On 4/14/17 11:20 AM, Federico Lucifredi wrote
On the business level, I do not agree: these detectors cost $25-50 because they
have a government-guaranteed demand curve, and vendors are just waiting for the
money to come in. While the government clearly has good reasons here, the
combination of that with limited competition gives you… pricey sensors. I could
be paying $50 for all sort of parts of my house that come for $4.50 today… like
my basement flood sensor, which folks have to sell to me without a government
mandated demand. I hope we get there soon for these as well, I see no reason
for something produced in the tens of millions to be this pricey — It is not an
iPhone!
You're making the argument that despite steady high volume demand there
is limited competition in the market and that the limited competition
has resulted in pricey devices which implies they are making large
profits (your comparison to iPhone) at your expense.
I would argue that if there is profit and steady demand in the market
then someone else will come along and make a device and sell it slightly
cheaper. However, if the cost of starting up a detector-making business
isn't worth it (hence why there is limited competition) then it stands
to reason there isn't actually as much profit as you might believe in
these devices.
I also do not think that volume necessarily translates to lower prices.
A CO sensor is more complex than a flood sensor--a flood sensor is
generally just resistance measurement between two bits of metal and the
resistance drops when water/moisture fills the space between them--so
the pricing may be vastly different on these sorts of devices even
before you consider that there is another sensor in there for detecting
smoke, which may be ionizing, photoelectric or both...
If we wanted to compare the current combination CO/Smoke detector market
to cell phone market, it would probably go something like this--
The $10-15 no-brand combination detectors you can find on the shelves
are the ZTE or unknown Chinese-brand names. Brand names change every
few years, and those that survive are synonymous with build-grade
cheapness. These are the absolute lowest cost and minimum viable
product designs to meet standards. They may use older technologies that
are still working but less than ideal when it comes to lifespan or
reliability.
The $25-50 Kidde/First Alert detectors are HTC and Samsung, they have a
wide range of model options from inexpensive to expensive with various
features and other improvements coming along with the highest priced
models, but the key is that the brand is established and trusted.
Then $100 Nest Smoke/CO detector would of course be Apple and their
iPhone ;-) ... They are essentially premium price and feature set, many
would argue a vanity product based on feature set alone.
I must admit that I know very little about what goes into the COGS for a
combination CO/smoke detector, so you may very well be correct that
there is 300-1000% markup between manufacturer cost to build and the
retail price on an average detector--but I have worked in the commodity
device manufacturing world and I just don't see those kinds of margins
going unchecked long term.
HOWEVER, all of that said... at the end of the day we've really only got
2 manufacturers on the market: First Alert/BRK and Kidde/Knighthawk...
So either I'm right and these guys are splitting the market share
between themselves on what is a high volume, but low margin, product...
or you're on to something and it's all collusion ;-)
If you have gas appliances in your basement I'd have an explosive gas alarm
down there too.
Now this is actually interesting. I have all of the above already but not the
explosive gas alarm (I am a sensor guy, I get these even when I don’t need them
to learn more about them), do you have a model you use/recommend?
Thanks for sharing!
I can't recall the manufacturer, but it was either Kidde or First Alert,
which if you note my last comment above stands to reason, since there
really aren't other options!
IIRC it ran off of AC power with a 9V backup battery, and it also had a
~7 year kill-clock based on the sensor gradually losing sensitivity over
time.
I can't recall the price, but was under $50.
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