Posted By:
Al C.risafulliI definitely do not agree with the restaurant analogy.
In a restaurant, you have a finite amount of square footage that can generate profit. You have overhead you are required to pay - not only cost of goods, but overhead and payroll for service staff, cooks, busboys, etc.
Further, in a restaurant you are not letting customers bid on how much a plate of spaghetti should cost. You're still telling them the price, and unless you're planning on going out of business, you're setting your pricing in a way that's designed to make sure that, over the course of an evening, your table is profitable.
On eBay, you've got a cost of goods and then a very low listing rate if your material does not sell. When eBay has a special promotion on fixed price listings, sellers with large inventory in their eBay store can move their merchandise to fixed-price listings at the click of a button, and only need to sell a handful of items to cover their costs. When you've got a few thousand items in your eBay store, you'd be surprised at how profitable this can be.
I can certainly understand the idea of letting markets set pricing. But I can absolutely understand the idea of reducing volume and increasing profitability as well.
-Al