Thank you for tuning in tonight. You can call me Chunky, and I will be your audio host for the evening. Without further ado, let's begin.
For tonight's segment, I'll be talking about treacherous prospect of pricing.
So, what makes pricing so finicky? I mean, it's easy right? You just price it based on what it's worth. And that is true, to a certain extent. For example, let's look at a car, and oh, I don't know, a radio station.
It's a pretty nice car; nice leather seats, good sound system, built in nav and media, strong mileage, the works. How much does this car cost? Well, the raw materials, the steel, glass, rubber, whatever else, cost, let's say 20k. So the car costs 20k then, right? No, clearly not; you have a box of raw materials, not a finished product. So we have process the materials, to turn them into usable parts. Between the furnaces, the presses, the cutting bits, the drills, and the mills, this costs an extra 30k. Alright, our car is up to 50k. But y'know what? But wait, it still isn't a car. It's just a box of parts that look vaguely car-ish. So let's put the pieces together for an extra 10k. There! Now we have a car. But, dude, where is it? It's in Germany, of course! Alright, we'll ship it in, putting a 1k dent in the wallet. So for those of you playing along at home, the raw cost of this car is up to 61k. Pretty reasonable for a car, right? Especially one this nice. But there's one little piece we forgot to mention. It's right there on the hood, too; that chrome circle, with chrome lines cutting it into thirds. But that can't change the price all that much, right?
Now, the radio station. Well, my booth cost about 80k, gear included. The transmission equipment cost about 7k. My salary is about 60k annually. This leaves us at about 150k, rounding. This doesn't even include the initial engineering fees, music deals, or the salary of anyone else in the studio.
So, where does that leave us? The car was estimated to cost about 61k to produce, but we never talked about that shiny circle on the hood. That, dear listeners, is the signature Mercedes-Benz hood ornament. That adds about 34k to the price tag, bringing it up to a cool 95k. The radio station on the other hand had an initial startup cost of about 90k, plus the host's salary of 60k annually. Y'know what we charge for the radio station? Exactly 0$; it's free. Well that doesn't make any sense; if the price were based on the cost of the product, the radio station should be way ahead of the car. So clearly, the raw cost of the product isn't the only thing guiding the price.
When setting the price of something it's important to consider all the factors. For example, the car is beautifully put together, made with the best materials, and engineering available to the market. The car is exclusive by design; owning one is as much about the status it carries as much as it is about the car itself. The radio station, is a service to everyone; DJs play music for their listeners, so bits, talk to their listeners, and have the listeners talk to them. The radio station serves it's followers, and is available to anyone. Putting a price on that service would alienate the people that look to the radio stations to keep them company on their commute, when they're working out, or when they're on their lunch break.
And that is why I have chosen to broadcast my music free of charge. I can earn my own money, with advertising and sponsored content. I don't need to put a paywall up between myself and my listeners. That would defeat the purpose of playing my music for the people from the get-go.
And with that, I must bring this broadcast to a close. Don't you worry though, there'll be plenty more to come, so stay tuned.
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