Hypex announces price increase on Fusion Amps

[Rick Sykora]

As their Fusion amps use AKM dsp chips, the AKM plant fire has forced them to do some chip buys at apparently higher prices that are being passed along to customers. If you are considering a purchase, may want to do before the price increase trickles down.

In related news, the dsp options for the Ncore amps are limited availability as they used AKM chips too. Must be a different chip though because, when asked, I was told that the dsp board was only being sold to customers that had purchased previously.

 

[Tks]

I need to look up this phenomena, where manufacturers of products, pass on cost-increases along to consumers, and to see if this is standard practice pre-Industrial Revolution as it now seems to me.

Not just literal costs from supplies, but also tariff changes. I'm just surprised so many companies exist out there that are confident enough in their businesses to pass the cost to consumers entirely like that. Begs the question why they don't simply raise the prices before such events occur. Especially these days with Corona going around... Sales figures getting worse? Raise prices!

???

So weird... Maybe someone with a business degree can spell it our for me. To me it seems like a simple "Oh other companies are doing it? Well, now I have enough confidence not to upset the market enough to where I would draw attention to myself with this move, so I'll proceed with the train". Or is it simply the case "Okay, normal consumers are buying less, so we raise price on anyone left still buying to make up for the shortfall".

Like why aren't there any companies taking the simple L and absorbing 50% of the cost, or 100% of the cost? Are their margins THAT bad?

 

[pozz]

I need to look up this phenomena, where manufacturers of products, pass on cost-increases along to consumers, and to see if this is standard practice pre-Industrial Revolution as it now seems to me.

Not just literal costs from supplies, but also tariff changes. I'm just surprised so many companies exist out there that are confident enough in their businesses to pass the cost to consumers entirely like that. Begs the question why they don't simply raise the prices before such events occur. Especially these days with Corona going around... Sales figures getting worse? Raise prices!

???

So weird... Maybe someone with a business degree can spell it our for me. To me it seems like a simple "Oh other companies are doing it? Well, now I have enough confidence not to upset the market enough to where I would draw attention to myself with this move, so I'll proceed with the train". Or is it simply the case "Okay, normal consumers are buying less, so we raise price on anyone left still buying to make up for the shortfall".

Like why aren't there any companies taking the simple L and absorbing 50% of the cost, or 100% of the cost? Are their margins THAT bad?

What industry do you work in?

If continued demand is assured and there are other internal pressures (supply chain, administrative, workers), then a price increase makes sense and will likely be accepted. I wouldn't assume margins to be as wide as all that.

There is always some cost to deliver the product on top of manufacturing it, and to maintain continued support and so forth. The relationship between that and the success of the business is not straightforward.

 

[ahofer]

I need to look up this phenomena, where manufacturers of products, pass on cost-increases along to consumers, and to see if this is standard practice pre-Industrial Revolution as it now seems to me.

Not just literal costs from supplies, but also tariff changes. I'm just surprised so many companies exist out there that are confident enough in their businesses to pass the cost to consumers entirely like that. Begs the question why they don't simply raise the prices before such events occur. Especially these days with Corona going around... Sales figures getting worse? Raise prices!

???

So weird... Maybe someone with a business degree can spell it our for me. To me it seems like a simple "Oh other companies are doing it? Well, now I have enough confidence not to upset the market enough to where I would draw attention to myself with this move, so I'll proceed with the train". Or is it simply the case "Okay, normal consumers are buying less, so we raise price on anyone left still buying to make up for the shortfall".

Like why aren't there any companies taking the simple L and absorbing 50% of the cost, or 100% of the cost? Are their margins THAT bad?

This parallels the discussions of tax incidence and minimum wage. Increases in business costs are split between consumers, capital, and labor in proportions depending on the equilibrium/elasticity in each of those markets. Prices that affect the sector uniformly, like tariffs and min wage, are generally more likely to be shifted to consumers or reduced labor demand (although in the min wage case, labor gratuity income can also be a flex point).

As your post suggests, the individual decision-making by capital is driven by “how much of this can I pass on to other constituencies while still optimizing my (hopefully long term) profits, thus how much might I absorb?”

 

[Tks]

As your post suggests, the individual decision-making by capital is driven by “how much of this can I pass on to other constituencies while still optimizing my (hopefully long term) profits, thus how much might I absorb?”

And is there any validity to my suspicion that this only occurs unanimously in the form of "we'll always be passing it on to consumers" in a Post-Industrial Revolution markets we find ourselves in.

The reason I mentioned post Industrial Revolution, is because I take it to be the case (barring of course self evident events like some global catastrophe like an asteroid hitting us, or Yellowstone erupting) that supply has forever from now on will be outpaced in contrast to demand for virtually everything that resembles a commodity, or has the propensity of becoming one (which is basically anything these days). Basic proof being simply intrinsic and planned obsolescence.

So I was wondering if that fact had anything to do with the nonchalance in passing so much over to the consumer whenever things like that occur, on top of the gradual price creep due to classical reasons (like inflation and all the other basic rationalizations like: "because we simply can").

@pozz

The reason it not being straightforward, is the reason I ask if this phenomena seems to be occurring even in times where one would assume the pressure to survive as a business, outweighs some long-term forecasts. Unless you want to posit that once C-19 is finished, (and for the tariff example I alluded to, I was talking about the latest exemptions that expired on China sourced products coming into the US, of about 25 percent), and if that were to have it's exemption renewed along with C-19 being finished. Would be be seeing a price reduction from companies? I have never actually seen prices go down after they've been announced to go up by companies. But then again I might just be ignorant, which is why I ask here for anyone that has a hunch.

Heck even audio is hit by this (Matrix Audio announcing price increases as well), and something to the tune of $500 on the Element X if I recall.

So I was wondering if this propensity for sudden changes being always passed off to consumers has some connection with post-Industrialized living.

 

[Cider]

Like why aren't there any companies taking the simple L and absorbing 50% of the cost, or 100% of the cost?

Why would they? Nobody would likely notice the gesture aside from unhappy shareholders.

 

[pozz]

@pozz

The reason it not being straightforward, is the reason I ask if this phenomena seems to be occurring even in times where one would assume the pressure to survive as a business, outweighs some long-term forecasts. Unless you want to posit that once C-19 is finished, (and for the tariff example I alluded to, I was talking about the latest exemptions on China sourced products coming into the US, of about 25 percent), and if that were to have it's exemption renewed along with C-19 being finished. Would be be seeing a price reduction from companies? I have never actually seen prices go down after they've been announced to go up by companies. But then again I might just be ignorant, which is why I ask here for anyone that has a hunch.

I think that companies will have little incentive to bring prices down, with two caveats depending on the type of business:

• For a service business, pricing is dictated by contracts. So if you feels some sort of pressure to alter pricing (competition, drop in demand), you can start adding in additional services or other features for free and present them as a kind of added value. Or reinvent the service line with new pricing tiers based on certain kinds of services.
• For a product business, pricing is built into a specific line. Rather than drop the price for the item/line, you would introduce a new line with new pricing tiers and discount the old line.

Do you mean something like, how can businesses under pressure justify raising prices? I think it's pretty useful to view the connection between businesses and their customers as a kind of discontinuous relationship or conversation. Customers won't accept any increase for any reason, but will if it seems reasonable or if they have no choice. In the latter situation, new entrants usually deliver competition (a "contextual" factor). E.g., cryptocurrency vs. traditional controlling entities in finance (banks and so on), or big lenders (again banks) vs. smaller, regional ones usually focusing on specific local markets, where you don't need as much capital to operate and can use community ties to your advantage.

 

[Tks]

Why would they? Nobody would likely notice the gesture aside from unhappy shareholders.

Do you mean something like, how can businesses under pressure justify raising prices?

Well, my primary question was if this occurrence was commonplace among pre-Industrialized pricing practices, and if so - by what mechanism does post-Industrialization grant this paradigm?

If it's not common, and there's no difference between now and 300 years ago in terms of how companies took pricing of products... Then I guess I have my answer.

 

[Rockdog]

I need to look up this phenomena, where manufacturers of products, pass on cost-increases along to consumers, and to see if this is standard practice pre-Industrial Revolution as it now seems to me.

Not just literal costs from supplies, but also tariff changes. I'm just surprised so many companies exist out there that are confident enough in their businesses to pass the cost to consumers entirely like that. Begs the question why they don't simply raise the prices before such events occur. Especially these days with Corona going around... Sales figures getting worse? Raise prices!

???

So weird... Maybe someone with a business degree can spell it our for me. To me it seems like a simple "Oh other companies are doing it? Well, now I have enough confidence not to upset the market enough to where I would draw attention to myself with this move, so I'll proceed with the train". Or is it simply the case "Okay, normal consumers are buying less, so we raise price on anyone left still buying to make up for the shortfall".

Like why aren't there any companies taking the simple L and absorbing 50% of the cost, or 100% of the cost? Are their margins THAT bad?

TKS, I'm a business guy in manufacturing sales and management for 30 years. Not sure that makes me any expert, but take it for what it's worth..

First, yes, margins are "that bad". Most successful businesses run much tighter margins than people imagine. Most corporations, not all, but most, and certainly small businesses, run very tight ships. Manufacturing firms build product bills of material down to the penny. Increasing costs can't simply be absorbed out of altruism to the customer base. If they could, every company would jump on that opportunity to compete with better products at lower prices. Rising costs force one or more of several options; hire less people, reduce salaries, lay off people, reduce benefits, cut manufacturing costs through product quality or reduced features, or pass costs on to the consumer. Which would you chose?

Many would say just cut ownership or management salaries, but even with the popular notion that CEOs and such are paid too much, decreasing these salaries are almost always a miniscule fraction of the whole picture. In most cases cutting a CEOs salary would have no effect on the bottom line at all, despite the political rhetoric of Bernie Sanders types. As in most social and political arguments, the proof is in the details. A 5$ manufacturing cost increase on a 100$ retail item is a big deal and requires hard choices. Doesn't seem like much, but the cost to produce just went up by a significant percentage.

There's an old adage that "corporations don't pay taxes". This is almost entirely true. They must pass them on to the consumer or they will face internal contraction, ie., lost jobs, decreased benefits, less features, etc. When you hear a politician claim they will fix the world by raising corporate taxes, they will never mention that means we all get a tax increase by higher costs being passed along, across all goods and services. This includes tariffs, of course, as a component of higher costs. Same thing, tariffs are passed on to the consumer. When a politician says they're punishing another country through tariffs, it means we're all paying those tariffs, and ultimately its the employees and consumers that take the hit. (Tariffs can, of course, hurt companies and countries by reducing sales volumes, but either way, the costs are passed on to those that still buy, and/or the business must contract to survive. The consumer and employees are the ones getting hurt.)

Nearly all corporations operate within a very fine balance of taking care of employees, staying competitive within their markets, and offering the best competitive edge they can muster. I would stake my claim on these fundamental truths; corporations don't pay taxes or tariffs, at least not to any significant degree. And, corporations don't arbitrarily raise prices in competitive markets. When they increase prices it's not out of greed or stupidity, its out of necessity. (Exeptions of course, but if the public understood these axioms better it would not bode well for our political ruling class, therefore the rhetoric on how immoral and evil corporations are when they don't simply "absorb" higher costs.) It's usually complete BS!

Cheers,

D

 

[Rockdog]

Just further, I don't see any difference in how markets or barters work today vs. 300 years ago, other than a load of media nonsense, political nonsense, much more manipulative governments, and a lack of understanding on basic principles of trade. Still true today, if it costs me more, its going to cost you more.

 

[Tks]

EDIT: Nevermind you replied to my question in your second post. I know it costs more, but was it always this seemingly much passed off to consumers?

Original Post:

@Rockdog

I know you wanted to give me a primer on how things basically work. But when you say:

When they increase prices it's not out of greed or stupidity, its out of necessity. (Exeptions of course, but if the public understood these axioms better it would not bode well for our political ruling class, therefore the rhetoric on how immoral and evil corporations are when they don't simply "absorb" higher costs.) It's usually complete BS!

I was just wondering. Seeing as how small businesses are going the way of the Dodo eventually, as the globalized inter-connectivity of the world increases, and the inefficiency of having a million little small businesses doing all the same thing become less and less logical, and just generally the occurrences of simply top corporations absorbing them all (by threat ala Amazon style, or by merger if it's cheaper to buy than to starve those businesses out). It seems to be whichever way the case - by trajectory or forced, it will come a day where a handful of companies provide the entire worlds' services (at least First World for sure). Any small businesses at that point will act as proxy for the larger corporation itself or like a franchise.

Being that as it may, I would be more interested in these "exceptions" you made mention of. Because all the other stuff is pretty bog standard.

Also my request about someone's take on the matter, maybe my original question slipped by a few folks. That was: is this trend I'm seeing of costs of any kind almost always being passed off to the consumer in near totality of something like a tariff implementation (so a 25% tariff increase, is seemingly increasing the cost of end-price of consumer goods by that quantity currently observing the GPU market MSRP's for example) -- is that a trend exclusively that seems to be a feature of the post-Industrialized world, if so, by what mechanism?.

And if it's not a feature of the modern world, then I guess I was simply hoping to get a quick answer from folks so I don't waste too much time doing all that reading that awaits me in finding out personally.

 

[pozz]

Well, my primary question was if this occurrence was commonplace among pre-Industrialized pricing practices, and if so - by what mechanism does post-Industrialization grant this paradigm?

Whoa. I thought that was a passing thought of yours.

Perhaps @Willem would know for sure.

Pre-industrialization, I think we would have to ask where and what time period. You have developed trading routes across Asia, Europe and Africa and across the oceans, but way less evenly distributed. It's interesting. I would expect some aspects to be similar, although price as an abstract concept divorced from the use and intrinsic value of a specific good is definitely due to industrialization. I think the main thing to expect, given a form of taxation and trade not relying on currency as a medium, is that the negotiation would be more centered on the specific good and what it provides, not what it could potentially provide ("price") once traded.

 

[Tks]

Whoa. I thought that was a passing thought of yours.

Perhaps @Willem would know for sure.

Pre-industrialization, I think we would have to ask where and what time period. You have developed trading routes across Asia, Europe and Africa and across the oceans, but way less evenly distributed. It's interesting. I would expect some aspects to be similar, although price as an abstract concept divorced from the use and intrinsic value of a specific good is definitely due to industrialization. I think the main thing to expect, given a form of taxation and trade not relying on currency as a medium, is that the negotiation would be more centered on the specific good and what it provides, not what it could potentially provide ("price") once traded.

As for what time period: Any single one that would show a differing paradigm, and preferably one not perhaps in the brink of economic collapse (as it becomes hard to judge for any coherent educational value pertaining to the question).

Maybe my stupid wording gets in the way? Forget about price vs valuation of intrinsic value. I would be content with keeping it as simply, market cost. The value of it or "price" (as you define as potential provided) should be avoided due to the complexity in considering such for my question.

Basically wondering if all price hikes area always so largely passed unto the consumer (controlling for the aforementioned natural price creep, and things like inflation or general market behavior and tendency to increase costs as markets become larger or as industries centralize in general).

 

[Rockdog]

EDIT: Nevermind you replied to my question in your second post. I know it costs more, but was it always this seemingly much passed off to consumers?

Original Post:

@Rockdog

I know you wanted to give me a primer on how things basically work. But when you say:



I was just wondering. Seeing as how small businesses are going the way of the Dodo eventually, as the globalized inter-connectivity of the world increases, and the inefficiency of having a million little small businesses doing all the same thing become less and less logical, and just generally the occurrences of simply top corporations absorbing them all (by threat ala Amazon style, or by merger if it's cheaper to buy than to starve those businesses out). It seems to be whichever way the case - by trajectory or forced, it will come a day where a handful of companies provide the entire worlds' services (at least First World for sure). Any small businesses at that point will act as proxy for the larger corporation itself or like a franchise.

Being that as it may, I would be more interested in these "exceptions" you made mention of. Because all the other stuff is pretty bog standard.

Also my request about someone's take on the matter, maybe my original question slipped by a few folks. That was: is this trend I'm seeing of costs of any kind almost always being passed off to the consumer in near totality of something like a tariff implementation (so a 25% tariff increase, is seemingly increasing the cost of end-price of consumer goods by that quantity currently observing the GPU market MSRP's for example) -- is that a trend exclusively that seems to be a feature of the post-Industrialized world, if so, by what mechanism?.

And if it's not a feature of the modern world, then I guess I was simply hoping to get a quick answer from folks so I don't waste too much time doing all that reading that awaits me in finding out personally.

I know you edited this, but again, I don't see why we believe a corporation is going to magically absorb any percentage of higher costs that will force them to reduce wage costs or product costs of which both will hurt them. Why should they? Corporations are not money repositories for the rest of society to take from at will.

Exceptions would be in monopolized markets where competition has been squashed, new markets with exclusive products in high demand, or in markets such as high tech where the financial barriers to entry for competitors are prohibitive. This is where government regulation can help, but the political class is usually financially and politically beholden to who feeds them. Most of the Western world is in this predicament now. Sucks..

Audio reproduction is not one of these markets. The audiophile market is relatively tiny and even big corps like Yamaha and Panasonic's footprint is not a lot of market share here. I can guess Hypex and others are eeking out margins and every tiny increase in costs is a pinch.

Interestingly, the competitive edge in audio is pretty fleeting, and I think that's why we see so much snake oil as well. When the top 20 DACs are essentially the same, what else do you have?

Yes, unfortunately small business, especially manufacturing, is getting hammered. Corporate taxes and marginally higher costs kill smaller businesses as larger corporations have the economies of scale to better deal with tightening production and labor costs, and are better equipped to maximize product offerings. (Sorry for the politics, but again the Bernies of the world hurt those they purport to help)

I know you want quick answers, but just like 300 years ago, if my costs for lamp oil goes up, you can't expect me to sell it to you for the original cost and just feed my own family less for your benefit.

Best,

D

 

[617]

What competition is there? MiniDSP?

 

[Rockdog]

What competition is there? MiniDSP?

Does Minidsp use AKM chips? Doesn't change the axioms one bit, though I think dsp plate amps come from several companies. If Minidsp wants to compete at a lower price they need to compensate for costs somewhere, likely reduced wage and production costs. As the consumer, you either walk away, pay the price, or have a more sparse product with less support. No free lunch and no corporation just "absorbs" cost.

 

[ahofer]

And is there any validity to my suspicion that this only occurs unanimously in the form of "we'll always be passing it on to consumers" in a Post-Industrial Revolution markets we find ourselves in.

The reason I mentioned post Industrial Revolution, is because I take it to be the case (barring of course self evident events like some global catastrophe like an asteroid hitting us, or Yellowstone erupting) that supply has forever from now on will be outpaced in contrast to demand for virtually everything that resembles a commodity, or has the propensity of becoming one (which is basically anything these days). Basic proof being simply intrinsic and planned obsolescence.

So I was wondering if that fact had anything to do with the nonchalance in passing so much over to the consumer whenever things like that occur, on top of the gradual price creep due to classical reasons (like inflation and all the other basic rationalizations like: "because we simply can").

@pozz

The reason it not being straightforward, is the reason I ask if this phenomena seems to be occurring even in times where one would assume the pressure to survive as a business, outweighs some long-term forecasts. Unless you want to posit that once C-19 is finished, (and for the tariff example I alluded to, I was talking about the latest exemptions that expired on China sourced products coming into the US, of about 25 percent), and if that were to have it's exemption renewed along with C-19 being finished. Would be be seeing a price reduction from companies? I have never actually seen prices go down after they've been announced to go up by companies. But then again I might just be ignorant, which is why I ask here for anyone that has a hunch.

Heck even audio is hit by this (Matrix Audio announcing price increases as well), and something to the tune of $500 on the Element X if I recall.

So I was wondering if this propensity for sudden changes being always passed off to consumers has some connection with post-Industrialized living.

IMO it has nothing to do with "post-industrialized living", inasmuch as the local chandler might well have passed off the King's tariffs on his wax or facilities to his customers. It's simply how people who trade for a living weigh their self-interest. And as far resource shortages as far as the eye can see, Julian Simon won a famous bet on that point. At any rate, this gets into politics, so we'd best return to audio...

The pandemic has messed up the global supply chain. There are shortages of critical chips (all made in Taiwan) and countries are "re-shoring" their suppliers. We are going to see higher prices for electronics.

 

[Rockdog]

And as far resource shortages as far as the eye can see, Julian Simon won a famous bet on that point. .

Love this reference of hope.... Audio reproduction will only get better and better and I'd guess in the longer run, prices will either stay stable or fall, relatively speaking. As long as economic freedom persists, that is.

 

[righthookmike]

It really comes down to individuals in our country. Are you willing to spend a little more and take up a little more of your time to find what you want from a smaller company employing people here and actually knowing and caring about what they are producing? Or are you going to save a few bucks, in the process diminishing the number of small businesses and then complain how everything is built like crap nowadays. I recently made the decision to spend over double the cost on an important product for my business to cut importing out of the equation. I understand it is not always feasible. but the compound effect of trying to save a few bucks is real. It costs us all(Americans)more in the end*
*Note: the views of the poster might not reflect the views of ASR