41570Re: Will V-CUBES go out of business?
- Jul 1, 2008Bart's ideas about profit margin and opportunity cost are
I spoke to my buddy who owns an injection molding plant in Honeyee
Falls, NY about it. I was going to see if he could produce
a "Pentultimate" a while back.
He told me, that having the mold produced is VERY expensive,
hundreds of thousands of dollars.
Back to Bart's point, the giant profit margin holds up only if you
look at "marginal cost" (the cost to produce one more puzzle). If I
had to guess, I would say, V-CUBES probably has a million dollars
invested in the 6x6 and 7x7 project.
Since V-CUBES probably has HUGE fixed/sunk costs. The AVRAGE cost
of producing a V-CUBE is huge for the 1st production run. The
cubes probably cost $1,000 / each average cost.
I don't think their markup or profit margin matters. Since V-CUBES
has the only 6x6 and 7x7 on the market, they are probably using the
profit maximizing formula for a monopoly (marginal cost = marginal
revenue = half the slope of the demand curve).
Since they are a monopoly, the price will be determined ONLY by the
demand. Their profit margin makes no difference.
--- In firstname.lastname@example.org, Bart <banaticus@...>
> Who cares, I don't buy their products either. ;) Making a x2 or x3
> profit, a lot of companies do that. But this is cheap plastic*
> talking about. It's literally extruded from a machine. At $80 apop,
> that's got to be like a x1000 markup or something. Maybe only afew
> hundred times markup and profit, but still, that's a heck of amarkup.
> A company that wants to make that much profit off of me really
> doesn't deserve my business. So I'm waiting until the price comes
> down to something approaching reasonable.
> *Noting that this isn't food grade plastic and doesn't need to be
> since we aren't trying to store water inside for months on end and
> that otherwise there isn't a cheap/quality plastic dichotomy, just
> thick and thin.
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