The consumer and producer price indices are weighted-average samples of
marketbaskets of goods which are believed to reflect the spending habits of
either a personal consumer or producer. Productivity gain has nothing to do
with such measure, nor should it. However, these are averages, and as Zig
Ziglar once said, "if a man has one foot in a bucket of ice water, and the
other foot in a bucket of boiling water, on average he should be pretty
comfortable." Our rigs may just be in the boiling water...
Issues of productivity do bear on this, however, because without increases
in productivity, there would be greater inflation (ceteris parabis).
Increases in wage rates, if not accompanied by increases in productivity,
result either in inflation (if the costs can be passed along to the
end-user, which in the case of the Argonaut V may be true) or reduced
margins in a more competitive and less differentiated marketplace, such as
TVs, stereos, PCs and CD players. This is an issue of the price elasticity
of demand, and the availability of substitute goods, which helps determine
this factor. What percentage of sales that would have occurred at $595 are
lost at $795? If the difference is less than 25%, Ten Tec stands to gain
(aside from issues of marketshare).
I don't doubt that an Argonaut might run less than $200 in parts, and even
in the labor-hours to assemble it, but I also wonder about the design costs,
marketing costs, and amortized overhead. Of course the amateur line may be
subsidizing the government bids, but if it is the other way around (which
has been claimed by other manufacturers of ham gear), we should be glad that
Ten Tec maintains its commitment to the amateur market.
The point has been made that we get far more for our $$ today in our gear
than we did 30, 20, or even 10 years ago, in terms of features, performance,
and inflation adjusted dollars. We also spend our money in far more places,
often leaving us less disposable income overall, but that may be more an
issue of lifestyle and priorities, not inflation or value.
73,
Art, KC2G
----- Original Message -----
From: <duffyb01@fuse.net>
To: <tentec@contesting.com>
Sent: Wednesday, May 29, 2002 12:48 PM
Subject: [TenTec] Re: 516 Price in Perspective
> A nice analysis, but it is not totally accurate. The government's
inflation calculator does not take into account the growth in manufacturing
productivity over the same period. For example, the price of a product
should come down over time as productivity increases (assumes no increase is
raw material costs). To take this further, if there is inflation, the
inflationary costs increases are somewhat offset by the tremendous increases
in productivity that have occurred over the same time period. While not
perfectly balanced, you can't say that the sale price of a $300 radio would
equal $1,200 today. Maybe the retail price over time would be actually be
closer to the original selling price.
>
> A perfect example of this is stereo equipment, CD radios and the like. 30
years ago a good CB radio (if there is such a thing) would sell for around
$400. Today it retails around $100. A good stereo receiver sold for over
$1,000 thirty years ago...now you can get something similar for under $400.
>
> Let's focus a bit on the Argonaut. The models in past years were more
labor intensive than they are today. Because of technology, the new model
uses far fewer components. Therefore in 2002, the retail price is not
totally based on what the radio cost to build, I think it is based upon what
TT thinks they can get for it. The projected retail was originally $595. I
suspect it costs them less than $200 to build each radio (in quantity).
Then the target price went to $695 and now $795. Why? Because we all talked
about it so much and told them we want it and can't wait to get it, ect.
Under the law of Supply and Demand, they think that we will tolerate the
price increases because the demand has increased. Had we all cried foul
when the price kept going up, and did not put in the advanced orders, TT may
have brought the price back down to reality.
>
> Another example. Yaesu is coming out with the new 897 (I think that is
the model number for the new 160 to 440 rig). So I asked their VP of sales
"how much?" He said they did not know yet, and asked how much I thought it
was worth. I told him and he gave me a range of $1,100 to $1,400. The
retail price is not directly related to the cost of manufacturing, but is
more directly related to demand and what the marketplace will tolerate.
>
> Regards,
>
> Duffy - WB8NUT
>
> > Like some readers of this reflector, I was surprised
> > when the price of the new Argonaut V model 516 was
> > announced at $795, particularly when the Ten-Tec site
> > had earlier given an estimated retail price of $695.
> > As some others have done, I decided to get some
> > perspective.
> >
> > At the Unofficial Ten-Tec web site
> > (http://www.qsl.net/tentec), original retail prices for
> > the 505, 509, and 515 versions of the Argonaut are
> > given; at the W8KC Virtual Ten*Tec Museum web site
> > (http://mywebpages.comcast.net/W8KC/lineage.htm), the
> > starting year of production for these models is noted.
> > With this information, I went to the Bureau of Labor
> > Statistics web site (http://www.bls.gov/cpi) and used
> > their "Inflation Calculator." This handy device allows
> > you to input a value and year, and calculate what that
> > value would be for any other year using the actual rate
> > of inflation over that period. For example, $100 spent
> > on goods and services in 1971 would cost $443.95 in
> > 2002 for the same goods and services, based on
> > inflation alone. The inflation-adjusted 2002 prices
> > for the three early Argonaut models are shown in the
> > fourth column of the table below:
> >
> > ---Model---- -Year- -Price- -2002 Price-
> >
> > Argonaut 505 1971 $288 $1279
> >
> > Argonaut 509 1973 $329 $1332
> >
> > Argonaut 515 1979 $429 $1062
> >
> > The $795 price for the new 516 is 25% to 40% less than
> > the inflation-adjusted prices of these Argonaut models
> > when they were first introduced, an interesting result.
> >
> > Bill, KD5QID
>
>
>
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