Its a common misconception, prices are never based on cost, its what people are willing to pay. Now, what people are willing to pay can be influenced by perceived costs, but thats pretty artificial too. The prices at a restaurant for example vary pretty wildly in profit margins. Pretty famously, sodas cost cents to make, but people are willing to pay orders of magnitude more.
Prices are 100% influenced by cost. That soda may be $3.00 even when the syrup is $.30, but if the cost of syrup went up to $2.00, the price of soda at the restaurant would go up. It would do so not because they arbitrarily decided it, but due to the cost of the syrup eating into their margins. This concept is the reason behind the revolution that is modern logistics and the global economy.
Its a common misconception, prices are never based on cost, its what people are willing to pay. Now, what people are willing to pay can be influenced by perceived costs, but thats pretty artificial too. The prices at a restaurant for example vary pretty wildly in profit margins. Pretty famously, sodas cost cents to make, but people are willing to pay orders of magnitude more.
Prices are 100% influenced by cost. That soda may be $3.00 even when the syrup is $.30, but if the cost of syrup went up to $2.00, the price of soda at the restaurant would go up. It would do so not because they arbitrarily decided it, but due to the cost of the syrup eating into their margins. This concept is the reason behind the revolution that is modern logistics and the global economy.