Jan 9, 2006, 10:41 AM
Post #1 of 15
"Deluxe Foam Backpad" on V3 Micron
So maybe I'm missing something, but I looked deep into the back of my container through the top of where the Cypres sits and I saw what I think is the "deluxe foam backpad" that I paid SEVENTY FIVE dollars for. Turns out its a 1/4 inch sheet of foam. Am I missing something here?
Why call it deluxe than? Why not say what it is? I don't find an accurate description of it on their options guide, any reason? I'm happy with the rig, just thought it was curious they are selling a piece of foam to me for $75, why not make it standard?
just thought it was curious they are selling a piece of foam to me for $75
You aren't paying for just the piece of foam. You're also paying for the labor involved in cutting the foam and sewing it in/on, the equipment needed to cut and sew it, perhaps the R&D involved in figuring out how to pad a backpad in a way that doesn't interfere with the function of the rig and - such a dirty word this is - maybe even a buck or two in profit for the company.
In reply to:
why not make it standard?
Because not everybody wants it? Because if it were included "standard" then the base price would have to go up and the manufacturer doesn't want to raise the base price? Because it may be a pain in the butt to cut/sew and the manufacturer doesn't want to have to do it on every rig?
Heh, alright, I'm done with my own thread here...I think I made the point I was trying to make. I expect a premium product when I pay a premium price. I'm not bickering over $75, just that I expected something else.
They are entitled to make a profit, but for $75, I would expect a piece of foam that actually makes the rig more comfortable. I'm more than happy to pay extra for comfort...
I paid $100 for the spacer foam backpad on my Odyssey and it is worth every penny! I think Aerodyne offers pretty much the same thing. Others I've seen I don't think are worth the extra $$. Just my opinion though.
Because then the base price would be $75 more, and your rig wouldn't be special. The special factor has got to be worth something.
It's not as simple as that. Options have an important place in some economics theory: discriminatory pricing. Some people want a container and they don't have a lot of money. Other people want a container and they do have a lot of money. Perhaps they have so much money that they aren't as worried about paying more money, if they can get a higher quality product - and "quality" has a lot of definitions.
If containers have only one price, then for the seller to pick the point on the price/quantity graph to maximize revenue (for a competitive market; oligopoly and monopoly markets are different) is easy but inefficient; the price/quantity curve is roughly a diagonal line and the revenue of any price point is roughly a box, leaving two triangles of unrealized revenue: people who won't buy because the product is too expensive, and people who happily bought but would have paid more and still bought.
Ideally, the seller would figure out how much each buyer will pay and sell the product to each buyer for that unique price. There are some obvious problems here, one of which is that people get upset when they learn what someone else paid for something and it's less. Another problem is actually determining what someone will pay.
One way around this is to have multiple models that do basically the same thing, but have different prices, and let the consumer choose how much they want to pay. Some people will pay more because they perceive they're getting something for their money, and depending on how they value their money, they may be willing to trade a lot of money for the increased quality they perceive.
But for some products, having multiple totally different models has prohibitive production costs (e.g. a new TSO for each one). Enter options.
In order for options to make a single product with a relatively fixed production cost [footnote 1] span a large price range, the options have to be priced much higher than their actual cost.
This is why getting power windows and door locks on a car, from the factory, can cost $3,000 or more. And to many people, it's well worth it, even if it only cost $500 more for the factory to put it in (and the company to market it, and the engineers to invent and support it, and the dealers to recall and repair it, etc.).
From personal experience I know there are many people who think paying $75 to have someone at the factory spend $15 worth of labor to cut and sew $2 worth of foam into a $2,000 product to make it feel slightly more comfortable with zero degradation in beauty is a great deal.
As an aside, if people are selling containers to intentionally make zero profit, and they aren't concerned about satisfying everyone who wants one and can only pay the cost of the cheapest container[footnote 2], then they can sell options at cost.
footnote 1: a relatively fixed production cost per unit is assumed because price/quantity/revenue graphs used for prediction typically relate to a single short-term average production cost curve which represents things like workforce, space, and tooling management. If individual units can cause a varying movement along the short-term production cost curve, then determining marginal profit on the graph would be impossible because it would become a function of great complexity. (The cost to make one unit would depend not on the number of units already made, but on the cost of the options of this unit plus the cost of making every unit already made - and all those units may have had options, too....)
footnote 2: I assume that the community of container buyers is large and varied enough that diseconomies of scale and variation in short-term production costs will necessarily mean that containers could probably never be produced for the absolute minimum possible per-container cost, even if the manufacturers wished to make no profit (of either type) overall or on any individual container - i.e. if the manufacturers were complete charities.