This is a market necessity because consumers are
conditioned to expect tiers.  Good or bad, its a
reality.  A manufacturer that doesn't have multiple
products in a given line is at a disadvantage to one
that does.  I have several friends that will only buy
the deluxe model.  In fact, if the line doesn't have a
deluxe model, they will move on to one that does. 
They aren't completely rational shoppers but most
aren't.  I'm the other kind of buyer - biased towards
the low end of the product line for the value. 

Not having multiple models makes it hard to serve the
broader market.  

This thread should start being OT and not EE, btw.

--- Robert Rolf <Robert.Rolf@ualberta.ca> wrote:
> If they can make money selling the economy model,
> why not just put in all the features of the 'deluxe'
> model
> and blow the competition away? Or is there that much
> more
> profit to be had with 30% of the market paying 20%
> more?
> 
> 100 widgets sell for a $1, cost $0.50, profit $50
> 70 widgets sell for a $1= 35$ + 30 @ $1.20 = $21.
> Total profit $56. OK, I guess it makes sense to have
> tiers.
> 
> I already understood why they design only one
> widget, but
> it just seems intrinsically wrong to cripple your
> product
> to create variations. Good thing I'm not an
> entrepreneur.
> 
> R
> 
> Spehro Pefhany wrote:
> 
> > I disagree. The market is there, they want to
> serve it,
> > and the question comes down to the most
> cost-effective way
> > to do that. Say there are 30% of people who want
> to buy the
> > deluxe model for 20% more and 70% who will buy the
> stripped
> > model at the base price.
> > 
> > If it's cheaper to put all the parts in every
> unit, do you
> > do that or do you increase your costs by building
> two
> > completely different units?
> > 
> > Or would you just build one unit and allow your
> competitors
> > to undercut you on the units that most people buy?
> > 
> > There's a reason that the Sears catalog would
> always feature
> > the "economy" model, the regular model, and the
> "deluxe".
> > 
> > Best regards,
> 
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