Economics lesson please.

M

manitoba

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OK, supply and demand I suppose is the answer. However, could someone who knows explain to me why less common cartridges are so much more expensive than more common cartridges, even if they are similar in size/materials/labour cost.

Examples -

30-06 for $18, 7mmWSM for 31 (both Federal blue box, both 150gr SP)
.308 for $18, 7mm-08 for $28 (though the -08 has a speer bullet in that case)

So, why does the basic ammo for my swede cost so much more than I think it should?

Thanks.
 
It probably has a lot to do with the volumes involved. They can run 30-06, 308, 223 lines continuosly due to the volume required to fill orders of popular cartridges. They are most likely dedicated machines and are only down for maintenance. less common calibers probably run on machines that need to be set up and run comparativly small amounts. So between labour costs and materials and warehousing it probably adds up. Just my 2 cents.
 
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The correct term is economy of scale. While the material (variable) costs per cartridge are similar for, say, .308 and 7mm-08, the tooling (fixed) costs are the same for either, regardless of how many cartridges are produced. Unit cost for any number of items is:

(Fixed costs + variable costs)/quantity produced

If your fixed costs are constant, but you are able to produce more units, it stands to reason that unit cost will be lower.
 
OK, but is it that much?

TJ - you make a good point, and that is a clear explanation. Thank you. I'm curious, though, if the manufactures really have that much greater cost, or if they pad the difference quite a bit because they can.

I also wonder if there is greater competition in the more popular brands which forces them to be honest.
 
a lot of the price difference is at the store level not the manufactor.if canadian tire buys a millon rounds for all their stores the get a better price than some one buying 20-50 cases.but i have also seen prices go the other way as well.i bought some winchester grey box 222 rem ammo at canadian tire for 20 bucks a box plus taxes,got some from our local gunsmith/mom and pop gun shop.winchester white box for 18 buck taxes in.and got some from a sporting goods store in NB federal blue box for 20 buck plus taxes.the shop with the lowest price does the least amount of sales.usually i have found that the name ammo,federal/rem etc prices tend to run higher than winchester but in some calibers you really do get what you pay for.
 
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