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Re: pricing

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On 31/03/2017 01:34, krw@notreal.com wrote:
> On Thu, 30 Mar 2017 17:03:15 +0100, Martin Brown
> <'''newspam'''@nezumi.demon.co.uk> wrote:
>
>> On 30/03/2017 16:47, Piotr Wyderski wrote:
>>> John Larkin wrote:
>>>
>>>> I give up. If they don't want to sell stuff, that's OK with me.
>>>
>>> If somebody is shy about their prices, there usually is a good reason
>>> for that.
>>
>> It is a common misconception that everything is based on materials cost
>> plus pricing, but things are often priced on what the market will stand
>> and how few alternatives are available. De facto not quite monopolies.
>
> Absolutely.  I have FAEs fighting this battle with their marketing
> people all the time - "At $x we can sell zero volume but at $x/n we
> can sell millions - can we sell the part for $x/n and still make
> money?"

FAE's ?

The scientific instrument company I worked for would not put anything 
into production unless the raw BOM cost was under 25% of selling price. 
This led to insane late stage cost cutting to shave off pennies to hit 
the rigid budget target (like switch stainless nuts and bolts for mild 
steel which quickly rusts and using a lower grade powder coat finish). 
It is actually a damn good heuristic for relatively low volume high end 
kit in a fast moving market but they applied it far too rigidly.

There was a story I was taught about this pricing distinction. Two or 
three major players shared all major contracts to supply cleaning 
products. A new start-up came in that hadn't done their market research 
properly and bid at materials plus 30% profit margin costing - 
undercutting all the existing players by about a factor of three. The 
won almost all of the contracts but didn't survive for very long.

The market encumbents took it in turns to corner the market in the key 
ingredients so that the newcomer could not make enough finished product 
to fulfil the contracts they had won. They quickly went bust.

A variant of this trick is how Pilkington/Chance wiped out all other 
competition in the UK window glass market during the Victorian era.
(you only have to corner the market in one key ingredient)

-- 
Regards,
Martin Brown

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pricing John Larkin <jjlarkin@highlandtechnology.com> - 2017-03-28 08:59 -0700
  Re: pricing Taxed and Spent <nospamplease@nonospam.com> - 2017-03-28 09:11 -0700
  Re: pricing Lasse Langwadt Christensen <langwadt@fonz.dk> - 2017-03-28 09:34 -0700
  Re: pricing Tim Wescott <tim@seemywebsite.com> - 2017-03-28 12:05 -0500
    Re: pricing Phil Hobbs <pcdhSpamMeSenseless@electrooptical.net> - 2017-03-28 14:52 -0400
    Re: pricing David Brown <david.brown@hesbynett.no> - 2017-03-29 10:54 +0200
  Re: pricing Tim Wescott <tim@seemywebsite.com> - 2017-03-28 12:14 -0500
    Re: pricing bitrex <bitrex@de.lete.earthlink.net> - 2017-03-28 16:01 -0400
  Re: pricing Tom Gardner <spamjunk@blueyonder.co.uk> - 2017-03-28 18:19 +0100
  Re: pricing tabbypurr@gmail.com - 2017-03-28 11:58 -0700
  pricing klaus.kragelund@gmail.com - 2017-03-28 12:02 -0700
    Re: pricing John Robertson <spam@flippers.com> - 2017-03-28 12:24 -0700
    Re: pricing John Larkin <jjlarkinxyxy@highlandtechnology.com> - 2017-03-28 13:06 -0700
      Re: pricing Klaus Kragelund <klauskvik@hotmail.com> - 2017-03-28 14:15 -0700
        Re: pricing Klaus Kragelund <klauskvik@hotmail.com> - 2017-03-28 14:18 -0700
        Re: pricing John Larkin <jjlarkinxyxy@highlandtechnology.com> - 2017-03-28 15:44 -0700
          Re: pricing krw@notreal.com - 2017-03-28 22:39 -0400
            Re: pricing Piotr Wyderski <peter.pan@neverland.mil> - 2017-03-30 17:53 +0200
              Re: pricing Lasse Langwadt Christensen <langwadt@fonz.dk> - 2017-03-30 09:12 -0700
                Re: pricing krw@notreal.com - 2017-03-30 20:29 -0400
                Re: pricing Lasse Langwadt Christensen <langwadt@fonz.dk> - 2017-03-30 17:57 -0700
                Re: pricing krw@notreal.com - 2017-03-30 21:11 -0400
                Re: pricing bill.sloman@ieee.org - 2017-03-30 19:36 -0700
                Re: pricing Piotr Wyderski <peter.pan@neverland.mil> - 2017-03-31 08:32 +0200
                Re: pricing John Devereux <john@devereux.me.uk> - 2017-03-31 08:36 +0100
                Re: pricing Piotr Wyderski <peter.pan@neverland.mil> - 2017-03-31 09:57 +0200
                Re: pricing John Devereux <john@devereux.me.uk> - 2017-03-31 09:42 +0100
                Re: pricing rickman <gnuarm@gmail.com> - 2017-03-31 05:30 -0400
                Re: pricing John Devereux <john@devereux.me.uk> - 2017-03-31 12:04 +0100
                Re: pricing Lasse Langwadt Christensen <langwadt@fonz.dk> - 2017-03-31 10:36 -0700
              Re: pricing krw@notreal.com - 2017-03-30 20:28 -0400
                Re: pricing Piotr Wyderski <peter.pan@neverland.mil> - 2017-03-31 08:41 +0200
                Re: pricing krw@notreal.com - 2017-03-31 20:20 -0400
    Re: pricing Larry Sheldon <lfsheldon@gmail.com> - 2017-03-28 21:21 -0500
  Re: pricing Don Y <blockedofcourse@foo.invalid> - 2017-03-28 12:39 -0700
  Re: pricing doh@yipee.com - 2017-03-29 12:31 -0700
  Re: pricing Piotr Wyderski <peter.pan@neverland.mil> - 2017-03-30 17:47 +0200
    Re: pricing Martin Brown <'''newspam'''@nezumi.demon.co.uk> - 2017-03-30 17:03 +0100
      Re: pricing krw@notreal.com - 2017-03-30 20:34 -0400
        Re: pricing Martin Brown <'''newspam'''@nezumi.demon.co.uk> - 2017-03-31 09:20 +0100
          Re: pricing krw@notreal.com - 2017-03-31 20:25 -0400
      Re: pricing bill.sloman@ieee.org - 2017-03-30 19:47 -0700
        Re: pricing rickman <gnuarm@gmail.com> - 2017-03-30 23:45 -0400
          Re: pricing bill.sloman@ieee.org - 2017-03-30 21:45 -0700
            Re: pricing Clifford Heath <no.spam@please.net> - 2017-03-31 15:55 +1100
            Re: pricing rickman <gnuarm@gmail.com> - 2017-03-31 01:30 -0400
              Re: pricing krw@notreal.com - 2017-03-31 22:30 -0400
          Re: pricing Clifford Heath <no.spam@please.net> - 2017-03-30 16:07 +1100
            Re: pricing Piotr Wyderski <peter.pan@neverland.mil> - 2017-03-31 10:11 +0200
            Re: pricing Tom Gardner <spamjunk@blueyonder.co.uk> - 2017-03-31 10:20 +0100
              Re: pricing Jasen Betts <jasen@xnet.co.nz> - 2017-03-31 20:41 +0000
            Re: pricing krw@notreal.com - 2017-03-31 22:27 -0400
              Re: pricing Clifford Heath <no.spam@please.net> - 2017-04-01 14:30 +1100
                Re: pricing krw@notreal.com - 2017-03-31 23:43 -0400
                Re: pricing Clifford Heath <no.spam@please.net> - 2017-04-01 18:15 +1100
                Re: pricing krw@notreal.com - 2017-04-01 09:46 -0400
          Re: pricing "Michael A. Terrell" <mike.terrell@earthlink.net> - 2017-04-03 01:32 -0400
            Re: pricing krw@notreal.com - 2017-04-03 12:55 -0400
        Re: pricing Piotr Wyderski <peter.pan@neverland.mil> - 2017-03-31 10:05 +0200
          Re: pricing Tom Gardner <spamjunk@blueyonder.co.uk> - 2017-03-31 10:21 +0100
            Re: pricing krw@notreal.com - 2017-03-31 22:31 -0400
          Re: pricing Martin Brown <'''newspam'''@nezumi.demon.co.uk> - 2017-04-01 09:10 +0100
  Re: pricing Cydrome Leader <presence@MUNGEpanix.com> - 2017-03-31 00:21 +0000

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