Why do large Multi-function Displays cost so much?

MonacoMike

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Sep 15, 2009
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Indiana lakes and Lake Michigan
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I saw an ad from a national retailer, the GPSMAP 7600xsv Series offered 5 different sizes with very large price increases as they went up in size. Please correct me if I'm wrong, but all models of this line have the same software and capability, so why does the price rise so sharply with the size increase?

The 7-8 inch are under $1500, 10 inch jumps another $1000, the 12 inch jumps $2200 and the 15 inch is a whopping $4200 more than the smaller units. Once you buy the smaller unit you have the base software and high quality display, what are they offering for all that price increase?

MM
 
Great question.
 
It’s a simple matter of they got it you want and who’s willing to pay for it
 
It's not just boats, it's the same with TV's, computer monitors, and anything else with a display.
Bigger picture = more money.
 
It's not just boats, it's the same with TV's, computer monitors, and anything else with a display.
Bigger picture = more money.

But you get a lot bigger tv or computer for you dollar compared to a boat screen!!
 
Apple iPhone, 5.8” screen, 1000$, iPad Pro, 12.9”, 1000$ (Plus more memory on iPad) You can also get the least expensive iPhone, 5” screen, around 450$, least expensive iPad, 8” screen, with cellular, 529.
So not always about screen size. Phones have traditionally been subsidized, so that raised the prices. But still, about demand, we are more willing to pay for phones (necessary?) than ipad(nice to have?).
Similar for Android, phones are more expensive than tablets, even though the latter has much larger screens.
 
There are many factors at play.
  • Available market supply and economy of scale. Consider that the GPS manufacturers are mot producing their own screens. They source it from other vendors that are providing the screens to a multitude of OEMs for various products.
  • There is more global supply / demand of the smaller screens, more production, and so the cost is less for the smaller screens.
  • Production yield. The master panel size for the glass limits how many screens you can get per panel. The yield is lower, so the price per screen is higher.
  • Expected demand / margin for a particular unit. During price modeling a producer will estimate the number of units they will sell for any given model. Generally, they want a similar profit margin for each. For each model there are sunk costs for development, production, packaging, shipping, etc. The fewer the number of units sold, the higher those costs are on a per-unit basis. Therefore as expected unit sales go down, the price per unit goes up.
  • Price sensitivity. Companies will set prices based on how sensitive the purchaser is to the cost of the good. For smaller units, customers will generally have a smaller budget and be more sensitive to the price. E.g., they have less income to spend. As Todd said, the bigger the display, the bigger the boat, and the higher the owners income, and generally, they purchaser will be less sensitive to the cost. E.g., a large boat owner will generally be have a higher disposable income they are willing to spend on a larger screen.
An example of bullet 2. My employer makes products with various-sized touch screens. One product line had a screen size of 7". The global demand for that screen size decreased. The cost for a 7" screen became 25% more than an 8" screen. The product and and firmware software to use the 8" screen, but only 7" worth of it.

Same with hard drives. The product was designed for an 80 GB drive. Those were phased out, so they went to 160 GB with only a 80 GB partition. Then the market moved to 320 GB drives. Due to overall market demand, it was less expensive to buy a 320 GB drive and use than to continue to use an 80 GB or 160 GB drive.

Source: degree in economics, product management, and practical experience in modeling and setting prices.
 
Basic economics - supply and demand. For all the R&D and qualification as a navigational aid the investment is quite large. Many more smaller displays are sold than the larger consequently why the larger are significantly more costly. Regarding the software - it is not the same across all of the sizes; maybe the supporting functions like for the sounder and radar but that's about where it ends.
 
There are many factors at play.
  • Available market supply and economy of scale. Consider that the GPS manufacturers are mot producing their own screens. They source it from other vendors that are providing the screens to a multitude of OEMs for various products.
  • There is more global supply / demand of the smaller screens, more production, and so the cost is less for the smaller screens.
  • Production yield. The master panel size for the glass limits how many screens you can get per panel. The yield is lower, so the price per screen is higher.
  • Expected demand / margin for a particular unit. During price modeling a producer will estimate the number of units they will sell for any given model. Generally, they want a similar profit margin for each. For each model there are sunk costs for development, production, packaging, shipping, etc. The fewer the number of units sold, the higher those costs are on a per-unit basis. Therefore as expected unit sales go down, the price per unit goes up.
  • Price sensitivity. Companies will set prices based on how sensitive the purchaser is to the cost of the good. For smaller units, customers will generally have a smaller budget and be more sensitive to the price. E.g., they have less income to spend. As Todd said, the bigger the display, the bigger the boat, and the higher the owners income, and generally, they purchaser will be less sensitive to the cost. E.g., a large boat owner will generally be have a higher disposable income they are willing to spend on a larger screen.
An example of bullet 2. My employer makes products with various-sized touch screens. One product line had a screen size of 7". The global demand for that screen size decreased. The cost for a 7" screen became 25% more than an 8" screen. The product and and firmware software to use the 8" screen, but only 7" worth of it.

Same with hard drives. The product was designed for an 80 GB drive. Those were phased out, so they went to 160 GB with only a 80 GB partition. Then the market moved to 320 GB drives. Due to overall market demand, it was less expensive to buy a 320 GB drive and use than to continue to use an 80 GB or 160 GB drive.

Source: degree in economics, product management, and practical experience in modeling and setting prices.

Great post! I did not think of the screen as having a market of its own separate from an otherwise nearly identical completed unit. I’m sure the screen market is far greater for the smaller screens. I knew someone here could distill it down to the answer.

I am not discounting all the other answers as they all play a part in the final price.

Thanks all,

MM
 
Short answer is because they can. That said there may be some economy-of-scale factors involved. They probably sell a lot more of the smaller units, so they are cheaper. There may also be a demographic factor. It doesn't cost that much more to build a cadillac than it does a chevy. But the target customers are willing to pay more.
 
I may be wrong but I'm guessing it has something to do with the area of the screen display.

I'm guessing (again) that the number of pixels per square inch is about the same as you move from one screen up to the next size.

Just picking a couple of easy sizes to do some math with, let's say a 7"x8" screen (56 square inches) has a certain number of pixels. When you move up to a 9"x10" (90 square inches) it is 60% larger so it probably has 60% more pixels. Then if you move up to a 10"x12" display (120 square inches) it's 1/3 larger than the 9"x10" so probably has 1/3 more pixels.

All those little pixels cost more money, as does the wiring to make them work and the software to run the whole thing.

I may be wrong, but I did say in a Holiday Inn Express once.
 
This ^

Why does a BMW 3 series base car cost 50% more than a fully loaded Honda Civic?

This is not analogous to the question. I did not ask why a Garmin costs so much more than a Humminbird. I asked if the BMW 3M was 4 times the cost of a regular BMW 3, why. The plotters I referenced were all the same series and all had the same features, just a bigger screen.

MM
 
Short answer is because they can. That said there may be some economy-of-scale factors involved. They probably sell a lot more of the smaller units, so they are cheaper. There may also be a demographic factor. It doesn't cost that much more to build a cadillac than it does a chevy. But the target customers are willing to pay more.

I think Brad nailed it when he pointed out that there are two entirely separate markets at play here, I was narrowly thinking only about the market for the finished plotters while forgetting that the components are in a market themselves. The screen manufacturer likely makes screens for a variety of military, industrial, medical, and marine usage.

I'm certain there is more demand for the smaller screens and Garmin likely gets them cheaper and can pass on a better price to customers. I still do not believe Garmin just wants to jack the price to the sky on the bigger screens. If they could sell a 15 inch for $2000 they would gain a huge market share. Rather, it makes sense that they pass on their parts acquisition costs.

MM
 
I may be wrong but I'm guessing it has something to do with the area of the screen display.

I'm guessing (again) that the number of pixels per square inch is about the same as you move from one screen up to the next size.

Just picking a couple of easy sizes to do some math with, let's say a 7"x8" screen (56 square inches) has a certain number of pixels. When you move up to a 9"x10" (90 square inches) it is 60% larger so it probably has 60% more pixels. Then if you move up to a 10"x12" display (120 square inches) it's 1/3 larger than the 9"x10" so probably has 1/3 more pixels.

All those little pixels cost more money, as does the wiring to make them work and the software to run the whole thing.

I may be wrong, but I did say in a Holiday Inn Express once.

Mike, That thinking is what prompted the whole question, but the math was not working. This may be too simplistic.

7"= $185
8"=$187
10.1"=$247
12.1"=$305
15.6"=$365

If you use the cost per inch of the 7, the 15.6 would cost $2886, not $5700. I was trying to figure out what other factors were in play here and feel Brad called it.

MM
 
Perhaps there is more to the reasoning than square inches of LCD or supply and demand. The 12" or 15" has a bigger power supply and more interface capability which probably means more circuitry inside the black box.
 
Mike, That thinking is what prompted the whole question, but the math was not working. This may be too simplistic.

7"= $185
8"=$187
10.1"=$247
12.1"=$305
15.6"=$365

If you use the cost per inch of the 7, the 15.6 would cost $2886, not $5700. I was trying to figure out what other factors were in play here and feel Brad called it.

MM
Mike,

I think an evaluation of cost per inch is the wrong measurement metric. As you increase the diagonal inch size, the increase of the screen area is not proportional.

A better evaluation metric would be cost per unit of area. To this end, I calculated the area of the screen for the Garmin 7600xsv models vs. their MSRP. The functions are largely the same; there are some minor differences as the units get larger such as additional video inputs. More power is required, so Frank has a valid point that larger (more expensive) power supplies are needed as the units increase in size.

The results were somewhat surprising. By far the most expensive unit on a price-per-inch basis is the 7" 7607xsv - the smallest model. The 8" model is the least expensive, with the 10", 12", and 16" incrementally more expensive. That increase in cost could be attributed to materials, extra ports, carrying costs, etc.

upload_2018-9-20_9-49-55.png
upload_2018-9-20_9-50-9.png



There are other metrics to consider though. Such as total pixels, pixels per inch of screen area (resolution), and cost per pixel. If you look at these, the 10" model has the highest resolution. But the 7" and 8" models have the lowest cost per pixel. Somewhat surprisingly to me, the largest model 16" model has the lowest resolution and the highest cost per pixel.

The best value of resolution vs. cost per pixel would be the 10" model.

upload_2018-9-20_9-55-22.png


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