CompuServe Messages

>> I'm not being a smart-alek… could you please explain to me… why? While it's not a written law that companies *HAVE* to price items higher at release to recoup R&D costs, it's almost invariably the case, and should be expected. Remember when Nintendo released the SNES here in 1991? It was priced at $199. During the '91 Christmas season, they sold hundreds of thousands — if not millions — of those units. Why? Demand was extremely inelastic (a 1% change in price produces less than a 1% change in quantity). People would have bought out the stores' invontories (and they did) no matter whether the SNES was $199, $99, or $19.95. However, IMMEDIATELY after Christmas, Nintendo lowered the price to $179 to better compete with the (I think) $149 Genesis. Within six months, both systems were going for $129. Now you can get either (without a pack-in) for $89. This could technically be called price discrimination; the companies sell products to people with varying degrees of want at prices matching that want, maximizing their profits. A person who thinks the Saturn is worth $475 will go out and buy it when it hits for $475 (as is happening in Japan right now). One who doesn't think so will wait until it comes down in price. (Heck, there are even people who think the Saturn is worth $800 — they're importing it at huge premiums!) Anyway, back to the case of a new Amiga company. The pent-up demand that exists is very inelastic; many are willing to pay twice for one now what they would have been in February of this year. If production of even current models is resumed, they will sell out at any price (let's hope CEI doesn't gouge us 😉 until the demand becomes more elastic (that is, until the desperate have bought all they want). Once that elasticity is regained, CEI will have to lower prices if they want to continue to sell Amigas. Sorry if the economics is a little confusing. 🙂 – Jim, on AutoPilot!