Washington standard. [volume] (Olympia, Wash. Territory) 1860-1921, 1914-08-21
FACTORY COST EXPERT SHEDS
NEW LIGHT On FUNDAMENTAL
PRINCIPLES Of MERCHANDISING

in buying their goods, he says: 1.-THE
modern factory, manufacturing staple
products, enjoys keener competition,
If possible, than any other line Of
business. 1t must sell it's products to
the retailer at price that will reutrn
the smallest profit possible that will
permit a reasonable return on the
money investment. Should the fac
tory put a price on its product that
would return to it's stockholders more
than fair rate of interest, either its
competitor would undersell 1t or new
capital, of which there is always an
abundance seeking investment, would
enter the field and eventually bring
the price of the article down to the
point that would return to the stock
holders a rate Of interest satisfactory
to investors in such securities. In
dwelling on this the purpose is to
show that under the present indus
trial conditions the selling price of
manufactured article is determined
solely by its cost of production.
Every modern factory has cost
system which shows to the fraction
of cent the cost Of their product
when 1t leaves the shipping room. 1t
must be sold at a certain figure to
pay a certain percentage Of profit.
1t costs no more per case to manufac-
ture me ten cases for little John
Smith than it does per case the
thousand for the larger buyer, and II
both offer the same terms Of payment
they will be charged approximately
the same price. The little John
Smiths scattered over the country
are the takers of the bulk Of the man
ufactured products of the country
and they are the ones the manufac-
turer has in mind when he puts the
lowest possible price on his product.
If, in quoting John Smith his regular
price-a price kept down by keen
competition, he is making only a
minimum profit, how can he by any
possibility quote lower one without
seriously affecting his dividends?
Dividends are what factories are run
to make.
MANY catalog houses lay great
stress on their ability to sell an ar
ticle at low price because they 'owr
their own factory Is there any
good reason to believe that their fac
tory can manufacture an article
cheaper than any other factory sim
ply because they own it? Catalog
houses owning factories, and factor
les using the tempting phrase, We
sell direct to the consumer in reality
have no advantage over the independ-
ent retailer in so far as price is con-
cerned, because their product, when
it leaves the manufacturing depart
ment, must be charged to the selling
department at exactly the same price
it would be charged to an independ-
ent retailer, were they themselves
not in the retail business. So you
see that the great stress laid on the
factory-owning feature by the larger
catalog houses is pure, plain, unadul-
terated Bunk"
In explaining how such houses are
able to occasionally quote low prices
on standard goods of well known
makes he has to say: "Catalog houses
as we'll as other merchants, often
have opportunities TO purchase at re-
duced prices, what is known to the
trade as Job lots A factory may
discontinue the manufacture of GER
tain style, and having large stock OF
that particular pattern on hand. will
offer the entire lot at cost or even
less. While OF course such merrhan-
Jiea 10 IF standard uualitv IL natur.