Dead Money – 2
You run a business. You have bought Fifty chairs for $20 each. You price them at $100 each according to the 5/1 ratio.
If you sell Ten chairs you have made back your money and the other Forty chairs are going to be profit.
This means you have some ‘wiggle room’ when you notice that the chairs aren’t moving.
In some cases when a particular item sells well and regularly, one might successfully connect those non-moving chairs to a sale; buy the product which is selling and get the one which is not at a reduced price.
Some businesses will start to reduce the price of the non moving item, in this example, chairs, to get rid of them.
Some businesses will give a free X for every chair purchased. Often these free X are other items which have been collecting dust for a time.
The key feature is to keep in the front of your mind is when a product came into the business, how long it has been there, and how rare or often the sale.