Sunday, February 21, 2010

Price Theory

(click on image to enlarge)

The usual theory for determining sell price is: costs plus profit equals selling price. This, of course, it is argued, cannot be applied to farm milk price because, as it is said, costs vary so much.

Two other theories, not formally stated, are as much or as little as the traffic will bear.

Retail prices for ice cream seem to seem to be derrived from some chemical formula because they float as if driven by the wind.

One might think the price, since a great deal of cream is used in the product, that butter prices would have a strong correlation. Not so. The correlation to butter is a rediculous .10 - practically nothing.


  1. I haven't seen too many half gallon ice cream boxes lately-haven't most companies down-sized the packaging? Another trick the processors love.

  2. There is no correlation between butter and ice cream because the cream is coming out of Canada. For years a certain popular ice cream company located in New York never used a drop of American cream.

    Go figure.