We are not talking about stages of production. We are talking about a single business.
The price components I am talking about are the costs that a business has which when added together makes up the price.
As an example, the pizza shop again:
If 20% of his costs are due to buying ingredients, and
20% by rent, and
40% by labor, and
20% by utilities.
That's 100% of his costs accounted for.
If the most that any one of these inputs is reduced is by 9%, then the most that his total can drop is 9%. It is not very difficult math.
If the most that any one of these inputs is reduced is by 9%, then the most that his total can drop is 9%. It is not very difficult math.It's the simple logic that confuses them.
This is not germane Rob. It is immaterial. It's not what we're talking about. It's not related to the nrst.
We're talking about whether or not a savings of 9% at each stage of production leads to a total savings of a higher percentage. It does.
For a 9% drop to occur, each component in your example would have to drop 9%.
And in a service business (one stage), tax costs are higher.