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From: rb@ccivax.UUCP (rex ballard)
Newsgroups: net.micro
Subject: Re: Atari 520ST & the K-Mart antics
Message-ID: <248@ccivax.UUCP>
Date: Mon, 9-Sep-85 21:22:09 EDT
Article-I.D.: ccivax.248
Posted: Mon Sep  9 21:22:09 1985
Date-Received: Thu, 12-Sep-85 08:22:51 EDT
References: <650@wdl1.UUCP> <372@dadla.UUCP> <653@ihu1m.UUCP>
Organization: CCI Telephony Systems Group,  Rochester NY
Lines: 36

> >                              He told me that for the 520ST, Atari had to
> > sign an agreement not to undercut the dealers as they had previously
> 
> Is this legal?  This sounds like price fixing!
> -- 
> Yosi Hoshen, AT&T Bell Laboratories
> Naperville, Illinois,  Mail: ihnp4!ihu1m!jho

In the past, the individual dealers were given a wholesale price based on
rather small quantities (<1000/year).  When K-Mart or some large volume
retailer places an order, usually want to know the quantity >100,000 price.
Most computer companies offer a spread of as much as 50% of the "quantity 1"
price.  (Apple can actually offer a large quantity price of <$1000 on the mac).
Because of Atari's "Cost Plus" policy, the spread is less than a few points.
K-Mart actually "Snubbed Atari" when atari only offered a small spread.
The only heavy "quantity discount" would be the reduced shipping costs.

Another factor is the service.  Many "K-Mart Buyers" were going directly
to Commodore/Atari rather than local user's groups/dealers for support.

Current margins are actually lower than with other computers (30 vs 50%)
so you may find a lot of "Bait and Switch" or "Loss Leader" advertising
going on.  This is typical of any "Consumer Electronics" market.  I've
already heard of a dealer offering a "Lower Price" only to arrive and
be told that one should buy a MAC or IBM, or get a "rain check".

Some dealers will be using "Creative Packaging" such as ATARI ST $749
(with purchase of additional software packages).  If Atari should decide
to start "retailing" the developer's kit.  They may throw it in with the
hardware but let the dealer "sell it" (read:-include it) for the difference in
price.  Another dealer charging full price for the hardware will "throw it in".

These tactics are familiar to anyone who has bought a componant stereo system.
ATARI may become the PIONEER (audio maker) of the Computer business, get a
great deal on it if you don't let the salesman "intimidate you" into something
with a larger margin.