Esoteric Rogue wrote:Now, about the whole want to compare prices for cheaper buy lower quality goods. I just want to offer some fuzzy math to show it's not often that it's applicable.
First, and just a bit offhand, when I looked at my blazer to do quality analysis, well, I'm the only provider of Textile, so no choice. I was the only provider of Linen, so no choice. I did have a choice for Dye, but I was the best choice for quality and price. So sometimes (or usually) there's no choice.
Also, if there is a choice between you and a competitor, choose yourself. It should be self-evident in almost all cases.
When I've looked to produce a new product, I've often looked at what materials competitors were selling. They can often sell stuff for a good price, especially considering the overhead and labor costs. The real profits may be in the finished product and retail sales. There may be profit to be had in supplying that material yourself, but that requires much more investment, and you may get better returns on investment using that money elsewhere for now. You can always start producing that material yourself later after your product starts selling and your usage of that material is more stable and significant.
That's especially true for materials that are really minor for what you're making, like glass for milk bottles, or steel for leather belts. Or maybe the competitor's stuff is in the city you need it, whereas your production is in another city and comes with a large shipping cost on it. Or anything that the competitor seems to selling at a very good value. With 30 competing companies, the objective is to hurt one competitor while slightly hurting yourself. It's just to help yourself as much as possible, even if one of the 30 competitors benefits as well.
There's also the choice of producing smaller amounts of things in each city instead of massive amounts in one place that you export.
Esoteric Rogue wrote:Also, a components quality isn't that significant. This is the fuzzy math, and I want to check out the most significant it can be.
First, on average, only 50% of it is materials instead of tech. Then, if you have three components, well, a third of 50% is 17%. Now, that's just to get the product quality. When it comes to sales, we know that perhaps a third of the overall rating is actually quality. So, we're now down to
6%. So, if you were decided upon one of three components where you could choose quality 80 or quality 40, well the difference is 40. But the effect on overall rating will only be 6% of that or
2.4.
It is true that many products are most affected by tech rather than component quality. But I think that small difference adds up. I mean, sure, going from 30 to 100 tech on a product that is 70% or 80% dependent on tech is huge. But that's for that one item. But a difference in quality in some material that affects 10% of many things will add up as well, but just be spread among many things. And if you still find it's just not significant enough, then maybe you should have been seeking cheaper priced and lower quality materials, since material quality apparently doesn't matter. (You've mentioned that you realized this dilemma already.)
Perhaps you could take that overall rating effect you found with some raw material, figure out how much that extra quality could allow you to raise the price of an item and keep the same overall quality (for a given level of concern for quality and price), figure out how many units of that product can be created using the resources from that mine/camp/well, and thus find just how much extra revenue that higher quality material brings over its lifetime. Then compare that to the difference in price between 2 natural resource locations with that difference in quality and similar amounts of total resource available.
I wouldn't be surprised to see some things almost always having greater net profit regardless of price/quality/brand concerns (within reason), and perhaps some things always being a loss from higher quality (like paper in cigarettes, since nobody cares about quality of cigarettes). And then maybe many other things in between that are highly dependent on consumer concern percentages.
BTW, I've always used unique brand strategy, so I've never experienced issues with low quality affecting the brand. So perhaps the low-cost approach suits unique brand strategies a bit better.
Esoteric Rogue wrote:
Edit to add another note: usually the difference in qualities is less than 40. In a 25 year old game, I see 4 wool suppliers that only have a difference of quality of 10. 4 suppliers of Timber was the most significant I see, ranging from 83 to 56, only a difference of 27. 27*.5*.4 ~= 5 overall for a bed, but only 27*.1*.4 ~= 1 for a sofa.
I've noticed that about sofas and beds and some other products. But the reason timber contributes so much more to the quality of beds is because more timber is used (120 for bed versus 30 for sofas). The quality effect of the timber on beds is a little more potent because it accounts for 50% of quality unlike the 10% for sofas (so 120 timber contributes 50%, versus 30 timber contributing 10%... so you get slightly more quality contribution for each timber used in the bed). Sofas and bed also have a similar market price (about $300). So each pound of timber used in sofas contributes about the same increase in quality and value as each pound used in beds.
But look at the leather used in leather handbags versus leather in sofas. Both sofas and handbags have market prices around $300. But it take 10 leather with 40% quality contribution to make the sofa, while it takes only 5 leather with 40 % quality contribution to make the handbag. So you get much more value out of high quality leather for handbags than you do for sofas. Or in other words, the price of high quality leather (if you're buying it, or have to pay higher shipping fees to get the good stuff, or you have to pay to train farmers) is going to be much more worthwhile for handbags than for sofas.
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