Estes 2022 price increases...some kits almost doubled in price.

[afadeev]

I was wondering why the MR is $30 and the Bull Pup 12D is $33. The MR seems to be a much more complicated rocket. Maybe a 24mm Bull Pup might be worth $33. I foresee a spring sale coming soon.

Those are two of my (top 10) favorite rockets ... but wait, there is a 24mm MMT version of Bull Pup out there?!
You just blew my mind!

Thank you, and please continue lamenting the price of the kits I didn't realize I wanted until I read about them in this thread!

a

 

[Ronz Rocketz]

Those are two of my (top 10) favorite rockets ... but wait, there is a 24mm MMT version of Bull Pup out there?!
You just blew my mind!

Thank you, and please continue lamenting the price of the kits I didn't realize I wanted until I read about them in this thread!

a

Thank you. After my Bull Pup 12D decided to go on an adventure, I decided to create an upscale version with 24mm and use a motor hook instead of friction fit.

 

[PDawg]

I still don't understand why Estes kits aren't cheaper the Custom Rocket Company kits which are made in the USA instead of China and are a smaller company.

 

[Hobie1dog]

Think Estes prices are high? Go on FB and look how high kits are on rocketry yard sale.

 

[afadeev]

I still don't understand why Estes kits aren't cheaper the Custom Rocket Company kits which are made in the USA instead of China and are a smaller company.

Supply and demand: Estes has a brand name, and CRC doesn't. So regardless of the cost of manufacturing, Estes can, should, and will charge premium prices for its kits.

Having said that, the old assumption that Chinese manufacturing is significantly cheaper than in the US, has been rapidly going out the window over the last decade. Chinese labor rates have risen to near-parity with American minimal wages. Add increase in transportation costs, and a lot of industries are looking to re-shore manufacturing out of China these days.



a

 

[John McClane]

Still price hike in this extent cannot be justified just with raise of input costs. Estes always had a big stock so price increase could be gradual. I think this is related to new management, new investment costs must be justified and paid for. All manufacturers including Estes have great competition in 3d print area so soon demand for pricey kits will drop. There is noticable shift toward education programs meaning service which can help raise the profit and that was very good move. Anyway we will see how management will handle this chalenging times. Regarding fb marketplace and ebay prices, they are overinflated as certain traders pushed prices high which will soon backfire on them as people usually do look for similar kit prices before post to sell and their input will be much higher until they come to point that they cannot sell because price is too high...

 

[Scott_650]

I still don't understand why Estes kits aren't cheaper the Custom Rocket Company kits which are made in the USA instead of China and are a smaller company.

The primary reason that Estes sets prices are higher than CRC‘s prices for like kits is that they can. Prices set by vendors have more to do with sales than material and manufacturing costs - if sales don’t meet projections then they’re too high, when they exceed projections they’re too low (that’s the really tricky part since sales can be affected by factors outside of price or cost), and if they hit the sales projection target they’re just right. We can all see the results of overpricing an item - that’s when Estes discounts the price on their website. And we also see the results of when they price something too low - that’s when they sell through that item’s stock in weeks rather than months. And when they set the price right we see those items available almost continuously, like the Alpha and Big Bertha.

 

[afadeev]

Still price hike in this extent cannot be justified just with raise of input costs. Estes always had a big stock so price increase could be gradual.

Folks, market prices have NOTHING to do with the cost of goods sold (COGS). I know it sounds counter-intuitive, but that's how it is in capitalist economies (planned/communist economies are different, which is why they don't last).
Supply and demand for the product drive the prices, not production costs:

https://www.economicsonline.co.uk/competitive_markets/rationing_and_incentives.html/

I think this is related to new management, new investment costs must be justified and paid for. All manufacturers including Estes have great competition in 3d print area so soon demand for pricey kits will drop. There is noticable shift toward education programs meaning service which can help raise the profit and that was very good move. Anyway we will see how management will handle this chalenging times.

Estes prices are going nowhere other than up.
You might be crafty and motivated enough to find substitutes online from no-name brands.
Most consumers wont, and shop for known brands from known distribution channels.

Regarding fb marketplace and ebay prices, they are overinflated as certain traders pushed prices high which will soon backfire on them as people usually do look for similar kit prices before post to sell and their input will be much higher until they come to point that they cannot sell because price is too high...

FB and eBay are not over-inflated for exactly the above reason - they reflect TRUE demand and equilibrium price for limited stock (supply) items.
You may not think the price is right, so you don't bid. However, someone finds those prices to be entirely reasonable, and freely and willingly exchange their money for those goods at those prices (or counter-offer lower, with some counters accepted and others rejected).

That's free market capitalism at work.
That's EXACTLY how it should be!

 

[lakeroadster]

First of all, I'm no economist nor do I know squat about marketing... but I'm curious here:

I've been working on an Excel spreadsheet of all Estes kits and their pricing and availability year-by-year since 1961. I'm now updating it for the 2022 product line and noticed that while some of the price increases were in line with past price increases (10% or less), some kits saw their price nearly double! Case in point would be the "Firehawk" (kit# 0804). It as listed in the 2020 catalog at $10.99, then for some reason it was absent in the 2021 catalog. Now it lists in the 2022 catalog at $20.99!!! That's a 91% price hike for an 11.2" tall mini engine rocket. By contrast the "Firestreak SST" (kit# 0806) is a very similar mini-engine rocket at 10.2" tall and sells for $10.99 (no price increase at all from 2021 or 2020).

I know Estes has done everything they can to keep price increases to a minimum, but what could cause such wild variations in the costs of very similar kits like this? I guess projected sales quantities could account for some of it. After all the Firestreak SST has been around for a very long time and is a good seller...but 91%?

Other products that saw significant price increases from 2021 to 2022:
The "Generic E2X" (#2008) went from $12.99 in the 2021 catalog to $23.99 in the 2022 catalog ( 85% increase ).
The "Alpha III Launch Set" (#1427) went from $35.99 in the 2021 catalog to $49.99 in the 2022 catalog ( 39% increase).
The "Journey Launch Set" (#1441)went from $32.99 in the 2021 catalog to $52.99 in the 2022 catalog ( 61% increase).

These are just the ones I've encountered so far. Just to be clear, these are the outliers. Most of the price increases are in the 10% or less range (which is expected) while some kits didn't see a price increase at all (like the aforementioned Firestreak SST).

I have every published price from every catalog that included pricing logged in my spreadsheet and nowhere else in the company's history have single year price increases been anywhere close to 85%-90% on any product. That includes the last time we saw double-digit inflation back in the 1970s.

Any thoughts?

Thanks for taking the time to create the spreadsheet and compile the data.

 

[neil_w]

I don't have any direct knowledge of Estes' situation but I can definitely draw analogies to my situation here at work.

First of all: cost of goods *does* affect pricing. To suggest otherwise is ludicrous. The hobby market is not like a efficient commodity market where pricing is purely supply and demand based.

As costs increase, prices often (not always, but often) must rise to maintain gross margin levels necessary to sustain the business. If the customers cannot accept or accommodate the higher prices, then the business could be in trouble. That does not appear to be the case right now, in most areas.

In our company, we have seen quantum leaps in cost of goods. Two key chip vendors recently instituted across-the-board 20% increases. Due to lack of supply, we sometimes need to buy from brokers whose prices are *hilarious* (1000% markup or more). Raw materials (e.g. steel) have seen huge jumps in cost. Shipping is nuts. We absorbed some these costs for a while, but eventually when it became clear that this situation was not going to change any time soon, we had no choice but to raise prices to maintain our margins and profitability. The particular products I work on run relatively high margins and therefore we have a little more cushion to play with, but there's only so much we can absorb before we must pass on higher prices to customers.

So, while I can't explain why a specific kit may have jumped 85%, I can definitely imagine what Estes might be going through right now.

 

[Ez2cDave]

Supply and demand: Estes has a brand name, and CRC doesn't. So regardless of the cost of manufacturing, Estes can, should, and will charge premium prices for its kits.

Simple solution . . . Buy parts and scratchbuild . . . It's much more economical than buying kits.

Buy your supplies & motors from sellers who discount them. The manufacturers still make their profit, but sellers who are willing to lessen their profit per item and focus on volume of sales get my business, every time.

Dave F.

 

[Scott_650]

I don't have any direct knowledge of Estes' situation but I can definitely draw analogies to my situation here at work.

First of all: cost of goods *does* affect pricing. To suggest otherwise is ludicrous. The hobby market is not like a efficient commodity market where pricing is purely supply and demand based.

As costs increase, prices often (not always, but often) must rise to maintain gross margin levels necessary to sustain the business. If the customers cannot accept or accommodate the higher prices, then the business could be in trouble. That does not appear to be the case right now, in most areas.

In our company, we have seen quantum leaps in cost of goods. Two key chip vendors recently instituted across-the-board 20% increases. Due to lack of supply, we sometimes need to buy from brokers whose prices are *hilarious* (1000% markup or more). Raw materials (e.g. steel) have seen huge jumps in cost. Shipping is nuts. We absorbed some these costs for a while, but eventually when it became clear that this situation was not going to change any time soon, we had no choice but to raise prices to maintain our margins and profitability. The particular products I work on run relatively high margins and therefore we have a little more cushion to play with, but there's only so much we can absorb before we must pass on higher prices to customers.

So, while I can't explain why a specific kit may have jumped 85%, I can definitely imagine what Estes might be going through right now.

CoG is most definitely a component of pricing just not as significant as it appears intuitively - if balance sheets were easy we wouldn’t have an entire discipline built around creating and documenting them (and well-paid experts good at manipulating…err, sorry…interpreting them ).

If we really want to oversimplify this for effect it’s all about money out versus money in - regardless of how much any given company spends creating a product or service if they take in more than they spend (taking profits counts as “spending”) the business is healthy and serving their customers. Where the real confusion can come in is in identifying the actual customers - are they the primary customers, consumers or the stockholders?

Companies can certainly serve more than one - most do but not always -and service to stockholders over customers, etc, and vice versa, may blur some ethical lines. My opinion is that Estes is doing a pretty good job of satisfying both their primary customers - distributors, institutions and major retailers - along with the consumers of their products (the builders and flyers) along with us - the smallest customer group they have - the enthusiast community.

Though they’ll being doing it better when we finally see the C5-0 “Super C” booster motor introduced!

 

[jderimig]

In free market capitalism it's immoral not to charge what the market will bear. A rising cog that affects every producer will allow an increase in price with a net reduction in unit sales volume. A cog increase that affects one producer may not allow that producer to raise prices if he is at the market will bear price .

 

[lakeroadster]

Thank you. After my Bull Pup 12D decided to go on an adventure, I decided to create an upscale version with 24mm and use a motor hook instead of friction fit.

Thanks for the video, that was fun!

 

[lakeroadster]

In free market capitalism it's immoral not to charge what the market will bear. A rising cog that affects every producer will allow an increase in price with a net reduction in unit sales volume. A cog increase that affects one producer may not allow that producer to raise prices if he is at the market will bear price .

immoral?

 

[jderimig]

immoral?

Yes sir.

 

[lakeroadster]

Yes sir.

The decision could arguably be construed as bad judgement, right or wrong. Stating that it is immoral seems, well, like most things today. A gross exaggeration.

 

[jderimig]

The decision could arguably be construed as bad judgement, right or wrong. Stating that it is immoral seems, well, like most things today. A gross exaggeration.

I will explain it later after I get off my day job which is enabling my company to sell it's products and services at the highest possible prices.

 

[jderimig]

The decision could arguably be construed as bad judgement, right or wrong. Stating that it is immoral seems, well, like most things today. A gross exaggeration.

Explanation. Capitalism has proven to deliver an abundance of products and services with increasing quality and lower costs over time. The price of the product should be maximized (within the constraints of balancing supply and demand) to encourage other entrants to come in, innovate, compete and drive efficiencies. The result is quickly declining costs and increasing value ( quality/price) of the products in the market.

If you price your product below what the market will bear it will discourage the main mechanism of capitalism and retard the value improvement of the product. The result is the imposition of higher costs and lower quality over time of these products to society. That is immoral.

 

[Scott_650]

The decision could arguably be construed as bad judgement, right or wrong. Stating that it is immoral seems, well, like most things today. A gross exaggeration.

Edit: looks like our buttons were pressed simultaneously

You can make a case for using that word though I’d lean more towards unethical - the idea being that by letting the market set the price you’re ensuring the maximum distribution of goods. Underpricing scarce items leads to hoarding and speculation, artificially squeezing the lowest end of the market while providing the top end with an unfair advantage. When the market arrives at a price unencumbered by manipulation or artifice then the maximum number of participants will receive at least some number of scarce items.

 

[OverTheTop]

COG definitely affects sell price. We are sometimes paying $1000 for chips we used to pay $9 for, but the normal distributor is out of stock. Higher COG means less discount available or higher sell price for the spectrometers.

 

[Sandy H.]

Explanation. Capitalism has proven to deliver an abundance of products and services with increasing quality and lower costs over time. The price of the product should be maximized (within the constraints of balancing supply and demand) to encourage other entrants to come in, innovate, compete and drive efficiencies. The result is quickly declining costs and increasing value ( quality/price) of the products in the market.

If you price your product below what the market will bear it will discourage the main mechanism of capitalism and retard the value improvement of the product. The result is the imposition of higher costs and lower quality over time of these products to society. That is immoral.

Edit: looks like our buttons were pressed simultaneously

You can make a case for using that word though I’d lean more towards unethical - the idea being that by letting the market set the price you’re ensuring the maximum distribution of goods. Underpricing scarce items leads to hoarding and speculation, artificially squeezing the lowest end of the market while providing the top end with an unfair advantage. When the market arrives at a price unencumbered by manipulation or artifice then the maximum number of participants will receive at least some number of scarce items.

For optional products and services, I guess that seems somewhat understandable (but I'm not 100% sure), but for mandatory products and services, that doesn't seem right.

I went to an outdoor event a few years back in September and when I tried to go through the gate they said no coolers. I said my cooler (soft sided 6 pack size, not big) only had water and showed them. They said no coolers and no outside refreshments. I went back to my truck, put the cooler inside and pounded a bottle of water on the walk back. A few hours in, I was thirsty and they were charging $8/bottle of water. That was not ethical.

My brother runs a business that does regular service for customers and also emergency service. The rates are based on planned vs. emergency and he is a 24/7 business. The rates are published and he sticks to those rates. After a natural disaster, many of his competitors raised their rates by a factor of 3 or 4, but he didn't. It was at the emergency service rate, but he wasn't price gouging, while the other guys were. That is ethical. Regretfully he has had to raise his rates (with notice) due to fuel prices, but the rate change was based on the change in fuel prices (assumed to be $5/gal, even though it is really $5.50/gal-ish right now, he's absorbing the rest).

Not sure if those are just outliers or if I'm just an idiot, but waiting until someone is about to get a huge EPA fine and then telling them the job is going to cost $30k, not $7,500 seems wrong. Also telling someone they can't bring their own water in to an outdoor event, but then charging $8 for a bottle of water seems fundamentally wrong. Charge $40 for a Coke or beer, but water at an outdoor event when its 98 deg is not optional and $8 for a bottle of water in the US is not logical.

Sandy.

 

[jderimig]

COG definitely affects sell price. We are sometimes paying $1000 for chips we used to pay $9 for, but the normal distributor is out of stock. Higher COG means less discount available or higher sell price for the spectrometers.

COG disruption is just that. If your COG goes up 100% and raising the price did not affect your unit sales volume, then your business was leaving money on the table before. Price is set by your customer not your cost. Your prduct viability is set by your cost.

 

[Scott_650]

For optional products and services, I guess that seems somewhat understandable (but I'm not 100% sure), but for mandatory products and services, that doesn't seem right.

I went to an outdoor event a few years back in September and when I tried to go through the gate they said no coolers. I said my cooler (soft sided 6 pack size, not big) only had water and showed them. They said no coolers and no outside refreshments. I went back to my truck, put the cooler inside and pounded a bottle of water on the walk back. A few hours in, I was thirsty and they were charging $8/bottle of water. That was not ethical.

My brother runs a business that does regular service for customers and also emergency service. The rates are based on planned vs. emergency and he is a 24/7 business. The rates are published and he sticks to those rates. After a natural disaster, many of his competitors raised their rates by a factor of 3 or 4, but he didn't. It was at the emergency service rate, but he wasn't price gouging, while the other guys were. That is ethical. Regretfully he has had to raise his rates (with notice) due to fuel prices, but the rate change was based on the change in fuel prices (assumed to be $5/gal, even though it is really $5.50/gal-ish right now, he's absorbing the rest).

Not sure if those are just outliers or if I'm just an idiot, but waiting until someone is about to get a huge EPA fine and then telling them the job is going to cost $30k, not $7,500 seems wrong. Also telling someone they can't bring their own water in to an outdoor event, but then charging $8 for a bottle of water seems fundamentally wrong. Charge $40 for a Coke or beer, but water at an outdoor event when its 98 deg is not optional and $8 for a bottle of water in the US is not logical.

Sandy.

You’ve fallen into a common trap when discussing economics - confusing individual action for the cumulative behavior of a market. You have a good inkling that that’s what’s happened when you offered the outlier qualification to your post.

As a participant in the market you made a rational (from your perspective) decision not to buy an $8 bottle of water (same choice I would have made incidentally). Others may have decided that $8 was an acceptable price given the situation. The market “worked” as the goods were distributed and money changed hands - just not to your satisfaction which is unfortunate for you. If the organizers of the event had a mountain of leftover water bottles on hand then they failed and, if they are unrestrained and capable of logical decision making, they’ll lower the price at the next event. On the other hand if they ran out of bottles halfway through the day you could see a price increase (or an increase in supply) during the next event.

 

[Sandy H.]

You’ve fallen into a common trap when discussing economics - confusing individual action for the cumulative behavior of a market. You have a good inkling that that’s what’s happened when you offered the outlier qualification to your post.

As a participant in the market you made a rational (from your perspective) decision not to buy an $8 bottle of water (same choice I would have made incidentally). Others may have decided that $8 was an acceptable price given the situation. The market “worked” as the goods were distributed and money changed hands - just not to your satisfaction which is unfortunate for you. If the organizers of the event had a mountain of leftover water bottles on hand then they failed and, if they are unrestrained and capable of logical decision making, they’ll lower the price at the next event. On the other hand if they ran out of bottles halfway through the day you could see a price increase (or an increase in supply) during the next event.

What if X number of people chose not to buy the water and were hospitalized due to heat exhaustion/dehydration? True, $8 vs getting hospitalized is an easy decision to make if you know those are the two outcomes, but if you are 'tough' and 'can deal with it' but really can't, that's lame. What if the people hospitalized have no insurance or are on medicare/public insurance. Was the $8/bottle of water worth the thousands of dollars passed on to others who weren't even there?

If you show up with your own water and aren't allowed to bring it in, then the moral requirement (for me personally, not an economy, market etc.) would be to charge a fair amount for water, not what the market would tolerate.

I guess the term that got used earlier (immoral) makes it a personal thing, not a market thing. A market is not sentient, so it cannot be moral or immoral, but individual actions within the market can be moral or immoral. If it is an individual (company etc.) then acting morally is important to me, even if you could make more money by gouging.

I imagine I'm wrong, as it seems that business doesn't match my view and there are a lot more businesses than me. If it were a rocket motor or Coke, no argument at all, as those are items nobody actually needs. Water, keeping your company from having a million dollar EPA fine or other similar extreme circumstances need to be cost based, not market based in my view. Again, I am probably wrong from a market standpoint. I hope I'm right from a human standpoint, though.

Sandy.

 

[lakeroadster]

Explanation. Capitalism has proven to deliver an abundance of products and services with increasing quality and lower costs over time. The price of the product should be maximized (within the constraints of balancing supply and demand) to encourage other entrants to come in, innovate, compete and drive efficiencies. The result is quickly declining costs and increasing value ( quality/price) of the products in the market.

If you price your product below what the market will bear it will discourage the main mechanism of capitalism and retard the value improvement of the product. The result is the imposition of higher costs and lower quality over time of these products to society. That is immoral.

Edit: looks like our buttons were pressed simultaneously

You can make a case for using that word though I’d lean more towards unethical - the idea being that by letting the market set the price you’re ensuring the maximum distribution of goods. Underpricing scarce items leads to hoarding and speculation, artificially squeezing the lowest end of the market while providing the top end with an unfair advantage. When the market arrives at a price unencumbered by manipulation or artifice then the maximum number of participants will receive at least some number of scarce items.

Immoral, is just the wrong word to use IMO.

 

[jderimig]

Immoral, is just the wrong word to use IMO.

Yes, its poetry not prose.

 

[jderimig]

What if X number of people chose not to buy the water and were hospitalized due to heat exhaustion/dehydration? True, $8 vs getting hospitalized is an easy decision to make if you know those are the two outcomes, but if you are 'tough' and 'can deal with it' but really can't, that's lame. What if the people hospitalized have no insurance or are on medicare/public insurance. Was the $8/bottle of water worth the thousands of dollars passed on to others who weren't even there?

If you show up with your own water and aren't allowed to bring it in, then the moral requirement (for me personally, not an economy, market etc.) would be to charge a fair amount for water, not what the market would tolerate.

I guess the term that got used earlier (immoral) makes it a personal thing, not a market thing. A market is not sentient, so it cannot be moral or immoral, but individual actions within the market can be moral or immoral. If it is an individual (company etc.) then acting morally is important to me, even if you could make more money by gouging.

I imagine I'm wrong, as it seems that business doesn't match my view and there are a lot more businesses than me. If it were a rocket motor or Coke, no argument at all, as those are items nobody actually needs. Water, keeping your company from having a million dollar EPA fine or other similar extreme circumstances need to be cost based, not market based in my view. Again, I am probably wrong from a market standpoint. I hope I'm right from a human standpoint, though.

Sandy.

The example you mentioned in not capitalism but a distortion of it. There are plenty of those. In this case the free market was restricted and there was trade restraint. If several water vendors were allowed there and each had plenty of supply, there would have been a 'moral' outcome as price discovery would have worked its way to the benefit of societal slice at that event. Interfering with capitalism is immoral.

 

[Ez2cDave]

Interfering with capitalism is immoral.

Where is the line between "capitalism" and "price gouging" drawn ?

Dave F.

 

[Cape Byron]

I still don't understand why Estes kits aren't cheaper the Custom Rocket Company kits which are made in the USA instead of China and are a smaller company.

Lots of replies already since you posted this, but I'll just say a few things.

Custom's stuff is great value. We now use their NCs and BTs in our kits. We also stock a limited selection of their kits. Lovely people to work with. But Custom and Estes aren't comparable players in this market.

Estes spends big on product development. Estes is now spending big on licensing. You have to get that money back from the consumer. That's where your money comes from.

I'd rather buy Made in the USA than Made in China. I'd really love to buy Made in Australia, which I do whenever possible.

Model rocketry is a tiny niche market in the hobby industry, and that industry is much smaller than even 10 years ago.

Just my $0.02 back to farming.