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Old 02-17-2011, 10:10 AM   #13
DMcCunney
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Device: Palm TX, Azpen A727 tablet, Fujitsu Lifebook p2110 w/ FBReader
Quote:
Originally Posted by warakawa View Post
If it's one of the Shenzhen companies, shouldn't they price the device cheaper than sony's
Why should they?

The Shenzen outfit is the manufacturer. They provide devices under an OEM deal to the outfit that puts their name on it and actually sells it. The question is why the seller charges the requested price. The answer is, "because they think they can get it." Pricing is always what the market will bear, and if they make their target revenue and profit numbers at a particular price point, they'll have no real incentive to reduce the price.

The idea behind price reductions is to accept lower margins in hopes of boosting sales, and making up in volume what you are losing on individual sales. But if you do that, you're betting that you will make it up on volume, and if you bet wrong, it can be an expensive mistake. It's really hard to raise the price again after making a cut like that if you discover you were wrong about the market.
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