Bearing prices, for shame

[Larry Diamond]

I work for an electronics manufacturing company. As a Program Manager I've seen some really shady people in senior positions with a variety of suppliers.

The most interesting conversation I had was with a Director of Sales and Marketing. I initiated a meeting with this gentleman and our Materials Manager. This company was charging us over $20ea an IC (Chip) that I learned should only be costing us about $1.85ea. They came off of the same line with no additional financial burden or value add to this device.

When I questioned him about his pricing, his response was, "That's what the market will bare". My response was very direct and simple, "So, what your telling me Mr. Supplier is that your company has no problem price gouging and driving higher cost to the consumer which sacrifices overall finished product marketability". I'm very aggressive when dealing with this type of folks. His comment earned a conference call with his VP of Marketing and $75K refund for his last 6 months of indiscretions, which I in-turn credited my customer.

The bad thing is that this mentality is all over in every industry. I have no problem for any company charging for any service or product that keeps them healthy. I will always have problems with marking-up because that's what the market bares.

Managing supply and demand is economics 101. Price gouging is down right unethical...

To be fair about the bearing prices stated below, Tower Hobbies & Distributors probably don't get that good of price due to special packaging requirements and volumes. Tower also provides a great service for the unknowing consumer that needs technical support. If they got them in the same box and paid the same price and didn't offer any technical support to the hobbyist (No value add),  I would be appalled.

Non-the-less...A smart buyer will look for the cost savings opportunities.

See ya,

Larry
  ----- Original Message ----- 
  From: Anthony Abdullah 
  To: discussion at nsrca.org 
  Sent: Tuesday, October 14, 2003 3:55 PM
  Subject: Bearing prices, for shame


  I work at a major industrial distributor and for some unknown reason had not utilized them as a source of replacement bearings yet. A flyer at my local field asked me to get replacement bearings for his OS91 VRDF and had me look up the part number. I found out that for at least the OS ducted fan engine they are standard NTN bearings. Tower charges 14.49 for the smaller front bearing and 16.99 for the larger rear one. I looked them up in our system and our cost on the front is $3.79 and the rear is $4.84! Now color me silly, but I think a 251% mark up is a little excessive. If only I could sell anything for that I would be flying a pattern plane made of gold.That doesn't even include shipping because both would have to be shipped so that's a push. Now I can see the price if the bearings are specially made for our application and require seperate tooling or equipment, but we bought and sold about 3.7 million of those last year for industrial applications alone, and probably have about 250,000 on the shelves of our 650 SCs at any given time. It is obvious that OS buys a standard bearing, renumbers it and sells it to us at a huge profit for their troubles. Another example of the RC market being taken advantage of.

  Moral of the story: if you can find another source of replacement bearings do it. My company has service centers in 48 states and any of the friendly associates could probably save you money on them. I would even be willing to acquire them and ship em and I would only charge you 150% markup. <vbg> 

  Disclaimer: I know that there are people out there who would say "what about OSs cost  overhead, and razor thin margins, and blah.... blah.... blah..." but I really am not concerned about that. I know it costs them X dollars to do business, but my only concern is spreading the word to my fellow RC enthusiasts so that we can stretch our already thin hobby dollar as far as possible. 


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