RadioShack Gone

I don't know what that means. Can you explain it?

He is about as in the dark as it can possibly get.

The "always wrong" bandwagon is a premier indicator of the stupidity his ilk festers and sullies this group with.

Radio Shack was just not sustainable. Too many high-rent leases and no high-profit product line where the company was very strong. It was a store of last resort to people that needed something right away.

You know what one of their biggest sellers is? Coin cell batteries. $6

and costs them pennies. I.e a private label 2032 coin cell is $5.99 at Radio Shack. At Harbor Freight a card of four is $2.99. At dx.com twenty are $3.64. Despite the huge mark-ups that they enjoy on batteries, they can't build a business on them.

It's always tempting to blame clueless management, but the real problem is that not every business is sustainable forever, especially high-overhead brick and mortar stores selling stuff with declining margins. Lafayette Radio went under. Olson Electronics went under. Not to mention Computerland, Businessland, CompUSA, Circuit City, and Good Guys. As margins fall on products you have to change your business model to sell other high-margin, higher-cost products. Radio Shack couldn't find the next high-margin, electronics-related, product line, and maybe there isn't one. I guess they could have moved into mattresses, solar installation, floor coverings, shoes, clothing, and paint. Not a lot of product lines can sustain a chain of 6000 stores anymore, you need a product that a lot of people won't or can't buy online.

You would be amazed to learn that many, many, people don't understand how prices are set. A lot of people think that the retail price is a fixed percentage markup of the manufacturing cost. Very rarely is this the case.

I recall trying to explain to someone that an added feature, that adds to the production cost of a product, does not necessarily mean a higher price to the consumer or a lower profit to the manufacturer. It may actually mean a lower price and higher profit, or the same price and higher profit, because the product will sell in much higher volumes.

It was hopeless. They had never worked for a company that manufactured anything. They were positive that anything that added to the cost of a product automatically resulted in higher prices and that anything that reduced the cost of a product automatically resulted in lower prices.

You are right, I didn't get it, I thought you were mad because you got a large bill from a tow company. Now I see you have a tow company. Just another instance of government interference in private enterprise.

Apparently not.

Hmm, must be your upset and don't know how to express yourself, so you fallback on degrade the poster because you don't know what else to say. None of the invectives you threw out is true, so where does that leave you? Mikek

Or, more often, an added feature is priced at a much higher margin than the baseline product itself. That happens a lot on cars.

Agilent/Keysight sells oscilloscopes that are deliberately bandwidth limited, and charges a heap of money to open them up. The cost to them is zero.

Software has a high development cost and essentially zero production cost, so its pricing dynamic is similar.

Were you asleep during the dot com era of the late 1990's? I reviewed more than a trivial number of business plans that sounded like "We'll give away the product for a while and make up the losses with increased volume." There were people who actually believed that would work. Other products were so poorly defined that it was impossible to set an end user price. A few were genuine loss leaders, where the basic product was priced to sell at a loss, but the high price of accessories and supplies compensated for the loss. Then, there are plans for making money with open source software which rarely works and doesn't scale. Despite the collapse of many of these products and services, I don't think we have quite learned the lessons of the dot com era. Last week, I ran into a company that seemed to price its product based solely on the price the competition charges. That actually works, until everyone does it or until they get accused of running a price fixing cartel. Lastly, there are companies that doesn't have a clue if they are making money or losing money until they run out of cash. Those are amazingly common.

There's also the problem of economic inflexibility. That's where a small change in price will have a huge effect on sales. Much of the low end of the industry is in love with the idea of practically giving away the product in order to generate sales, and then later raising the price when sales appear to be good. Then, they wonder why sales dropped to zero when the price went up. It's so much easier and sometimes better to start with high prices, and drop them with increased production, except that it looks lousy on the quarterly sales figures.

Then, there's the local market, which seems to have a problem with arithmetic: I guess retail is still an art.

I beg to differ slightly: As I understand it, e-branding is similar to name recognition, where a company tried to get its name associated with the specific market segment. When the product and the company name become interchangeable, it's considered successful. For example: copier = Xerox tissue = Kleenex PC = Microsoft While there are definite advantages in consumer marketing, I have my doubts about its value to a company that makes a wide variety of products, or deals with sophisticated buyers, such as most of the wholesale electronics industry. These generally know what they want before they go shopping and are quite resistant to retail branded impulsive purchases.

Yep. It can get worse. I worked for a radio company the literally would not even consider selling a product that the industry leader (Motorola) is not also producing. Much of the product line was designed to be an alternative to the leader and priced accordingly. Many years later, I'm still not sure if it was the correct strategy, or if it could have been done better differently.

Chuckle. Many years ago, my father owned a garment manufacturing business. Every year, the owners of competing companies would meet in the traditional smoke filled hotel room to fix prices and decide on the winning bids for the large retail stores. It was highly efficient and fortunately did not attract the attention of the regulators. However, it fell apart when most of the suppliers went to overseas contractors, which preferred to setup their own cartel. As you note, had the companies involved grown to a sufficient size to support a government fine and penalty structure, I'm sure it would have collapsed earlier.

I missed most of the fun. I was spending time reviewing business plans and product ideas for a few vulture capitalists. I didn't get into the structure of the business or the financials, but concentrated on whether the product or service was feasible. Science fiction devices, bogus patents, inflated performance specs, unrealistic R&D schedules, and just plain bad ideas, implementations, and technology were common. There were even a few outright hoaxes and scams. Put a pretty package on a bag of worms and it's difficult for many to see the obvious. My batting average was better than most, but far from perfect, which was made easier for me because I only received biz plans that were deemed questionable or were suspicious looking.

My palatial office was furnished mostly by Goodwill when I moved in

Looks like the dot com days might be coming back: Here's a company that bases its product on something it doesn't own or control, where the owner could easily obstruct or sabotage the installation. This should be interesting...

t after the CB craze of the mid-70's.

Radio Shack used to be so much more.

On my desk sits a copy of one of the many books that Radio Shack published a long time ago (ISBN 1124109374 in a Navy Blue Radio Shack cover with a one inch orange square in the upper left corner). The book's name is _Voltage Regulator Handbook_. A group of National Semiconductor (NS) employees wrote it.

Among other things it contains NS Application Notes and Data Sheets. It also contains plug-and-chug formulas to design power supplies using the NS 7805 device (among others). It's just the sort of thing that comes in handy to correctly answer Circuit Cellar's Electrical Engineering Challenge. :)

I'll bet you're wrong.

How much. Not how little or how much they must charge.

If you're in an accident and you're present, your choice.

Wrong.

Whenever I call you AlwaysWrong, I'm always right, DimBulb.

NO ONE said anything like that.

Or you can look at it the other way. They're eating the production cost of the higher performance unit for every one that doesn't get upgraded.

I was thinking of standard features on cars that if left out would cause a reduction in sales and hence end up resulting in the manufacturer earning lower profits. Removing $2 in cost and making the item a $100 add-on often doesn't work because your competitor includes it as a standard feature.

I recall many years ago when Honda first added cup holders to the Accord, but the Camry didn't have them. Two vehicles of about the same size, with the same reputation for quality, selling for about the same price. Toyota rushed cup holders out for the Camry.

You're looking at that backwards. Keysight is charging less to those that don't need the higher bandwidth.

You can say, "wrong" all day long. That isn't the same as knowing anything about it.

If they were "eating" the cost, they would just not sell the low end units. The point is clear, it is cheaper for them to add a minor tweak to the unit and sell the same hardware at a lower price than it is to sell two different units. There is no cost to be eaten.

TL;DR - Not sure what the rant is about, I can't remember the last time I saw a product introduced at a low price only to have the price raised later. I have seen samples given out, is that what Jeff is talking about, free samples of toothpaste?

Would you prefer a one-line pontification instead?

Ever seen anything advertised as an "introductory price" usually "for a limited time only"? Common enough with 500,000 hits.

More correctly, it's called "penetration pricing":

Incidentally, I haven't used toothpaste for the last 40 odd years and I also don't know what Jeff is talking about.

Yup. The low-end units are still profitable, they just have lower margins. If they didn't sell a lower-end unit they would make less money. It would also drive up the cost of the higher-end units as they lost economies of scale in manufacturing, and had fewer sales to amortize the development cost.

This sort of thing has been going on for decades if not centuries.