Some questions about prices.


#1

André, I have always questioned how the prices of yo-yo’s and yo-yo gear re decided on.

I know that material and size has something to do with it and also what kind of bearing it has, but I’m pretty sure there is more to that than those things. Help me out?

~Spin On!


(J. Lev) #2

I’m not André, but I can offer an answer.

The major cost of a yoyo comes from research and development. Finding good ways to balance weight, best options for speed, materials, response, and playability. Then there’s all the testing that needs to be done, as well as changes, cost of materials etc. Then, you need to pay the people who actually do the machining, and then the people who do the coloring and/or engraving of the item. THEN, you need to pay the shipping company who ships them all out, and then you need to pay the store that sells them.


#3

Xdohl makes some very accurate points.

You also have to consider that you’re in a niche market.

There just isn’t a demand for millions of units. Heck, the demand isn’t even in the thousands spread across all manufacturers. If you’re selling less of a product, you’re making less money.

Let’s play with some imaginary numbers on a real crude scale, just to get the gist of it…

Let’s take all the factors that Xdohl listed, and a couple more he didn’t, and make up an arbitrary number. Let’s say all that jazz, plus operating expenses for a year, runs our company right around $100,000. Now, let’s make our own yo-yo company based on these figures.

Our company is now, for our purposes, $100K in the hole. Time to sell some product!

Now, in that year, our company sells 100,000 “Super Duper Spinner X” yo-yos for $20 a piece. Well, that’s 2M in income. Minus all our expenses for the year, we’ve made $1.9M in profit. It’s time to light cigars with $100 bills, buy a yacht, and make rap videos. Bonus!

Now, let’s say we didn’t have a 100,000+ unit sale year. Let’s say we only sold 1000 units. At $20 a piece. Well, we’ve made $20,000. Which only leaves us $80,000 in the hole this year! Yay! Wait, this is bad…

Let’s say this happens a year or two more. Things are looking bad. Real bad. On the bright side(?), at least we have an idea of about how many units we can expect to sell in a year. We’re moving an average of 1000 a year. Sometimes more, sometimes less, but we have an average.

What can we do? Selling product isn’t covering our expenses for the year. At this rate, we might as well not be open. Now, things aren’t as bad as they were in that first year, believe it or not, because we got all the expensive research & development, designs, molds, and machining out of the way. It’s not costing us as much as $100K a year to operate, but to keep it simple let’s say that this is still the case. $20K in “profit” a year isn’t cutting it.

We could close down. We could trim expenses. No more free doughnuts and coffee in the break room. We could let some people go, no matter how much we love working with them.

Or…

We could try selling our product for more money.

If we sell our yo-yo for $50 a unit, we’ll make $50,000 this year. Better, but not good enough.

How about $100 a unit? Well, that’ll yield us right around $100,000. Well, now we’re breaking even. The pressure is off, just a little bit. Of course, breaking even doth not a profitable company make. People are a little miffed at the price tag, but least they’re still buying.

Let’s push our luck and go for $125 a unit. Bam! $125K in sales! That’s $25,000 above our operating costs! People are upset that the Super Duper Spinner X costs so much, but they’re thankfully happy with the product. They wish it was cheaper, and ask a lot of questions about why it can’t be, but they’re still buying. Let’s just keep the price fixed right here, or their loyalty is going to disappear. We don’t want that. Let’s just be glad they’re willing to spend their money on our product.

Now, we’re doing alright, but it doesn’t seem we can go much higher. The demand for our stuff is there, just not in the numbers we’d like. We’re running “in the green” and that’s good, but it’s becoming evident as the years roll on that none of us are ever going to get rich doing this.

Hey, at least we’re doing something we love, right?


#4

nice explanation and example. very interesting!!!


#5

/salute Doc. Very very good example. It would be nice to spend less money on yoyo’s, but yes the quality of the product would go down dramatically if the companies knew they would lose money selling them. I say, keep the price, and produce the very high quality yoyo’s. We may complain, but we’ll buy them and LOVE THEM!!!


(JonasK) #6

I just want to point a teeny bit more out when it comes to prices. As said above, one the reasons for high pricing is a lot of production costs. These production costs are higher on products made in America or Europe. If you take a look at the L3, which has gotten on the list of top-notch metals, you will find that it has a really low price. This is because it is manufactored in China, where they have a much smaller amount of production costs.

Addment: I can’t explain why some US made metals are very cheap. For example, I don’t know how Yomega has managed to push the price on the Maverick down to 30 dollars. You would have to ask Yomega.


(Connor) #7

I dont think theres much more I can offer to this thread. Just about all the info has been covered.


#8

Then you didnt have to post :wink:

Also, I think Yomega did that because people may have not thought the product was worth it. As Robert was saying, they keep buying because they are satisfied with the product.


#9

Not to go off on a tangent here, but Samad is spot-on with this.

I can virtually guarantee you that the total costs behind the Maverick would put it way past a $30 price tag to be profitable.

Of course, the Maverick isn’t worth $30. Not by a long shot. And they can’t be expecting to sell many, given their almost pariah-like status in the yo-yo community. Couple this with the fact that it’s junk on a string.

This is more proof positive that Yomega is never going to “get it” and do anything with the company as it stands now. You’d think they’d be chomping at the bit to make a product, regardless of it’s cost, good enough to help people look past some serious mistakes they’ve made.


#10

Wow, I never thought of it that way. I thought the main components were how famous the player that designed it is and the material it was made from. I think we have our first moderator.


#11

This is why I love yoyoeXpert! Logical, helpful posts! Thanks Doc! :wink:


#12

Thanks for the vote of confidence everyone. :wink:

The fame of the player attached to a signature yo-yo is often inconsequential. Sure, it sells units, but you can’t really set a price based on it. Well, you could but it wouldn’t be the smartest thing you could do.

Materials are a different matter. The price of metal tends to fluctuate, sometimes drastically. The price of “white metal” has been steadily rising for several years now, and that takes a toll, although this isn’t related to yo-yo production.

Aluminum, which is what most of your high-end yos are made of, has steadily crept up in price as well. (Although it recently took a nose-dive. Don’t expect this to last.)

Exotic metals, although rare in yo-yo production, can range from kind of pricey to downright obscene.

Titanium, as an example, tends to be a little pricey. No where near as pricey as it’s made out to be, though. I’ve noticed things made with titanium tend to be ridiculously marked up. With the internet being a click away, the trading prices of such things are available to the world.


#13

You saved my words DocRobot… :stuck_out_tongue:

Happy Throwing! =]


#14

My post is going to be as long or as complex as Doc’s, but here it is. Most companies sell products for 400% of the cost it is to make them. For example, I’ll use the new iPod Shuffle 3rd Gen. You can purchase it for $100 dollars, but it only costs them around $25 to make. That means they will make $75 of every iPod sold. Here at YoYoExpert, Andre has been very kind to us by offering the yo-yos at a 10-15% off price! Hope this helps!


#15

Really? I don’t notice. :o The price difference.


(JonasK) #16

I guess you can see that on the PGM. I have noticed a minor difference on other yoyos, but if you buy a PGM here, it will be 35 dollars. And if I’m not wrong, a PGM is 45 dollars at YYN.

Addment: The PGM used as example was the hubstacked one.