Ok, I've been silent on
this issue, but it is time to speak out of my mind! I think someone equated this to Mistletoe Berry* farmers or something. I'm trying to seriously figure this out in my mind. Here are some random thoughts (no offense intended ice cream parlor owners, agency owners or stock analysts): [more]
I'm an ice cream store owner. I buy ice cream, hot fudge and strawberries at wholesale price (the more I buy the bigger discount I get). My terms are 2 percent 10, net 20 with all my suppliers. I mark up my products about 200 percent (not as much as soda, which costs me about $0.09 and I sell for $1.09). My customers can pay me cash or I have now started allowing credit cards (it only takes about 2.8 percent out of my 200 percent margin and they get one charge that shows "Dave's Ice Cream Parlor" on it). I've also had families come in to my store and buy five ice cream sundaes with strawberries on them. I didn't require them to put their names on their cones, but i've seen some kids give their sundaes to their grandparents who didn't buy anything at the time! Good thing I didn't put the kids name on their cup ... hmmm.
I also own a travel agency. I sell airline tickets at the "suggested retail price" (which is also my cost vs. two times my cost). If the client pays with credit card, the airline gets the money weeks before the customer actually even gets to use the product (no 2 percent 10, net 20 here!). I, as the merchant, don't actually even get to touch the money unless they pay cash--in which case I get to keep it for 3.5 days on average vs. when the customer actually gets to use the product some 12 days later on average. It's actually a negative receivable for the airline. (What ever happened to Lufthansa's pay-as-you-fly program?
I'm a Wall Street Stock analyst. I've never run a business in my life, but i have an MBA from Haavaad**. I see "merchant fee" as a line item on the airlines I analyze in detail. Why would my airline be paying this? They haven't made money cumulatively to date. If we push this merchant fee on their distributors, my airlines will finally make consistent profits just like when we eliminated distribution costs which brought waves of profits!!
* I like this analogy to airline partnerships. One minute they want to kiss you, the next minute you take a bite and you have gastrointestinal distress.
** I have nothing against Harvard, other than the fact that they only offered me an academic scholarship*** which equated to just 75 percent of total costs.
*** Ok, not really.
www.lecompte4board.com
David LeCompte
Short's Travel Management