It's known as a "loss leader" Phil. Been around in retail marketing for years. Advertise Pepsi at an unbelievably low price hoping to draw customers into the store that might just pick up some Doritos or other products in that aisle at a decent enough profit margin to keep the bottom line in the black on average. And, it works!
73, Terry, W0FM K3 474 -----Original Message----- From: Phil Hystad [mailto:[email protected]] Sent: Tuesday, February 09, 2010 12:21 AM To: Conway Yee Cc: [email protected] Subject: Re: [Elecraft] On the advisability of selling kit radios I learned a little new thing about Toyota marketing just this week. Toyota of course has been in the news lately with the massive recalls. It was reported that the Toyota Prius Hybrid is subsidized by about $2500 to $3000 by Toyota. That is, the Prius whole sale price to the dealers is a few thousand dollars less then it costs to build. Every Prius car sold is a money loser for Toyota! Toyota is happy with this though (they said so) because it is their front-line product. It is the product that gives them name recognition, the product that brings them Kudos for high-tech achievements, and the product that brings customers through their doors. Thus, a company does not need to make money on a given product to justify its production and sale -- there are other reasons to build products. A smart company will choose the profit margin for each product individually. It is rare for all products to be treated the same. Some will bring in a margin of 40%, others only 5%, and then maybe others, by plan, minus 10%. The Elecraft K3 may have a 30 % margin and maybe the K2, being in production for so long is now about 50 % margin. But, a new solid-state amp may only be 5% or 7% -- enough to make their customers happy without losing money but not earning money like a K3 or a K2 either. phil, K7PEH ______________________________________________________________ Elecraft mailing list Home: http://mailman.qth.net/mailman/listinfo/elecraft Help: http://mailman.qth.net/mmfaq.htm Post: mailto:[email protected] This list hosted by: http://www.qsl.net Please help support this email list: http://www.qsl.net/donate.html
