Garmin 195...295...296...396....

Michael Ware wrote:
"Robert M. Gary" wrote in message
ups.com...

Dan Luke wrote:
"Robert M. Gary" wrote:

Selling it for less than people are willing to spend (because the cost to
make it is
cheap) just makes you foolish.

-Robert

Well, there is a comprimise there. If they sold a 396 for $3500, would they
sell any? Probably. If they sold them for $1995, would they make any money?
Probably.

If they sold the first 100 for $3500, then dropped the price to $1995
they would get both prices.

-Robert

Jonathan Goodish wrote:
In article . com,
Actually, if the selling price doesn't generate a profit (not just cover
costs), most businesses won't make it.

True, but only in accounting terms. In business terms the cost to
produce the product "Cost of Capitol" includes a return to investors
(the required return is calcuated based on a number of factors, GE
doesn't need to return as much as Sun for example, debtors require the
lowest return).

-Robert

"Robert M. Gary" wrote in message
ups.com...

Michael Ware wrote:
"Robert M. Gary" wrote in message
ups.com...


Well, there is a comprimise there. If they sold a 396 for $3500, would
they
sell any? Probably. If they sold them for $1995, would they make any
money?
Probably.

If they sold the first 100 for $3500, then dropped the price to $1995
they would get both prices.

-Robert

True, they could. But the 396 has been out for about a year now, and I have
yet to see prices on new 296 come down any. They will sell them for that
price until demand drops off, then discontinue production.

Michael Ware wrote:
"Robert M. Gary" wrote in message
ups.com...

Michael Ware wrote:
True, they could. But the 396 has been out for about a year now, and I have
yet to see prices on new 296 come down any. They will sell them for that
price until demand drops off, then discontinue production.

Its all just marketing (which is why we said the marketing department
sets prices, not the production or RND departments). My guess is that
they consider the 196 to be their "intro" model and do not see a need
to drop the price of the 296 to fill that section of the market. At
some point the 196 will seem obsolete and they will need to find
another product to fill that void (possibly the 296). The actual cost
to produce the 196 and 296 are probably about the same but dropping the
price of the 296 may eat into the 396 market (some people will perfer
to pay the lower price and forgo the extra features). The bottom line
may be that the 296 is too similar to the 396 right now to use it as
the low end product.


-Robert

wrote:
Still flying with the 195 on my yolk and that was $ well spent years
ago but would like to upgrade. Anyone hear anything about what's coming
down the pike next? Seems about 2 year intervals for these portables.

Thanks for any info.

Dale
PA-24

FYI, they just dropped the price on the 396. It now sells for $2195 at
Tropic Aero, JA Air, and most other places.

Brock Boss

Gig 601XL Builder wrote:
"Robert M. Gary" wrote in message
ups.com...
Unless you are MicroSoft selling the Xbox 360.

Microsoft isn't selling Xboxes, they are selling XBox games.
Actually, from having done some consulting in this general area for
Microsoft I would say that they simply want to establish a better
position in the family room (i.e on the TV). XBox is only one piece of
their strategy. I'm not sure how much information is public but you can
find public information on Microsoft's CSF web site
http://www.microsoft.com/serviceprov...framework.mspx


-Robert

In article . com,
"Robert M. Gary" wrote:
True, but only in accounting terms. In business terms the cost to
produce the product "Cost of Capitol" includes a return to investors
(the required return is calcuated based on a number of factors, GE
doesn't need to return as much as Sun for example, debtors require the
lowest return).


From a practical standpoint, that's really irrelevant if the business
never makes money. If the business is never profitable, it can't return
anything of substance to investors and sooner or later the "investment"
will cease. What is accomplished by operating (or investing in) a
business that only consistently breaks even or loses money, or otherwise
has an artificial "cap" on profitability?

Most businesses in the United States do not have debt traded on the
public market--they are small businesses. In this case, profitability
is even more important because the number of private debtors is usually
relatively small and the window of opportunity to turn loss to profit is
much narrower.

Business is all about profitability and if you don't have it--whether
you're a large or small business--you won't last very long.



JKG

In article .com,
"Robert M. Gary" wrote:
From an accounting point of view you are right, you must make a profit.
From a business point of view you have a concept called "The Cost of
Capitol". That cost includes the profit you need to make based on where
you get your money (investors expect more money than debtors etc).
Cover costs **MUST** include all Cost of Capitol including returns
(i.e. profit it layman's terms) for investors.
-Robert


There really is no practical difference between the "accounting" point
of view and the "business" point of view when you get down to the brass
tacks--if the business isn't profitable (or expected to become
profitable), there's no reason to operate it. All of the accounting
minutia is rather irrelevant if the business can't cover debt payments
and provide appreciable uncapped returns to investors. While all
businesses have target margins and other objectives, I'm not aware of
any (good) businesses which decide to stop making money once those
targets are hit.

We all work to make as much money as we can, right?



JKG

Jonathan Goodish wrote:
There really is no practical difference between the "accounting" point
of view and the "business" point of view when you get down to the brass
tacks--if the business isn't profitable (or expected to become
profitable), there's no reason to operate it.

The point is that "profit" is not an absolute. There is a cost to using
your money that is very, very tightly related to how the company is
financed. If you are a publicly traded company you must earn a return
to make your investors happy (usually calculated as risk free rate
(T-bills) plus risk premium for your stock). If you are financed by
debtors the the cost of your capitol is just the interest rate you pay.
All investors expect to get returns, but at different rates. This is
why companies have finance departments that know their "cost of
capitol".
So it is wrong to say "you must make a profit". If a product would
produce a "profit" of 2% but your investors expect a 10% return, you
are losing money and should not produce the product. This is where
companies financed through debt have an advantage (their cost of
capitol is often lower).

-Robert

Most businesses in the United States do not have debt traded on the
public market--they are small businesses. In this case, profitability
is even more important because the number of private debtors is usually
relatively small and the window of opportunity to turn loss to profit is
much narrower.

Again, you are using the term "profit" in an accounting way. If you are
a small company there is cost for you to use your money to produce the
product. If you are using your own money in the bank, then that cost is
the lost opportunity cost you could have had if you had left the money
in the bank, plus something for your risk. If you borrow money, the
cost is the cost to borrow the money. If you have investors (which is
what you are when you own a small company) the cost of capitol is the
return you require for it to be worth it to continue to invest in your
company.

If a product is going to return 0.5% then you'd be a fool to invest in
it, just buy T-bills. You need to return a "profit" that matches your
cost of capitol.

-Robert, MBA