A Case Study In Retail Markup (The Full Post)
I had made the contention that the iphone has higher subsidy a lower retail markup than other phones. While the verizon website does list some phones as having a retail price of over $500, I contend that these phones have a much higher retail markup than that of the iphone.
I present:
The Motorola Droid
http://www.verizonwireless.com/b2c/store/controller? ... »
Listed Retail Price.....$559.99
Price w/ 2 year.........$299.99
Online Price............$199.99
For Comparison:
The Motorola Droid ala Wirefly
http://www.wirefly.com/eCommerce/SpecialOffer.aspx?c ... »
Wirefly Price........19.99
What does this mean?
Wirefly ...
(continues)
I present:
The Motorola Droid
http://www.verizonwireless.com/b2c/store/controller? ... »
Listed Retail Price.....$559.99
Price w/ 2 year.........$299.99
Online Price............$199.99
For Comparison:
The Motorola Droid ala Wirefly
http://www.wirefly.com/eCommerce/SpecialOffer.aspx?c ... »
Wirefly Price........19.99
What does this mean?
Wirefly ...
(continues)
...
Actually, you're logic is flawed.
Authorized retailers can offer lower prices by giving their own subsidy from their commission.
If they were to make, say $100 commission, then they can offer up to $100 off additionally (though, they wouldn't do that or they'd make no money).
For example, my friend actually works at an authorized retailer. Their cost on the Moto Droid is $500. They sell it for $99.99 ($400 loss).
So, if we assume your guesswork of 360 subsidy reimbursement is accurate, that means they gave up an additional $40 off from their commission to offer better pricing.
Now, as far as Apple's iPhone pricing... have you ever thought that Apple might require anyone selling the device to have the same pricing in their cont...
(continues)
Authorized retailers can offer lower prices by giving their own subsidy from their commission.
If they were to make, say $100 commission, then they can offer up to $100 off additionally (though, they wouldn't do that or they'd make no money).
For example, my friend actually works at an authorized retailer. Their cost on the Moto Droid is $500. They sell it for $99.99 ($400 loss).
So, if we assume your guesswork of 360 subsidy reimbursement is accurate, that means they gave up an additional $40 off from their commission to offer better pricing.
Now, as far as Apple's iPhone pricing... have you ever thought that Apple might require anyone selling the device to have the same pricing in their cont...
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you forgot somebody in your case study
http://www.store.motorola.com/mot/en/US/adirect/moto ... »
as it turns out there is no workshop of elves to make them. they have to be bought from a vendor to sell them.
and you do know the whole point of business is profit right?
http://www.store.motorola.com/mot/en/US/adirect/moto ... »
as it turns out there is no workshop of elves to make them. they have to be bought from a vendor to sell them.
and you do know the whole point of business is profit right?
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While I'm sure the carrier marks up the price and makes some money on retail, I think the manufacturer is the one making the money. It's pretty obvious if you research it.
I know my cost on a Droid from Verizon is $505. I can tell you my commission on that phone for a $9.99 line is somewhere in the neighborhood of $330.
Also, there are more vendors than just Verizon that we can order our equipment from. They all sell them for pretty much the exact same price. It's not only the carrier.
I know my cost on a Droid from Verizon is $505. I can tell you my commission on that phone for a $9.99 line is somewhere in the neighborhood of $330.
Also, there are more vendors than just Verizon that we can order our equipment from. They all sell them for pretty much the exact same price. It's not only the carrier.
...
. . .
Didn't half of the forum's population spend all of yesterday explaining subsidies and markups? And now we must do it again?
*sigh*
Didn't half of the forum's population spend all of yesterday explaining subsidies and markups? And now we must do it again?
*sigh*
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Minimum Advertised Pricing
Apple is VERY strict about their pricing. if you don't know this you know next to nothing about apple. They are very good at managing the percieved value of their products.
Verizon only reimburses with Commission and device spiffs (if they advertise the phone very low or offer BoGo. You don't get ANY money back for just selling the phone.. again.. this is Phone Knowledge 101. You get paid on the rate plan and features, NOT on the phone.
Contrast this with Apple, where they require that the phone be sold for X. Period. Verizon has this on some phones, but it is temporary at best, whereas apple sets all pricing from their website.
Verizon DOES NOT pay 360 for the phone. they pay over 500.
Ag...
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Apple is VERY strict about their pricing. if you don't know this you know next to nothing about apple. They are very good at managing the percieved value of their products.
Verizon only reimburses with Commission and device spiffs (if they advertise the phone very low or offer BoGo. You don't get ANY money back for just selling the phone.. again.. this is Phone Knowledge 101. You get paid on the rate plan and features, NOT on the phone.
Contrast this with Apple, where they require that the phone be sold for X. Period. Verizon has this on some phones, but it is temporary at best, whereas apple sets all pricing from their website.
Verizon DOES NOT pay 360 for the phone. they pay over 500.
Ag...
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I can verify that phones are usually within $20 of the corporate full retail price, and more likely within $10 on most handsets.
I can see the actual cost in the inventory system. I once worked as an inventory analyst for several years (not for Verizon), and can tell you that when the software says average cost, it means average cost. A company would be stupid to report anything other than reality because of taxes, auditing, and depreciation. If they over-inflate the average cost, the company pays more in taxes and loses more in depreciation. If the company undervalues their average cost, they might be cited for tax fraud, evasion, and what have you.
No, it makes sense to be honest when it comes to your product's cost. But don't c...
(continues)
I can see the actual cost in the inventory system. I once worked as an inventory analyst for several years (not for Verizon), and can tell you that when the software says average cost, it means average cost. A company would be stupid to report anything other than reality because of taxes, auditing, and depreciation. If they over-inflate the average cost, the company pays more in taxes and loses more in depreciation. If the company undervalues their average cost, they might be cited for tax fraud, evasion, and what have you.
No, it makes sense to be honest when it comes to your product's cost. But don't c...
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#1) The entire concept of markup does not apply to ANY device which is sold "exclusively" through only one carrier.
You can't compare prices INSIDE a monopoly.
#2) Dealers don't PAY retail for anything. If they did, they would never make a profit on a no-contract sale!
You can't compare prices INSIDE a monopoly.
#2) Dealers don't PAY retail for anything. If they did, they would never make a profit on a no-contract sale!
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2) Dealers pay practically retail. You're right, it's not exactly retail, but it's within 50 of the retail listed price 9/10
And dealers don't really make a profit on a no contract sale. Dealers arn't built to make money on phones, but rather plans. If you are selling your phones retail you are LOSING money.
And dealers don't really make a profit on a no contract sale. Dealers arn't built to make money on phones, but rather plans. If you are selling your phones retail you are LOSING money.
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