Re: define linearization
Re: define linearization
- Subject: Re: define linearization
- From: Graeme Gill <email@hidden>
- Date: Tue, 20 Aug 2002 16:04:14 +1000
SKID Photography wrote:
>
I don't mean to get into a fight about what goes into making a rip and or making a printer and
>
it's software. I also didn't realize that you had a vested interest in RIPs which explains
>
your point of view.
I just find it kind of funny at times, that there are heaps of articles in this
list complaining about how difficult/impossible it is to make default drivers
to various printers produce the desired result, and then have the same people
wondering how RIP manufacturers dare to charge for their product.
>
Let me put it this way: Do you view the RIP business as an 'elastic' or 'inelastic' business
>
model?
>
>
Some (myself included) say that if one drops the unit price for a RIP, the demand will more
>
than make up for the lower profit margin.
The price/demand response is often a difficult to judge factor is trying to sell a
product.
There is almost always some elasticity in any market, but sometimes this curve
behaves in strange ways, or sometimes it's hard to get from "here" to "there"
(ie. low volume, high margin to high volume, low margin).
For instance, if we dropped the profit margin on our product by 50%, do we
think the sales volume would increase ? Possibly. Would our overall revenue
increase ? I suspect not - the increased sales volume wouldn't compensate
for the loss in margin. Sometime we've seen reverse curves - dropping price
drops volume, because customers figure that anything that cheap can't
be any good. We very definitely adjust our prices depending on the
expected market size (as well as what competitors are doing, of course!).
>
We all make our own decisions about pricing about our own businesses every day. It's a matter
>
of opinion as to which is correct. But chances are, that the business that breaks from the
>
pack (price wise) first ,will win the largest share of the market. Even AOL finally realized
>
this.
Some markets are just too specialized to ever break into the volume area.
The stakes are a lot higher in volume markets. If you get it right, you can
make a lot of money, but if you get it the slightest bit wrong, by
underestimating your real costs, you can loose a fortune. The
classic way of underestimating your costs are to not make your
projected volume (ie. not meeting economy of scale, not selling
inventory), or having a flawed product (where you
when spend more than your profit fixing/updating/replacing each
product sold). I've been all to closely involving in such disasters!
Several RIP manufacturers have made valiant efforts to move into
the volume end of the market, but as far as I can tell, they
haven't been particularly successful in making money.
Those manufacturers that have made it to high volume (by being
OEM suppliers to the printer manufacturers) have been squeezed
unmercifully on price, and don't seem to be doing particularly well
either. Being an OEM supplier, and having no end user visibility
gives you little power, apart from competing on price.
The market for RIPs intended to support proofing is never going
to be a consumer market, it's a specialist market, and will remain
relatively low volume. What may happen, is that perhaps some of
the printer manufacturers may wake up to the fact that they
aren't experts at color or screening, and that perhaps it may
give them an advantage to licence such technology from people
who are.
Graeme Gill.
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