Path: utzoo!utgpu!jarvis.csri.toronto.edu!mailrus!tut.cis.ohio-state.edu!bloom-beacon!apple!oliveb!sun!pepper!cmcmanis From: cmcmanis%pepper@Sun.COM (Chuck McManis) Newsgroups: comp.sys.amiga Subject: Re: A2286 pricing - grrr! Message-ID: <95636@sun.Eng.Sun.COM> Date: 24 Mar 89 00:32:33 GMT References: <135@mindlink.UUCP> Sender: news@sun.Eng.Sun.COM Reply-To: cmcmanis@sun.UUCP (Chuck McManis) Organization: Sun Microsystems, Mountain View Lines: 58 Think about it. What is an Amiga, what is a PC, and who would want both? Commodore _makes_ PC Clones. There not exactly competitive but since they have a better reputation than Compaq in a lot of Non-US type places you can understand how they can sell them. What is an Amiga with a bridgecard? It is a game machine with a humongous software base! One of the the perpetual complaints of many Amiga owners is that "Gee, on the PC I can get Ventura Publisher" or some other product produced by a company that can invest _millions_ of dollars into R&D. So how does one go about getting _Amiga_ programs that are as good as the PC equivalents. Well, belive me it costs the same amount of money to write a Ventura Publisher for the Amiga as it does for the IBM PC. The difference being that there are 20 *million* PCs and only 1 million Amigas. The number of copies you will sell, will in general be 1/20th of the number you sell for the PC. So given the exact same margins you have to charge 20X as much. Your $50 PC program costs $1000 on the Amiga! Yuck ola! But wait, $50 and $800 for the Bridgecard gets me the same functionality! See the problem? The Amiga software vendor just went out of business. To bad, the Amiga was such a nice machine. Economic reality. It's a bitch but something we all have to keep in mind. The formulas : Cost/Unit = Manufacturing Cost + (Development Cost / Market Size) Retail = Cost/Unit / (Distributor Markup * Dealer Markup) Follow them or die. Not an easy choice. These two formulas will show you *every* way that you can adjust your costs/profits and whether you eat or starve. Note that for Software manufacturing cost is practically nil anyway so generally you don't even have to think about lowering that. There are also some guidelines, like "No Distributor wants to carry something that makes them less than 40%." or the demand curve for games approaches zero as the retail price approaches $50. Things like that. These you find out either by market research, or that old standby hard knocks. In case you are wondering most of the "constants" above are really interrelated formulas. For instance, Market Size and Manufacturing Cost are directly related by the economics of scale. It is cheaper on a per unit basis to manufacture 1000 units than it is to make 100 units. Determining something like Development Cost is a science that entire books have been written about. So while it's easy to say it isn't exactly easy to compute. For small businesses you can always pick some constants and plug them into your spreadsheet to see how the numbers roll. Anyway, that is my guess why the A2286 is so expensive. It isn't designed to either a) compete with Commodore's clones, or b) to undermine the Amiga software market by making it more economical to buy it and a software package rather than a native Amiga software package. --Chuck McManis uucp: {anywhere}!sun!cmcmanis BIX: cmcmanis ARPAnet: cmcmanis@sun.com These opinions are my own and no one elses, but you knew that didn't you.