Many people believe that Indian motorcycles are more expensive than other brands. In reality, Indian motorcycles are priced very competitively with other motorcycle brands (Mainly Harleys) in their respective categories. What has led to this misconception is a lack of understanding of how prices and value work in today’s market economy. To better understand the issue at hand it is important to first look at what factors determine price and value. These include production costs, competition, and demand for products relative to supply (supply=number of sellers/demand=number of buyers). The cost of producing an item or service can be broken down into two components: fixed costs which do not vary with changes in output such as raw materials and other variable costs which vary with changes in output such as labor. For
For example, it costs the same amount to make 10 units as 100 units. In this instance, you could say that each unit of output has a fixed cost of zero dollars since it costs no additional dollars to make more. Labor is also viewed in this way; however, due to time constraints individuals are only productive for certain amounts of time before requiring rest which means their labor will cost different amounts at different levels of productivity (how much work can be done by an employee in one hour).
anyway let’s clearly understand why Indians are so expensive:
Indians are expensive because of their high-quality parts, strong engines, and heavy frame which makes Indian motorcycles expensive compared to other motorcycles. their great design and sound system also play a role in this matter, power and reliability are other reasons. let’s know about the reason Indian motorcycles are expensive:
Looking at Indian motorcycles, the company has put into place some very clever strategies that allow them to sell high-quality machines for reasonable prices while maintaining healthy business margins. A large part of the reason for this is because they source their machines from overseas manufacturers, primarily Thailand. This allows them to benefit from the economies of scale that come along with producing in larger quantities which leads to lower costs per unit produced. A key factor behind Indian motorcycles’ ability to produce high-quality goods while keeping prices low comes back to their focus on maintaining margins instead of maximizing profits. In other words, if they sell an item at a price that ensures that it is cheaper than competing brands but does not maximize their profit margin then they will be willing to do this as opposed to selling an item at a higher price and making more money per unit sold.
In order for Indian motorcycles as a company to stay profitable without raising prices, they must constantly monitor and modify the variables which affect their cross-price elasticity of demand (how responsive consumers are to changes in price). Indian motorcycles have done this quite well; however, some competitors do not seem to realize that producing goods for reasonable prices while maintaining reasonable margins is a key strategy in ensuring success.
Indians and Harleys are in the competition their bikes prices are relatively close with Harleys being more expensive. these both brands consider to be premium brands and they do not try to undercut competition like other brands. These two brands hold a substantial market share in the motorcycle industry and see no reason to adjust their prices due to changes in supply or demand.
since they are premium both company’s bikes are much more expensive than Honda, Yamaha, Suzuki, etc.
Now, what factors determine the value of Indians?
This largely depends on how one individual values something relative to another individual. A good example would be rare paintings; there will always be one person who is willing to pay more than anyone else for it which essentially means the painting’s value is equal to that person’s willingness or ability to pay. An additional factor behind an item’s perceived value can be attributed to its scarcity, meaning if everyone were to want that painting then its value would increase.
Value can also be determined by how much one values their own time or what one could do with the money they are spending. If someone doesn’t have a whole lot of time and really enjoys bike riding, it is likely they will choose a faster motorcycle over a slower one even if the slower motorcycle were cheaper. This is because time is a valuable resource that many individuals equate to monetary value.
In order to determine what price an individual sets for their good, you must look at both supply and demand in terms of elasticity which means whether buyers are sensitive to changes in price or not (a more inelastic good is meaningless sensitive). Inelastic goods typically won’t change in price due to changes in demand or supply.
For an example of how elasticity affects the pricing, let’s assume there are two competing department stores across the street from each other, both selling name-brand watches at their respective prices. One day they come across a new shipment of watches with the exact same quality as all of their others which usually cost $200. If their demand is relatively inelastic then they will not have to lower their prices even though more people would be interested in buying it because each store will still get enough customers willing to buy it at its current price. The opposite case would occur if this department had just received a large shipment of low-quality knockoff watches that nobody wants or is willing to pay for then each department would have to lower the price until people are willing to pay for it.
The same concept applies when determining how inelastic the motorcycle industry is when looking at supply and demand.
Pricing inelastic goods have become an easier endeavor, in part due to online retailers being able to track consumer data in real-time. This enables sellers with access to this information to better ensure their prices reflect what consumers will be willing and/or able to pay. Companies such as Amazon and Walmart enjoy a significant amount of control over pricing because they can see exactly who is purchasing certain items and how much those items cost, which makes strategic price changes easy and profitable. However, other companies such as Indian Motorcycles face difficulties because they do not have the same data that Amazon and Walmart do. For instance, Indians could potentially lower its prices simply to get more people interested in buying its product thinking that once more people buy their bikes it will be able to increase overall demand for its products while also increasing profits, but this may not actually happen.
To summarize, Harley-Davidson and Indian Motorcycles will continue with their price points because they are both premium brands; therefore, there is high demand for them which means any changes in supply or demand won’t affect their prices due to their inelastic good prices. However, other companies like Honda may need to make adjustments based on how elastic their products are relative to one another which can create opportunities for consumers who may be looking for a better deal.
Indian motorcycle’s prices are not affected by changes in supply or demand because they are premium goods which means that consumers will be willing to pay any price for them. However, other companies such as Honda may need to make adjustments based on how elastic their products are relative to one another which can create opportunities for consumers who may be looking for a better deal.
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