...just one big jump.
If you have a price increase of 12% on a $5000 watch on 4/1/2006 you have $5600 MSRP....Then on 4/1/2007 another 12% brings the MSRP to $6272...then this year on April Fool's day it goes to $7025.....
So we have a $2000 jump in 731 days but 3 x April 1 price increase.
If you then take the fact that some areas of the world are growing faster than others, you see the supply go to those areas and, obviously, less supply then goes to the old formula 1/3 Americas, 1/3 Asia, 1/3 Europe.
This gives you less of a discounted price and less supply with increased demand.
Think of Oil...if we drilled for it in ANWR, Colorado, The Dakotas and the Great lakes and off the coast of Florida/California(where the Chinese are drilling)...then we would have more supply and the marketplace would decide where the cost should be.
Raising prices gives more return for the same inventory but you lose clients. Then the assimilation factor moves in when new clients come in at the higher price and the cycle starts again.
Oh, and one more thing.....when prices get so high...those who already own a $5000 Panerai, Rolex et. al....will buy a new strap rather than pay the price increase on a new watch....a new look for little cash and no inflation.
I hope this helps.
Elliot
Elliot Lazarus
www.TCStraps.com www.mariopaci.com
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