[TTDegs]

Originally Posted by dudesterlang

You gave a perfect example yourself with your tile cutter. We can all find exceptions. Is fuel not mass produced?? More people want tile cutters, so they make more & the price comes down. Whahey, point proved by your good self!!
I could almost guarantee if I asked any supplier or indeed any retailer to buy 1 item or 1000 of the same item there will be a huge discount for the bulk order. If I wanted to buy a custom built car (or anything for that matter) I would have to pay a premium because they are made to order in very low numbers.

yes, but again, the tile cutter isn't cheap because it's in high demand, it's cheap because someone cottoned on that if they made them cheaply enough, there was a small profit to be made.

High demand is where you are trying to buy something, but everywhere is sold out.
This is a basic part of demand being greater than supply.
With my tile cutter, there were more than a dozen left on the shelf after I bought it, and there was no queue behind me of people fighting to grab one!
This is a situation where supply exceeds demand.

Bulk orders, or even bulk selling, is a completly different matter, and has nothing to do with supply and demand...

Lets say you invent something - we'll call it a 'super-widget'.
It costs you £2 to make each one.
You find a retailer who agrees that it is the next best thing and wants to buy it from you.
You sign up a contract to supply them with 10 super-widgets.
You sell them 10, at £5 each, and they put it on the shelves at £20 each.

They sell out in 10 seconds flat.
There are riots, and queues, reports in the paper after some schoolkid was mugged for one.

Retailer wants an order of 10,000 units.

You are in a position where demand far exceeds supply.
You get cheaper components from your suppliers, meaning you can make them for £1 (and you hope they don't ask why - read on, as what I'm about to say applies to them too)

Do you:
1) sell them 10,000 units at the original £5, happy with your increased £4 profit each (from £3 profit)
2) sell them 10,000 units at £4, happy to retain the same profit margin as before, even though you know they will still be sold to the customer at £20 (and on ebay at £50)
3) sell them 10,000 units at £10 each, because you know that you are controlling the supply, and that they will still be happy with either the £10 profit they make, or will simply put the customer price up to £25


That is supply and demand!



And back to your car - yes indeed, your hand built car will cost more than a mass produced one - becuase your demand exceeds the car producers supply.
You are willing to pay more for the time and effort which goes into making it.

If no one was willing to pay the extra for hand built cars, then demand would be lower than supply.
These companies would then either have to go out of business, or reduce their prices (possibly to the point where it was not economically viable)