Subject:
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Re: part pricing theory and practice
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Newsgroups:
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lugnet.market.theory
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Date:
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Fri, 30 Mar 2001 17:47:49 GMT
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Viewed:
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543 times
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I'm certain to open a few discussions, and there is probably a economist out
there to correct me.
Price is merely a function of supply and demand in a perfect market.
For many AFOLs the market is nearly perfect, they understand the potential
supply and the demand by them is proportional.
However, the world is not made up of AFOLs and therefore the market is full
of discontinuities - information asymmetries, what have you...
IE - I bought a vacuum cleaner last week, local store wanted $399, and they
offered to discount it to $369 (before tax).
I found it on the internet at $239 (no extra for shipping).
Some people don't know about parts packs
Some people are kids who only want a part, not parts they might use.
Some people are parents who don't have the time to worry about saving a $1
to please a child (particularly prevalent in LEGO as it _is_ a toy)
IE - Just the other day, I had a parent who sent me a $20 and said "send me
whatever quantities you want from this list, and my kids will love you"...
I've had teachers buying for a class of kindergarteners... collectors
finishing sets damaged in earthquakes... neighbors building train sets...
architects... corporate gift seekers... wedding planners... internationals
with no local source... even folks in every corner of the US where the
closest LEGO was a 2-hour drive away in the big city...
BTW, I know instantly what my return is on a set, and there are a surprising
number of sets which don't meet the hurdle, some parts won't sell at any
price... (almost)
-Jon
In lugnet.market.theory, Cary Clark writes:
> I was thinking about buying some white plates from Brickbay, and came up with this comparison (viewing in a monospaced font is a
> good idea):
>
> Brickbay Baylit S@H #5320
> Lo Avg Hi
> 1x1 10 12 17 20 6 x8=48
> 1x2 8 10 16 15 5 x8=40
> 1x3 8 12 20 12 5 x4=20
> 1x4 10 12 20 15 6 x8=48
> 1x6 9 12 20 20 7 x4=28
> 1x8 16 18 23 40 8 x4=32
> 1x10 20 21 25 40 10 x2=20
> 2x2 7 9 15 10 4 x8=32
> 2x3 9 11 12 20 5 x4=20
> 2x4 10 13 15 15 6 x8=48
> 2x6 13 14 16 20 7 x2=14
> 2x8 16 20 25 40 8 x2=16
> 2x10 20 30 40 50 10 x2=20
> 2x2-L 10 14 15 20 6 x2=12
> -----
> =398 (actual price for #5320 is 3.99)
>
> Prices are in US cents, and I threw out used parts on Brickbay (although they would have sometimes skewed the price higher); I
> didn't throw out the high and the low, although maybe I should have, and I eyeballed the average.
>
> It sure looks to me like service pack $5320 is a real bargain compared with BrickBay. The average prices are 2x S@H's, so unless I
> plan to never use fully half the parts, I'm better off going direct to Lego.
>
> Which brings me to my theory question: What is setting the price on Brickbay?
>
> Inertia? As bulk packs become available, Brickbay prices are slow to come down. White 2x4 plates are available by the hundred for
> $6.99, yet the lowest price on Brickbay is well above that.
>
> Greed? Hardly seems likely, since no one is earning their livelihood by parting out Lego. And Baylit's elevated prices are explained
> by Jon as limiting the work he has to do, which seems entirely reasonable.
>
> Return on investment? In the Lego world, it's common practice to buy, part out, sell the unneeded bits, and recoup the initial
> investment. But if the sets are bought at deep discount, the price per part should seldom exceed 5 cents. I understand marking up
> the parts, but there's no way it can pay for the sorting work involved and sufficiently compensate the seller for the time involved.
>
> Demand? Most likely. But it is curious that buyers are willing to value Brickbay Lego, which is sometimes of questionable quality,
> as much as parts guaranteed new from S@H.
>
> Value? Maybe Lego enthusiasts actually value parts more than LDI does. How else does one explain why used Lego commands a great a
> price as it does?
>
> Thoughts?
>
> Cary
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Message is in Reply To:
 | | part pricing theory and practice
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| I was thinking about buying some white plates from Brickbay, and came up with this comparison (viewing in a monospaced font is a good idea): Brickbay Baylit S@H #5320 Lo Avg Hi 1x1 10 12 17 20 6 x8=48 1x2 8 10 16 15 5 x8=40 1x3 8 12 20 12 5 x4=20 (...) (24 years ago, 30-Mar-01, to lugnet.market.theory)
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