IT's Most Outrageous Markups? 194
masteritrit asks: "I have seen some really outrageous markups from IT companies. Cisco sells memory for a router I have for $1500 bucks and I bought it directly from Kingston for $56 bucks. I also had someone at storagetec accidentally reveal that their standard markup is 700%. What are some examples of this that others have seen and how do you feel about it?"
The obligatory SCO post. (Score:2, Funny)
And before the trolls turn up, I know 699% of nothing is nothing, but it was the best I could do at this time of night.
Re:The obligatory SCO post. (Score:2, Funny)
Actually, I was thinking that a markup of <ERR DIV_BY_ZERO>% was more appropriate.
Re:The obligatory SCO post. (Score:2)
Re:The obligatory SCO post. (Score:2)
And before the trolls turn up, I know 699% of nothing is nothing, but it was the best I could do at this time of night.
Slight error in the above figure. I believe the 10th power and 1st power are upside-down.
CompUSA Prices (Score:5, Informative)
However, there was one adapter (PS2->AT or serial->ps2, i forget which) that we charged ~$50 for when it was listed as $.50 cost in the computer... 1000% profit is not bad.
Re:CompUSA Prices (Score:5, Informative)
As I was making price tags for the cable aisle one day, I starting comparing retail and cost. On average, the markup of cables was around 1800% of cost. I'm not exaggerating.
It's a ripoff, yeah, just like those huge CD binders for which they charge $50, but pay $15, or most anything in the Accessory aisle.
It's not totally unjusified, though-- the reason cables are so marked up (and the reason they try to push them on you) is to make up for very low profit margins elsewhere in the store.
The average profit on, say, your average Compaq box is something like $50. If one of those walks out of the store without being paid for, you've gotta sell fifteen more to make up for it. Factor in employee costs and whatnot, and they don't really make any money selling computers. (This made it especially aggravating when Joe Schmoe thought he could haggle prices on the things, as if it were a car.)
Anyways, I'm not apologizing. They're still ripping you off, if all you need is a cable.
On the last day before I quit, I went through that same cable aisle and bought one of just about everything on the shelf-- employees could buy everything at cost. I figured that paying $50 for twenty cables in advance would be better than paying the same for two cables down the line, when I would be desperate and without the discount.
shoplifting (Score:2)
True, but it doesn't take many comptuers to cost CompUSA a lot of money. And Comptuers themselfs are not nessicarly the target. I couldn't shiplift a 19 inch monitor if the gaurd is paying attention, but a 2.5 inch harddrive, memory module, or even the latest sexy teenie bopper CD fits in my pocket. Do your crime in winter and a lot will fit under a coat. (I hope you get caught if you try, it drves the prices up for honest people)
I think cables are marked up so much mostly because the market will bear
Re:CompUSA Prices (Score:4, Funny)
Claim that she is pregnant.
The father is a computer geek/Slashdot reader.
Therefore the kid is going to be somewhat square.
Re:CompUSA Prices (Score:2)
USB cable to plug it to my computer: $15.
Bullshit.
Re:CompUSA Prices (Score:2)
Re:CompUSA Prices (Score:2, Informative)
Re:CompUSA Prices (Score:2)
That sounds familiar. Friend of mine gave me an old computer, so I went to CompUSA and looking for a PS2 -> AT adapter, and it was over $30. Holy fark! Too expensive for my tastes.
So to save money, I decided to look around some dumpsters at some of the computer businesses around here. Lo and behold, I found my adapter. Works great! Free!
Re:CompUSA Prices (Score:2)
Re:CompUSA Prices (Score:2)
>
If someone told me they'd pay me $30 to spend my day digging through trash dumpsters, I would say no.
Re:CompUSA Prices (Score:2)
But many computer bits can be had for free, if you are willing to look. Especially true for older, & free computers.
It didn't take me more then 10 minutes.
Re:CompUSA Prices (Score:3, Informative)
Computer: $1500 ($150 profit)
Monitor: $200 ($50 profit)
Printer: $100 ($40 profit)
Printer cable: $30
Re:CompUSA Prices (Score:2)
Re:CompUSA Prices (Score:2)
Yeah, CompUSA cable prices are extortionate. A few years ago, I needed a Mac-to-VGA adapter and an ethernet cable, and was outraged enough over the prices to actually post a rant about it. [google.com]
I bought the monitor adapter, opened the packaging very carefully, and promptly ordered what I needed online for less than half what CompUSA w
Re:CompUSA Prices (Score:2)
Cpu markups (Score:3, Insightful)
It costs Intel or Amd the same whether they are making a 1ghz or a 3, the differences in prices are just their way of recouping development costs.
And of course, specialty cpus are marked up anymore, for example Athlon MP's.
Not *entirely* true. (Score:4, Informative)
When a wafer of silicon comes out of the FAB, they test each chip to see what it can handle. Chips that can only do perhaps 1200Mhz without failure will get marketed as 1 Ghz, 1.3 Ghz as 1.1 Ghz, and so on. This ensures the chips are reliable at their standard clockspeed, and ensures the 3Ghz+ wafers go to the higher end parts.
Obviously, they only have limited control over this process, and when demand for a lower-speed chip increases, they may have to put a 1.3, 1.4, or 1.5Ghz rated wafer down as a 1GHz part, since people want to buy the 1GHz parts (this is also, BTW, the reason why sometimes the 1.4Ghz part is chaper than the 1.3Ghz).
As the speeds increase, you have continually smaller quantities of silicon that will run at the higher speeds, meaning if demand exceeds your supply of these parts, then you have to keep the prices higher to keep that demand in chack, and also because you may end up tossing out large parts of the wafers (This, also, is an issue when people purchase 1.4/1.5Ghz chips, and they have a glut of lower-rated silicon. They keep quite a bit of it, but eventually if the surplus grows to great, there's nothing to do but dispose/recycle the stuff).
So there *are* costs incurred with going up in speed.
Supply and Demand (Score:2)
We all love Adam Smith - with some rules.
HTML is bad enough... (Score:5, Funny)
Not *that* kind of markup. (Score:2)
Not an answer, but... (Score:4, Interesting)
Future Shop (Canada's version of Best Buy) is selling an external one for $170 CAD (~$120 USD?). It seems hard to believe that the price of one hasn't come down in what, over half a decade?
Re:Not an answer, but... (Score:2)
Doesn't seem too bad to me, but I haven't modem shopped in a long time.
Re:Not an answer, but... (Score:3, Informative)
The internal USR 56k modems go for $80 here and are not winmodems. Is there an additional $90 worth of circuitry/plastic/shielding that goes into the external?
Re:Not an answer, but... (Score:2)
The fact that not many people are buying analog modems might have something to do with the price of modems in the first place, but still...
I find it amusing that I can buy... (Score:2)
The manufacturers could sell a lot more of those mice if they made the interface chip Flash-programmable and padded and pre-scored the circuit board so you could snap off the mousey bits and use the rest as a generic USB interface.
Re:Not an answer, but... (Score:4, Informative)
The internal USR 56k modems go for $80 here and are not winmodems. Is there an additional $90 worth of circuitry/plastic/shielding that goes into the external?
Yes. Long ago, when there were no winmodems and no DSL or cable, USR made Sportster and Courier modems.
Despite coming from the same manuacturer, at the same time and for many years, Couriers had an excellent reputation for solid reliable communication, whereas Sportsters, ok for your occasional surfer, where on the whole quite awful. The difference was in the reliability and speed over whatever flaky analogue connection you had at hand, as well as fancier features which folk who just connect to ISPs never use.
Nowadays not many people use their modems over international and poor quality telephone lines, or with weird other modems that don't conform to standards, or indeed simply use the older, slower standards, which may not be well tested with a modern modem. Try to imagine that.
Long, >0.5 second delays means more powerful echo cancelling algorithms. Long analogue lines means better equalisation too. Both need better quality (more expensive) electronics, otherwise the elecronics wrecks the signal quality so the DSP algorithms can't get anything useful out of the subtler parts of the signal. Both need a more powerful DSP chipset.
Crappy lines also means better algorithms for selecting the best modulation schemes for those lines, and adapting as conditions change. Only the better modems will adapt the speed upwards during a call when conditions improve, for exmaple. (Line conditions do change, for example as the weather changes or the lines heat up during a call).
It is possible to implement a modem without certain features that make it more robust. V.34 in particular (the 33.6k standard) has several optional capabilities which improve performance over bad lines.
It may interest you that current 56k analogue-side modems need less DSP processing power than their earlier V.34 33.6k cousins. I am not sure, but that is what I have read and it makes a lot of sense to me. That means that although you buy a cheap modern modem that is capable of 33.6k and has the benefit of modern day chip speeds, it may still not have the processing power of the very expensive older models - simply because it doesn't need that for what it is most likely to be used for - "56k" connection to an ISP over a local analogue loop and an otherwise digital network.
Some people still need the best connections over international or really bad links, with maximum reliability and connecting to older, even obscure modems. I'm certain, if the application were mission critical (e.g. bank or trade transactions in real time) and that given the choice between a Courier and Sportster at least, they'd choose the former for those kinds of calls.
Of course you are also paying for the Courier reputation as well. But that is not a bad thing, if it is important to you to have a brand whose reputation is (supposedly) based on repeatable quality.
I agree that DSL electronics are fairly high precision and the DSP in them much more powerful than older modems. However, DSL is always run over a single local loop, needs to operate with only one, not too complex standard. It is optimised for one signalling method, and despite the speed it is not the most dense of signalling methods: consider how hardly anyone has the fastest DSL available in principle over their lines - and how much it costs to get that. Consider: DSL does not run over very long distances, and certainly not over international distances.
Just a few thoughts of mine, take as you like :)
-- Jamie
That answer doesn't cut it (Score:2)
As someone who's sitting here looking at a 56 K external modem, and who also knows that there is about as much electronic stuff in it as in your $5 Rat Shack telephone, I'll disagree with you.
Re:That answer doesn't cut it (Score:2)
Sure, software modems can slow a Pentium to a crawl, but it's irrelevant now. Any PC made in the last 3 years will handle a soft modem well enough so that most people won't care - and definitely won't pay for anything "better." Heck, the same thing is happening with onboard audio. I'll take a $20 Win-modem over a $70 USR for infrequent, personal use any day; and I would probably do
Re:Not an answer, but... (Score:3, Interesting)
Re:Not an answer, but... (Score:2)
Re:Not an answer, but... (Score:2)
Future Shop is owned by Best Buy. The Future Shop brand will be phased out (or was supposed to) until Best Buy realized that as long as nobody knew, they could make the two brands compete against each other and manipulate the market place to their advantage. Future Shop will gradually start 'sucking' more, and Best Buy will miraculously manage to undercut their prices every time, for some mysterious reason.
Now *thats* a free market, eh?
What about the opposite? (Score:4, Funny)
I'd watch out. (Score:2)
By not walking off with all the extra free stuff, you are giving someone their job back.
Re:What about the opposite? (Score:2)
Buyer beware (Score:5, Interesting)
But for a contrasting situation: about 5 years ago I worked for a dominant office-equipment supplier in the Rocky Mountain region (name left out not to protect the guilty, but to avoid self-embarassment...) in their PC/printer repair depot. We outsourced our monitor repairs, and would routinely double whatever the price was - whether it was mainly parts or labor - for no good reason other than that we could. We sold Laserjet fusers for a decent markup - until we changed from geniune HP to remanufactured parts, and kept the prices the same... so a $180 fuser we sold for $215 became a $40 fuser sold for $215... I could go on. They did that 'cos they were sleazy, and I hated working there.
I've been on the lookout for a 4-pin to 4-pin Firewire cable at a decent price for awhile now; usually I see them for a ridiculous $40-$50 most places. Recently when my need became more urgent, I swung by Fry's and found them for $9. That's just a case of buyer-beware - if you're concerned about saving money, make sure you're not being fleeced before plunking down your cash. Do some legwork if the price difference is worth your time.
Another example: inkjet printer makers sell the printers at a loss and make it up by selling carts at inflated prices. That's OK by me, when alternative sources for carts and ink are available. When they started putting ICs into the carts to prevent "counterfeiting", that's where I draw the line, and it turns out that inkjet printers from 2-3 years back (available for dirt cheap on eBay and Craigslist) still work just fine with $3 cartridges (also from eBay)....
The really outrageous markups are in the financial business anyway. $35 because they let your credit card payment check sit for 3 days before processing it? Bah!
Re:Buyer beware (Score:2)
Re:Buyer beware (Score:2)
I picked up a set of 5 6' firewire cables for about $6 total.
Same with batteries... the little button batteries for your laser pointer, etc. Retail, they cost $1 - $3 a piece, but you can buy them from an electronics dealer for about $2 for a blister pack of 10.
Sooner or later, the horrible markups will backfire, if people start getting smart and shopping around o
PRINTER INK! (Score:5, Insightful)
Numerous stories have been posted on this - I'm surprised "Printer Ink" isn't half of the posts here...
Re:PRINTER INK! (Score:2)
Pointing out the obvious... (Score:2)
Infinite Markup in some instances (Score:2)
You receive some rather neat toy from your distributor for selling X widgets during their promotion. Said toy is rare and unusual and sought after.
Boss takes said toy and sells it in the store as a 'Collectors Item' for pure profit.
None of which you get.
I'm sure that happens all the time elsewhere too.
IBM RAM upgrades... (Score:5, Funny)
So we crack the case to put in the new RAM, and what do we find? The *exact same* Kingston RAM module is already providing us with our first 512 MB of memory. Priceless.
Re:IBM RAM upgrades... (Score:2)
On the flip side, I'm addicted to IBM iSeries [as400] They absolutly rock. They "just work" like no mear PC [or AMD/Intel] harware can match. But they are REALLY, REALLY PRICY. But it's no different
HP/Compaq Spare Parts (Score:2, Funny)
I just about fell off my chair laughing so hard. I think we bought an equivelant hdd through compgeeks for
wang33
Double is standard (Score:5, Informative)
Don't forget the cost of doing buisness. If you count only the cost of food, McDonald's as a 200% markup. Food and labor is about 100% (these two were about half the costs in the resteraunt I worked at). However after all the other little things add up, profit of 5% not obtainable no matter how hard we tried, and some months we lost money. Overhead gets you every time...
I used to work at StorageTek, and I don't know if I believe the 700% markup. Only because how do you figgure that. If just the cost of making the parts, that is beliveable. They don't have a lot of volumn (compared to say DELL), but all their systems have a lot of engineering in them, so they have to recover a lot of costs from each sale. I know many smaller products never directly became profitable, and were only worth it because they helped drive a bigger sale.
I don't think Cisco wants to be in the RAM buisness. They are used to selling either big machines for a lot of money, or small machines to re-sellers. Call them up for a $50 ram module, and they may have more than $50 in overhead just to answer the phone, get it off the shelf, and ship it. The salemen selling it may require more than $50 himself just to make it worthwhile to write up the stupid order. (time is money, and that time could be spent trying for a big sale) Call them direct and you might get a vice president more inclined to sell in lots of 1000 than single lots, and you have to pay for his time. Their processes don't support selling memory, but they know they have to. They charge to make up for their process, plus some extra to either profit or make you go elsewhere. (one other point is they have to keep memory for old systems around ever after it is hard to get, you may be paying for an assumption that they have made their last order of that part and have to conserve inventory)
Buisness is complex. That doesn't excuse you from not looking for the best value. Don't buy the expensive parts if a cheap one is just as good. Unless your time itself is worth more than the effort it would take to find a cheaper supplier. If you are a high level executive, getting memory from Cisco may be a better use of your time than searching for memory suppliers. I could find them on google and 5 minutes latter have the order done, but if you don't do that I could see it taking 20 mines, which means the executive would need to make $250 an hour - cheap for a CEO. (though why a CEO isn't telling an underling to do the job I don't understand - something they should know how to do in one minute)
Re:Double is standard (Score:2)
Ink Cartridges (Score:2)
I ended up buying those do-it-yourself ink kits where they give you a couple of syringes and some containers of ink. It was cheaper, but, clumbsy fool that I am, I ruined my shirt...
I don't know about computers (Score:2)
Overhead (Score:2)
I work at a hospital... (Score:3, Informative)
And this doesn't even take into account the enormous profit the drug companies make on that product that costs them less than pennies to produce. You wonder why health insurance costs so much.. here's part of it. This is a case of markups in a situation where the consumer has little choice (if they are bedridden in a hospital). And this in an industry that is supposed to be helping people (and a non-profit at that). Abuses aren't necessarily limited to the likes of SCO. At least most of the time in the IT industry you have a choice as a consumer.
I don't know how outrageous this is but, (Score:3, Interesting)
Backwards mark-up (Score:2)
Re:Backwards mark-up (Score:2)
So I hauled home a dish I didn't need, and spent the $50 on DVDs later that week.
Re:Backwards mark-up (Score:2)
And no, calling the computer "the harddisk" is not any more cluefull.
Re:Backwards mark-up (Score:2)
I went to buy my daughter a Compaq CPU and LCD from Circuit City.
I don't think it's likely he went to purchase a 20 year old computer, and a modern LCD, for his daugther to use...
Re:Backwards mark-up (Score:2)
My daughter has no clue what to do with either, but she enjoys playing with the printer.
Check out Radio Shack margins (Score:3, Interesting)
The pack might only sell for 0.25 - but they gotten for about .0025.
Re:Check out Radio Shack margins (Score:2)
Re:Check out Radio Shack margins (Score:2)
I had once gone to Radio Shack for some phone cables and splitters. Paid a fortune for the stuff. Turns out there was a dollar store right beside, so I walked in, found cables and splitters all for less than $2. Walked right back over to Radio Shack and returned my purchases.
When I set up my first home network, I went with 1
here's a good one (Score:2, Funny)
Believe me, I never made that mistake again!
Re:here's a good one (Score:2)
Almost as outrageous as people paying good money for a copy of Red Hat!
It must've cost about $0.05 for the media, plus a few bucks for the programmer who copied the code from VMS, BSD, and MacOS.
Or downloaded it from the net...
5 - 6 times free market prices. (Score:2)
MS-Office and MS-Windows are marked up about 5-6 times what would be normal for other products. Although everything else is losing scads of money [sec.gov], MS-Office and MS-Windows pull in 79% and 86% profit margins. In other words, the monopoly rents cost consumers billions [consumerfed.org] -- a big drain on the economy even ignoring broken patches, interoperability and security problems.
If you start looking at value, the markup for Windows and Office is much higher since their offerings are of less
Slow boat from china (Score:2)
The reseller I used to work at seemed to do a lot of this kind of business. We found a taiwanese firm with an office in CA and were able to order stuff like VGA splitter boxes (still > $100 most places) for like $9.
We got tons of stuff from this place -- 1000's of printer cables and the like. If the going retail price was $25 we'd buy them for $0.27 ($0.25 for 100 or more).
Problem is we'd h
Sun Microsystems Memory (Score:2)
HP Heatsink - $972.00!!!! (Score:4, Funny)
I just don't get it.
Apple RAM (Score:2)
Re:Apple RAM (Score:2)
Well, I haven't checked out Apple RAM for a while, but while loading up my fiancee's Dell laptop, I discovered that I could get an extra 512MB DIMM bundled & preinstalled for around $330...or I could buy the same DIMM from Crucial for $130. Guess which I did?
By the way, if the prices aren't quite that outrageous, I don't mind paying a little extra to get stuff straight from Apple--or, for that matter, from most locally-owned stores, and other places I think are worth it. So long as the money's going
local shop... (Score:2)
rule of 3's (Score:2)
the hard drive is right on, but the cable is a bit high...but it's a convienance item...so the markup is higher.
Re:local shop... (Score:2)
You have to make a profit somewhere (Score:3, Insightful)
If the part is to be installed on site the actual profit becomes much less. There seems nothing a customer loves more than wasting a field techs time with little things after the paperwork has been filled out.
Oh and for most markup I once charged a customer $300 for a 20 cent fuse for a printer. Call it penalty markup for plugging the thing into an outlet I insisted was bad.
Re:You have to make a profit somewhere (Score:2)
'X' mark: $1
Knowing where to put 'X': $9,999
Markup != Ripoff (Score:4, Insightful)
It really is important to understand this concept of business. Just because they can sell it cheaper doesn't mean they should. Remember, they're not just selling you small quantities of material, they're selling you a tool that helps you do a job.
Large markup means market failure (Score:2)
It's both a rip-off and a sign of an inefficient (malfunctioning) market.
Say the real cost to put a USB cable into my hand is $5, but you charge me $30 for the privledge. Well, with a markup like that some e
Re:Large markup means market failure (Score:2)
I'm not sure I agree with your definition of malfunctioning market. Basically what happens is some things are marked up really high, and others barely break even. The result is that prices fluctate from place to place, thus catering to the discriminating customer.
A fair price is simply the price a customer is willing to pay for any given item.
Re:Markup != Ripoff (Score:2)
It's not a case of supply and demand. If the high prices were caused by lack of supply, then the stores would have to pay the factories high prices as well. Supply and demand can't explain a huge resale markup on an unchanged end product.
Your main point though, "they sell at this price because people are willing to pay this" stands, of course. But that's not because of supply and demand, that's because of how people work (putting $30 on top of an already large bill is less of a problem than paying $30 for
firewire cables.. (Score:2)
Best buy wanted $50 for a 4-foot cable. That struck me as obscenely high, so I drove around for a bit, and eventually found one at Radio Shack for $15, which I deemed acceptable for a retail outlet.
Just the previous month, another friend of mine had purchased a firewire c
Re:firewire cables.. (Score:2)
The Best example I know (Score:2)
A single 16MB ECC SIMM (part no. SM4000/16) still costs a smidgeon under $1000. It's not just because they're EOL'd - they were always expensive.
This was just downright mendacious profiteering on DPT's part. I see no reason why they couldn't have designed for standard ECC memory.
If anybody knows where these SIMMs can be had at a more down-to-earth price point, do let me know
RAID cache is valuable stuff (Score:2)
True story (Score:2)
That is, until I informed them that I could buy them locally for $6 each. The vendor quickly changed the price to $9.
One other.... (Score:2)
And all it got you was one additional connection into the ring.
Support contract (Score:2)
Check the contracts....
Re:Support contract (Score:2)
Buy support contract.
Buy cheap memory.
Have system failure.
Remove cheap memory.
Call for service.
Replace cheap memory.
Works great!
They're killing their own business (Score:2)
Since they dont
Most outrageous ever (Score:2)
Now for the question...am I a troll or funny? Or just a funny looking troll? Wait...I think we all are. Crap.
it is not just goods, services too (Score:2)
IBM FRU parts (Score:2)
Re:Video-game companies (Score:4, Informative)
Re:Video-game companies (Score:3, Informative)
Re:Most outrageous is... (Score:3, Insightful)
Re:Most outrageous is... (Score:2)
Working for a manufacturer, I can tell you that resellers aren't very happy when the manufacturer undercuts them. The manufacturer generally doesn't have a retail sales force, and I can't say that I've ever seen a manufacturer sell an item for less than what's in their retail channels.
It's
Re:Misc ones (Score:2, Interesting)
The Future Shop stores I've been to here are fairly pushy with their warranties. I purchased a $500 digital camera and was asked twice by the clerk why I didn't want an extended warranty. Then the clerk went to the manager who approached me and asked me why I didn't want a warranty. If the store is do
Re:Misc ones (Score:2)
A friend bought a Sprint PCS phone from one of those Sprint PCS stores (I don't know if it was a mall outlet, or kiosk, or whatever) but when his phone cratered they didn't handle the warranty, but sent his phone off for repairs. He was phoneless for a month. To a business guy, this was a mega hassle.
When my phone died I walked into BB with the magic yellow folder and the box the phone came in (with all the goodies) and walke
Re:Misc ones (Score:2)
September of last year, I bought two new cell phones, one for me, one for my wife. My cell phone was a cheapie at $30, because I figured that I would replace it this year. My wife's, on the other hand, was one of those $250 models that does all kinds of nifty stuff, so I sprung for the 2-year service plan for $60. Not a bad deal, right?
Well, 9 months later, the antenna breaks clean off the phone. We take it in to get it fixed, but they refuse because the antenna is an "acc
Re:Misc ones (Score:3, Informative)
the big problem