Digital Wealth

Image courtesy TechTree.com

A thought came to me today, via the subconscious mind.

Imagine for example, a camera from Polaroid (this is just an example). Someone buys this from the grey market, manufactured in fact by Polaroid but without warranty at a reduced price. Another person buys this from a regular store, with bill and warranty. Does the price difference at which these two people have bought the cameras indicate anything? I think it does: the quality of the product, from the horse’s mouth.

Nonsense? Let me explain. Cost of manufacturing is decided by the total expense in manufacturing a product, divided by the total number of units manufactured. The cost of selling and after sales support is added to it, calculated similarly – finally the desired profit is added to arrive at the selling price.

My assumption here is that when purchasing something without a bill, the company only charges manufacturing price, with a marginal sales price. However, when purchasing in an authorised showroom, the full price, as I explained above is charged. Hence, the difference of those two prices is the cost of after sales support. The higher this cost is, it means a higher percentage of units require servicing or fixing. Which translates to lower quality.

An example:

To me this indicates Brand A is more ‘stable’. Would be interested in doing this as an experiment: someone could take it up as an MBA project. Please let me know if you are interested.

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