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Show your costs to boost sales

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Re: Show your costs to boost sales

#71

Post by vntok »

elboru wrote: post #52
londons_explore wrote: post #11

Most "premium" products costs are mostly Advertising, R&D, paying employees/shareholders, etc. They're valid things to spend money on, but don't reflect the "top quality ingredients" that consumers expect the money to be spent on. I suspect many consumers wouldn't like to know that the $1500 iPhone they just bought only has $400 worth of actual parts in.

To be honest I don’t pay for expensive parts, I don’t really care if they cost $100. Instead I pay for a final product that can last me more than 2 years without becoming crap. I bought my first iPhone 4 years ago, today it works like the first day (I only had to replace the battery a few months ago). I never experienced that from any Android, I’m not saying there aren’t good quality Android phones out there, but I n…

Try any Samsung Sx product. You won't even have to replace their battery after only 4 years.

Re: Show your costs to boost sales

#72

Post by vincentmarle »

blinding-streak wrote: post #53

The article is interesting and all, but the fact that I had to wade through 3 separate "subscribe to our newsletter!" sections before even getting to the start of the real content is ridiculous. I counted a total of 6 different places where the user is asked to sign up for something or take some sort of action. Good lord.

It worked for me, I did sign up.

Re: Show your costs to boost sales

#73

Post by blackshaw »

blinding-streak wrote: post #53

The article is interesting and all, but the fact that I had to wade through 3 separate "subscribe to our newsletter!" sections before even getting to the start of the real content is ridiculous. I counted a total of 6 different places where the user is asked to sign up for something or take some sort of action. Good lord.

Substack makes it way too easy to fill your articles with "Subscribe" and "Share" buttons; you can do it with one click.

Re: Show your costs to boost sales

#74

Post by frankbreetz »

I would say I would be more likely to buy the chocolate, but not the chicken soup. The bulk of the cost being an opaque category like labor wouldn't sit right with me. I feel like I am being tricked. Whose labor? The chef, the server, the farmer, the truck driver, the CEO. I think if the broke this category out more it would work better.

Re: Show your costs to boost sales

#75

Post by GuB-42 »

If showing your costs puts your product in a good light, then do it, if it doesn't, don't. The article just shows that cost breakdown is one thing you can use in your marketing.

It is the same as showing where your ingredients come from. No product will show "made with GMO corn from the most productive industrial farms". If it is shown, it means there is something desirable about it.

Transparency isn't always a good thing. I think JCPenney’s tried it, and it was a huge marketing failure.

Re: Show your costs to boost sales

#76

Post by pydry »

Swenrekcah wrote: post #50
pydry wrote: post #40

Earlier quoted context omitted.

Luxury brand wallet owners feel much the same way about their wallets that you do about your iPhone.

Perhaps, but I think most luxury brand buyers fall into one of two categories: 1) They are paying more for quality materials, durability and perhaps a hand-made feel (that may or may not be in line with reality). 2) They are paying more so that they can get something that most others can't only because it's too expensive. I really can't believe that people who buy $2000 handbags think that the handbag company is doin…

You can replace R&D with trust, material quality, worksmanship or some other ethereal hard to pin down quality.

Re: Show your costs to boost sales

#77

Post by Frost1x »

pydry wrote: post #40
chadash wrote: post #28

Earlier quoted context omitted.

Point taken, but perhaps a bad example. When I buy an iPhone, I'm paying a little for materials, but mostly I'm purchasing the culmination of tens of billions of dollars of R&D that possibly surpasses any other product on Earth. A better example might be a luxury brand wallet where they sell the illusion of better quality, but that may or may not be true.

Luxury brand wallet owners feel much the same way about their wallets that you do about your iPhone.

>I suspect many consumers wouldn't like to know that the $1500 iPhone they just bought only has $400 worth of actual parts in.

This is neglecting software development, maintenance, new features rolled out, etc. Yes, you're overpaying beyond cost, Apple would go out of business if you weren't. The question is are you overpaying for the functionality or value you get out of the product/service and are the margins too fluffy.

In the case of a designer wallet or velben goods in general, you're really paying for the status and symbolism in the inflated margins. This may be true of some iPhone owners who don't use their phone or buy one every quarter but not most, they're getting utility and value out of the devices that's likely worth the cost.

Velben goods get a bit complex as well because of intangible value in social situations. Sure, that designer wallet is a waste of money. My $10 leather wallet does the same thing and is probably more durable (even blocks RFID, yay). There is much theater to life, however, and velben goods can land you in situations surrounded by those will wealth that leads to opportunities you might not otherwise have.

Impression and perception is difficult to assess value (advertising and marketing in business sure think its valuable), but you'll find you may get bumped in lines, have better service, land a job, or something else all because of such social impressions. This is the entire reason people don't wear flip-flops, athletic shorts, and t-shirts into the office or interviews and why some people carry thousands of dollar hand bags around. The question is: what's your ROI on these impressions? It's difficult to measure and frankly to me seems typically like a net loss. I personally think it's crazy and could care less if you waste money to flaunt wealth or play status games, but I've witnessed the effects first hand of success in this realm to not completely discard the intangible value that may exist.

Re: Show your costs to boost sales

#78

Post by gpm »

pc86 wrote: post #42
tyrex2017 wrote: post #33

omg, brace for BS marketers start putting fake cost numbers on their products to boost sales..

Wouldn't that be illegal?

Outright lies would be, but hollywood accounting is a thing even when the relationship is adversarial.

For example set up two companies, company 1 purchases the ingredients for cheap, does some minor amount of work on them, and sells them to company 2 for way too much money. Company 2 then turns them into soup and makes 0 profit. Cost breakdown on the soup makes it look like the ingredients were really expensive, but actually it's just that company 1 is making the profit instead of company 2, and they happen to have the same owners. (Note: Not legal advice... I don't know if this exact scheme would be legal, but I'm pretty sure schemes like it would be).

Re: Show your costs to boost sales

#79

Post by rahimnathwani »

tdmckinlay wrote: post #47
shoto_io wrote: post #39

Earlier quoted context omitted.

Hi Thomas, thanks for your work. I am a fan! Just a minor comment: I find using decimals places (like 16.1% and 21.1%) in human experiments pretty irritating. It feels like false precision. After all, these experiments must have confidence intervals. If I had to guess, I’d assume at least a +/- 5 ppts variability in all these numbers. What’s your view on that?

Thank you so much! I agree that the figures can vary for many reasons and we shouldn't expect them to be exactly the same (some things we don't end up controlling for). At the same time, if we take the experiment of the soup for example: They measured 9,227 sales of it so the 21.1% increase is quite robust and I'd expect the error margin to be much lower than 5% either way - so in some ways the precision is warranted…

"if I were to round a 21.4% to 20%"

Right, but you'd round 21.4% to 21%, not to 20%.

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