Official:Margins

=Margins and Pricing=

One of the challenges of shopkeeping is deciding how to price your offerings. Pricing is doubtless more of an art than a science, and wily shopkeepers will take into account their competitive position when pricing.

For example, a distiller on Alpha Island may have a good business primarily selling small orders of fine rum at a high markup to already high commodity and labor costs. In contrast his fellow distiller on Guava might have cheap supplies of raw materials but little in the way of passing trade, relying more on bulk orders from local Pirate crews.

The Price of an Ordered Item
The price of an item when Ordered by a customer is the sum of all of the component costs, including labor.



For example, a Bandana from a Tailor. A bandana requires 1 units of plain cloth, and 1 hours of basic tailoring labor. Suppose, for plain cloth, my Buy Price is 20, and my Cost is 25. Also suppose that, according to my Labor Force menu, my basic labor offer (what I pay for labor) is 10, but my charged rate (the Cost of the labor) is 15. Then, the quote for one bandana will show a cost of, 40, since:

1 plain cloth  x 25 'Cost' per plain cloth          =  25 1 basic labor  x 15 'charged rate' for skilled labor=  15 40

Assuming you 'bought' the cloth and labor at your asking price, this bandana cost you, 30, since

1 plain cloth  x 20 'Buy Price' per plain cloth     =  20 1 basic labor  x 10 'Offer' for skilled labor       =  10 30

Therefore, you stand to make a net profit of (40-30=10) on one order of a bandana.

Pricing Inventory
A shopkeepers in certain trades will always keep a quantity of popular finished goods on hand to fulfill the whims of the 'impulse purchaser'. Rum is an excellent example of a product that is often purchased via the trading interface from a vessel by Pirates in a hurry to go out pillaging.

A shopkeeper can make a nice additional margin on such goods by ordering a number of units and keeping them in stock, for sale for a higher price than if ordered by customers for later collection.