Social Question

SQUEEKY2's avatar

If I buy an item for $5 and have people willing to pay me $500 for that same item…(see details)

Asked by SQUEEKY2 (5049 points ) April 16th, 2014

Is that price gouging or just a fair profit? and does it still mean the same if I am a big box store, or a vehicle dealership?
I mean is it gouging if people are willing to pay for it, even though I paid very little and they are going to pay through the nose for it?
Is it different if a person does it, or a business does it?

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11 Answers

SQUEEKY2's avatar

I had a friend that worked at a parts counter for a car dealership and he showed me an antenna for one of their sports cars the dealership bought it for under $10 and sold it to the customer for just under $200 is that a fair profit or just gouging?

Seek's avatar

Price gouging is situational.

Say you are a supplier of bottled water, and there’s a pipe burst in the city, and all the tap water has been contaminated. Everyone now has to buy bottled water. You, with dollar signs in your eyes, raise the price of your bottled water 700%. So now everyone has to pay $7 for a gallon of water, instead of about a buck. THAT is price gouging.

Finding an antique at a thrift store and turning a profit on it isn’t price gouging.

elbanditoroso's avatar

This is a free market economy. This is capitalism. If you can buy an item for $4.00 and sell it for $400, lucky you.

I see price gouging not as a one-on-one thing, but as institutionalized—if @SQUEEKY2 sells to me directly, it’s private between us. If Exxcon or GM is soaking me, then it’s price gouging.

LuckyGuy's avatar

I’d only call it price gouging if the buyer needs that item to survive and has no other options: drinking water, food, power, fuel oil.
If the item is not a necessity then more power to you. If you can sell that Goodwill purchased Beanie baby for $500, great!

GloPro's avatar

Do NOT contact my mother about selling your Beanie baby.

Cruiser's avatar

Most time if and when profits of any item begin to exceed 20% it will attract competition and lots of it. So it will be a matter of time before a super large profit margin begins to shrink. As for the car dealership, sourcing parts is not an easy thing to do and the dealer can justify the upcharge in order to support his ability to have a storefront and convenience for the customer.

Hypocrisy_Central's avatar

At it’s core, fair exchange is no robbery.

LuckyGuy's avatar

@GloPro But it’s Quackers! Check out the video Bankrupt By Beanies, on Vimeo.
It’s around 9 minutes long and I’m betting you’ll love it!

Dutchess_III's avatar

I think price gouging happens when you up the price of things that people need. You force them to pay far more than they should and they have no choice.
If the person feels whatever it is is worth $500, it’s simply an awesome profit.
Can I ask specifically what it is? Is it something they could compare prices to on the internet?

Espiritus_Corvus's avatar

The difference is duress. If it can be proven that the buyer was not buying under their own free will, that is, if they were not free of duress, then it is price gouging.

If you are selling five-gallon containers of water that cost you two dollars for $50 each to people in a disaster area that have had no water for two days, then you are gouging. If you sell the same water at the same price to someone who is not under any such duress, then it is not. This is all covered under Introduction to Business Law.

The element of duress nullifies all contracts written or implied—and can lead to criminal charges. Which probably is covered under Introduction to Criminal Law.

RealEyesRealizeRealLies's avatar

Confucius answered one of his disciples on the same question.

Q
“Here I have a fine gemstone given unto me. Shall I hide it away in a casket, and protect it. Or shall I sell it and seek a profit?”

A
“Sell it indeed.”

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