Passing savings to consumers

[redhawk979]

So I've seen this a lot as a reason to use Bitcoin or to get merchants to adopt it.

You'll save 2-5% on payment processor fees so you can pass those savings on to the consumer.

Whats the incentive on their part versus just increasing their profit due to decreased processing costs?  The reason I ask is this:

Oil prices are down a decent chunk since for about 6 months now, maybe 20% or so? I'm from NY and gas is averaging ~$2.90 here, down from ~$3.50 a few months back. Prices are cheaper in other states too. So why am I still being charged the same costs to ship packages via FedEx/UPS, or for cab rides? I fly at least once a month for business, but my airfares haven't come down at all either. So these companies are basically paying less for fuel costs but charging me the same amount. I have a feeling when quarterly earning reports are due for them, they'll have a slightly increased profit margin due to saved costs since they're still charging the same amount.

[DannyHamilton]

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Whats the incentive on their part versus just increasing their profit due to decreased processing costs?
- snip -

Competition.

It doesn't happen immediately (initially businesses are typically able to reap short term increases in profits when their costs are reduced).

Over time, if the costs remain low and don't increase, eventually a business will lower their prices to increase their market share over their competition.  This forces the competition to adopt similar cost saving practices so that they can reduce their prices to remain competitive.

[goose20]

I see 3 factors coming into play here - each affecting price in different ways/proportions:

1. Competition - detailed well by dannyhamilton above;
2. Consumer expectations - we get accustomed to a certain price level - no consumer calculates what input costs are; and
3. Other inputs costs may be rising offsetting falling oil costs i.e wages, rents etc.

[pawel7777]

It all depends what market you operate in.

If you're in highly competitive low-margin retail sector (selling exactly same goods as your competitors) sharing your savings with customers could give you a crucial advantage.

But if you're an artist, selling your paintings with large profit margin, giving 1-2% discount wouldn't matter that much. But then again, there's also the PR factor, if you choose to share, you'll be perceived as more genuine and honest merchant and you surely would get more sympathy from bitcoiners.

As for your oil price drop examples. I think the most important reason for that is what goose20 wrote:

 

...
2. Consumer expectations - we get accustomed to a certain price level - no consumer calculates what input costs are; and
...

Also, some businesses (such as UPS/FedEx) simply cannot be too flexible with their pricing. Adjusting prices every week or two would be seen as very unstable and unpredictable by their partners. I'm sure when the opposite happens (oil price goes up) they won't rush with increasing their charges.

[deluxeCITY]

This will hopefully happen over time. Most companies factor in the cost of processing payments in their pricing. When companies realize how much they are saving on bitcoin transactions they will start to give consumers an incentive to use bitcoin by offering a discount that is a portion of the savings

[botany]

Right now, merchants are able to attract bitcoin users just by offering bitcoin as a payment option.
When there is sufficient competition, they will start passing on savings to consumers.

[cyberpinoy]

So I've seen this a lot as a reason to use Bitcoin or to get merchants to adopt it.

You'll save 2-5% on payment processor fees so you can pass those savings on to the consumer.

Whats the incentive on their part versus just increasing their profit due to decreased processing costs?  The reason I ask is this:

Oil prices are down a decent chunk since for about 6 months now, maybe 20% or so? I'm from NY and gas is averaging ~$2.90 here, down from ~$3.50 a few months back. Prices are cheaper in other states too. So why am I still being charged the same costs to ship packages via FedEx/UPS, or for cab rides? I fly at least once a month for business, but my airfares haven't come down at all either. So these companies are basically paying less for fuel costs but charging me the same amount. I have a feeling when quarterly earning reports are due for them, they'll have a slightly increased profit margin due to saved costs since they're still charging the same amount.

the reason you dont see any changes is called ETHICS, and as modern consumer we neither have the time or care to make businesses responsible for their  ethics. Why do you not see a change, because they can!! They Can do whatever they an to you, because boycotting gasoline stations DI NOT WORK, trying to boycott transportation in general, NEVER GOING TO HAPPEN. they do it because they know as consumers YOU WILL DO NOTHING BUT TAKE IT UP THE ASS AND LIKE IT!!! If you give them an inch THEY WILL take a mile

Pure and simple

[iluvpie60]

So I've seen this a lot as a reason to use Bitcoin or to get merchants to adopt it.

You'll save 2-5% on payment processor fees so you can pass those savings on to the consumer.

Whats the incentive on their part versus just increasing their profit due to decreased processing costs?  The reason I ask is this:

Oil prices are down a decent chunk since for about 6 months now, maybe 20% or so? I'm from NY and gas is averaging ~$2.90 here, down from ~$3.50 a few months back. Prices are cheaper in other states too. So why am I still being charged the same costs to ship packages via FedEx/UPS, or for cab rides? I fly at least once a month for business, but my airfares haven't come down at all either. So these companies are basically paying less for fuel costs but charging me the same amount. I have a feeling when quarterly earning reports are due for them, they'll have a slightly increased profit margin due to saved costs since they're still charging the same amount.

I bet you they are sitting on months worth of inventory because they obviously don't want to run out of fuel for their planes. So what price did they buy the fuel at? The price it was months ago. Competition will bring it over time like everything is brought down. Nothing is instant.

[botany]

So I've seen this a lot as a reason to use Bitcoin or to get merchants to adopt it.

You'll save 2-5% on payment processor fees so you can pass those savings on to the consumer.

Whats the incentive on their part versus just increasing their profit due to decreased processing costs?  The reason I ask is this:

Oil prices are down a decent chunk since for about 6 months now, maybe 20% or so? I'm from NY and gas is averaging ~$2.90 here, down from ~$3.50 a few months back. Prices are cheaper in other states too. So why am I still being charged the same costs to ship packages via FedEx/UPS, or for cab rides? I fly at least once a month for business, but my airfares haven't come down at all either. So these companies are basically paying less for fuel costs but charging me the same amount. I have a feeling when quarterly earning reports are due for them, they'll have a slightly increased profit margin due to saved costs since they're still charging the same amount.

I bet you they are sitting on months worth of inventory because they obviously don't want to run out of fuel for their planes. So what price did they buy the fuel at? The price it was months ago. Competition will bring it over time like everything is brought down. Nothing is instant.

They should be looking at marginal profits and not really be worried about what price they bought fuel at.
The write-down of inventory should be factored in immediately.

[redhawk979]

So I've seen this a lot as a reason to use Bitcoin or to get merchants to adopt it.

You'll save 2-5% on payment processor fees so you can pass those savings on to the consumer.

Whats the incentive on their part versus just increasing their profit due to decreased processing costs?  The reason I ask is this:

Oil prices are down a decent chunk since for about 6 months now, maybe 20% or so? I'm from NY and gas is averaging ~$2.90 here, down from ~$3.50 a few months back. Prices are cheaper in other states too. So why am I still being charged the same costs to ship packages via FedEx/UPS, or for cab rides? I fly at least once a month for business, but my airfares haven't come down at all either. So these companies are basically paying less for fuel costs but charging me the same amount. I have a feeling when quarterly earning reports are due for them, they'll have a slightly increased profit margin due to saved costs since they're still charging the same amount.

I bet you they are sitting on months worth of inventory because they obviously don't want to run out of fuel for their planes. So what price did they buy the fuel at? The price it was months ago. Competition will bring it over time like everything is brought down. Nothing is instant.

They should be looking at marginal profits and not really be worried about what price they bought fuel at.
The write-down of inventory should be factored in immediately.

Fuel costs account for a massive expense on their part, why wouldn't they be worried about what price they get fuel for?

[Q7]

It's the same everywhere you go not just at your place. What goes up and never comes down again is basically what inflation is all about and that is exactly what is reflected. For price to come down basically it takes all the sellers to come to a simple agreement to reduce it. If all sellers maintain the same price and demand is still florishing... things might pretend there is nothing happening.

[TheTribesman]

Up like a rocket, down like a feather. That's consumer prices. I like it when the govt forces them to reduce prices. They will NEVER do it voluntarily (they are always forced by govt or market pressures).

Here in the UK, the water board went to the govt with a planned rate increase. The govt told them to get lost and FORCED them to reduce their prices. They have no ethics. They have bank accounts and their own expenses they want to cover. Ethics are collateral damage.