Next message: (no name): "lv-ab: Re: holding tanks"
I have heard this too, as the justification for trying to save 3 cents
on a sensitive component by using one with less tolerance than would
make for good reliability. In one company an increase of $0.10 in
component cost resulted in $1.00 increase in product price.
But such calculations, even though they may teach them in the world's B
schools, are obviously flawed if you were to consider the true cost of
production, PLUS the cost of warranty repairs due to cheap components,
PLUS the cost of ongoing repairs. The trouble is, they also charge for
service contracts, and customers don't seem to mind paying even large
amounts for service, so the manufacturers make $more by going cheap than
they would be producing a better product that breaks down much less
often. I'm talking about the computer industry as it used to be when I
was in the hardware world a couple decades ago. I don't know if all
that applies to all electronics today.
Dick
> I found, in my 'discussions' with management that end
> pricing was indeed the reason Quoted for 'cheeping in the
> design. However I always wondered why. after a certain
> profit for a product had been decided upon, it was necessary
> to increase the end price by $10.00 if I wanted to use a
> part that cost $0.10 more?
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