@rplst8 posted:This is true to an extent. However it's hard to measure how much more someone would buy if the price were lower.
i.e. if a boxcar costs $75 I might by only one, but at $50 I might buy three. I just wonder if the supply/demand curve is balanced right now.
Hard to know. There is a principle in pricing products (the term escapes me) where there is a psychological barrier to buying that if you are able to get below it, can mean more sales then might otherwise be expected. So in this example, at 75 bucks, person sees it, says "that is crazy", and buys just one. Price at 50 bucks? Guy says "wow, that is a deal at 50 bucks, I'll take 3" (this was a pretty good example). Marketing people and finance people don't just go by normal supply and demand curves, sometimes "sexy pricing" can make you spend more than you would at the higher price. Demand for goods is obviously not always a logical or rational thing. If you need a pound of nails to do something, and it costs 12 bucks, you might grumble and pay for it; but if it cost 6 bucks, you might not grumble, but you buy the same item.
The downside to cutting price is in this example they may not be able to do a lower price, even if it meant higher sales. From their perspective, let's say that 75 buck single purchase price made them 30 bucks (not a great example, but let's say). I price it at 50 bucks, and someone buys 3 instead of 1, I make 15 bucks.....not as good a deal (for me). Now if a lot of people saw the 50 buck price, and instead of 1 at 75, I sold lets say 10@50, I make more money (it gets complicated, because it leaves out that the fixed costs remain the same). It would all come down to pent up demand at a price, if enough people would buy at 50 that won't at 75, or people will buy multiple instead of one, they make more money.
With toy trains there is one downside to this, demand and the size of the market. In a limited market like toy trains, dropping the price may be unlikely to generate all that many more sales. Those who want it will pay the price, with the big margin, if they drop it they might buy more, but others may not drum up demand even at 50 buck level.
