Posts Tagged electronic gadgets

Why your Christmas gadgets aren’t getting cheaper this year

Most of us eagerly wait for the festive seasons as it is accompanied by huge discounts over almost every consumer goods starting from clothes, watches, gadgets, computing devices, jewelries and many other such items. This trend of decline in the price of the consumer goods especially electronic goods has been recorded by the Bureau of Labor Statistics from the year 1998 i.e. the time from which the electronic goods began to be marketed at an affordable price that was acceptable to the consumers.

The Statistics

The Bureau of Labor Statistics in United States has closely studied this downward trend in the prices of the electronic goods and has come to the conclusion that from the year 1998 till 2005 the decline in the prices of the electronic goods amounted to as much as 85% of the initial price of these goods. However, after 2005 a noticeable change is visible in the percentage of decline. From 85% the price decline figure reduced to only 65% in a matter of just a year. Moreover, in the recent time the percentage of price decline has weakened further and presently it is merely 6% of the earlier price.

The drastic fall from 85% to about 6% within a time span of less than two decades has led the economist and market analyst to wander the probable reason behind such a trend and they have come up with the following conclusions.

Economies of scale

Firstly, analysts are of the opinion that the economies of scale theory was primarily responsible for the declining price of the electrical goods since 1997. According to this theory the price of the goods are bound to fall as the production of the number of units of the same good increases. This decrease in the price of good per unit is primarily triggered by increase in demand.

When the demand for goods increase, the amount of goods manufactured also increases and mass production leads to the reduction of the price of the product. This is exactly what contributed to the decreasing prices of the electronic gadgets like mobile phone, laptops and all the high tech devices.

Wifi enabled phones, Bluetooth enabled phones, iPods, pen drives and other device that were considered unaffordable at one point of time were commercialized. Once the common people began to understand their value and dynamic utility, the demand of the goods increased leading to decrease in the prices of the products.

Explanation behind current stagnancy

So the question that is certainly going to crop up in our mind is: What are the factors that have contributed to the stagnancy in the prices of the electronic goods? The analysts are of the opinion that, in the recent time stagnancy is noticeable in the prices of the electronic goods because the manufacturers of these brands have reached the bottom line as far as their profit margin is concerned. The prices at which they are selling the electronic products right now are giving them the minimum profit. Therefore, there is no scope for further reduction in the prices.

These are the two important factors that have been pointed out by www.gadgetank.com which have contributed to the stagnancy of the prices of the electronic goods this Christmas.

If you have planned to invest in a gadget, then do it right away because this is the best price at which the electronic goods are being offered to the consumers.

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