22 LR Solution - RAISE PRICES THROUGH THE ROOF

[David E]

Simple! Sell more for a little less markup but in the end make more profit.

Wal-Mart has used this idea for years, now tell me it doesn't work for the largest retailer the world has ever seen.

Oh, so instead of selling 100%, they'd sell 110%?



.

 

[cfullgraf]

It is a short term bubble (that would have been even shorter if prices rose as quickly as demand). But, you can add capacity without increasing your capital expenditures. Labor is a variable unit, and can be pressed into service to work additional and/or longer shifts.

Yes and no. It depends.

If the manufacturers are already 24/7, there is no capacity available.

If they have to hire people, there is a training period. Yes, adding workers and shifts can produce more product sooner but it can have negative effects as well for a while until the new workers get up to speed.. I would think ammunition manufacturing does not lend itself well to grabbing a some temps to increase production, but I could be wrong. All we need is some ammunition plant blowing up because some inept employed hired and trained too quickly made an error ("I know what I've done when I said oops, what did you do when you said oops?" Bill Cosby)

New equipment is the slowest to increase capacity and not a good investment if the production needs fall off. I suspect that it would take a year at least to get new ammunition lines up and running once the money was approved to spend. You do not run down to Wally World and pick up some equipment.

And in big industry, it is not always quick and easy to get capital money approved to spend even it times of shortages. Been there, done that.

Finally, maybe raw materials are just not available. It does not matter how much production capacity a manufacturer has if it cannot get materials to feed it.

 

[jcwit]

Oh, so instead of selling 100%, they'd sell 110%?

Of course not!

I suppose you know for a fact that everyone is selling 100% of what is manufactured.

I suppose you know for a fact all distributors are shipping 100% of all their inventory.

I suppose you know for a fact all retailers are totally sold out of all inventory.

 

[PJSprog]

Raising prices to limit consumption...
Determining whether or not someone needs something...
Not sure I've ever heard such arguments before.
Oh, wait ... yes I have ... they're the exact same arguments the grabbers use when they want to slow down and eventually stop the purchase of any firearms-related products by the public.

 

[Pilot]

Buyers set market pricing, not sellers. Don't want to pay too much for .22? Don't buy it at the panic prices that we saw at gun shows and Gunbroker type sites. Sure some retailers didn't raise the prices as much as they could have and sold to scalpers, but that has lessened as .22 becomes more available, and it is no longer worth their time. That is the market. It worked, people have hoarded, but you'll be seeing those bricks back for sale at a lot lower prices.

 

[David E]

Of course not!

I suppose you know for a fact that everyone is selling 100% of what is manufactured.

I suppose you know for a fact all distributors are shipping 100% of all their inventory.

I suppose you know for a fact all retailers are totally sold out of all inventory.

I didn't say any of that.

I simply challenged the naive assertion that if prices were artificially raised by the manufacturer they'd eventually drop their prices to pre-panic levels if they're selling as much or more than before at higher prices.

 

[BoilerUP]

I backordered a 5000ct case of 40gr MiniMags last night at MidwayUSA for something like $335 shipped; backorder is due before the end of this year.

They also have Winchester M22 1000/2000ct available for backorder.

What were we talking about, again?

 

[jcwit]

Buyers set market pricing, not sellers. Don't want to pay too much for .22? Don't buy it at the panic prices that we saw at gun shows and Gunbroker type sites. Sure some retailers didn't raise the prices as much as they could have and sold to scalpers, but that has lessened as .22 becomes more available, and it is no longer worth their time. That is the market. It worked, people have hoarded, but you'll be seeing those bricks back for sale at a lot lower prices.

Wife & I had our own retail business for the last 20 years till retirement when I reached 58.

I set the prices, at a fair profit margin for both of us to live comfortably. It may well have been possible for us to make a higher margin of profit, but we kept inventory moving right along and were more than happy with what we made. Never, ever relied on what the customer thought about my pricing structure. Most of all it was none of their business.

 

[Gun Master]

Large Order .22 Purchasing

I backordered a 5000ct case of 40gr MiniMags last night at MidwayUSA for something like $335 shipped; backorder is due before the end of this year.

They also have Winchester M22 1000/2000ct available for backorder.

What were we talking about, again?

We are also talking about the "small change" 50 rds. at a time buyer. Sorry to report that not everyone has the ability ($) to buy in huge bulks.

 

[Black Butte]

a store finally getting in a boatload of ammo and then let ONE guy buy it all

So what? The guy waited in line, had the cash to buy it, and obviously wanted it. That's good for the economy. If you want it more, you can either wait longer or pay more. That's the free market. I stocked up when bricks were $7.00 at Walmart, so I can wait until demand falls.

 

[WinThePennant]

Says who?

Why pay $50 for 100 .22's if you can buy something else for less? Many wouldn't buy anything, which the antis would love.



That's mighty optimistic. If they sell 100% at twice (or more) than current retail, WHY would they lower the price?



The fact that rationing IS inefficient makes it unprofitable for the flippers to keep buying all that's available.

Of course retailers want to sell their wares for as much as possible. But, they cannot? Why? Competition.

When you have big fat profit margins, which is the case now with 22 LR (only it's the scalpers and not the manufacturers running up the price), then you have more participants coming into the market. Or, they increase supply (expanding plants, hiring workers, paying overtime, etc.). Then, price and supply finally equalize until we are all happy again paying a reasonable price for a product.

Of course, with increased scalpers and hoarders comes decreased supply for all the rest of us. Instead of acting like a lot of jackasses vowing revenge against retailers that raise prices (ala CheaperThanDirt), we should be glad to see that they are acting rationally in the face of sudden and extreme demand. Those fat profit margins encourage more market participants, more innovation, more all kinds of good stuff.

 

[BoilerUP]

We are also talking about the "small change" 50 rds. at a time buyer. Sorry to report that not everyone has the ability ($) to buy in huge bulks.

I understand that.

But look beyond your own indignation at how that post is related to the discussion at hand re: scarcity, shortage, gouging, supply/demand equilibrium, etc.

 

[jcwit]

So what? The guy waited in line, had the cash to buy it, and obviously wanted it. That's good for the economy. If you want it more, you can either wait longer or pay more. That's the free market. I stocked up when bricks were $7.00 at Walmart, so I can wait until demand falls.

I spose! I stocked up years ago as well, just because things were so cheap at the time.

But not everyone has that option, every day there are new shooters coming into the shooting sports.

Its really encouraging to start a hobby where one can't get the supplies to pursue it.

Course it does help the anti's in their endeavor.

 

[jdh]

Raise prices and other manufactures will start making .22 lr. as well as current manufactures will increase output to get in on the gravy. That will increase supply and the prices go down.

No.

They won't. They won't because those that so load it are running at capacity now. To increase production they will have to invest in new plants, equipment, and employees. Those who don't load it would have to invest in new plants, equipment, and employees. Chances are by the time those new plants and equipment are completed and the new employees trained to run them the crises will be over with production returning to pre-stupidity levels. That would require those new plants to either be mothballed and the new employees layed off or the plants continue to produce creating a surplus, causing the prices of the finished products to crash resulting in the company loosing either way.

The companies do not see the need to temporarily increase production or they would have already done so.

 

[Stophel]

Many here are decrying "rationing". Well, the only ones doing any rationing are the businesses themselves, all totally of their own volition, with no government coercion, and all totally done in the interests of their own business and, I think, the interests of their customers. All of you free market capitalists should be quite thrilled at that.

I also backordered some Winchester and Remington .22 ammo from Midway last night (thanks to whomever it was that posted the heads up that they were doing that). The expected delivery date was late December and sometime in January!!!! Quite a while to wait, but I'll give it a shot. Assuming it actually DOES come in (I don't have high hopes that I'll get it... I expect a delay, and another delay, and then a message saying "discontinued" or something...) I'm definitely not going out and shooting it all up.

 

[Black Butte]

No. They won't. They won't because those that so load it are running at capacity now. To increase production they will have to invest in new plants, equipment, and employees.

If demand levels off, prices come down, and customers win. If demand doesn't level off, new production is created, prices come down, and customers win. All customers have to do is wait. Of course, it helps if you had the foresight to stock up while prices were low.

 

[BSA1]

"That's mighty optimistic. If they sell 100% at twice (or more) than current retail, WHY would they lower the price?"

Simple! Sell more for a little less markup but in the end make more profit.

Or use it as a loss leader.

 

[danez71]

I backordered a 5000ct case of 40gr MiniMags last night at MidwayUSA for something like $335 shipped; backorder is due before the end of this year.

They also have Winchester M22 1000/2000ct available for backorder.

What were we talking about, again?

Lets refresh.

The title of the thread is:

22 LR Solution - RAISE PRICES THROUGH THE ROOF

And in the 1st post, the OP says

Raise prices by a multiple of 4 times (to reflect demand), and you'll see people who have a NEED actually buying the ammo.

So while you back ordered 5000 rounds at 6.7 cents each (deliverable in the next 30 days), and they seem to be fairly available in stock at 10 cents each, the OP doesn't like that and says the solution is to raise the price 4X to 27 cents to 40 cent each.


Why? because while the OP claims he wants the free market to work its self out, he doesnt like how the free market is working and has decided that, with zero proof or a shred of evidence, that his plan of quadrupling the price of 22lr to the 27-40 cent range will be better for everyone.



I think that about sums it up.

 

[WinThePennant]

No, I'm simply arguing that self-imposed distortions are causing high prices and shortages.

I said at least twice now that the 4x number was off the top of my head. It should be raised to the new equilibrium point that reflects current levels of demand.

Again, if it wasn't for the treatment that CheaperThanDirt got for raising prices, we wouldn't be seeing this mess with ammo shortages.

 

[BSA1]

I think that about sums it up.

Yep Pretty much. You did forget about to mention that the O.P. is totally ignoring that the free market, without government intervention, has corrected the shortage of black rifles, high capacity magazines and centerfire ammunition and the high prices have dropped and are dropping to pre-banic levels.

The O.P. is also overlooking the role the President, Federal and State Governments with their willing lackies in the TV and Print Media along with massive amount of abuse of power by government agencies are playing in their relentless drive for socialism

But then again I think you summed it up better than I can in fewer words.

 

[Gun Master]

"Treatment of Cheaper Than Dirt" - i.e., "price gouging" et al

It is difficult to imagine the effect of "accusations" damaging the ammo market . Are you perhaps a CEO, stockholder, or otherwise a benefactor of Cheaper Than Dirt ?

 

[WinThePennant]

I think that about sums it up.

Yep Pretty much. You did forget about to mention that the O.P. is totally ignoring that the free market, without government intervention, has corrected the shortage of black rifles, high capacity magazines and centerfire ammunition and the high prices have dropped and are dropping to pre-banic levels.

The O.P. is also overlooking the role the President, Federal and State Governments with their willing lackies in the TV and Print Media along with massive amount of abuse of power by government agencies are playing in their relentless drive for socialism

But then again I think you summed it up better than I can in fewer words.

I'm sorry, but can you point out where I said that the free market wouldn't eventually figure this out (despite best efforts to hamstring it)?

 

[benEzra]

Manufacturers aren't adding new capacity because if they are stuck selling at current wholesale prices, then the expense of setting up a new factory in uncertain times would be a risk.

If manufacturers were able to raise their prices to a point that would support new investment in manufacturing without having to amortize it over a very long payback time, then we'd see the shortages alleviate. But right now, those potential profits are going to the scalpers in order to fund more scalping, instead of going to the manufacturers and funding more manufacturing.

Artificial price controls create shortages; that is a fundamental principle of economics. That is no less true when the price controls are voluntary. However, Americans have developed a sense over the last 30 years or so that they'd rather have controlled prices and shortages rather than high-enough-to-meet-demand prices and abundance, and so the markets distort themselves accordingly. So manufacturing doesn't increase much, scalping becomes hugely profitable, and store shelves start to look like a Soviet grocery.

Personally, I'd rather see $5-10/box ammo on the shelf than empty shelves marked at $3/box, but that's just me...

Yep Pretty much. You did forget about to mention that the O.P. is totally ignoring that the free market, without government intervention, has corrected the shortage of black rifles, high capacity magazines and centerfire ammunition and the high prices have dropped and are dropping to pre-banic levels.

Rifles (and to a lesser extent, magazines) aren't consumables in the same way that ammo is; even magazines can take years to wear out. If manufacturing isn't increasing to match the new shooters with new guns now trying to buy ammo, and can't keep up with the former coupla-boxes-on-hand types that are now looking to keep more on hand, then I don't think the ammo supply for high-demand calibers is going to catch up for a long time. It is certainly going to take a lot longer than if more production had been incentivized early on, and in the long run prices are going to stabilize at an equilibrium point higher than they otherwise would have, methinks.

And remember, price controls distort supply and demand even when they are implemented voluntarily across an industry, rather than by government fiat. An undistorted market would have corrected the shortages a lot quicker, albeit at the cost of higher prices in the short run. Americans would rather have shortages, though, so shortages we have.

 

[WinThePennant]

@ BenEzra -- You nailed it in a few paragraphs, which is better than I could do in five pages.

Showoff...

 

[Deaf Smith]

And manufactures could sell online but only sell one case per customer or address.

Yes sell retail online.

That is what e-commerce is all about.

Deaf