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Originally Posted by Trueoo7
What about "quantity" and mass production? If you raise the price you ultimately lose customers. If you increase production you bring down the price and increase customers much like TV's.
When flat screens first came out they were a fortune (ex. 52" TV cost $2300 two years ago, same TV now costs half of that because production increased which brought the costs down) Quality is as good, if not better than original.
So their price increase doesn't necessarily make them more money, it probably keeps them flat or their head above water because they have decreased their potential customer base by putting their product further out of reach for another 25% or so of society.
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"mass production" is an oxymoron when talking about production levels that we are seeing in the "Cobra" industry. The ecomonies of scale are almost non-existant at these levels of production. People, this is not GM we are talking about!
The price increase probably only brings them closer to where they need to be, indeed most all of the "bigger" players in the business have recently increased pricing (Kirkham, Shelby, SPF, etc.) in an attempt to recover some of the margin they have given away over the last few years in a attempt to keep some sort of sales volume alive. Indeed most all of the manufacturers have held pricing over the last few years in an attempt to generate sales and perhaps at least stay in business. While it might keep you alive, it does not keep you healthy.
As to "pricing out of 25% of the market" you cannot aim your product and business plan at a segment of the population that really can't afford or justify owning your product. Could Kirkham sell a buttload of cars at $9,995.00? Sure! But what does that do to the long term value and moreso the long term business plan? Most of the "Cobra" manufacturers are amazed that the market has still not yet been saturated and that there is still a decent sized market to sell to. In marketing there is a "sweet spot" where the price to volume curves intersect and I think most of the manufacturers believe they are now at that point. I know for a fact that I could sell more SPFs at a lower price point but for how long? When the factory is out of business so will I be....there must be a little bit left for all when the bills are paid, otherwise why bother?