How do you know what he was charged? That, if I remember correctly, is how a business decides what to charge for their product.
That is NOT how retailers decide what to charge for a product. They charge what they think they can get away with charging. Sometimes it is not much more than the wholesale cost of the item. Sometimes the markup is EXTREME. Sometimes, they actually sell a product for LESS than they paid the manufacturer for it!
I know all of this because I was, long ago, the assistant manager of a store belonging to one of the world's largest drugstore chains. Here are some examples:
Glucosamine is a popular 'dietary supplement.' Its a pill that is claimed to help with pain from arthritis, though there's little or no scientific evidence that it does anything but drain people's wallets. It is quite expensive.
Our company sold several brands of Glucosamine, including a store-brand. The leading brand-name was called Osteo Bi Flex. Its come down in price since then (15 yrs ago), but back we sold a bottle of 40 pills for $45. The wholesale cost was $39. We didn't make a lot of money from each sale.
The store brand version sold for a lot less. $35 retail. The wholesale cost was just $3 a bottle! The markup on the store brand was extreme.
The problem for me was that a lot of elderly people struggling to survive on Social Security, often with no other income, and suffering from terrible joint pain, would come in and agonize over whether they should buy this stuff, instead of eating properly. I'd say no, but these people were so desperate for ANYTHING that would help them with their arthritis pain.
The store brand was a better deal, but even that was too expensive for many of them. If the company I worked for had based the price of their store-brand Glucosamine on the cost they paid for it, they could have sold it for much, much less. They didn't, because that's not how retailers price things. They priced it at a level that made it look like an incredible deal for the customer.
We sold stuff for less than we paid for them too. An example was the four-packs of Kodak and Fuji color print films. We sold them ridiculously cheap. At the time, a 4-pack of Fuji 200 was selling for about $5, and the wholesale was $9. Why did we sell it SO far below our cost?
One word: Photofinishing. We had a one-hour lab in the store, and we also had a lower-price next-day service for film developing. The markup on film processing was extremely high. If we could get a customer in the door for the underpriced film, we had a good change of getting them to come back for overpriced developing, and we made a good profit in the deal!
To recap: wholesale cost of goods has almost nothing to do with retail pricing. Retailers charge the highest prices they think they can get away with, though sometimes they sell at a loss to get customers in the door to buy something with a higher profit margin.
