I agree that if it happens at all, using higher prices for status, it would be an increase by a small margin. I think one of the main things companies look at to determine prices, is they look at comparable product prices already on the market for similar items. When I took economics in college…in the moments I was paying attention anyway there was some interesting discussion about this.
For example, if we set the price range for a plastic yo-yo, from $5 (Duncan Butterfly) up to $75 (delrin?), a company has to ask themselves questions. For example, they have to ask what other products are “most similar” to theirs. If I determined that the closest products to my Delrin yo-yo in material and manufacturing costs, are the Volume (high), Halo (midrange), and Sun (low), I might approach it this way:
Hmmm…my product is also a Delrin like the other three, but it plays better than the Sun, yet costs less to make than a Volume, so…I think it is most similar to a Halo, which is selling for $60. Therefore, I am sure mine will sell at $60 and compete in the same market with the Halo. In fact, I think due to the shape and size people will prefer mine over the Halo.
Now, I’m just using those yo-yos as examples for the thought process. But, one must consider the profit margin as well as the prices of competing yo-yos. Every $100 yo-yo is competing with every yo-yo in general, but especially in direct competition with throws similarly priced at $100. The competition within that spectrum has nothing to do with price…as they all cost $100. Now, the selection of the buyer is based on “preferences.”
For example, you can buy Kellogg’s Raisin Bran, or Post Raisin Bran, but at the end of the day, while they are priced about the same, buyers are choosing one or the other based on “preference.” Some people just prefer one brand in general over the other (been buying Kellogg’s for years), while to others the preference is not a brand specific preference, they realized one has more raisins than the other. The Post cereal might have crispier flakes and less sugar…others might prefer that.
So, same with yo-yos. A $100 One Drop and a $100 YoyoFactory will sell not only due to what the yo-yo offers, but some people will choose one over the other just due to the brand. Nothing wrong with it either way…just how it works. One person might be a loyal One Drop fan and buy the One Drop, while another person likes the fact that YoyoFactory includes extra response or a multitool with the yo-yo, so they will spend their $100 on that. For others…they just like the looks of one yo-yo over the other and none of that dictates.
In prior discussions about this on the forum about prices, I’ve seen people discussing the cost of making the actual yo-yo. I hear nothing about the yo-yo company’s office bills, staff salaries, promotional items, cost to mail yo-yos to and from anodizing and to stores, the cost of packing material, boxes, artwork, web hosting, airfare for team members…taxes. But not only considering all that, they have to look at what other yo-yos are similar on the market. These prices are usually carefully dialed in. The price is dialed in just right so the yo-yos are not sold too cheaply when more money could be made. But, it is also a mistake to price a yo-yo too high, and have it sit on the shelf and turn people off. How many times have you seen that happen?
If I were in the shoes of a manufacturer, I would rather price a tad too high and drop the price a bit if necessary (but do it sooner), rather than price the yo-yo too low and raise the price when it starts to sell. People get really angry when you start off low and raise prices, but they are usually more happy to see a small price drop. As a business, I would approach it that way.
I like the title of this thread…feel like I’m back in college or something. Nice thread.