“Not a bit of it. If both men sell at wholesale they ought to be on one level, otherwise the smaller buyer can not hope to succeed. And I tell you it is much more to the interest of manufacturers that there should be six small houses in a town than one extra large house. Your large buyer is autocratic; he can break the market, and often does it to his own hurt, as well as to the damage of every one else. The average buyer is content to buy as low as his competitor, or if he gets a little inside price, keeps it to himself, lest his competitor shall know it.”
“You seem to have figured it out pretty thoroughly.”
“I have, and I know what I'm talking about. But of all the silly things manufacturers do, they never get quite so absurd as when they undertake to advertise.”
“Please explain.”
CHAPTER XIII.
“I can explain what I mean by showing you this letter,” said Mr. Shively. “Here is a line of goods I proposed to handle, and wrote the manufacturer for prices. He has advertised them largely, but has not worked up a very large sale as yet, though he has succeeded in making them pretty well known. He writes me he will discount 35 and 5 per cent., and adds: 'Please do not quote or sell at better than 30 and 5.' What does he take me for? The list is $12; 35 and 5 off brings the net price to $7.41, and if I sold at 30 and 5 off, I get $7.98, or 6 per cent. on the investment, and I pay freight out of that! But this manufacturer thinks I am liable to cut under $7.98, so kindly cautions me against doing it. He must have a mighty queer idea of a merchant's profits.”
“What would you do if you were in the manufacturer's place, to begin with?” I asked.
“First decide on a fair retail price. Every article must first be judged on this basis. It is not 'What will the jobber pay for this?' that decides the cost of goods, but 'What will this retail at?' Having decided this, then settle on a discount from this price that will pay the retailer a fair profit, and in quoting prices to the retail trade stick pretty close to this. Then the jobber should have a margin of 15 per cent. at least, and yet be able to sell retailers at my price.”