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Topic: Is Group Buy really needed

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  1. #1

    Is Group Buy really needed

    Unbelievable that Michiel is at 342 pianos sold. Who would have ever thunk that 300+ people would be interested in legally purchasing a sampled piano. Even more amazing would be, if he were to keep this group buy situation for Old Lady open for 2 months or more. What if he sold 500-1000 pianos with this lower $80. Amazing!!

    Same with EW Gold.

    This quote below was mentioned in another thread:

    "Simply offer a sale for the lowest price, and dispense with the Group Buy technique altogether.

    If people are indeed going to flock to the product, then they will. The numbers will be hit. If not, they won't."


    What is stopping sample developers from selling at the lowest reasonable price point all the time just like in the group buy?

    I have no answers but it would be curious to see if Michiel would be able to sell 300+ pianos if his starting price upon release were $80. Who knows, maybe he wouldn't sell as many. Perhaps we as consumers need this psychological feel of "What a deal!"

    But that leads me to the quote (above) again. Wouldn't we feel we're getting a deal...Group Buy or not, if his piano was at $80 all the time, or if EW Gold were at $400 from birth of product to now?

    Just interesting to consider it. There are obvious a lot of honest buyers out there. Maybe if the price was "right" more often then we could do away with the Group Buy.

  2. #2

    Re: Is Group Buy really needed

    I was thinking along the same lines. Certainly, the manufacturers are counting on these sales as "loss-leaders" to bring customers in. For example, I'm sure many recent EWQLSO Gold purchasers are going to upgrade to the Pro edition and that will benefit EW even more.

    But to me, it does seem that in general software prices are always priced higher than what most people would consider reasonable. I suspect that there's enough professionals and professional organizations with the budget to shell out for these higher prices, and that this rate of return is satisfactory to the software manufacturers.

    There are advantages to limiting distribution. For example, pros will be less likely to share their samples with their friends than say students would be. So limiting the number of copies distributed and charging more for them is one way to counter that. But of course, exclusivity will always create envy, and the "Robin Hood" mentality that's pervasive in the piracy world has exploited that very sentiment.

    On the other hand, if the price of an item is within reach of most, then what possible reason can there be to pirate? I submit that if prices for software in general were cheaper, more copies would be sold and the demand for pirated products would diminish significantly. I've always believed that.

    Simply: I would buy more sample libraries if I could afford them. I bought GPO within the first few months of release because it was just so perfectly priced. I also recently bought EWQLSO Gold as well as both of the PMI pianos for the same reason. In the last 3 months alone, I've taken advantage of several other Group Buys as well.

    Now sure, I can't deny that as a promotional tool these group buys are great (the concept and dynamics of these are candidates for some interesting analysis!), but I did previously have my eye on most of these products and price alone was my only obstacle to a purchase.

    u

  3. #3

    Re: Is Group Buy really needed

    Quote Originally Posted by undertone
    Simply: I would buy more sample libraries if I could afford them. ... I did previously have my eye on most of these products and price alone was my only obstacle to a purchase.

    u
    That's my situation too. And I am 95% sure we aren't alone here by the looks of EW Gold and Michiel's sales thus far.

  4. #4

    Re: Is Group Buy really needed

    Well, though I'd love to see prices go down a 60% and I really would, I don't think it may sell all that much... there would always be someone releasing a library for a higher price, saying that is is better than the others...

    Every library have its flaws, but maybe with a low price, one could think: "this patch is horrible... well after that it's only a 300 $ library, what would you expect"... we all know it has nothing to do with it (the great quality of GPO is a good example), but one would always compare it to the superior: "if I had this library, my patch would not sound as horrible" (and it could sound worse )

    Just my 2c... and I wish I'm wrong so I could buy more things

  5. #5

    Re: Is Group Buy really needed

    I agree ! Lower prices on everything will make hundreds happy .

    Is it better selling something at 1000$ for only one Pro customer or selling it 333$ for a pro and two hobbyists , I think the second

    That way you would get a total of 100 customers for a total of =~ 33.000$ instead of maybe 10 pro's for 10.000$ ( and faster average sale rates too )

    Also , more customers -> More user demo's for the company -> More spreading out the word -> More sales come back .
    Mouth to mouth is important as well ( if not the most )
    Theo Krueger - Composer

    www.TheoKrueger.com

    Kontakt 2 Scripts

  6. #6

    Re: Is Group Buy really needed

    But don't understimate the power of a sale and a good deal. And the dynamics of a time limit. Both these factors may explain the success of group buys.

  7. #7

    Re: Is Group Buy really needed

    Quote Originally Posted by Marty
    What is stopping sample developers from selling at the lowest reasonable price point all the time just like in the group buy?
    In Economics this is called "excedent appropriaton". In an economy we have consumers of all kinds. Given the same product, different consumers are willing to pay different prices. Then the developers start selling with the highest price possible, so that they can appropriate the excedent of the consumers who are willing to pay more. When there are no more consumers at this level, they lower the price to the next level and so on. In the end of the process, the developer is limited to the cost of the produtct itself and the price stops falling, but then he has already appropriated all the excedent available in that economy. Anyway, group buys should only be done in cases when the products have already fulfilled all its selling potential in the higher excedent level. If this is not happening, they shouldn't do it yet. At least I wouldn't.
    So, forget this idea, they are never going to do it, as long there are individual consumers willing to pay higher prices than the group buy prices.

  8. #8

    Re: Is Group Buy really needed

    Quote Originally Posted by Ned Bouhalassa
    But don't understimate the power of a sale and a good deal. And the dynamics of a time limit. Both these factors may explain the success of group buys.
    I think Ned hit the nail on the head. If you price Gold, for example, at $400 as the regular price, you'll probably sell more units, but nothing generates demand like the feeling of getting a good bargain. People who would not normally have bought it start thinking, "I have a lot of orchestral samples already, but I can get a $1000 library for $400- I can't pass that up!"

    It's also part of a natural product cycle- a new product comes out and the company needs to recoup the R & D and production costs, which are significant. The product is priced accordingly, along with other factors like estimated demand, the price of alternative products, etc. But once the sales revenues cross the break even point, there is more pricing flexibility because there is less risk if the price reduction is not appropriately offset by a rise in volume- sales at this point are "gravy".

    Also, the public's experience has been that new products come out at high prices, but those prices eventually drop- we've seen it over and over again with VCRs, DVD players, Plasma TVs, HDTVs. How many times have you heard someone say that they'll buy a flat screen as soon as the prices drop? If they were priced low from day one, people have no sense of the relative value and will just assume that the price will eventually drop, regardless of how low it is to start with. Sellers know they will have to drop the price at some point as technology changes and competitors enter the market- they just don't know when or how far, so they "make hay while the sun shines."

    From reading the manual, I can see that a LOT of expense and time went into making the Gold library, and the release price was competitive. But you can just read the posts on this forum and know that there is always a group of people that are waiting to see what else comes to market and when that happens, prices of the "old" products tend to drop. What the group buy does, is mitigate some of the risk that the drop in price will not be sufficiently made up for with the rise in volume- you create your own supply curve.

    The success of these group buys is the best argument to support this strategy, all of this is just an analysis of why. My case is a perfect example. I have been doing non-orchestral music lately. I desperately needed updated orchestral libraries, but not needed the samples right now, I thought it made sense to wait and see what libraries came out in the meantime and see where prices went, knowing there was product in the pipeline. I figured when I decided to work on an orchestral piece, I would review the options at that time. I still don't need an orchestral library, as I am working on a kind of loungy jazz CD, but I could not pass up the Gold deal. I also took advantage of the 30% off of the Pro upgrade.

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