You missed the point entirely. “The research, the engineering, the design and the brand” is almost exactly the same for both models. The problem is that Sennheiser charges you $150 more for pretty much the same headset.
So if Louis Vuitton made a version of their bags that’s the same but a different logo, at only a 50% margin instead of 98% or whatever their current margins are, you’d be angry at them too?
But because they only sell the version with the super high margin and not the “crippled” cheaper kind, it’s somehow just fine?
Same with iPhones, those margins are huge, they could totally sell you a crippled cheaper version of the same hardware and still make money. They just choose to only sell things at the highest margins, because their UX and brand are so strong. How is “pricing everything super high” fine and “also sell a few cheaper options with lower end-user value” terrible greed? That’s totally upside down to me.
> So if Louis Vuitton made a version of their bags that’s the same but a different logo, at only a 50% margin instead of 98% or whatever their current margins are, you’d be angry at them too?
Useless comparison, bag here is only fashion statement, not something you use for technology.
And it's weird assumption they made any of them "first", they most likely designed both in parallel (design time != start of production time) and just put worse sounding version in cheaper one to not cannibalize the market.
If LV did that, it would damage their brand. People justify paying for premium brands by convincing themselves they get something exclusive. If LV showed you can get the same product, just with a different brand, then it's no longer exclusive. Those who previously believed in the brand would be angry.
And the difference between the different products sold by software people is frequently just a few bits here and there. The "Pro" version might allow bigger files or higher resolutions or whatever, the "Lite" only does 20 projects at a time, whatever. The cost for these differentiated products is exactly identical, the underlying product is precisely the same, yet they have the audacity to charge (often a significant) price differential. And you even already did all the work for the Pro Ultra version! How dare you artificially cripple it to sell it at a lower price! Disgusting and reprehensible. Software developers should be ashamed of themselves.
It's known as "market segmentation" and it's been around forever. Look at CPUs, car engines, smart phones - same hardware with different feature bits enabled allows you to sell the same widget cheaper to a different demographic without destroying the value proposition of the more expensive variant.
Yeah, this sounds like textbook price discrimination via market segmentation to me. Producers do this to capture more of the consumer surplus value (willingness of some consumers to pay more than others). The alternative is to offer a single model for a price somewhere in between. Without the segmentation the richer / more willing to spend consumers save some money, but some of the poorer / less willing to pay consumers get priced out of the market. With effective price discrimination, the supplier gets higher profits, but there's also some cross-subsidy from bigger spenders to the more thrifty ones, so there's also some progressive redistribution.
Well, if there was a proper competition the "cheaper but better performing model" would capture some of the competition market, but headphones are bit too subjective market for that.
