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| Overpriced Stuff........ |
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| wilfred:
Price always meets a willingness to pay. Set it too high and either no-one will pay or a competitor will see an opportunity. |
| Smokey:
--- Quote from: coppercone2 on February 06, 2023, 12:08:36 am ---I feel like test equipment is incredibly proportional to scientific progress. In the long term its better if the margins are lower for society IMO, I feel like some people have the idea that its a luxury good... but it leads to game changing scientific breakthroughs.Some things are priced so its like big corporations only, which don't necessarily have the smartest people, or the best intentions. ... --- End quote --- Cutting edge science needs cutting edge test equipment... which itself sometimes needs cutting edge science to make. |
| coppercone2:
--- Quote from: Smokey on February 06, 2023, 03:34:30 am --- --- Quote from: coppercone2 on February 06, 2023, 12:08:36 am ---I feel like test equipment is incredibly proportional to scientific progress. In the long term its better if the margins are lower for society IMO, I feel like some people have the idea that its a luxury good... but it leads to game changing scientific breakthroughs.Some things are priced so its like big corporations only, which don't necessarily have the smartest people, or the best intentions. ... --- End quote --- Cutting edge science needs cutting edge test equipment... which itself sometimes needs cutting edge science to make. --- End quote --- 'well its for the ____ industry, they have deep pockets' i.e. mega overpriced accessories. I think there is some times competition over a unrealistic price region that takes WAY too long to fall down. |
| Berni:
It is hard to prove exactly how much profit is being made on a product For large volume mass produced consumer goods, yes the BOM cost is the main driving factor (like TVs, washing machines..etc). These things heavily recycle R&D between products and whatever R&D cost is spread over massive volumes. The production process is heavily optimized and automated, minimizing the cost of that. So it is really about buying parts, putting them together and getting it out the door as fast and cheaply as possible. This market has a lot of competition so this drives a race to the bottom of making the cheapest product. (This sometimes results in products that are actually too cost cut down even) But when it comes to more specialized products this is completely different. The niche products don't have the market demand for you to be able to sell them in the millions quantities like TVs can. Things like specialized scientific equipment require a lot of expensive R&D to develop and don't sell many units, so the huge cost has to be spread over a small number of products. On top of that the money for the R&D might have come from investors that want to see a return on there investment. The parts might also be very specialized so they might have to keep a sizable stock of them on hand. There are other costs unrelated to production, like having to have a sales team that works directly with costumers, perhaps a servicing team that installs and calibrates the equipment. You also have some critical employees that are experts in that niche field, you need to pay those well to retain them because if they leave you are not finding a replacement anytime soon. Even as the product is sold there is often more R&D going in in terms of software development to improve the product and help it keep up with modern requirements. All these costs coming in from different directions at different times make it very difficult to even calculate the true cost of making a product, let alone formally prove it on paperwork. But safe to say the BOM cost is only a small part of the total price. But yeah sometimes they have a monopoly and can charge whatever they want. Id say retail is taking too much of a profit. They just buy up products from brands and sell them to costumers, yet they have 50 to 100% markups on them. They are taking a really big cut of the pie for how much work they are putting into it. This goes up a lot for specialized stuff that is sold to industry. |
| tooki:
--- Quote from: Berni on February 06, 2023, 07:15:20 am ---Id say retail is taking too much of a profit. They just buy up products from brands and sell them to costumers, yet they have 50 to 100% markups on them. They are taking a really big cut of the pie for how much work they are putting into it. This goes up a lot for specialized stuff that is sold to industry. --- End quote --- (retail veteran here)Well, the margin varies wildly: in groceries it’s typically around 10%. On a computer, typically under 5% markup, which doesn’t even cover costs, so the stores often sell them at a loss, especially on low-end machines. Printers, especially low end models consumers typically buy, are similarly low-margin. On the other hand, the name-brand USB cable they sell you to go with it for $25 cost less than $2 from the distributor. That’s why accessories get pushed so hard with computer sales. In overall retail, wholesale prices are around 40% of the retail price. But it’s hard to claim that retail takes too big of a profit: in retail, you’re paying for convenience, because the store is in a convenient location (=very expensive rent), has staff, and performs money-losing services like customer support, handling returns, etc at that expensive retail location. (Online vendors can do those things at cheap facilities far away from the customer). Also, in malls, stores have to pay the mall a % of sales as a commission (which is why malls love high-revenue stores like Apple) in addition to rent. There’s also loss due to theft and damage (or insurance premiums for insurance against such losses). With that said, since you talk about “sold to industry”, maybe you’re not actually talking about retail, but about distributors. And yeah, they take a cut. But whether that’s bad is debatable, it depends on what value they add. I mean, buying parts in small quantities on Digi-Key, etc. is way more expensive than buying a reel from the manufacturer. But you’re paying for the convenience of being able to buy small amounts of each part, of parts from multiple manufacturers, all in stock at one place, as a consumer or small business that the manufacturers don’t actually want to deal with. And that’s why manufacturers like TI or Analog Devices outsource their own logistics to Digi-Key, mouser, etc. |
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