the maximiser

Ever so often in business, I come across vendors who will look at maximizing their profits on every transaction. The thinking goes that if I can cadge off an additional 10% from the client on every transaction, I would be making more money.

The basic assumption underlying this theory is that the client will continue to make the same number of transactions for the vendor to make the notional greater money. Inadvertently the client just reduces the number of transactions.

This leaves the vendor with lesser revenues & even lesser profits in total.

On the other hand, there are vendors who would standardize production at a given standard rate. I personally feel these vendors are worth partnering, they understand that profits will be marginal when economies of scale are demanded.
The profits arise from larger raw material buying power, increase inventory turnover, lowering invariable costs per unit with economies of scale.

Another facet of this vendor is he can successfully differentiate between the volume buyer and the base buyer, base prices for base quantities which would compete vis a vis any other vendor and marginal pricing for economics of scale.

I think this is the heart of the business. He differentiates the 2 buyers and thinks long term on how to get his costs down. The vendor makes best of what a particular kind of buyer is willing to pay, as well as gets his costs down with economies of scale. In doing so he is actually cadging off the smaller buyer but does this over the long term rather than early on.