Originally posted by zoolander But these are cameras! Why is the pre-order price jacked up ? We're doing them a favor by pre-ordering the camera, and they'll have an EXACT idea of how much stock they'll need to order. If they don't put it out there in the form of a pre-order, they'll have no idea as to how much stock they should get in. If they get in too much, they'll have stock sitting. If they haven't got enough stock, they'll lose sales to their competitors.
This is marketing 101 and a form of market segmentation.
The idea is that you have the choice to make a single product, at a given price and you'll gain some amount of money.
But if we analyse things:
- some people that want the product cannot afford it and don't buy. It is too expensive.
- some people are willing to pay more for the product but you'll not get more money from them if you don't ask.
Reality is that if you are selling 1 variety of potatoes, you can split into 2 packs, call one premium choice and ask 3 time for it. Some people will still buy it even you it is exactly the same product.
So what you do is you propose the product at different price. If you keep exactly the same product but ask for 3 price, cheap, normal price and expensive price you'll sell much more and make more money.
The cheap version is going to get sales from people that could not have afforded the initial price. As long as the marginal cost to get 1 more is cheap enough, it is better to get some sales from them anyway.
The expensive version allow you to ask more from people that are willing to pay more, so obviously that a benefit.
This work very well for potatoes. But clothes is also typical. You just need to change the brand name and you can ask 100$ instead of 50$ or 20$. This work for camera too like the Leica rebadges.
In electronics, you play on the exclusivity of being the first to have the product, the benefit of showing to friends. They don't have it yet, you have. You are going to shine at the coffee break. So manufacturers ask more when a product has just been available, and very shortly drop the price. If timed well, you get all the money early adopter were willing to pay for but also the money from "normal" people but also from the few that will buy it on sale at an incredible discount. You have to time it right: giving enough premium time for early adopter so they can show off long enough but not too long, so you get the money from the other segments.
Of course, if people get the impression they are deceived and pay too much for no reason or the cheap version is as good, your model doesn't work. So in all cases you need to ensure the wealthy or normal people don't all get the cheap version. You use a brand name, you remove/add a feature insisting on the huge difference it make or why not... change the sensor size.
All the idea can be applied. Theses potatoes are better for your health, this chicken is allal, the camera has less/more MP, the car has better looking wheels... The default frequency of the CPU is set higher/slower. You make your line of clothes advertized by some famous wealthy person and don't sell in the same shop... As long as the change in cost for you is minimal, you fully benefit of it.