Nicely stated Dave. Just because "loss leader" works in retail does not make it a cure all. Elecraft is not retail by our mainstream standards. It is "sort of" retail, but more likely a "niche" vendor. It cannot be compared to Pepsi, Doritos or any other main stream retail products. That was not my intent.
My point was simply that the poster's comment that a loss leader "could" work was worth a comment. But, that's Wayne's and Eric's call. My business is also a niche business, but becoming more retail every day. I have seen evidence of others in my field using "loss leaders" to promote their business. One guy went nuts and won a huge bid on a "loss leader" price. Then he had to provide the goods for that price and his business tanked. The BOTTOM LINE lies in THE REAL "bottom line". I think Eric and Wayne have done their homework on their product research introductions in the past and we all enjoy the results of their toils. I hope they continue to play off their success. And, I wish them (and US) much success in the future. 73, Terry, W0FM K3 #474 -----Original Message----- From: Dave - AB7E [mailto:[email protected]] Sent: Tuesday, February 09, 2010 7:43 PM To: [email protected]; [email protected]; [email protected]; [email protected] Subject: Re: [Elecraft] On the advisability of selling kit radios Spoken like a true sales guy. In some businesses (including the one I managed for several years before I retired), that is indeed a viable business strategy. But it's a brainless strategy to use indiscriminately, and lots of companies have sunk their ship by not understanding how and when to use it. How many additional K3's do you think Elecraft would sell ("pull-through") because they marketed a high power amplifier? How much additional profit margin do you think Elecraft would make on their other products (overhead dilution and vendor leverage)) because they marketed a power amplifier? How much do you think Elecraft would learn that could be applied toward building even better transceivers because they were building a high power amplifier? Next to nothing in all cases, in my opinion. And, maybe most importantly ... how much sense does it make for your most costly (by far) product to be your loss leader? As I said before, if Elecraft can develop and sell a high power amplifier for a reasonable profit, that's great. Otherwise, I hope they don't try because I'd sure like to see them still be here a few years from now. Dave AB7E ------Original Mail------ From: "Terry Schieler" <[email protected]> To: "'Phil Hystad'" <[email protected]>, "'Conway Yee'" <[email protected]>, <[email protected]> Sent: Tue, 9 Feb 2010 10:11:56 -0600 Subject: Re: [Elecraft] On the advisability of selling kit radios 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 ______________________________________________________________ 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
