sterckxe
Posts: 4605
Joined: 3/30/2004
From: Flanders
Status: offline
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quote:
ORIGINAL: Monkeys Brain
I already did Marc.
Ok, because it's you and because I've got some time to kill while monitoring a massive database update I'm going to tell you a true story that maybe helps to get the "sweet spot" concept across - don't worry, I won't charge you for this 
Some years ago we were in London doing some X-Mas shopping when we came across a milk foaming thingamagick that was all the rage and every store had them - as both my father in law and my brother in law are heavy cappuccino drinkers it was the perfect gift for them and at 17 GBP (around $30) the price was just right too.
The gifts were well received and in use to this date, but the thing is that 6 months later we came across the exact same device in a local store for $1.99
Did we feel cheated ?
Nope - the distributor of that device had correctly determined that in order to maximize his sales he couldn't sell it too cheap, because nobody would think it would make a good X-Mas present at $1.99 or charge too much for it and not sell any at all. No, he correctly determined the sweet spot to be at 17 GBP which placed it right there in the price range most people would consider "just right".
To recap : price setting has little to do with production costs, but is almost purely based on the seller trying to optimize his income. If he's correct in his sweet spot determination and #sales * price is higher than his production cost he makes a profit, if not he'll have to either bring down his production cost, either lower (price elasticity) or increase (margin) his price or just stop producing and selling the stuff. That's it - no other options available.
Everyone who complains about a price setting has to convince the seller of this crucial factor : that he'll make more money after lowering his prices, because increased sales numbers will make up for the lower margin. You might be able to make that case for wargames that have been on the market for a number of years, but it'll take some doing for new games.
Now, that said, Matrix also has price elasticity data as they regularly have a sale in which they temporarily reduce the price for wargames that have been around for a couple of years. Since we're not seeing a permanent price reduction for titles that have been on the market for a rather long time we can only conclude that sales for older titles haven't dropped to zero and that a permanent price reduction for some titles is not on the table ... yet. There are psychological aspects too - permanently lower your prices after some time and a lot of wargamers might adopt the "wait for the price to come down" posture.
Now, all of the above is not rocket science - even an illiterate street vendor practices these principles - yet it's something a lot of those complaining about "the price" do not seem to grasp : that yelling "your price is too high" to an ice-cream vendor who's busy serving a long line of customers has zero effect, not on him and not on his customers, but that you might be able to make your case when you observe he's not selling anything.
Greetz,
Eddy Sterckx
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