[Using gas as a fine example of bad retailling] I think the way many people set their price at gas stations is absurb.
According to my testing each in q in gas should be +2. I tried setting q1 gas 1000 for 25 , all sold in 17hrs. q0 gas 1000 for 23, all sold in 17 hrs as well. What does this prove? Simple. Each gas quality increase should be +2q in stores and so far everyone has been setting the wrong prices that why you see the price of gas in realm 1 is so low and its screwed up. The profits has been dropping since the start of the realm.
So if you are selling each gas increase by +1. You are pushing the average price down.
A fine example is that the price of cars is currently capped at its max compared to gas (Do so by marxer in realm 1). It is because those people selling gas just want to sell fast without knowing the after effects of selling too cheap that the price will just decline and so will their profits in time.
For me I set 25+2q for gas in stores in realm 2. This way, you will keep the average price up and not 'helping' yourself lowering your own profit. So i dont understand people who retail for a price about 17-18c for q0 gas. There is a reason why the default price for gas is q0 at 30 when the realm first started.
When this realm first started, I set 1000 q0 gas for a price of 30 and it sells in 20 hours. Now I set 1000 q0 gas for a price of 23 and it sells in 17 hours. So figures.
What do you think?
Free feel to comment if you think I am right or wrong. : )
Info on retailling. Retaillers read and Learn. : )
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Guest
Info on retailling. Retaillers read and Learn. : )
Last edited by Guest on 11.11.2007, 14:15, edited 5 times in total.
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Guest
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Guest
Thx for sharing your point of view.
I understand your theory. Its like knolls's setting the optimum price for max profit. He wrote a thread on that. But I think on gas it works differently. As the optimum price is way lower from the default price of 30. But by setting at the optimum price, you will lower the optimum price gradually till it really hit rock bottom and in the end you be earning peanuts compared to other industry.
Whereas if you put a higher price, you will bring up the optimum price and in the long run you have stand to have a better profit. This is what I learnt from marxer about cars, lean production about tvs, cajny on tvs and jewelery, spiral about jackets.
Just sharing and further proving my theory. Look at leather jackets in realm 1 as a fine example.
France : Leather jackets 194,958 2,116.93
I understand your theory. Its like knolls's setting the optimum price for max profit. He wrote a thread on that. But I think on gas it works differently. As the optimum price is way lower from the default price of 30. But by setting at the optimum price, you will lower the optimum price gradually till it really hit rock bottom and in the end you be earning peanuts compared to other industry.
Whereas if you put a higher price, you will bring up the optimum price and in the long run you have stand to have a better profit. This is what I learnt from marxer about cars, lean production about tvs, cajny on tvs and jewelery, spiral about jackets.
Just sharing and further proving my theory. Look at leather jackets in realm 1 as a fine example.
France : Leather jackets 194,958 2,116.93
Last edited by Guest on 11.11.2007, 14:25, edited 1 time in total.
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Guest
I think the gas market is too big for anyone to be able to influence the pricing. Spiral owns the leather jacket market so he can dictate prices. I doubt we can influence 90% of the gas retailers to change their prices. I wouldnt mind selling Q10 gas for 45c, but as the market stands now I have no choice but to sell for 17c or so for 12h shifts. 24h pricing just costs me too much money and i wont be able to sell all my gas.
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Guest
Oh good, Regnum had been getting too many of the "stop moving the averages" posts lately."
Occasionally the public gets to talking about speed limits around here. For a long time in New Jersey they were at 55 mph, then a few roads were moved to 65 but plenty were not. In discussing them, you can pretty much always rely on hearing an argument like this:
The truth is that these things are never so one-dimensional. You can't move your profit to zero just by undercutting the averages. And you can't move it to infinity just by staying above. Yes your optimal price goes lower when the averages go lower. Sure it would be nice to have it stay higher all other things being equal. But trying to maintain it above all else generally means you're losing out on 20
Occasionally the public gets to talking about speed limits around here. For a long time in New Jersey they were at 55 mph, then a few roads were moved to 65 but plenty were not. In discussing them, you can pretty much always rely on hearing an argument like this:
- People drive 65 anyway. If you move the limit to 65 they will just drive 75, and if you go higher they will just go higher.
The truth is that these things are never so one-dimensional. You can't move your profit to zero just by undercutting the averages. And you can't move it to infinity just by staying above. Yes your optimal price goes lower when the averages go lower. Sure it would be nice to have it stay higher all other things being equal. But trying to maintain it above all else generally means you're losing out on 20
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Guest
Yes thats why the game theory, dominant strategy and prisoner's dilemma comes into play. Where 'rational' players will choose their dominant strategies and there is a nash equilibrium.
Of course in this case for the short run the best payoff matrix would be setting below the average price. It is smart business only in the short run. How would you explain the better profits earned (2-3x more) in the long run in france leather jackets retailing. Obviously you need 2 sacrifice the pie to have a large share of pie in future. The price wouldnt just rocket rise out of the blue.
Another thing would be tit for tat strategy. It is also illustrated here. Some sellers wanting to sell above average, however others sell below average and they will think why should they have lower profits? Thus, a tit for tat results and in the end more people selling below average.
An obvious example in the real world will be drugs. In some country there is capital punishment for drugs peddling and smuggling, but why do they still mess around with drugs? Well it is due to the temptations of the high payoff in the payoff matrix.
But for the case of gas, where there is abundance of seller, I think it is a hopeless situation. Thats why I plan to get out of this industry sooner or later. This also shows the selection of country to set your retail outlets. Why some people rather choose turkey or france despite the smaller demand. Simple, they will be able to have a larger influential ability.
And obviously You can't move your profit to zero just by undercutting the averages. And you can't move it to infinity just by staying above. But it does significantly affect in the long run.
Thats why some players find alternatives to overcome such problems. They who know how things work and find solutions to it. By going mainly into retailing and leaving the production line for others.
But this just proves my point and my theories are right. All I have mentioned so far are idealised situations where everyone cooperates for the best outcome in the long run. However due to prisoner's dilemma, everyone is for himself behaviour, it is hard to achieve especially when there are numberous people involved.
Of course in this case for the short run the best payoff matrix would be setting below the average price. It is smart business only in the short run. How would you explain the better profits earned (2-3x more) in the long run in france leather jackets retailing. Obviously you need 2 sacrifice the pie to have a large share of pie in future. The price wouldnt just rocket rise out of the blue.
Another thing would be tit for tat strategy. It is also illustrated here. Some sellers wanting to sell above average, however others sell below average and they will think why should they have lower profits? Thus, a tit for tat results and in the end more people selling below average.
An obvious example in the real world will be drugs. In some country there is capital punishment for drugs peddling and smuggling, but why do they still mess around with drugs? Well it is due to the temptations of the high payoff in the payoff matrix.
But for the case of gas, where there is abundance of seller, I think it is a hopeless situation. Thats why I plan to get out of this industry sooner or later. This also shows the selection of country to set your retail outlets. Why some people rather choose turkey or france despite the smaller demand. Simple, they will be able to have a larger influential ability.
And obviously You can't move your profit to zero just by undercutting the averages. And you can't move it to infinity just by staying above. But it does significantly affect in the long run.
Thats why some players find alternatives to overcome such problems. They who know how things work and find solutions to it. By going mainly into retailing and leaving the production line for others.
But this just proves my point and my theories are right. All I have mentioned so far are idealised situations where everyone cooperates for the best outcome in the long run. However due to prisoner's dilemma, everyone is for himself behaviour, it is hard to achieve especially when there are numberous people involved.
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Guest
I agree with you that in the long run, it'll make a lot of difference if everyone sells at above average price
one thing i'll like to add: it's not enough to just look at the average price and set your price higher. you have to look at the average quality too. if your quality is higher than the average quality, and you sell your goods at average price, you'll lower the average price in the long run. ask the industry leaders for the 'correct' prices/formula
and having said that, it is hard to get everyone to collaborate. there are too many players who want quick profits. like you said, we are all in 'prisoners' dilemma' . since it is hard to get every1 together, people choose the 'best' option, which is to sell at lower-than-average prices to get max profit.
if you can create a syndicate and get all the players to join in, then you can influence the price upwards. look at industries where there are fewer players. eg leather jackets in france, diamond rings, golden watches/necklaces. profits are good, very great at times
the gas industry has too many players. it is hard to get everyone together to push prices
one thing i'll like to add: it's not enough to just look at the average price and set your price higher. you have to look at the average quality too. if your quality is higher than the average quality, and you sell your goods at average price, you'll lower the average price in the long run. ask the industry leaders for the 'correct' prices/formula
and having said that, it is hard to get everyone to collaborate. there are too many players who want quick profits. like you said, we are all in 'prisoners' dilemma' . since it is hard to get every1 together, people choose the 'best' option, which is to sell at lower-than-average prices to get max profit.
if you can create a syndicate and get all the players to join in, then you can influence the price upwards. look at industries where there are fewer players. eg leather jackets in france, diamond rings, golden watches/necklaces. profits are good, very great at times
the gas industry has too many players. it is hard to get everyone together to push prices
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Guest
Varg AB wrote:I think the gas market is too big for anyone to be able to influence the pricing. Spiral owns the leather jacket market so he can dictate prices. I doubt we can influence 90% of the gas retailers to change their prices. I wouldnt mind selling Q10 gas for 45c, but as the market stands now I have no choice but to sell for 17c or so for 12h shifts. 24h pricing just costs me too much money and i wont be able to sell all my gas.
you sell Q10 for 17c in your stores?-
Guest
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Guest
Does a lower average sales price mean less players will start a gas company? Further, does less players in the gas game make for a better gas game?
The cause and effect relationships might make the gas game more profitable to some players in the long run if they know what they are doing. If every player setup 1 well/1 factory/1gas station (I'm not sure how gas works either) then it wouldn't be much fun.
Maybe now is not the time for capitalization. The Q is too low (R2) and that makes players think they can still make it in the big time gas game. That's why competition limits profit. In a monopoly you can set what price you like.
The cause and effect relationships might make the gas game more profitable to some players in the long run if they know what they are doing. If every player setup 1 well/1 factory/1gas station (I'm not sure how gas works either) then it wouldn't be much fun.
Maybe now is not the time for capitalization. The Q is too low (R2) and that makes players think they can still make it in the big time gas game. That's why competition limits profit. In a monopoly you can set what price you like.