Terry, Yes, and as I explained to someone else, I too have been involved in this sort of thing for decades. Only our business was not a packaged product like Pepsi, it was software. As everyone knows, giving away software as a means of generating interest in other revenue producing products is not uncommon.
Someone earlier mentioned the need for determining the ROI of a new product as a means of justifying its production and sale. However, that ROI does not need to be on that new product but rather it can be on another product. Let us suppose that Elecraft developed an amplifier that they sold at a break-even price. But, this product could easily be used by many people who DO NOT use or buy other Elecraft products. If the amplifier is a success (not in revenue but rather in popularity and respect) then it is very likely to increase, maybe substantially, the sales of products like the K3, K2, P3, or K3+ as new customers are brought into the fold. Yes, "loss leaders" are a very important "tool" in doing business. 73, phil, K7PEH On Feb 9, 2010, at 8:11 AM, Terry Schieler wrote: > It's known as a "loss leader" Phil. Been around in retail marketing for > years. Advertise Pepsi at an unbelievably low price hoping to draw > customers into the store that might just pick up some Doritos or other > products in that aisle at a decent enough profit margin to keep the bottom > line in the black on average. And, it works! > > 73, > > Terry, W0FM > K3 474 > > -----Original Message----- > From: Phil Hystad [mailto:k7...@comcast.net] > Sent: Tuesday, February 09, 2010 12:21 AM > To: Conway Yee > Cc: elecraft@mailman.qth.net > Subject: Re: [Elecraft] On the advisability of selling kit radios > > I learned a little new thing about Toyota marketing just this week. Toyota > of course has been > in the news lately with the massive recalls. It was reported that the > Toyota Prius Hybrid > is subsidized by about $2500 to $3000 by Toyota. That is, the Prius whole > sale price to > the dealers is a few thousand dollars less then it costs to build. Every > Prius car sold is a money > loser for Toyota! > > Toyota is happy with this though (they said so) because it is their > front-line product. > It is the product that gives them name recognition, the product that brings > them > Kudos for high-tech achievements, and the product that brings customers > through > their doors. > > Thus, a company does not need to make money on a given product to justify > its > production and sale -- there are other reasons to build products. > > A smart company will choose the profit margin for each product individually. > It is > rare for all products to be treated the same. Some will bring in a margin > of 40%, > others only 5%, and then maybe others, by plan, minus 10%. > > The Elecraft K3 may have a 30 % margin and maybe the K2, being in production > for so long is now about 50 % margin. But, a new solid-state amp may only > be > 5% or 7% -- enough to make their customers happy without losing money but > not > earning money like a K3 or a K2 either. > > phil, K7PEH > > > ______________________________________________________________ Elecraft mailing list Home: http://mailman.qth.net/mailman/listinfo/elecraft Help: http://mailman.qth.net/mmfaq.htm Post: mailto:Elecraft@mailman.qth.net This list hosted by: http://www.qsl.net Please help support this email list: http://www.qsl.net/donate.html
