Posted by Rick Denney on November 19, 2002 at 16:06:54:
In Reply to: Re: Re: Expensive Mouthpieces vs. Old Standbys posted by Joe Baker on November 19, 2002 at 13:28:34:
Those are perhaps three contributing factors to the costs, but I don't think they contribute as much to the price.
Price is determined by the market alone, and the manufacturer makes pricing decisions often before even knowing what the cost will be, as the basis for determining an acceptable cost.
If Fred Blat can sell 100 Blatmaster mouthpieces for $300, 500 mouthpieces for $100, and 1500 mouthpieces for $50, based on the reputation he can create for his product through advertising and quality (more of the latter allows less of the former), then he can earn a revenue of $75,000 selling at the lowest price, and $30,000 at the highest price. Let's assume costs are $50 for the lowest volume and $15 for the highest volume. Subtracting costs, the high price model earns him $25,000 in profit, while the low price model earns him $52,500 profit. The low-price model is the most effective, assuming that he can build 1500 mouthpieces. But if his production capacity is 100, then he'd be a fool to sell them for less than $300 (if the market will support it), no matter what it costs him to build his design. Inelastic supply and sufficient demand supports high prices, and most small-shop producers raise their prices to control demand so they can get some sleep and have a life.
Part of getting $300 for a mouthpiece is that it is a limited supply and a high price, which many consumers interpret as having a high value. Unusual designs support this expectation.
From a cost standpoint, it takes the same amount of brass bar stock to make a Conn Helleberg as it does to make a Monette. With the Conn, more shavings end up on the floor, that's all. The salvage value of those shavings won't amount to that much. Costs are higher for Monette because of less automation in the tooling (maybe). A design like Doug Elliott uses requires two threaded interfaces per mouthpiece, and that increases costs considerably, I expect. But I'd bet the range of costs is quite small compared to the range of prices.
Rick "who is hoping he didn't just encourage Doug to raise his prices, heh, heh" Denney