STI Pricing Game - Lets have a Debate!
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For the sake of arguement, lets do some sample pricing scenarios:
Assumptions:
Sales figures and Variable Cost based on intuition
Invoice = MSRP - 3k
STI Variable Cost = 24k
Margin = Units Sold x (Invoice - Variable Cost)
Case 1:
MSRP: EVO = 29k; STI = 29k
Sales:EVO = 4000; STI = 10000
STI Margin = 10000 x 2000 = $20,000,000
Case 2:
MSRP: EVO = 29k; STI = 32k
Sales:EVO = 5000; STI = 6000
STI Margin = 6000 x 5000 = $30,000,000
Case 3:
MSRP: EVO = 29k; STI = 35k
Sales:EVO = 6000; STI = 3000
STI Margin = 3000 x 8000 = $24,000,000
If Subaru could only pick among these three price points, it is clear that 32k is the way to go. Of course, these numbers are just guesses but it illustrates the point that Subaru does not have to match the price of the EVO in order to maximize it's profits.
Ok guys...time for you to throw some numbers out.
Assumptions:
Sales figures and Variable Cost based on intuition

Invoice = MSRP - 3k
STI Variable Cost = 24k
Margin = Units Sold x (Invoice - Variable Cost)
Case 1:
MSRP: EVO = 29k; STI = 29k
Sales:EVO = 4000; STI = 10000
STI Margin = 10000 x 2000 = $20,000,000
Case 2:
MSRP: EVO = 29k; STI = 32k
Sales:EVO = 5000; STI = 6000
STI Margin = 6000 x 5000 = $30,000,000
Case 3:
MSRP: EVO = 29k; STI = 35k
Sales:EVO = 6000; STI = 3000
STI Margin = 3000 x 8000 = $24,000,000
If Subaru could only pick among these three price points, it is clear that 32k is the way to go. Of course, these numbers are just guesses but it illustrates the point that Subaru does not have to match the price of the EVO in order to maximize it's profits.
Ok guys...time for you to throw some numbers out.
Guest
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97, you forget the the demand for the STi will follow an exponential function, very high at first, and very low as time passes and new models come out. Therefore Subaru maximizes its profit by matching the limited initial supply to the high demand. Subaru and its dealerships act as a discriminating monopoly, charging the most from every buyer that they can. There are some people who would smend 40K for the STi, Subaru if they could, would accept this amount of money from them. The next group might pay 37K and Subaru would sell the next batch to this group...etc. Who knows the exact furmula that they will choose as I am sure that they are also interested in blocking any comparison betwen the STi and the EVO VIII in the minds of potential buyers, so they might not want to upset the public with that kind of pricing strategy. I am sure I will be in line with you to get an STI when/if I have the money and when the price is right..
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Good job Woogie !
Originally posted by Woogie099
97, you forget the the demand for the STi will follow an exponential function, very high at first, and very low as time passes and new models come out.
97, you forget the the demand for the STi will follow an exponential function, very high at first, and very low as time passes and new models come out.
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