Commodity Pricing

  1. What will it take to drive the price of scanners down to the commodity level?
  2. There is a predictable pattern of product competition.
  3. I think we are still in the early stages of that process.

What is it going to take to drive the price of scanners down to where it will make them truly affordable? Could this result in a much larger “pie”? I have been told by one of the largest manufacturers that their goal was to get the price down to that of a total station, and soon. There does not seem to be any evidence of that, but this is not kind of worldwide economy where companies are going to be willing to take risks with their revenue models.

From more of a business theory perspective, the price of most products goes through a predictable life cycle. When first introduced new products tend to compete against each other based on functionality. Once two or more competitors provide similar feature levels, the basis of comparison switches to reliability. From there the process moves on to ease of use or convenience. And once the competitors are able to offer all of these at similar levels the focus then becomes price.

At each step in most product life cycles the manufacturers tend to oversupply performance features that customers do not value. This pushes the process into the next phase. Eventually, once price becomes the focus of competition you end up with a commodity. Think Walmart.  In the consumer GPS handheld market once Magellan introduced the $100 receiver it was all about price after that.

So where are we in the laser scanning product life cycle? I do hear comments about the reliability of specific products. Convenience can come up, particularly in terms of size and weight, but for the most part it seems to me that we are still in the functionality stage.

Looks like we have a long way to go, unless someone thinks they can trade price for volume.

Thoughts?

P.S. I won’t be posting tomorrow. I have to go to a wedding – my daughter’s.

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