop at least. Not everyone knows that all products in a specific franchise, or line exist, so retailers function in part as end consumer marketing. That's why places like GameStop/EB Games have the store papered in promotional posters and such.

Hmm, unless you go into a specialty shop daily and really unaware of a product you are a fan/collector/passionate (or whatever) I dont see how a store may give me more than what a web site, any kind of product from a company can be look on their site or something similar, if you are into a specific novelty, I'm pretty sure you are quite updated about anything coming up, the store doesnt really give me any benifit in a sense

 

[KyuubiNoKitsune-Hime]

Well in this case, say a kit for Warhammer 40k comes out, but you didn't hear about it in advance, you'd learn about it seeing it on display at a local specialty shop at least. Not everyone knows that all products in a specific franchise, or line exist, so retailers function in part as end consumer marketing. That's why places like GameStop/EB Games have the store papered in promotional posters and such.

Hmm, unless you go into a specialty shop daily and really unaware of a product you are a fan/collector/passionate (or whatever) I dont see how a store may give me more than what a web site, any kind of product from a company can be look on their site or something similar, if you are into a specific novelty, I'm pretty sure you are quite updated about anything coming up, the store doesnt really give me any benifit in a sense

Not always true. Honest what it looks like to me is that you're trying to dismiss retail, brick and mortar type stores. When in reality they offer a service to people who want the service, because they offer a service it costs a bit more to buy from them generally. You're looking for reasons to back up the idea that they're inherently exploitative, instead of looking at the concept that they're valuable to people who shop at them. Really as far as I can see that's the only reason one could dismiss every point someone makes out of hand. The fact is that just because a store isn't a valuable service to you personally, doesn't mean that's true for everyone else, if the store is able to stay open that means that it has a customer base that finds it useful. It's important to note that you are not all people, that people like brick and mortar stores where they might pay a bit more for their own personal reasons. A lot of collectors like to go into say comic book stores and be pleasantly surprised by finding a comic book in a favorite series, when they didn't know that comic book even existed. Using your personal objectives to say a store is unnecessary is only valid to your experience, because it's your opinion, one which you can't expect everyone else to share.

 

[Fallow]

Not sure if capitalism is really the best word but I'll explain my confusion

I have been working for a board game retailer and heard the real price of ordering from the distributor and the price the box are put on the shelf. My concern at some degree was, why should I pay a 20-40% margin for just someone being a intermediate. I know you can get that box for 30$ but I have to pay 50 or 60? I there something I just don't get?
And please don't talk about the concept of someone else making money for their living or paying their store, that not the concern here and more about why the crazy difference, because they have to make money.
I guess some may say, they offer a service and you have to pay for that.

My second concern is about platform such as Kickstarter. I may misunderstand the concept but they keep around 5% of a founded project? All the did was being a platform and a name, yes I obviously know about all the protection and such, again, my concern is not here.

Anyway, I hopes my confusion was comprehensible.

You pay extra because the retailer believes he can sell the board games for that price. If he thought they would sell for more, he would charge more.

I understand the concept of markup and such, but still I don't get why I have to pay some one else a profit for technically nothing they did, rather than just being a intermediate between me and something bigger that don't deal directly to people.
What prevent me for not just getting my own "insert object" from the distributor? just because I'm not worth it? what the different from my local board game retailer that order just 1 or 2 game from a specific. That where I have a hard time to draw a line. I don't mind paying for a service or similar thing but when you basically did "nothing" I feel like its hard for me to understand why I have to pay the higher price so an intermediate can do business

It has nothing to do with "what they did". Capitalism does not pay you for your efforts or your hours, but after what people will pay. That is where "market pressure" applies. Have you noticed that prices go down when multiple companies compete for products (say AMD and nVidia)? That is not because the products are suddenly less valuable, but because people are less likely to pay for an expensive product when there are cheaper alternatives.

Coming back to your boardgame - the retailer believes that $60 is the best amount. This may be because the game has potential, or perhaps because the risk of not selling the boardgames at all is high and the price needs to offset that risk with an equally high reward. Perhaps it's because the retailer negotiated an exclusive deal, or because the location of the store is in an expensive area. It boils down to a single factor - the whims of the store owner.

One of the reasons that businesses get lower prices is they buy in larger volumes than the consumer will.

I understand the concept of bulk purchase, but I know for a fact that for my the place I work they rarely buy in bulk. as for big board game, one or two at most unless it the new one

They market and advertise products, because with out such advertisement, the consumer won't know that a product even exists.

I am not sure what you are referring to. beside the "advertisement" of being a specific retail, I don't see how you can't know if a product exist, if you are looking for it, you know it exist?

Bulk purchases and ad costs are completely arbitrary, and play no role whatsoever in the final price unless the store owner decides they do. There are no physical laws governing boardgame prices. There is no way things "have to be".



In summary, you pay the price set because you have no better alternative (for reasons such as: exclusivity, location, product quality/performance/modularity/localisation/etc).


If there is a better alternative, go for it, and tell your friends to go for it, because the result will be (lower prices at your niche store || your niche store going out of business).