Supply And Demand
vraiblonde said:
Which leads to my question:
WHY does the price of stuff go up? Yes, I know how it works - COGS goes up, so prices go up, so wages go up, etc, etc. But why? Why can't stuff be the same price as they were in the 50's?
How does inflation work? Someone school me in simple language so I don't have to explode my brain trying to get a google education.
EXAMPLE: The amount of server space available to you is in balance. There's not too much, nor too little, IE it makes business sense for you at it's current cost. Call this, server costs, 'A' or think of it as gas price per gallon.
You're paying for what you need and what you need is available in amounts that the market is happy with. This includes the guys who make servers. The people who supply them with the parts and the guys who house and service your servers.
Your server space demand goes up some every year as does everyone elses, worldwide, according to your plans and customers demands and demand in a nation that is growing a bit better than predicted is using even a bit more, China. In a perfect world, all this growth is accounted for in the future plans of the server supply chain so as not to cause disruption of the market. What if your business is growing a bit better than you'd planed? What if everyones is? Ah, the symptoms of a healthy economy.
Well, we find that the guys who put together the servers had not planned aggressively enough for future growth. There is plenty of parts and supplies but the demand for new servers is running 5% ahead of production.
Everyone who had planned on using more server space is screaming bloody murder that their order get filled; their business depends on it. So, somebody is willing to pay a bit more to make sure they get theirs on time. The next guy is willing to pay a bit more. The next guy HAS to or he won't even, figuratively speaking, be able to get to work. And so on.
Imagine that there is something special about putting servers together, some final process that can't just be sped up in short order. Call this the 'refinery' stage. Whatever the conditions, the point is you simply can not just go faster
and it will take years to add to that capacity.
In the mean time, the parts are there, the service is there, the end user is there, all tapping their fingers, waiting, figuring new ways to compete, to be able to afford the higher cost associated with the artificial slowdown in the supply of servers and thus server space.
Is there another way? Is it cheaper? Will the problem be fixed before we initiate this new way? Can we cut costs here? raise prices there?
So, server space price has caused a ripple because business is reacting to the problem. Will this inflate some prices? Drive others down? What about down stream from those price increases and/or decreases?
Depending on how balanced out the economy is all the way through, from labor, to transportation to marketing and so on, things may vary.
To oil:
There is plenty of oil but global refinery capacity has maxed out. China's economy is growing as is ours as is the worlds. Demand for gasoline has out paced supply at the pump. The supply is chasing the higher dollars that a competitive market is wiling to pay to make sure they get theirs, on time and in the amount needed.
Most electricity is provided by coal which is cheap and plentiful. As it is not winter yet, the real pinch is being felt at the pump BUT it is spread out over ALL of us. If you drive 25,000 miles a year and you get 20 mpg, using 1,250 gallons of gas at about $1 more per gallon, you're spending an extra $1,250 a year which is real money BUT it's only about $.50 an hour in wages to cancel it out, call it $.75 to allow for taxes.
Anyone not getting a $.75 raise this year? You gonna ride a moped to save $1,000 or so?
I hope I'm posting this in the right section...
Will this be before or after you throw pee on Angelina Jolie?
...nevermind.
