Originally Posted by reef58
God I am too lazy for this. I never said CK headset were better than any other in that post. I don't think a headset has much bearing on the performance of a bike. Therefore if you go for a CK headset then it is a mere luxury, or bling, or whatever you wish to call it. I repeat buying a CK headset is a lot like uying expensive carbon fiber bottle cages. They are kinda cool, but in the end don't make a difference.
Yes I pulled the numbers out of my a$$. I don't have access to his financials. There exact numbers are not important to my point. My point being with his low volume, and higher costs his margins are not going to be disproportionatley higher than a similar business. Since he has a loyal following I suspect he is at the upper end on his margins again just my own conjecture.
I agree with you about CK not going hungry. I suspect he is doing well.
Maybe I didn't word my response well, or maybe I failed to properly comprehend your post, but I don't think CK is really sticking it to the consumer with grossly over-inflated prices due to his reputation.
Since you are a business expert you can certainly agree that CK is going to incur much more costs per unit than many of the other vendors. More than likely there are 10 brands or more of headset being stamped out in the same factory in China, or wherever.
Sorry if I offended. That was not my intention.
Richard
I'm not offended, and I do not mean to offend. I just get so worked up over this because I have seen too many business not reach their potential, or downright fail because they don't understand this fundamental concept (price vs cost).
We're on the same page for most everything. I disagree with this key point, "CK is going to incur much more costs per unit than many of the other vendors". Not necessarily true. True value added businesses can be structured in such a way that the the number of units sold bears no relation to their cost per unit. It's all about management of capacity, resources/logistics.
I'm guessing that you are in some sort of basic retail, distribution type of business, a non-unique service, or other commodity based business. In those situations the number of units moved bears a direct reltationship to your costs per unit if using classic models.
In truely value-added businesses where products are actually being made, or unique services being sold then you price based on the value and THEN you create the cost structure that best utilizes the resources generated.
It's not about how big you are when you are the one creating the value.