New product priced far too low to gain credibility?

[Neil McCauley]

Howard,
I don't think we've seen anywhere near the worst of the current financial situation and i'd be inclined to think that any company who has the balls and transparency to reduce their prices must stand a better chance of meeting more custom.
new punters will get a bite of the apple, brand loyalists might remain and the snobs can go and spend their money elsewhere.

I agree that we've not seen the worst. But then again I'm only (like the rest of us) taking a view on what the media feeds us. As for organisations with 'balls' - yes they would - on the face of it - stand a better chance. However I have experienced first hand 'hidden' factors which I can barely comprehend let alone describe which can distort what otherwise might have been a logical outcome to marketing objectives. Regretfully, standards are slipping, aspirations are increasing and greed knows no boundaries.

[Neil McCauley]

I have no idea how lively the high end market is - could you please give me some idea. i always imagine it's footballers who send their P.A to go get them a nice stereo

For me, but I am atypical in the way I communicate with customers, I've had the best 4 months ever. I can offer no credible explanation.

As for footballers and other famous celebrities, my policy was [and remains] always always to quietly screw up the demo. I don't want their business because I don't want the hassle that usually goes with it. I made an exception with Daley Thompson and with Midge Ure. Both gentlemen from the start.

[John]

Its a pity that some people see high costs as meaning high performance and may dismiss a item because of its low costs or may purchase the item due to branding This is what marketing people love but is the death to true value and sometimes even choice

[StanleyB]

7 to 1 is quite a high ratio for people like me. I work off far less than that otherwise I couldn't compete with the direct sellers in China and HK.

[Alex Nikitin]

A insight into how many makers define the retail price of a product might be of interest. Generally, the manufacturing cost per item (sometimes with the R&D cost amortized, or not as the case maybe) is multiplied by say 10, 15 or 21 - or any other number that springs to mind, albeit with one eye open to see where competitor products are sitting in the price band. Thus an audiophile product that retails for say £900 ex VAT might have a base manufacturing cost perhaps as little as £45.

Howard,

My experience at Creek was very different from what you describe. At that time I've calculated that the VAT on the final sale was sometimes more than our profit (before taking R&D into account) . With my current products I have a similar approach to pricing, that means my profit is about 15-20% of the retail price. Perhaps I am following a wrong business model...

Alex

[Neil McCauley]

Its a pity that some people see high costs as meaning high performance and may dismiss a item because of its low costs or may purchase the item due to branding This is what marketing people love but is the death to true value and sometimes even choice

I am certain this happens and i can cite instances. However Marco might go into one if I name names. So you'll have to guess.

[Neil McCauley]

Howard,

My experience at Creek was very different from what you describe. At that time I've calculated that the VAT on the final sale was sometimes more than our profit (before taking R&D into account) . With my current products I have a similar approach to pricing, that means my profit is about 15-20% of the retail price. Perhaps I am following a wrong business model...

Alex

Interesting point. I'm not experienced to comment on your business model of course. Do you sell direct?

[StanleyB]

Perhaps UK sellers have to branch out more and cater a lot better for orders from other European countries. In the last few weeks my level of sales to neighbouring countries has exceeded my UK sales. The weak £ is having a positive effect on my quantity of goods sold, even if margins are lower.

[Neil McCauley]

Perhaps UK sellers have to branch out more and cater a lot better for orders from other European countries. In the last few weeks my level of sales to neighbouring countries has exceeded my UK sales. The weak £ is having a positive effect on my quantity of goods sold, even if margins are lower.

Identical here too!

[Alex Nikitin]

Do you sell direct?

The cheapest model is sold only direct, otherwise I would not be able to make any profit at all . All the rest sold mostly trade and if I sell direct occasionally I would only sell for a full retail price, no discounts.

Alex