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I thought that markup was implicitly accepted in blog. I of course do not think that the price should be just the cost of the parts. In fact, I did mention that

by chewxy 13y ago

I thought that markup was implicitly accepted in blog. I of course do not think that the price should be just the cost of the parts. In fact, I did mention that the fact that both $10 kettles and $39 kettles exist implies that there is some form of price discrimination. The difference in price is the additional markup that the manufacturer can get away with. As I mentioned, my marginal utility does not increase with the markup - a $39 kettle gives me the same utility as a $10 kettle. As for 100,000 units, yeah, that was probably a mistake. Australia only has 22 million people. No idea why I arbitrarily picked 100,000.

vacri 13y ago
Yeah, I read through in more detail and saw that lurking towards the end. Just came back to edit, perhaps delete the comment but it's already replied-to. :) The costings at the end are off. Testing is much less that $5/unit for these kind of things, for example. Usually you'll have a common testbench across all products - it'll be much lower per unit, and not tied to a particular model. Also, retailers aren't the only ones in the pricing process - as I say above, wholesalers/distributors and transport also get figured into the cost. It all adds up. Marketing costs are mostly borne by the retailer portion of the price, as the wholesale channel marketing is much more limited and cost-effective (no tv or radio spots, print one catalogue and you're fine for a quarter/year, run a more niche website only for retailers, etc) The Australia-limited market thing is less of an issue - a kettle will have a market wider than this. But kettles generally last a long time, and there are hundreds of models out there. Though to honest, after a friend's horror story of one day finding a cockroach in her kettle that had been boiled white, I'm much keener on glass kettles now...
gojomo 13y ago
Same utility? Not if you fear your $10 plastic kettle so much that, after a single circuit-breaker throw, you have to discard it! Never mind the $39 kettle. Totaled over ten years, the $150 kettle's seemingly-tiny advantages in reliability, capacity, features, and style over the $10 kettle can be worth way more than its $140 price premium.

by chewxy 13y ago

vacri 13y ago

Yeah, I read through in more detail and saw that lurking towards the end. Just came back to edit, perhaps delete the comment but it's already replied-to. :) The costings at the end are off. Testing is much less that $5/unit for these kind of things, for example. Usually you'll have a common testbench across all products - it'll be much lower per unit, and not tied to a particular model. Also, retailers aren't the only ones in the pricing process - as I say above, wholesalers/distributors and transport also get figured into the cost. It all adds up. Marketing costs are mostly borne by the retailer portion of the price, as the wholesale channel marketing is much more limited and cost-effective (no tv or radio spots, print one catalogue and you're fine for a quarter/year, run a more niche website only for retailers, etc) The Australia-limited market thing is less of an issue - a kettle will have a market wider than this. But kettles generally last a long time, and there are hundreds of models out there. Though to honest, after a friend's horror story of one day finding a cockroach in her kettle that had been boiled white, I'm much keener on glass kettles now...

gojomo 13y ago

Same utility? Not if you fear your $10 plastic kettle so much that, after a single circuit-breaker throw, you have to discard it! Never mind the $39 kettle. Totaled over ten years, the $150 kettle's seemingly-tiny advantages in reliability, capacity, features, and style over the $10 kettle can be worth way more than its $140 price premium.