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"Usually ,in electronics products are priced around 3.5x of their components costs, with most of the cost difference going towards marketing and offline retaile
by jusben1369 13y ago
"Usually ,in electronics products are priced around 3.5x of their components costs, with most of the cost difference going towards marketing and offline retailers"
- That's a tad inaccurate. The cost of components is just one cost the manufacturer has. You've forgotten all the other costs around labor, overhead, sales and marketing, storing and moving product. THEN that manufacturer needs to actually post a profit and thus sell the good at a higher price than the costs of its components and sales and marketing/G&A etc.
I think Google's online model only with no advertising would be a cheaper go to market than the traditional way. But no where near the degree you imply. To the point, that isn't responsible for the price difference alone. This phone was being subsidized.
- hershel 13y agoAFAIK, motorola does make a small profit over the moto-g.They're not subsidizing it. And online only without marketing can offer 35%+ decrease in price, which fits my comment.
- jusben1369 13y agoIt doesn't fit it at all Hershel. 35% makes a lot of sense relative to sales and marketing and channel costs. 3.5X the price of components with most of that being made up in marketing and offline retailer costs is a completely different statement.
- hershel 13y ago35% is half of what's left after cost of components. i consider 51%(35%+) as most.
- hershel 13y agoI think i missed something. I just looked at the book "from concept to consumer" and they give an example of a real product that sold at retail for $50(went to retailer through a distributor) while the manufacturer got only $19 ,i.e. 38%. If it was online only, it could go for half the price , while offering 24% margin($6) for online sale and logistics(excluding shipping), which i believe is pretty reasonable for that market.