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Economic Illiteracy
Mar. 26th, 2008 11:02 amI am dealing with an economic illiterate today. Eventually I will get tired of it and stop answering. After all, it's like teaching a pig to sing.
Specifically, the discussion was over variable and fixed costs of a convention membership. Variable costs are those that directly vary with the membership. You sell more memberships, you need more program books. Fixed costs are those that don't change, or don't change much within the range of anticipated attendance. The cost of renting your function space is fixed unless your membership count changes radically. The cost of annual filing fees for your non-profit corporation are fixed no matter what.
I responded to someone who started getting into fine-grain discussion of how much per member (in variable costs) computers for registration or other pieces of the convention cost. You're misleading yourself if you pretend that such fixed costs are variable. If you sell one more membership, you do not go buy twenty-five cents' worth of computers.
Anything in excess of the variable cost of servicing a membership goes toward paying the fixed overhead costs. That's elementary business economics. Trying somehow "allocate" overhead so that ever member is responsible for renting 1.37 folding chairs is a foolish exercise.
Specifically, the discussion was over variable and fixed costs of a convention membership. Variable costs are those that directly vary with the membership. You sell more memberships, you need more program books. Fixed costs are those that don't change, or don't change much within the range of anticipated attendance. The cost of renting your function space is fixed unless your membership count changes radically. The cost of annual filing fees for your non-profit corporation are fixed no matter what.
I responded to someone who started getting into fine-grain discussion of how much per member (in variable costs) computers for registration or other pieces of the convention cost. You're misleading yourself if you pretend that such fixed costs are variable. If you sell one more membership, you do not go buy twenty-five cents' worth of computers.
Anything in excess of the variable cost of servicing a membership goes toward paying the fixed overhead costs. That's elementary business economics. Trying somehow "allocate" overhead so that ever member is responsible for renting 1.37 folding chairs is a foolish exercise.
