[Elecraft] Price increase in mid Sept.

[Tony Estep]

On Thu, Aug 16, 2012 at 8:32 PM, N5GE <Lists at n5ge.com> wrote:

> ...You cannot buy a rig directly from the giant rig manufacturers. ...

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This has nothing  to do with the original point, which was the perfectly
true observation that the price of some radios comes down over time. It is
probably correct, as was conjectured in the first post, that the marginal
cost of production declines as the company goes up the learning curve with
its tooling, etc., and perhaps order quantities can be managed more
cost-effectively as well. These gains may be passed along in the form of
price decreases. Moreover, there is the very real possibility that a new
design may have a premium value when it first hits the market, and that
premium may decline over time. This is very familiar in the semiconductor
business, where chip makers actually post future price curves showing
planned declines.

But if production costs are mainly a function of components whose costs
rise over time, the manufacturer has no cost savings to pass on, and in
fact may have to raise prices to maintain margins.

In the final analysis, price is a function not only of costs and desired
margins, but of demand. In particular, if a manufacturer is selling all he
can make of some item, and there is an order backlog, then clearly the
price is satisfactory to customers. The most relevant considerations to a
consumer of any product are performance, suitability, and competitive
alternatives. Some manufacturers earn dazzling margins, but are able to
sell all the gadgets they can make; others can't sell their products even
at prices at or below manufacturing cost. The price declines seen in
certain sectors of the ham market may simply be a reaction to dwindling
demand. In all cases,
the discipline of the market is a lot better way to set prices than
someone's impressionistic hunch.

Tony KT0NY


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