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− | = | + | = <u>Econ 101 as it Relates to Wet-Shaving</u> = |
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− | + | <u>'''What's This Razor Worth?'''</u> | |
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− | + | <u>'''Why Did That eBay Razor Sell for Such a Crazy Price?'''</u> | |
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− | + | How much is a razor worth? | |
− | + | The answer, of course, is in supply and demand. | |
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"Supply and demand" is a phrase that gets thrown around a lot when it comes to prices of razors, stones, and other wet-shaving paraphenalia. Usually when the phrase comes up is to explain seemingly unexplainable prices: "Well it's supply and demand" someone will say. | "Supply and demand" is a phrase that gets thrown around a lot when it comes to prices of razors, stones, and other wet-shaving paraphenalia. Usually when the phrase comes up is to explain seemingly unexplainable prices: "Well it's supply and demand" someone will say. | ||
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First, let's look at demand. If we were to survey wet-shavers about how many DOVO Best razors they would be willing to buy at a given price, we would end up with something like this: | First, let's look at demand. If we were to survey wet-shavers about how many DOVO Best razors they would be willing to buy at a given price, we would end up with something like this: | ||
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− | + | Now let's look at supply. | |
As you might expect, it works exactly the opposite of demand: at high prices a lot of people want to sell, at low prices not very many will sell. On a graph, it would look something like this: | As you might expect, it works exactly the opposite of demand: at high prices a lot of people want to sell, at low prices not very many will sell. On a graph, it would look something like this: | ||
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If we put those curves together, we can get an idea of what will happen in normal market conditions: | If we put those curves together, we can get an idea of what will happen in normal market conditions: | ||
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To clarify how this works, as well as understand what happens when things change in the market, let's look at what happens when a shift takes place. | To clarify how this works, as well as understand what happens when things change in the market, let's look at what happens when a shift takes place. | ||
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Say a particular razor has been selling at it's equilibrium price for a long time - supply and demand are stable. Then, one day, someone posts to a high traffic internet forum with really nice pictures of the razor, and a review stating how well it shaves. A lot of people see the review and decide that they would like to buy that razor. What happens is that the entire demand curve moves. More people are willing to buy at all of the price points along the curve. | Say a particular razor has been selling at it's equilibrium price for a long time - supply and demand are stable. Then, one day, someone posts to a high traffic internet forum with really nice pictures of the razor, and a review stating how well it shaves. A lot of people see the review and decide that they would like to buy that razor. What happens is that the entire demand curve moves. More people are willing to buy at all of the price points along the curve. | ||
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+ | That's the basics of supply and demand. Let's look at eBay prices: | ||
Say the seller doesn't know what they have - they have one razor that they are willing to sell for whatever it sells for. It's the only one like it on the market. | Say the seller doesn't know what they have - they have one razor that they are willing to sell for whatever it sells for. It's the only one like it on the market. | ||
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If you have a razor from Jones Hardware in Anytown USA, it might be the only one like it in existence. To the market though, it may be just another generic hardware store razor. | If you have a razor from Jones Hardware in Anytown USA, it might be the only one like it in existence. To the market though, it may be just another generic hardware store razor. | ||
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+ | Now to answer the big questions: | ||
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+ | = <u>Should I buy this razor for $xx?</u> = | ||
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+ | No one but you can answer this. Tell me where you are on the demand curve, and I'll tell you if you should buy it. | ||
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+ | The only problem is, if you know where you are on the demand curve, there's no need to ask if you should buy it for that price. You already know. | ||
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+ | = <u>How much is my razor worth?</u> = | ||
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+ | To truly establish that, we could come up with a price range that the market would bear based on statistical analysis of a market survey. To do that would cost tens of thousands of dollars. | ||
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+ | Your razor ain't worth that much. | ||
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+ | Beyond that any answer you get about how much the razor is worth is based on where the person answering sits on the demand curve for that razor, or their observations of where people sit on the demand curve. | ||
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+ | People experienced with vintage razors can make an educated guess, but ultimately that's all it is - a guess. | ||
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+ | That's why we don't do appraisals on SRP - there is no accurate answer. | ||
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+ | If you want to know what the market will pay for your razor - put it on eBay. You'll have the answer in a few days. |