Comments on Category #1
Pricing is our first category, MSRP that is.
24 Manufacturers with 121 models...so far. For each model we will list the statistics published by their respective producer. The categories will fall under two main headings for the two main components of the headset, a headphone section and a microphone section.
The categories are not yet finalized, some may yet be added and some may be deleted. There are some categories that are set and those are the ones we focus on in the next few blogs.
Category - Price, MSRP
Manufacturer's Suggested Retail Price, MSRP. According to the most basic of economic theory, retail pricing follows the same rules and is set by the rules all product and service pricing follows, that often referenced law of supply and demand. Ask the typical salesperson how they set their prices and they will hold their head up and spout, "supply and demand", without having any idea what he has just said. It's more of a cliche that a rule, much less law, that we all are assumed to have a vast understanding of. So, in practice, "supply and demand" being evoked by a salesman translates to "I have no clue."
The laws of supply and demand are best left to economist who study the marketplace. Years ago while listening to public radio, an economist in giving advice directed to the small business owner summarized the simply stated, yet complex law with the statement, "you set your prices to be as busy as you want to be." Given that you have a product or that people want or need, a high price will lower sales, a low price will raise sales. The trick is to set prices so that you maximize net profit, which in a small business is your paycheck.
So, what does this have to do with MSRP. "Companies are in business to make money." How many times have you that. For some companies the statement is true. There are some companies that are in business because the person or people who started the business had an interest in what they were or are doing, and started the business because it was something they enjoy, the exchange of money lets them keep doing it without having to get a job. Fortunately for those of us looking for headsets the latter is often the case. Couple that with the number of companies and you've got a formula for competitive pricing, good offerings and often updated products.
What is MSRP
As the name implies this is a price that the manufacturer "suggests" the product to be sold for. Legally, at least in the US, prices cannot be set by the product's manufacturer. They sell on the open market to distributors or directly to retailers and in some cases directly to the end user, that is, in the case of headsets, to us the gamers.
When a manufacturer sells to anyone short of the end user, they can determine their price to the distributor, then the distributor determines the price to the retailer and the retailer sets price to the consumer.
It is worth noting that some manufacturers have created a sort of loophole in the law by having written into its retail agreements that the potential retailer is required to agree to and sign is wording that recognizes and acknowledges the law that states that retailers are free to determine their own prices and that MSRP are merely suggestions or guidelines, and additionally they recognize that manufacturers are within their rights to choose their retail representatives and that does not preclude cutting off a retailer who chooses to sell their products for less than MSRP. You can find examples of this in the electronics industry where companies put large percentages of their budget into advertising to promote a product line that, in reality is very inexpensive to produce. These products are well known, well liked and in most cased really good products, just priced at a point where better choices per dollar are available, just not as well known or well marketed.
Determining MSRP
How does a company set is suggested selling price. This is not universal, not a law, rather it's a rule of thumb. Something to keep in the back of your mind as a starting point to understand pricing in electronics. It goes like this. If a product costs x to produce then the MSRP is about 4x. This gives the producer room for profit as well as the distributor and the retailer.
What does this mean for the less common, or less traditional sales structures, namely the direct seller and the manufacturer that is a high exposure advertiser with low product cost. The direct seller usually produces less units and sells at a higher profit margin. The advantages are that the price is usually less than it would be traditionally or the products are of a bit higher quality at their price. On the other hand the heavy advertiser delivers a lesser product per dollar. In the case of the strong advertiser, the company is not making inferior products, their advertising cost just place more cost on their products.
The manufacturers that step up with the big marketing money add value to the industry overall, they serve to make us aware of the existence of new products and improvements of existing products. Their reward for this is that they make the sales to the consumer who is making the impulse purchase, no research, that's cool, I'll take it...and that's all of us from time to time. Again, it doesn't mean that the product can't be the best in a particular price point, indeed, if it is, it dominates the market and owns that segment.
Selling or Street Price
In the current market MSRP is just a point to start looking. The suggested price can serve as an alarm system in that if we visit a site to purchase an item and the site has the item above what we know to be the MSRP, we have an issue. When we decide on that one headset, the street price, or what we will need to hand over to obtain our new edge, is what we need to know.
Summary - Minimizing the Price Effect
Price is an important element in any purchasing decision, we don't want it to be the only one. Price, while an objective category, influences the subjective portion of the review more than any other category.
To help minimize the effect of price, we will rate the products with four different parameter sets. Rather than a good, better, best system, we will use an A, B, C, D grading system where A will be the best product available regardless of price. Products that are A rated are the best available, they could cost $10.00 or $100,000.00, price does not factor in at all. Products that receive a grade of B are products that are well above the curve. Owning a product with a B grade will make a great addition to a system and cost is a small part of the purchase decision. Products with a C grading are good products, again a good upgrade to any system and will gain that goal of having a sonic edge and price a major factor; these products give a lot of return for the monetary unit spent. Grade D are products that function, but may not improve your gaming experience beyond not waking up the rest of your family. D graded products are functional and possibly an grade above the mono bluetooth headset, but not a first choice for an edge.
We'll talk more about the grading system and have more detail about what is required for the various grades in future posts, but, for now, keep in mind that we are trying to minimize the price effect found in so many reviews that allow the reviewer to avoid making any real judgment that is useful to the gamer by having conclusions that all start with the "at this given price point, you would be hard pressed to find a better..." line in an attempt to retain their credibility. Unfortunately, this doesn't help the reader with a genuine opinion or give the manufacturer any helpful feedback, it simply comes off as another advertisement.
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