Don_DickleIf someone opened a store and just sold stuff at cost, which undercuts every other competitors by alot. Would this not for the big corps to come way down on their prices?
I often though about if for some reason I had a lot of money if I should try to make common things and sell at low margins over a charity setup. Like target 1% above inflation for the companies profit when targetting the price of the items.
This was basically the concept behind Cost Plus Drugs. Mark Cuban realized he could sell generic drugs at a basic 15% markup and $10 pharmacy+shipping, and drastically undercut the competition. Their drug prices literally list the breakdown of manufacturing cost, 15% markup, $5 pharmacy labor, and the $5 shipping on each page.
He has been blunt that the business isn’t really about lowering drug prices. That is certainly a bonus, but he’s not doing it to be magnanimous. He simply realized that the markup on drug prices was so mind-bogglingly absurd (oftentimes over 2500% markup) that he could undercut the market by thousands of dollars and still make a tidy 15% profit.
Patient drug prices in the US are insane, and he is simply exploiting that fact to undercut everyone else on the market.
He simply realized that the markup on drug prices was so mind-bogglingly absurd (oftentimes over 2500% markup) that he could undercut the market by thousands of dollars and still make a tidy 15% profit.
When the libertarians tell you fan fiction about the “invisible hand of the free market,” this is what they mean. And the fact that it took this long for someone like Cuban to come along should tell you how viable a strategy it is.