Originally Posted by 2ursula

It seems a natural assumptions that prices are based on various rational considerations.

Rational considerations are the costs of making the product and all the costs of doing business, from advertising to delivering the product to the doors of people as well as taxes, fees and other ways the government extracts money from unsuspecting people.

This is however only the basis for the MINIMUM (break-even) price.

The by far more relevant factor in pricing products has absolutely nothing to do with any kind of thought that could appear rational to consumers:

Merchants in general charge what the market will bear. No research institute, no university, no think tank has better or more updated demographics than the big merchandizers.

Here is what merchants actually do: They use their demographics to determine 'what the market will bear' and then have their cost calculators determine whether this is enough over cost. Enough is a relative term. "The business of business is business."(Adam Smith, Founding Father of the Free Enterprise System, sort of) People are in the business to make as much money as they possibly can. It's the nature of business as we practice it.

This system will eat us all, unless we start to be savvy consumers. When I heard what Chinese companies were doing to manipulate their Indian counterparts out of business I startet hording fabrics. I had much fun and now have enough fabric for at least 10 years.

There is only one lever to get this system back into balance. Stop buying for a while.

Most of the merchants NEED to maintain their cashflow to pay the bankers. That's how we get to see lower prices again - wherever we are. (The price at the product originators is below the relevance threshold. Remember, it is demographics that determines the price. People are more interested in quilting and crafting. So naturally, the craft and quilting store prices are (quite predictably) over the moon.)