Estes Prices

Discussion in 'The Watering Hole' started by jqavins, Nov 8, 2019.

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  1. Nov 8, 2019 #1

    jqavins

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    Preliminary Note: This is not a complaint. This is something I've noticed, and I find it odd.

    Estes prices in the last few decades have outpaced inflation by around 47%.

    I first got interested in rocketry in the mid '70s, and loved browsing the Estes and Centuri catalogs. I remembered the price of kits being lower - lots lower - back then, so I just checked. The catalog price of a Big Bertha, already a venerable kit even then, was $3.95. I then used this inflation calculator to find that $3.95 in 1975 is worth $18.85 today. But today's catalog price for a Big Bertha kit is $26.99, 43% more.

    A three pack of C6-3s back then cost $1.65, which would be $7.87 today, but today's catalog price is $11.79, which is 50% more. These two items' price increases average 47% more than the general rate of inflation.

    Now, it's always true that some goods and services see price growth higher than the CPI and some lower; that's why CPI is an average. Just look at housing and college tuition for one and milk for the other. And I very much doubt that model rocket kits and engines are in the standard basket of goods and services that's used to gauge inflation. Still, this seems like it's beating inflation by a lot more than one would expect for a materially pretty simple product.
     
  2. Nov 8, 2019 #2

    BBowmaster

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    I think one reason is that a lot of the goods and services used to track inflation use economies of scale. A small operation like Estes doesn’t have those same economies so the prices reflect a closer correspondence to real material and labor costs.
     
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  3. Nov 8, 2019 #3

    jadebox

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    A Big Bertha kit usually sells for around $20 which is pretty close to the value that you calculated based on inflation.
     
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  4. Nov 8, 2019 #4

    SecondRow

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    Hobbies are in the standard basket of goods for the CPI. You can actually look at the CPI of the "Toys, games, hobbies and playground equipment" sub-sector. Unfortunately, the BLS only started keeping this data in 1997. But since that time, prices have actually decreased 61%! There are some caveats, I'm sure. Sample sizes might be small. And the hobby industry is probably not the driver of the sub-sector, or the price decrease in general. It's probably video games.

    Edited: Never mind that last sentence. Video games are excluded from this sub-sector.

    https://beta.bls.gov/dataViewer/vie...1;jsessionid=9642E8C2F1177C1411755553D4F3E7DF
    upload_2019-11-8_13-44-23.png
     
    Last edited: Nov 8, 2019
  5. Nov 8, 2019 #5

    dr wogz

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    I think another aspect, might be how much we're willing to pay.. I'm pretty sure some industries push the price until supply start to pile up, then they know their "limit"..

    A local restaurant did this, start with good food, then slowly lower the quality until people stop coming in. That's the limit they'll tolerate..

    And some are just loyal to the brand, regardless of quality or price..
     
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  6. Nov 8, 2019 #6

    Funkworks

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    For a company like Estes that has been selling 10,000's or 100,000's of products for decades, the price sets itself:

    If [price/unit] decreases, then [margin/unit] decreases so:
    Profits = [units sold] x [margin/unit],
    becomes less than optimal.

    If [price/unit] increases, then [units sold] decreases, so:
    Profits = [units sold] x [margin/unit]
    becomes less than below optimal.

    So there's a natural sweet spot for the price where Profits = [units sold] x [margin/unit], is optimized. (All businesses look for this sweet spot, according to basic economics).

    Another way to explain this is that there are more people than there were 50 years ago, so there are more people in the hobby, and so there are more people willing to pay a higher price.
     
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  7. Nov 8, 2019 #7

    jqavins

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    It's true that prices are set not by cost but by what the market will bear. Apparently, we bear a rate of increase that is greater than the overall CPI.

    I'll bet that restaurant would have done better to raise prices than lower quality, but what to I know? Well, what I know is that I personally would rather pay a rising price for good quality, up to a point, than pay a steady price for declining quality. Probably the sweet spot includes a little of both.
     
  8. Nov 8, 2019 #8

    dr wogz

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    I was also going to use car prices as an example, but there are some big changes in technology that drive up the price, not to mention the wants, desires, and expectations we have today.

    (thinking back to "The Price it Right") car prices in the 70's & 80's barely topped 5-figures. Today, its' rare to get a car for less than $20K (Canadian dollars, and a "decent" new car!!)

    But again, people want the gadgets & such, so they're willing to pay the bigger bucks..
     
  9. Nov 8, 2019 #9

    dhbarr

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    Perhaps fewer retired engineering types were flying in the 60's & 70's ; and the upper limit wasn't all stretched out from MD CF Os.
     
  10. Nov 8, 2019 #10

    shreadvector

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    Perhaps they make 100,000 of an item in the past and now they make 5,000 or 10,000 so they do not get as good a cost of materials, etc.

    Transportation costs have gone up.

    Regulatory costs have gone WAY up.
     
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  11. Nov 9, 2019 #11

    John Taylor

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    Seems like their engines are expensive and many of their models can be had real cheap, like at Hobby Lobby for example.
    Seems like their main profit comes from repeate engine sales.
     
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  12. Nov 9, 2019 #12

    Peartree

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    Don't forget that over a sufficiently long time span, there have been some significant spikes in the cost of raw materials. In particular, it hasn't been that long ago that the widespread use of balsa in windmill rotor arms caused a worldwide shortage and a corresponding spike in prices.
     
  13. Nov 10, 2019 #13

    Yukon@K-9 Rocket Tech

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    Welp this is a why so many kids are building sugar motors and blowing stuff up. I think rocket motors are surely overpriced and should be cheaper. It's a paper tube, clay, charcoal, sulfur, and potassium nitrate, won't cost much to make. Gun ammo is cheaper :D
     
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  14. Nov 10, 2019 #14

    tomsteve

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    supply and demand plays a part,too. if i have product "X" and sell 500,000 a year, that means i can get a better price on materials to build product "X" and lower the price.
    if i sell 5000 of product "X" a year, the material prices will be higher because im not buying as much so the price will be higher.
    something else that has to be included into the cost of product "X" is overhead. cost of utilities to keep the lights and heat on in the building, insurance, property taxes, building rent/lease/payment...a few more. all of those have to be figured into the cost of product "X". those costs have gone up over the years,too.
    have to include wages and benefits for employees,too.
     
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  15. Nov 11, 2019 #15

    jqavins

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    But has Estes's manufacturing volume gone down? I rather doubt that this is part of why their prices outpace the average of all goods and services.
    The increases in these things affect manufacturers of all stuff equally or very close to equally. They are part of what drives up all prices, but they are not part of why one niche product goes up nearly 50% more than the average.
     
  16. Nov 11, 2019 #16

    dr wogz

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    FYI:
    I just paid $19.99CAD each, for a pack of D12-3 & D12-5. and they're 2 per pack..

    Ouch!
     
  17. Nov 11, 2019 #17

    shreadvector

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    The things Estes makes are not average consumer products (toasters).

    The motors, their ingredients and the manufacturing process are subject to regulations BEYOND anything you are considering. Dept of Homeland Security is involved and there are costs associated with transport, storage and manufacturing operations. Security is treated seriously and is expensive.

    We amy not have the sale volume numbers, but I think it is safe to conclude/infer that sales are lower than they were when there were huge quantities of Estes products on thousands of Wal-Mart, Micheals, Meijer and local hobby shop shelves. Almost no local hobby shops left.
     
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  18. Nov 11, 2019 #18

    BABAR

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    Really is too bad Walmart dropped rockets. I think that really affects getting kids into the hobby.
     
  19. Nov 11, 2019 #19

    tomsteve

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    i suggest you contact estes and ask them directly.
     
  20. Nov 11, 2019 #20

    jadebox

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    Back in 1975, the products usually sold for the price listed in the catalog. Today they are usually sold at a price lower than the catalog price.

    If you use the actual selling prices, the difference between the current prices and the prices calculated by inflating the 1975 prices is much lower. Just running a quick estimate, I think the price of Estes's products have exceeded inflation by only about 10 or 12%, not 47%.
     
  21. Nov 11, 2019 #21

    James Duffy

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    Bill S and BABAR like this.
  22. Nov 14, 2019 #22

    Yukon@K-9 Rocket Tech

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    Yes i totally agree. i'm reading a book on the history of money and economics. It just all keeps going up!
     
  23. Nov 14, 2019 #23

    prfesser

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    The price of commercial motors (or almost anything**) ordinarily*** has little to do with the cost of materials. You also have:
    --Machinery, which is likely custom-built and is occasionally destroyed by accident.
    --Insurance for employees, equipment, inventory, liability re. users who insist on stupiding, etc.
    --EPA compliance, collection and disposal of waste chemicals and materials
    --BATFE compliance, a lot more involved for a manufacturer than for a user
    --The normal costs incurred in any business: other materials, personnel, packaging, postage, and other things I haven't thought of.

    Somewhere I recall reading a manufacturer's account of many other costs and hurdles that are encountered by the motor manufacturer. Don't recall where.

    Best -- Terry

    **A book is just paper, cardboard, glue, and ink. A wedding cake is just sugar, sugar, more sugar, flour, etc.
    ***With the 3x-4x increase in the price of AP, which wasn't cheap before the increase, the price of an APCP motor will undoubtedly increase to reflect that, since 40-80% of the motor is AP.
     
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  24. Nov 15, 2019 #24

    Marc_G

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    much like the @prfesser says, not so much cost of materials. Unless someone can explain why I usually pay the same for a book on my Kindle (electronically downloaded, practical distribution cost is pennies, if that) versus one made from a chopped down tree, pulped, printed, shipped to distributor, to store, sits on shelf, and pimply guy checks me out at a register. Sure, author and publisher need to be paid, but seriously...
     
  25. Nov 15, 2019 #25

    Initiator001

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    Traditionally, Estes has raised it's SRP pricing 5%-7% each year, sometimes twice a year.

    Back in the late 1990s, Estes did almost $50 million/year in sales. Today that number is less than $10 million/year.
     
  26. Nov 15, 2019 #26

    KILTED COWBOY

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    Sometimes when you lower prices you sell more product.
    Estes sales down to 10 million from 50 million in 25 years not a good thing.
    But we rocketeers just keep taking it in the shorts because we love to fly them.
     
  27. Nov 15, 2019 #27

    John Kemker

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    Some call this the "Gillette" model of business: Give away the razor, make your profits on the blades. Printer companies do this all the time. In some cases, it is actually *cheaper* to buy a new printer than to buy the consumables when they run out, since the new printer comes with new consumables.
     
  28. Nov 17, 2019 #28

    Yukon@K-9 Rocket Tech

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    I'm talking about BP motors as apposed to APCP. I totally understand the cost of APCP motors and think they're quite reasonable. Black Powder motors seem more expensive then they should be. They follow a simple manufacturing process more or less like cheap fireworks. They follow same manufacturing techniques, materials, and regulations as the propulsion section of fireworks, yet they cost more. In fact Estes started out making fireworks motors. It's like I understand why i would pay a lot for a metal fountain pen (APCP) yet why I would pay 7 dollars for a single plastic ball point pen (BP). (Basic point is, considering every factor, black powder motors are still overpriced)

    well there's nothing we can do about it :)
     
  29. Nov 19, 2019 #29

    david davy

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    Prices is a reason
    I wanted to get back into rocketry and fly some of my collection from the 60s and 70s and maybe build some newer ones. But after checking the prices of motors and kits like many other things nowadays that are not necessity's i will not be getting back into it. I refuse to pay the prices that are asked for non necessity's.
     
  30. Nov 19, 2019 #30

    Steven

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    Costs me just as much to by a complete electric razor as it does to buy replacement blades. A country built on waste.
     

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