I believe Lionel priced the Y3 to provide their targeted ROI on an updated Legacy engine investment. The fact that it will provide information about the purchase volume at that price is true but I doubt that drove Lionel's pricing decision. The street price is $1,500 and I have one on order. The price is still 15% under an O gauge model. Buying S gauge Legacy engines at 1/2 of the O gauge price was great while it lasted, seems that will no longer be possible.
Were I responsible for approving S gauge engines I would require a higher ROI for S than for O because the likelihood of exceeding the build minimum by a larger than planned amount is lower. The total market is smaller but the investment and production costs are almost the same. This results in a lower probability of converting above plan gross margin into bottom line profit.
