>Because pans get sold by experienced companies who recognize that the price of an item is decided by its utility and the amount people are prepared to pay for that utility, not anything to do with the cost of manufacture.
The price of an item is decided by supply and demand. The only way you get a retail price which is significantly higher than the manufacturing cost is a lack of competition.
For items like pans this is probably more at the retail level than the manufacturers. I kind of doubt Walmart is buying $1 pans for $45 and selling them for $50.
No, I think this is where the "pan selling industry" and the "tech toy/trinket selling industry" are different.
There's something going on in the "pan selling industry" which results in very little "race for the bottom price" type competition - there are clearly many individual companies importing pans from China, but the "well known retail price" of those pans is ~$30 no matter which retailer you buy it from (within reason - at least within enough reason that all the $30 price-point retailers are still in business).
Tech toys, on the other hand, quite often end up in the "race to the bottom" price category - with many innovative and desirable items ending up available from sites like Alibaba or DealExtreme at ludicrously low prices.
I think part of it is the audience - the "pan buying demographic" is probably a lot earlier in it's uptake of globalised web based purchasing than the demographic who's buying Arduinos and RasberryPis. Perhaps one day your average mid-western housewife will say "I need a new saucepan, I'll just check Alibaba before I drive to the mall and pick one off the shelf at Walmart - if I can save $20 and only need to wait a week I'll just get it delivered."
But like I said - I suspect it's "experienced companies" who are not exactly colluding or price-fixing, but who all know that it's better for _all_ of them to keep pans priced at ~$30 and have everybody make margins of almost $29 per sale, rather than end up trying to compete on price at $5/pan knowing that the total market for pans won't increase just 'cause the prices drop 85%.
(And sometimes, you get the evil-Walmart-effect, where someone big enough to absorb the temporary losses chooses to drop the consumer-expected pricing down to $2/pan, waits out until the competition goes broke and vanishes, then puts the prices back up near $30/pan while owning all or most of the market.)
>There's something going on in the "pan selling industry" which results in very little "race for the bottom price" type competition - there are clearly many individual companies importing pans from China, but the "well known retail price" of those pans is ~$30 no matter which retailer you buy it from (within reason - at least within enough reason that all the $30 price-point retailers are still in business).
That's what I'm saying -- they don't compete with each other. There isn't enough competition that anyone decides to try to improve their market share by lowering prices, because it's just Bed, Bath & Beyond and Sears and such like "competing" with each other in any given local area, and not enough people buy housewares over the internet to move the needle against those guys.
>I think part of it is the audience - the "pan buying demographic" is probably a lot earlier in it's uptake of globalised web based purchasing than the demographic who's buying Arduinos and RasberryPis.
More than that, electronics are purchased in bulk by corporate purchasing departments. If you're buying 25 new devices every two years you may not be such a big fish that you qualify for a volume discount, but you're certainly spending enough money to justify a significant amount of comparison shopping, which means a high price elasticity of demand and an immediate market share advantage for retailers who engage in price competition.
>But like I said - I suspect it's "experienced companies" who are not exactly colluding or price-fixing, but who all know that it's better for _all_ of them to keep pans priced at ~$30 and have everybody make margins of almost $29 per sale, rather than end up trying to compete on price at $5/pan knowing that the total market for pans won't increase just 'cause the prices drop 85%.
The phrase you're looking for is "conscious parallelism." You get de facto collusion without communication by means of everyone adopting the strategy that they not be the first to engage in price competition. It works only so long as you have sufficiently few competitors that all of them religiously follow the strategy -- because having a third of the market with 5X the margins is more profitable than having the whole market at 1/5th the margins. The problem comes when you have more competitors, in which case someone decides they would rather have half of the market at 1/5th the margins than 1/15th of the market at 5X the margins, and believes (perhaps correctly) that they will be the one to survive a price war. This has basically been Walmart's business model for probably the majority of the products they sell, and Amazon et al are now doing the same thing even more aggressively on the internet.
You're assuming a free market, which stops working when you have too much differentiation between products. Free market analysis stops working when you consider that at one point humans are part of the decision making process
The price of an item is decided by supply and demand. The only way you get a retail price which is significantly higher than the manufacturing cost is a lack of competition.
For items like pans this is probably more at the retail level than the manufacturers. I kind of doubt Walmart is buying $1 pans for $45 and selling them for $50.