On Thu, Aug 24, 2017 at 7:54 AM, Rob Berendt <rob@xxxxxxxxx> wrote:
Question, if they are making a profit by selling something to the customer
with one trading partner and only 1 daily transaction, why should they
charge more for the customer with 100 trading partners doing 1000
transactions daily?
That's a very silly question. If a vendor has a chance to make more
profit versus less profit, it is completely fair to assume they will
choose more profit. I am not saying all vendors do this, but the
baseline assumption has to be that they will try to maximize their own
profit. That is pretty much the central tenet of capitalism.
Everyone things the bigger guy always has bigger pockets to
pick. Not considering they also have bigger expenses, rules and
regulations that many of the smaller guys don't.
It's also fair to assume that the bigger guy has bigger pockets. It's
of course not always the case, but it's a completely reasonable
baseline assumption.
Look at simple math. Let's pretend there's a tiny operation (just a
few people) that is wildly, wildly profitable. Like, riDUNKulously
profitable. On crazy sales for their size. We'll say they make 99%
profit on $15 million in sales. (I'm confident this hypothetical
company is doing way, way better than most small outfits.)
Let's pretend a giant company, with boatloads of bureaucracy and red
tape and costs and so on and so forth is only barely, barely,
razor-thin profitable. Let's say they make 1% profit on sales of $2
billion. (This hypothetical company has sales that are a fraction of
Time Warner's or Facebook's, and way, way, way-the-hell lower margin
percentage. Our pretend corporation is impressively lame and
ineffective in relation to other businesses its size.)
Who has the bigger pockets? The amazingly and almost unreasonably
successful tiny company or the just sort-of-getting-by big
corporation? (Hint: the CEO of IneffectualCorp can give himself a
Ferrari for every day of the week on the company dime and still make
more in profit than the little guy does in gross sales.) Now imagine a
*normal* small company versus a *normal* giant company.
John Y.
midrange.com
