Whenever you visit a craftsman’s workshop, be it an artisan, wood craftsman or whatever else, their shops usually have a decent range of items from something that may cost five to fifteen euros to the proper items costing from fifty euros up. It should not be any surprise that the most selling items are the little trinkets and jewellery, as their price most often are from the bottom up. The price is nevertheless higher compared to the production costs than on anything else in the workshop, and that is due to necessity.
Wait, isn’t this blog supposed to be pro-consumer? Is this a hundredth post? No, and this is pro-consumer. The more information the consumer has the better. Nevertheless, we must consider reality as well. The big item orders and their several hundred or thousand production costs and installation may not bring in large income in the end. Maximising profit is any business’ main goal, and an absolutely necessity for smaller companies or individual entrepreneurs. By minimising some production costs and maximising the price the consumers are willing to pay, a person can maybe gain a living.
For example, small full metal jewellery, like crosses and such, are of one or two millimetre thick steel. Their shape usually is either something slightly original or from the general consensus of what looks. When mass-produced, their production costs tend to me low, as you can get them laser or water cut at a very low price. Adding some of your own flavour, like hammering the surface and painting it black, often produces a look that looks like the jewellery was hand-made in a forge from a piece of steel. Production costs for an individual piece might be something like to two euros (perhaps five with modern cost of material, though I know cases laser cut jewellery has cost as low as 20 cents) and the final price tag on the item might be either fifteen or twenty euros.
The reason why small items of relatively high price in comparison to their production costs exists is because they sell the most. These trinkets are often gifts that fit in the pocket and might look a bit special, especially if they have some local flavour to them. They’re also great for impulse purchases, as the low-cost seems almost insignificant compared to a hundred euro candelabra next to it. If all the work is done locally, the price won’t even have big chunk of logistics in it.
Of course, the price wouldn’t be that high if people weren’t willing to pay. The consumer rarely considers the end-price their willing to pay in terms of logistics, raw materials and work put into the product. The perceived value of a product weighs more in the end over more practical and solid information. The fact is that we as consumers pay what we consider to be valuable to use (or to others depending how much you want to impression people with your new shit) and modify our purchasing behaviour accordingly. Trading card games are great example of this. While the cards themselves are practically worthless pieces of cardboard and ink, the perceived value of their rarity within their specific games or their usability in a given deck gives them a high market price. Rarely you see a card being high in price because it has exceptional artwork or the like. The value of these cards also tend to shift rather quick as formats change, something that yours truly is not keen on.
Another though a bit different example of maximising profits while cutting away production costs is the lack of headphone jack in smartphones. Even when some phones nowadays lack the jack for traditional headphone gear in favour of wireless pieces (that frankly tend to outright suck in utility), the end price of the phone is still the same. The Wirelesness doesn’t excuse the same price, as Bluetooth is a standard in modern phones across the board. In cases like this we can question whether or not it’s just or acceptable for big companies to keep the same sales price for their phones when their production costs have seen a cut. After all, we’re not talking about a trinket here, but a several hundreds of euros worth of money.
The question whether or not upping the price like this is ethical towards the consumer is somewhat a moot question. On one hand it is true that in an ideal world products wouldn’t cost much more than what their production costs, personnel salary included. In reality this doesn’t really work due to how life tends to kick us in the balls. Profit is also necessary in order to gather money for industry related projects, additional raw materials, new equipment and so on. Profit doesn’t magically end up in a bank account as a plus mark. I’m sure all of know the feeling of wanting, needing to expand on something that you directly need, but simply lack the budget for it.
This can turn into purchasing politics very easily. While voting with your wallet is essentially the best way to hurt a provider (even a 10-15% drop in sales with video game sequels sounds alarms in companies) but is also used as a way to show support for whatever reason. DLC, especially visual flavour DLC and the like, is like these trinkets. Producing them doesn’t cost much at all while their pricetag can be surprisingly high. Again, this is just minimising costs while maximising profits. A consumer may buy these trinkets just for such perceived values as they’re just cool to have within a game as options, or that the user has a “complete” game in their collection with all the extra stuff and thus feel satisfaction through this, or just because they happen to like the developers and wish to show some support by providing them with further sales. Not really sure how much I can personally encourage buying any DLC to a game, but that’s something any and all individuals have to decide for themselves. It is a question of opinion in the end, and all of us have the right for our own.