jskim9 said:
If they they sell twice as many at half the price (of $100K) isn't that the same amount of revenue?
I think I got what you all want
- Thread starter drmanny3
- Start date
If they they sell twice as many at half the price (of $100K) isn't that the same amount of revenue?
hondaholic said:
No. Depends on the profit margin. Here's how:
ie. Pretend each NSX v2 costs $25,000 to make.
($50,000 RRP - $25,000 costs) x 10,000car sales = $250,000,000 profit.
vs.
($100,000 RRP - $25,000 costs) x 5,000car sales = $375,000,000 profit.
Double the price, half the sales, 50% more profit. Plus additional exclusivity. This is obviously how Ferrari stays in business.
I hope Honda splits the difference and keeps it just under $100k. Because it's not a Ferrari, it <B>will</B> depreciate like the present NSX causing nobody to buy them.
It could be even more profit than Neo wrote. From what I learned in economics: You have a certain fix amount you need to develop a car and set up the assembly line, distribution etc. Plus you have the variable costs for each car you build. The fix amount will be shared by the number of cars. E.g.: If you have 10 Million fix costs and sell 10 cars each car has to shoulder one million as his part of the fix costs (plus the variable costs). If you sell 100 cars it's only 100,000 bucks fix costs per car.
So you have two possibilities when you build (and hopefuly sell) more cars: Make every car cheaper or keep the price high and make more profit (of course you can also choose a way in between).
If you keep that in mind you'll see that Neo's calculation is not entirely true because the costs for each car vary with the number.
So you have two possibilities when you build (and hopefuly sell) more cars: Make every car cheaper or keep the price high and make more profit (of course you can also choose a way in between).
If you keep that in mind you'll see that Neo's calculation is not entirely true because the costs for each car vary with the number.
Of couse we have fixed and variable cost and capital cost that are amoritized but the point of my post really is that it all comes down to product planning, product positioning and brand strategy, most of which Honda does poorly (I suspect because I beleive most decisions have been made in the past by Japan rather than by American Honda).
I am a marketeer at heart (http://www.automoblox.com), and if the Acura brand was under my watch I would bring it further upmarket so it would be considered a true competitor to BMW, Audi, MB and Lexus. Acura is too good of a value proposition to be luxury.
The reason why the NSX didn't sell in higher quantites (I would argue that is was a moderate marketing success), is because the guy who purchases that type of car wants a brand
The RSX would be gone in a heart beat. The Germans came down market with well established brand equities. Honda is trying to work their way up, not as effective in my opinion.
I am a marketeer at heart (http://www.automoblox.com), and if the Acura brand was under my watch I would bring it further upmarket so it would be considered a true competitor to BMW, Audi, MB and Lexus. Acura is too good of a value proposition to be luxury.
The reason why the NSX didn't sell in higher quantites (I would argue that is was a moderate marketing success), is because the guy who purchases that type of car wants a brand
The RSX would be gone in a heart beat. The Germans came down market with well established brand equities. Honda is trying to work their way up, not as effective in my opinion.
