Even with a premium price in place ($1200 instead of the initial projections of ~$1k), Fujifilm announced on Saturday that it has been overwhelmed with orders for the just-released FinePix X100, and cannot keep up with demand for the camera—or even its leather case and lens hood. In response the company is attempting to increase production, but may push most U.S. and U.K. deliveries to as late as April.
(Thanks to Kent)
ADDENDUM: It's very common to read on forums strident comments to the effect that there's "no excuse" for companies to have a shortage of product for an introduction—how can they not have known? But of course, looking at it from the opposing angle, the downside is pretty big too. I know of a couple of real situations where companies badly misread demand on the high side, and it was not pretty—lots of real money was committed and lost providing product nobody actually wanted to buy. Demand with no supply is frustrating for consumers, but supply with no demand can spell real losses for companies.
I've also heard the old adage that "When there's a line, the price is too low." I don't think that's so simple, either. I've been involved in price-testing several products where there was a distinct "shelf" or line above which the demand dropped off a cliff. In one such case, we found people who seemed quite happy to pay $19.95 for a magazine subscription who departed in droves when the price went to $20.95. (You can test this pretty easily by sending out renewal offers for $19.95 but randomly sending two or three thousand people the exact same offer but with the $20.95 price. Then just quantify at the percentages of renewal orders you get from the two groups. Ironically, in that case, there was lots of difference between $19,95 and $20.95, but almost no difference between $20.95 and $23.95.)
To me, it was a real risk on Fuji's part to hike the price of the X100 to $1,200. It's paying off, looks like, but that sort of move is never a mortal lock.
Tailoring the price too closely to match demand has other risks, too. Wasn't there a case with one of the iPhones where Apple charged early adopters too much of a premium and then had to give refunds once the price dropped, to defuse complaints from angry early adopters who felt they'd been gouged? The damage caused by that kind of bad PR can be difficult to assess. Imagine if Fuji put the price of the first X100s at $1,500 and got that price for the first two months—but then lost sales for the rest of the product lifecycle because of a persisting impression that the camera was overpriced—even after the price had dropped? People don't like being manipulated, and if you manipulate them too transparently you can pay a price for it in other ways.
And you can't just ask people, either. You get very soft data when you ask people how much they'll pay for something. People answer such questions from the standpoint of their "ideal selves"—themselves if they actually had as much money as they picture themselves deserving. But it's their real selves that actually buy things. Ideal selves love to confidently say, "I'll take it." Real selves tend to be more cautious.
There can be quite a difference between ideal and real wallets and bank accounts. Many's the time I've read a review of a hot new sports car that costs $60,000 and been very firm in my opinion that I'd pay $45,000 for it but not $60,000. A pollster would get an earload to that effect if I were being asked. But of course I have never actually paid $45,000 for a car in my life, and the chances I'll ever do so are pretty slim at this point. The market researcher would be left contritely explaining to the manufacturer that he just can't explain it—lots of people said they'd pay $45,000 for that car. That Johnston guy, for one.
Similarly, Fuji didn't know if people would actually buy the X100 until it came time for them to fork over the dough. It's easy to get your head turned by a pretty new product and exclaim with great enthusiasm, "I'd buy one of those in a heartbeat!" But that doesn't mean you actually will.
These companies have all been jilted before, believe me.
Of course every company would like to be able to predict demand just perfectly for every new product. But it's a very complicated guessing game. There are too many separate factors to isolate any one of them to the point of certainty.
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Original contents copyright 2011 by Michael C. Johnston and/or the bylined author. All Rights Reserved.