, 10 tweets, 2 min read Read on Twitter
0/ So anyway, this is a lesson in capitalism. The issue is 'business models'. We can roughly reduce this to four choices:
1- high-quality at a high-price
2- low-quality at a low-price
3- low-quality at a high-price
4- high-quality at a good price (high-volume)
1a/ There's usually a good reason expensive products are expensive. The added benefits cost more money, so they charge more. However, the market is smaller, so they need higher margins to pay back RND, so they are often MUCH more expensive.
1b/ High-end cars are a good example. If you want to race your car offroad or on a track, you need the more expensive tires, gears, suspension, brakes, etc. Sure, they don't make a difference for massmarket (normal road driving), but experts needs them.
2/ Then there is the opposite of the market, extremely high-volume at the cut-throat prices. This accounts for most of the products we buy, like the Walmarts of the world.
3a/ Then there is the crap market that pretends to be high-end because people are morons and can't tell the difference. This is the world of Monster audio cables, as well as Bose and Beats headphones. The audiophile world is full of this crap.
3b/ Other places you find this nonsense is high-priced wine, bottled water, and vodka, where double-blind taste testers can't tell the difference. It's not that these products are bad, it's just that they aren't really "high-end" that merits the expense.
4a) Then there is the last market segment of high-end products that are nonetheless sold in high-volume at a low price. It's an extraordinarily difficult business model to pull off.
4b/ Apple is a great example of this, under Steve Jobs but not so much recently, as demonstrated by the MacBook keyboard fiasco. Sure, Apple isn't the lowest priced option, but neither is it price in the absurd "luxury item" category.
4c/ Another example is Costco, where the median income of their customers is twice the national average. They sell only high-quality products -- but in such large volumes that they can the price down.
4d/ Which is why I shop at Costco rather than Wallmart, because I can be confident that what they are selling me is actual quality rather than fake quality, and that they aren't going to jack me around on the price.
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