I managed to get a ‘great deal’ on my second Garmin 935, with the price at the time coming in at GBP430, as shown below. That’s a low price for the UK but about the same as the US$499 current price on Amazon. But that price got me thinking (often a dangerous thing 😉 )
It got me thinking on whether or not the Garmin 935 was too expensive or, perhaps, too cheap.
Arguments for: “It’s too expensive”.
I’m one of the first to moan if I think something is too expensive. I’m more than happy to pay what I consider to be a fair price for something and realise that the manufacturer has to make a profit to re-invest in their own future.
I would tend to compare a product to the competition and figure out that it’s got, let’s say, 5 additional features. Perhaps I’d only use two of those additional features. In a realistic case with the 935, let’s say those additional features are: the ability to support multiple run-bike ‘brick’ repeats; and the ability to support ANT+ sensors.
So how MIGHT I place a value to me on those features?
- ANT+ :: Well LOTS of companies do that ‘feature’. It’s common, although not in the direct competition. It’s probably cheap to implement. Let’s say it’s worth £30 (read as: $30, Eu30)
- Brick repeats – That’s a relatively unique feature that is scantily available outside of the Garmin ecosystem. Let’s face it we can get by without BRICK REPEATS with a few extra key presses. I’m just being lazy saying that I want Brick repeats. To compound that how often do I really use that feature? Maybe 5 times a year? Maybe 10 times? Certainly NOT every week. Then again it IS a feature specific to the intended use that I bought the 935 for in the first place. Let’s say it’s generously worth £50 to me.
I don’t especially like the looks of the product, though it’s fine. I could knock a bit off the value to me because of that. There are lots of other features, some of them unique, such as all the clever Firstbeat metrics. Those are toys for me. Interesting but they don’t add any value to me although they WILL add value to others.
So we are adding £30+£50=£80 onto the price of a competitor product like the V800 (£267) or SPARTAN TRAINER (£200). So that makes it generously worth about £350 which is still £80 LESS than I spent on what at the start of this month.
Conclusionette: It’s too expensive
Counter: You might come back at me with a well-worn phrase like ‘It’s only worth what someone will pay for it‘ and I clearly DID pay £430 for it. So, the argument goes, it IS worth £430 to me.
The argument may be a bit more nuanced than that as I had no choice but to buy the watch because of this blog. In reality I’d have paid more for it. BECAUSE I HAD TO.
Other arguments against the 935’s price would include features which the 935 does not implement as well as the competition eg GPS accuracy and other features that just don’t work as well as they should eg optical HR.
Arguments For: It’s too cheap
It’s got lots of features. And I mean lots. If you work out the cost per feature it may well come out cheaper than the SPARTAN Trainer. Pricing based on the accumulated cost/value of all the features may well make it more expensive. You could construct a reasonably plausible argument along those lines.
It is a cutting-edge product. It has cutting edge features that you can’t get elsewhere. There is a certain, mystical ‘something’ that the informed owner gets by wearing such a sports watch.
Putting aside the ‘you’re paying to be a beta tester’ argument, the early buyers of technology tend to be the ones who will pay a premium for whatever reason – be that ‘novelty-‘ or ‘toy-‘ related reasons.
A related argument for a new product would come out along pure economics lines. Namely that a new product will usually have lower production volumes as the company determines market demand, irons out early issues and starts to ramp product volumes incrementally higher. So, at the start of such a process, the product is scarce and scarcity combined with demand can lead to higher prices.
That economic argument was certainly true for the first few months of the 935’s retail life. It was generally hard to find one and buyers had no choice but to pay the full RRP as retailers had usually pre-sold models before even receiving their stock allocation. But, that moment in time is now well and truly passed.
Another argument could be along the lines of trying to answer the question “What will the market bear?“. Many triathletes are relatively wealthy in the global scheme of things. I think many would pay more for what is probably the best triathlon watch.
Indeed if we look at Amazon’s pricing we can see that prices go up and down; probably based on their stock levels at any given time compared to demand at any given time. Amazon seem to have a clever model that adjusts the price for what their market will bear. Maybe the Amazon price broadly reflects the true market price? Maybe.
Let’s say that instead of releasing the 935 how they did…ie en masse. That, instead, Garmin released 1000 units every month. What would people have paid for them given the restriction on supply? I would GUESS that in an auction those first 1000 units would have gone for very high prices. I would guess at over $1000/£1000/Eu1000.
Clearly Garmin have to balance production levels and the cost of holding back stock to support such a model. Whilst such a method WOULD maximise the price paid for each INITIAL Garmin 935 (review) it certainly would NOT maximise the total product revenues for Garmin over a longer period – for example if instead they released 2000 units globally maybe they would have sold them at $900. I’m sure Garmin’s marketing team will be modelling scenarios along similar lines to that.
Perhaps instead Garmin could have maximised PROFITS and sold the 935 initially only through its own shop. That would cut out dealer margins entirely (which are probably a third, or less, of the 935’s price). Again that would also be a balancing act as such as strategy would seriously hack off certain dealers and if often repeated would eventually give Garmin distribution issues if dealers refused to work with them.
Perhaps also Garmin learned something from the release fo the CHRONOS? (Currently >$900) Effectively that was an expensive format Fenix 4. It’s not quite the same as the Fenix 5 and the Fenix 5 itself is nearly identical to the 935 in terms of functionality; even if parts of the hardware are different. Perhaps such a super-expensive watch gave Garmin a more true insight into the number of people who really are prepared to pay big bucks for a sports watch with a life of only 2 to 4 years.
Furthermore remember that there are no likely immediate successors to the 935. There will NOT be another product that essentially matches the 935’s features AND THEN DELIVERS SOME MORE FEATURES over and above that. Even the replacement V800 will not do that.
Maybe there are also arguments about avoiding annoying their intended market. Effectively forcing people like me to pay a large premium compared to the 920XT and then seeing the price collapse 9 months later is not a great move.
My Conclusion: I reckon they could have squeezed the market throughout most of 2017 for prices of over £550.
Thought: With increasing competition at the lower ends of the market from Xiaomi/Amazfit, perhaps we shall see prices rise for Garmin’s premium products to compensate?