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The Almighty Buck Technology

IT's Most Outrageous Markups? 194

Posted by Cliff from the insane-profit-margins dept.
masteritrit asks: "I have seen some really outrageous markups from IT companies. Cisco sells memory for a router I have for $1500 bucks and I bought it directly from Kingston for $56 bucks. I also had someone at storagetec accidentally reveal that their standard markup is 700%. What are some examples of this that others have seen and how do you feel about it?"
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IT's Most Outrageous Markups? More

IT's Most Outrageous Markups?

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  • Would everyone who just though of mentioning SCO's markup of 699% please add their post below.

    And before the trolls turn up, I know 699% of nothing is nothing, but it was the best I could do at this time of night.
      • Would everyone who just though of mentioning SCO's markup of 699% please add their post below.

      Actually, I was thinking that a markup of <ERR DIV_BY_ZERO>% was more appropriate.
    • Would everyone who just though of mentioning SCO's markup of 699% please add their post below.

      And before the trolls turn up, I know 699% of nothing is nothing, but it was the best I could do at this time of night.

      Slight error in the above figure. I believe the 10th power and 1st power are upside-down.

  • CompUSA Prices (Score:5, Informative)

    by xWeston ( 577162 ) on Monday September 29, 2003 @07:33PM (#7089894)
    When i was a salesman at compusa (a few years back) we sold USB cables for $30+ when they were only $5 or so at cost. I've seen grocery stores selling them for much less than $30. The same thing went for parallel printer cables.

    However, there was one adapter (PS2->AT or serial->ps2, i forget which) that we charged ~$50 for when it was listed as $.50 cost in the computer... 1000% profit is not bad.

    • Re:CompUSA Prices (Score:5, Informative)

      by Murdock037 ( 469526 ) <tristranthorn@ho ... .com minus berry> on Monday September 29, 2003 @07:58PM (#7090120)
      I was a CompUSA drone for awhile there, too.

      As I was making price tags for the cable aisle one day, I starting comparing retail and cost. On average, the markup of cables was around 1800% of cost. I'm not exaggerating.

      It's a ripoff, yeah, just like those huge CD binders for which they charge $50, but pay $15, or most anything in the Accessory aisle.

      It's not totally unjusified, though-- the reason cables are so marked up (and the reason they try to push them on you) is to make up for very low profit margins elsewhere in the store.

      The average profit on, say, your average Compaq box is something like $50. If one of those walks out of the store without being paid for, you've gotta sell fifteen more to make up for it. Factor in employee costs and whatnot, and they don't really make any money selling computers. (This made it especially aggravating when Joe Schmoe thought he could haggle prices on the things, as if it were a car.)

      Anyways, I'm not apologizing. They're still ripping you off, if all you need is a cable.

      On the last day before I quit, I went through that same cable aisle and bought one of just about everything on the shelf-- employees could buy everything at cost. I figured that paying $50 for twenty cables in advance would be better than paying the same for two cables down the line, when I would be desperate and without the discount.
    • Bought a printer at Fry's: After rebate, $40.
      USB cable to plug it to my computer: $15.

      Bullshit.

    • Re:CompUSA Prices (Score:2, Informative)

      by Repran ( 560270 )
      Profit is not price minus purchasing price. It is price minus cost. Cost can be a lot more then what a company has payed for a piece of equipment. You have to take, labor, storage, handling, capital cost, overhead, office and store rental into account. And those are just from the top of my head.
    • However, there was one adapter (PS2->AT or serial->ps2, i forget which) that we charged ~$50 for when it was listed as $.50 cost in the computer...

      That sounds familiar. Friend of mine gave me an old computer, so I went to CompUSA and looking for a PS2 -> AT adapter, and it was over $30. Holy fark! Too expensive for my tastes.

      So to save money, I decided to look around some dumpsters at some of the computer businesses around here. Lo and behold, I found my adapter. Works great! Free!
      • Similar to this, I have several Compaq scsi drives with an SCA (I think) connector and a scsi card with normal dba-looking connectors. The SCA (or whatever it is) connector includes power. I found adapters to make it work without the Compaq drive sleds that the drives were in previously (when used in servers.) Online, three adapters were about $15. I got a fourth drive later and rather than wait for a fourth adapter online, I went to my local geek shop. Well, they had them there, but for about $35. And the
      • > ... $30 ...
        > ... look around some dumpsters ...

        If someone told me they'd pay me $30 to spend my day digging through trash dumpsters, I would say no.
        • Then go ahead and pay their inflated prices.

          But many computer bits can be had for free, if you are willing to look. Especially true for older, & free computers.

          It didn't take me more then 10 minutes.

    • Re:CompUSA Prices (Score:3, Informative)

      by exhilaration ( 587191 )
      According to our manager at THE STORE FORMERLY KNOWN AS COMPUTER CITY (now CompUSA), retail stores make very little money off the high-price items such as computers. They need those items to bring in customers. The REAL money is in supplies and accessories. Customer buys a computer: 5-10% of that is profit. You talk them into getting a printer and more stuff, and you end up with something like this...

      Computer: $1500 ($150 profit)
      Monitor: $200 ($50 profit)
      Printer: $100 ($40 profit)
      Printer cable: $30

      • --CDW is the same way... I walked in there, couldn't *believe* the prices on most of their stuff. Walked right back out w/o buying anything (they didn't even have the CPU cooling fan I needed in stock.)
    • However, there was one adapter (PS2->AT or serial->ps2, i forget which) that we charged ~$50 for when it was listed as $.50 cost in the computer... 1000% profit is not bad.

      Yeah, CompUSA cable prices are extortionate. A few years ago, I needed a Mac-to-VGA adapter and an ethernet cable, and was outraged enough over the prices to actually post a rant about it. [google.com]

      I bought the monitor adapter, opened the packaging very carefully, and promptly ordered what I needed online for less than half what CompUSA w
    • You think that's bad, go check out the markup on SCSI cables sometime.

  • Cpu markups (Score:3, Insightful)

    by revmoo ( 652952 ) <slashdot.meep@ws> on Monday September 29, 2003 @07:36PM (#7089917) Homepage Journal
    Well, pretty much any cpu you buy is going to be marked up pretty heavily.

    It costs Intel or Amd the same whether they are making a 1ghz or a 3, the differences in prices are just their way of recouping development costs.

    And of course, specialty cpus are marked up anymore, for example Athlon MP's.

    • Not *entirely* true. (Score:4, Informative)

      by OrenWolf ( 140914 ) * <ksnider@flarERDOSn.com minus math_god> on Monday September 29, 2003 @08:21PM (#7090289) Homepage
      AMD/Intel *do* incur higher costs for the faster chips of the family.

      When a wafer of silicon comes out of the FAB, they test each chip to see what it can handle. Chips that can only do perhaps 1200Mhz without failure will get marketed as 1 Ghz, 1.3 Ghz as 1.1 Ghz, and so on. This ensures the chips are reliable at their standard clockspeed, and ensures the 3Ghz+ wafers go to the higher end parts.

      Obviously, they only have limited control over this process, and when demand for a lower-speed chip increases, they may have to put a 1.3, 1.4, or 1.5Ghz rated wafer down as a 1GHz part, since people want to buy the 1GHz parts (this is also, BTW, the reason why sometimes the 1.4Ghz part is chaper than the 1.3Ghz).

      As the speeds increase, you have continually smaller quantities of silicon that will run at the higher speeds, meaning if demand exceeds your supply of these parts, then you have to keep the prices higher to keep that demand in chack, and also because you may end up tossing out large parts of the wafers (This, also, is an issue when people purchase 1.4/1.5Ghz chips, and they have a glut of lower-rated silicon. They keep quite a bit of it, but eventually if the surplus grows to great, there's nothing to do but dispose/recycle the stuff).

      So there *are* costs incurred with going up in speed.
  • I say let them charge wahtever they want because the market will decide what the price should be. When something is over-priced there will always be a competitor that is hungry enough to take a smaller profit margin. Of course this is null and void when there is a monopoly in the market.

    We all love Adam Smith - with some rules.

  • HTML is bad enough... (Score:5, Funny)

    by phraktyl ( 92649 ) * <wyattNO@SPAMdraggoo.com> on Monday September 29, 2003 @07:38PM (#7089941) Homepage Journal
    But XML markup is the worst!

  • Not an answer, but... (Score:4, Interesting)

    by LordOfYourPants ( 145342 ) on Monday September 29, 2003 @07:42PM (#7089984)
    I would absolutely *LOVE* if someone could tell me how much both USR and retailers are making on external 56k modems:

    Future Shop (Canada's version of Best Buy) is selling an external one for $170 CAD (~$120 USD?). It seems hard to believe that the price of one hasn't come down in what, over half a decade?
    • USRobotics makes very high quality modems, and the fact that it's external means that it's NOT software (which is how everyone else manages to make modems so cheap these days). So basically, you're paying for quality and not getting ripped off with a software modem.

      Doesn't seem too bad to me, but I haven't modem shopped in a long time.

      • Non-USB Cable and DSL modems are also hardware-based, and can communicate at speeds 20-30x faster than a 56k modem. Given that, I paid $150 for my DSL modem 2 years ago. Is there something unique in a USRobotics external hardware modem that makes it that much more expensive than a DSL/cable modem despite being around for 5+ years now?

        The internal USR 56k modems go for $80 here and are not winmodems. Is there an additional $90 worth of circuitry/plastic/shielding that goes into the external?
        • Oh, didn't relize the differnce was that big. I guess that is very high. Hm. Sorry, don't know.

          The fact that not many people are buying analog modems might have something to do with the price of modems in the first place, but still...

        • ...a miniature optical scrollwheel mouse for AUD$23 retail inc (10%) GST from Big W stores, but the wholesale price of just the USB interface chip is AUD$25+GST.

          The manufacturers could sell a lot more of those mice if they made the interface chip Flash-programmable and padded and pre-scored the circuit board so you could snap off the mousey bits and use the rest as a generic USB interface.

        • Re:Not an answer, but... (Score:4, Informative)

          by Jamie Lokier ( 104820 ) on Tuesday September 30, 2003 @05:47AM (#7092132) Homepage

          The internal USR 56k modems go for $80 here and are not winmodems. Is there an additional $90 worth of circuitry/plastic/shielding that goes into the external?

          Yes. Long ago, when there were no winmodems and no DSL or cable, USR made Sportster and Courier modems.

          Despite coming from the same manuacturer, at the same time and for many years, Couriers had an excellent reputation for solid reliable communication, whereas Sportsters, ok for your occasional surfer, where on the whole quite awful. The difference was in the reliability and speed over whatever flaky analogue connection you had at hand, as well as fancier features which folk who just connect to ISPs never use.

          Nowadays not many people use their modems over international and poor quality telephone lines, or with weird other modems that don't conform to standards, or indeed simply use the older, slower standards, which may not be well tested with a modern modem. Try to imagine that.

          Long, >0.5 second delays means more powerful echo cancelling algorithms. Long analogue lines means better equalisation too. Both need better quality (more expensive) electronics, otherwise the elecronics wrecks the signal quality so the DSP algorithms can't get anything useful out of the subtler parts of the signal. Both need a more powerful DSP chipset.

          Crappy lines also means better algorithms for selecting the best modulation schemes for those lines, and adapting as conditions change. Only the better modems will adapt the speed upwards during a call when conditions improve, for exmaple. (Line conditions do change, for example as the weather changes or the lines heat up during a call).

          It is possible to implement a modem without certain features that make it more robust. V.34 in particular (the 33.6k standard) has several optional capabilities which improve performance over bad lines.

          It may interest you that current 56k analogue-side modems need less DSP processing power than their earlier V.34 33.6k cousins. I am not sure, but that is what I have read and it makes a lot of sense to me. That means that although you buy a cheap modern modem that is capable of 33.6k and has the benefit of modern day chip speeds, it may still not have the processing power of the very expensive older models - simply because it doesn't need that for what it is most likely to be used for - "56k" connection to an ISP over a local analogue loop and an otherwise digital network.

          Some people still need the best connections over international or really bad links, with maximum reliability and connecting to older, even obscure modems. I'm certain, if the application were mission critical (e.g. bank or trade transactions in real time) and that given the choice between a Courier and Sportster at least, they'd choose the former for those kinds of calls.

          Of course you are also paying for the Courier reputation as well. But that is not a bad thing, if it is important to you to have a brand whose reputation is (supposedly) based on repeatable quality.

          I agree that DSL electronics are fairly high precision and the DSP in them much more powerful than older modems. However, DSL is always run over a single local loop, needs to operate with only one, not too complex standard. It is optimised for one signalling method, and despite the speed it is not the most dense of signalling methods: consider how hardly anyone has the fastest DSL available in principle over their lines - and how much it costs to get that. Consider: DSL does not run over very long distances, and certainly not over international distances.

          Just a few thoughts of mine, take as you like :)

          -- Jamie

    • If it's a Courier, you're paying for the firmware, performance and the features of the modem. The market for these modems is relatively price-insensitive. It is much more important that they work reliably. I've used them for commercial applications where a few minutes of down-time would wipe out any cost savings gained by buying cheaper modems. In my situation, some people at the other end of the link tried to save money by buying Sportster modems. They ended up ripping them out and replacing them with Cour
    • They have come down in price. I paid upwards of $350 for my USR Sportster 28.8 modem when v.34 was first approved back in 1994. If I could have bought even a 28.8 for $120 back in 1994, I would have bought two, and sold the other through a BBS for a tidy profit (ah, the days before eBay).
    • >Future Shop (Canada's version of Best Buy)

      Future Shop is owned by Best Buy. The Future Shop brand will be phased out (or was supposed to) until Best Buy realized that as long as nobody knew, they could make the two brands compete against each other and manipulate the market place to their advantage. Future Shop will gradually start 'sucking' more, and Best Buy will miraculously manage to undercut their prices every time, for some mysterious reason.

      Now *thats* a free market, eh? ;)

  • What about the opposite? (Score:4, Funny)

    by Chris Brewer ( 66818 ) on Monday September 29, 2003 @07:49PM (#7090045) Journal
    Here's an opposing view [dansdata.com] (Scroll down to the second-last letter - lucky b'stard).
    • Some businesses have insurance to cover that stuff, but they tend to fire people who make mistakes like that.

      By not walking off with all the extra free stuff, you are giving someone their job back.

  • Buyer beware (Score:5, Interesting)

    by bscott ( 460706 ) on Monday September 29, 2003 @07:56PM (#7090095)
    That $1,500 Cisco memory is, I think, good for everyone - it contributes to Cisco's bottom line by ripping off the ignorant and lazy, thus keeping them from having to raise prices for the rest.

    But for a contrasting situation: about 5 years ago I worked for a dominant office-equipment supplier in the Rocky Mountain region (name left out not to protect the guilty, but to avoid self-embarassment...) in their PC/printer repair depot. We outsourced our monitor repairs, and would routinely double whatever the price was - whether it was mainly parts or labor - for no good reason other than that we could. We sold Laserjet fusers for a decent markup - until we changed from geniune HP to remanufactured parts, and kept the prices the same... so a $180 fuser we sold for $215 became a $40 fuser sold for $215... I could go on. They did that 'cos they were sleazy, and I hated working there.

    I've been on the lookout for a 4-pin to 4-pin Firewire cable at a decent price for awhile now; usually I see them for a ridiculous $40-$50 most places. Recently when my need became more urgent, I swung by Fry's and found them for $9. That's just a case of buyer-beware - if you're concerned about saving money, make sure you're not being fleeced before plunking down your cash. Do some legwork if the price difference is worth your time.

    Another example: inkjet printer makers sell the printers at a loss and make it up by selling carts at inflated prices. That's OK by me, when alternative sources for carts and ink are available. When they started putting ICs into the carts to prevent "counterfeiting", that's where I draw the line, and it turns out that inkjet printers from 2-3 years back (available for dirt cheap on eBay and Craigslist) still work just fine with $3 cartridges (also from eBay)....

    The really outrageous markups are in the financial business anyway. $35 because they let your credit card payment check sit for 3 days before processing it? Bah!
    • firewire cables have HUGE markups...I had to buy one 2 years ago (shool project, needed movie off the camera NOW) and it was $54 for one pretty short 6 to 4 pin firewire cable. I have seen the same length online for prices that come down as low as $5. When I recieved my nomad jukebox about 9 months ago, it came with the exact same cable (in addition to a USB cable) and I highly doubt that the cost of the nomad was raised $50 to include a fricking cable. The same time it was purchased, best buy still had
      • That's why I look at electronics places like Marlon P Jones (http://www.mpja.com) where they often sell surplus cables and whatnot for a song.

        I picked up a set of 5 6' firewire cables for about $6 total.

        Same with batteries... the little button batteries for your laser pointer, etc. Retail, they cost $1 - $3 a piece, but you can buy them from an electronics dealer for about $2 for a blister pack of 10.

        Sooner or later, the horrible markups will backfire, if people start getting smart and shopping around o

  • PRINTER INK! (Score:5, Insightful)

    by Dr.Dubious DDQ ( 11968 ) on Monday September 29, 2003 @07:57PM (#7090105) Homepage

    Numerous stories have been posted on this - I'm surprised "Printer Ink" isn't half of the posts here...

  • Printer ink/toner. 'Nuff said.
  • I've seen this before.
    You receive some rather neat toy from your distributor for selling X widgets during their promotion. Said toy is rare and unusual and sought after.
    Boss takes said toy and sells it in the store as a 'Collectors Item' for pure profit.

    None of which you get.

    I'm sure that happens all the time elsewhere too.

  • IBM RAM upgrades... (Score:5, Funny)

    by MightyTribble ( 126109 ) on Monday September 29, 2003 @08:24PM (#7090319)
    ...for one of our AIX RS/6000 servers. I forget the exact quote amount, but it was, I think, around $1,200 for 512MB. We bought the same RAM from Kingston for less than $400 (after the IBM rep almost blew his top arguing that if we didn't buy from him, we'd void the warranty).

    So we crack the case to put in the new RAM, and what do we find? The *exact same* Kingston RAM module is already providing us with our first 512 MB of memory. Priceless.
    • in your case, ram is tied to performance & and IBM includes that increase in your "support and service" cost. IBM is really the all time master of the hardware markup, and the locked-in customer racket. What's worse is that IBM's software cost based on hardware features...go faster and pay more $$$$.

      On the flip side, I'm addicted to IBM iSeries [as400] They absolutly rock. They "just work" like no mear PC [or AMD/Intel] harware can match. But they are REALLY, REALLY PRICY. But it's no different

  • Just for giggles when a hdd in one of laptops crapped out, I went to HP's website to find out what they had to offer, i found this $1073.00 10 gig laptop hard drive. [hp.com]
    I just about fell off my chair laughing so hard. I think we bought an equivelant hdd through compgeeks for
    wang33

  • Double is standard (Score:5, Informative)

    by bluGill ( 862 ) on Monday September 29, 2003 @08:29PM (#7090371)

    Don't forget the cost of doing buisness. If you count only the cost of food, McDonald's as a 200% markup. Food and labor is about 100% (these two were about half the costs in the resteraunt I worked at). However after all the other little things add up, profit of 5% not obtainable no matter how hard we tried, and some months we lost money. Overhead gets you every time...

    I used to work at StorageTek, and I don't know if I believe the 700% markup. Only because how do you figgure that. If just the cost of making the parts, that is beliveable. They don't have a lot of volumn (compared to say DELL), but all their systems have a lot of engineering in them, so they have to recover a lot of costs from each sale. I know many smaller products never directly became profitable, and were only worth it because they helped drive a bigger sale.

    I don't think Cisco wants to be in the RAM buisness. They are used to selling either big machines for a lot of money, or small machines to re-sellers. Call them up for a $50 ram module, and they may have more than $50 in overhead just to answer the phone, get it off the shelf, and ship it. The salemen selling it may require more than $50 himself just to make it worthwhile to write up the stupid order. (time is money, and that time could be spent trying for a big sale) Call them direct and you might get a vice president more inclined to sell in lots of 1000 than single lots, and you have to pay for his time. Their processes don't support selling memory, but they know they have to. They charge to make up for their process, plus some extra to either profit or make you go elsewhere. (one other point is they have to keep memory for old systems around ever after it is hard to get, you may be paying for an assumption that they have made their last order of that part and have to conserve inventory)

    Buisness is complex. That doesn't excuse you from not looking for the best value. Don't buy the expensive parts if a cheap one is just as good. Unless your time itself is worth more than the effort it would take to find a cheaper supplier. If you are a high level executive, getting memory from Cisco may be a better use of your time than searching for memory suppliers. I could find them on google and 5 minutes latter have the order done, but if you don't do that I could see it taking 20 mines, which means the executive would need to make $250 an hour - cheap for a CEO. (though why a CEO isn't telling an underling to do the job I don't understand - something they should know how to do in one minute)

    • I've recently been seeing inventory sheets lying around the local Wal*Mart. By appearances, Wal*Mart manages to score a good 50% markup on almost everything. I was rather surprised it was that high.
  • I was in Future Shop yesterday since my printer had run out of ink. They wanted $90 for a colour cartridge, and $40 for a black cartridge. Damned if I'm paying $150 (when tax is included) for a small capsule of ink that's going to last me maybe two months...

    I ended up buying those do-it-yourself ink kits where they give you a couple of syringes and some containers of ink. It was cheaper, but, clumbsy fool that I am, I ruined my shirt...
  • because I usually just pay the price at the local retail store because it's close and easy, but the markup on guitars is RIDICULOUS. You can talk guitar salesmen down thousands of dollars. Sometimes, I like to go in, haggle my way to under a grand for a (marked as) $3000 guitar, then walk out. The salesmen expect that kind of thing, but it's fun to spend a day playing very expensive guitars, and if you look serious they show you the *real* nice ones. Fun.
  • In any business, especially a retail store, the per-item overhead can dwarf the wholesale/bulk price of an item. You are paying for ordering, inventory, floor space and other costs. With a vendor like Cisco or Sun, they have to specify, test and qualify the item, assign it a part number, stock it in warehouses, provide packaging and documentation, etc.

  • I work at a hospital... (Score:3, Informative)

    by Anonymous Coward on Monday September 29, 2003 @08:38PM (#7090445)
    and a similar situation occurs there. (slightly OT) You would not believe the hospital markups on perscription drugs. We routinely charge as much as a 6000% percent markup over the actual cost. (one particular one costs the pharmacy $1.50 per tablet and sells for over $95/tablet to the patient(!) Some of this accounts for waste, and some pays for the basic infrastructure, but that is certainly a significant margin considering we move hundreds of that particular drug a day. Some of the IVs we make cost hundreds of dollars each.

    And this doesn't even take into account the enormous profit the drug companies make on that product that costs them less than pennies to produce. You wonder why health insurance costs so much.. here's part of it. This is a case of markups in a situation where the consumer has little choice (if they are bedridden in a hospital). And this in an industry that is supposed to be helping people (and a non-profit at that). Abuses aren't necessarily limited to the likes of SCO. At least most of the time in the IT industry you have a choice as a consumer.

  • I don't know how outrageous this is but, (Score:3, Interesting)

    by Sevn ( 12012 ) on Monday September 29, 2003 @08:38PM (#7090446) Homepage Journal
    Those of us that used to make redboxes [inforeading.com] ended up paying 25 bucks for the 33 memory tone dialer and another 5 for the new quartz timing crystal. When I was busy making and selling about 50 a week, I found a better source at asiansources.com [asiansources.com] and started getting them from the same place RadioShack ordered them from for 3 bucks a piece quantity 100 without the lame RadioShack logo on them. The quartz timing crystal I found for 49 cents a piece but I can't remember where. It's been too long. I never could find a great price for mercury switches (the only way to do it right) but my boxes looked completely normal from the outside so they were worth it. :)
  • I went to buy my daughter a Compaq CPU and LCD from Circuit City. The sales guy asks if I want the free inj-jet printer. As she already has a laser I knew she has little use for it, but what the heck. I'm sure I'll find someone who wants one. The sales guy then goes, "oh, because you bought the CPU, LCD & printer bundle here is your $100 rebate slip." Go figure?? I guess I should have gotten a dozen more printer and neted the system for zilch. I'd love the free-market if it didn't hurt my head so
    • I had another backwards markup deal at Circuit City a while back. Bought a new DirecTiVo to replace an older Sony receiver...it was $399.99, or $400 with a $50 gift card if you bought a "system" which included the $0.01 single LNB dish.

      So I hauled home a dish I didn't need, and spent the $50 on DVDs later that week. :-)
    • It's called a "computer" not a "CPU". A CPU is a "Central Processing Unit", it is only one of perhaps a dozen parts inside the typical computer, other parts being motherboard, memory, harddisk, power-supply, ...

      And no, calling the computer "the harddisk" is not any more cluefull.

  • Check out Radio Shack margins (Score:3, Interesting)

    by MerlynEmrys67 ( 583469 ) on Monday September 29, 2003 @09:04PM (#7090631)
    Worked there in the late 80s. Note the margins on simple resister/capacitor packs (realize that the most expensive thing in them was the cardboard holder too).

    The pack might only sell for 0.25 - but they gotten for about .0025.

    • Yeah, but again, you have the overhead issue. I used to work at an ECM [Electronics Contract Manufacture] and yeah, pieces were in the fraction of a penny a piece.....on a full reel of 10,000....bought a dozen reel at a time. After dealing with that stuff,[and crawl on the floor to find one sot23 because we delt with engineering samples of EXACT PIECES...go figure] I wouldn't wish anyone to have to package all those little Radio Shack packs....that's insane...
    • Try cat-5e cable. 50' at Radio Crap goes for about $40CDN before tax. The campus book store sells it for $25. I think in the shorter lengths it gets above $1/foot at Radio Shack.

      I had once gone to Radio Shack for some phone cables and splitters. Paid a fortune for the stuff. Turns out there was a dollar store right beside, so I walked in, found cables and splitters all for less than $2. Walked right back over to Radio Shack and returned my purchases.

      When I set up my first home network, I went with 1

  • here's a good one (Score:2, Funny)

    by Anonymous Coward
    I actually paid $150 for a copy of Windows. Can you believe it? $150 for an operating system? It must've cost about $0.05 for the media, plus a few bucks for the programmer who copied the code from VMS, BSD, and MacOS.

    Believe me, I never made that mistake again!
    • I actually paid $150 for a copy of Windows. Can you believe it? $150 for an operating system?

      Almost as outrageous as people paying good money for a copy of Red Hat!

      It must've cost about $0.05 for the media, plus a few bucks for the programmer who copied the code from VMS, BSD, and MacOS.

      Or downloaded it from the net...
    • There is truth in that joke.

      MS-Office and MS-Windows are marked up about 5-6 times what would be normal for other products. Although everything else is losing scads of money [sec.gov], MS-Office and MS-Windows pull in 79% and 86% profit margins. In other words, the monopoly rents cost consumers billions [consumerfed.org] -- a big drain on the economy even ignoring broken patches, interoperability and security problems.

      If you start looking at value, the markup for Windows and Office is much higher since their offerings are of less

  • Blackbox and other outfits like that have just about every oddball convertor, splitter, etc. you might ever want.

    The reseller I used to work at seemed to do a lot of this kind of business. We found a taiwanese firm with an office in CA and were able to order stuff like VGA splitter boxes (still > $100 most places) for like $9.

    We got tons of stuff from this place -- 1000's of printer cables and the like. If the going retail price was $25 we'd buy them for $0.27 ($0.25 for 100 or more).

    Problem is we'd h
  • Sun charges outrageous prices for "Sun" memory. You can buy the same memory far cheaper from Kingston (or anywhere else). Of course Sun gets you by saying that they won't sell you a service contract if you're not using "Sun" memory.

  • HP Heatsink - $972.00!!!! (Score:4, Funny)

    by seigniory ( 89942 ) <bigfriggin&me,com> on Monday September 29, 2003 @09:20PM (#7090762)
    No lie - we needed an HP heatsink to replace one that was (ahem) "dropped". Turns out that the heatsink costs $3 more than the processor (P3 1Ghz) itself (which CAME WITH A HEATSINK).

    I just don't get it.
  • If there is one thing you never want to buy, it's RAM from Apple. Their prices are crazy!

    • Well, I haven't checked out Apple RAM for a while, but while loading up my fiancee's Dell laptop, I discovered that I could get an extra 512MB DIMM bundled & preinstalled for around $330...or I could buy the same DIMM from Crucial for $130. Guess which I did?

      By the way, if the prices aren't quite that outrageous, I don't mind paying a little extra to get stuff straight from Apple--or, for that matter, from most locally-owned stores, and other places I think are worth it. So long as the money's going

  • A local computer shop has an extreme-beyond-extreme markup well over 100%... The retarded owner sells $2 USB cables for $15-$30 depending on if he has it in stock or not. He also sells $35 wd (to him) BB (2mb cache) 40-gig drives for $119. That is an example of the markup and idioticy that exhists in small american businesses.
    • from raw material to manufacturing cost is 3X markup. From Manufacturer to Distributor is 3X markup. From Distributor to Retailer is 3X markup. From Retailer to YOU is 3X markup.

      the hard drive is right on, but the cable is a bit high...but it's a convienance item...so the markup is higher.

    • local pc shop - compaq 486 machines 200..... (no screen or cd drive)

  • You have to make a profit somewhere (Score:3, Insightful)

    by Crashmarik ( 635988 ) on Monday September 29, 2003 @09:43PM (#7090916)
    The question seems to be talking about gross markup in I.T., the problem is I.T. is a very funny business where almost all the cost is in figuring out what to buy. A particular cable or part may cost 25 cents, having someone around that can tell the customer that its the cable they need is not cheap at all.

    If the part is to be installed on site the actual profit becomes much less. There seems nothing a customer loves more than wasting a field techs time with little things after the paperwork has been filled out.

    Oh and for most markup I once charged a customer $300 for a 20 cent fuse for a printer. Call it penalty markup for plugging the thing into an outlet I insisted was bad.

  • Markup != Ripoff (Score:4, Insightful)

    by NanoGator ( 522640 ) on Monday September 29, 2003 @10:11PM (#7091091) Homepage Journal
    Listen dudes, just because it's got a high percentage of profit, doesn't mean it's a rip-off. It's an example of supply and demand. If $5 USB cables are being sold for $30, then it's because enough people are spending $30 a piece to buy them. When people stop paying $30 a piece, the price will drop.

    It really is important to understand this concept of business. Just because they can sell it cheaper doesn't mean they should. Remember, they're not just selling you small quantities of material, they're selling you a tool that helps you do a job.

    • Listen dudes, just because it's got a high percentage of profit, doesn't mean it's a rip-off. It's an example of supply and demand. If $5 USB cables are being sold for $30, then it's because enough people are spending $30 a piece to buy them. When people stop paying $30 a piece, the price will drop.

      It's both a rip-off and a sign of an inefficient (malfunctioning) market.

      Say the real cost to put a USB cable into my hand is $5, but you charge me $30 for the privledge. Well, with a markup like that some e

      • "Of course, theory and practice aren't on speaking terms right now, so enjoy your $30 cable and your malfunctioning market."

        I'm not sure I agree with your definition of malfunctioning market. Basically what happens is some things are marked up really high, and others barely break even. The result is that prices fluctate from place to place, thus catering to the discriminating customer.

        A fair price is simply the price a customer is willing to pay for any given item.

    • It's not a case of supply and demand. If the high prices were caused by lack of supply, then the stores would have to pay the factories high prices as well. Supply and demand can't explain a huge resale markup on an unchanged end product.

      Your main point though, "they sell at this price because people are willing to pay this" stands, of course. But that's not because of supply and demand, that's because of how people work (putting $30 on top of an already large bill is less of a problem than paying $30 for

  • A year or two ago, a friend of mine from work bought his first computer, something to accompany his DV camera. It had a firewire card in it, but neither the computer nor the camera had included a firewire cable. Back to the store we went.

    Best buy wanted $50 for a 4-foot cable. That struck me as obscenely high, so I drove around for a bit, and eventually found one at Radio Shack for $15, which I deemed acceptable for a retail outlet.

    Just the previous month, another friend of mine had purchased a firewire c
    • I haven't priced USB cables, but I noticed that you can get those crappy digital cameras from Office Max for $9 (the display says $49, but thereal price is $9) and it comes with a 5 ft USB cable. I considered buying a few just in case I needed extra cables since to get a lower price I'd probably have to order online and shipping costs would make it more expensive.
  • ...has got to be ECC cache memory for DPT SmartCache/SmartRAID IV SCSI host adapters.

    A single 16MB ECC SIMM (part no. SM4000/16) still costs a smidgeon under $1000. It's not just because they're EOL'd - they were always expensive.

    This was just downright mendacious profiteering on DPT's part. I see no reason why they couldn't have designed for standard ECC memory.

    If anybody knows where these SIMMs can be had at a more down-to-earth price point, do let me know ;o)
    • RAID cache ram is supposed to persist during a power outage. Persistent cache RAM in a RAID array or SCSI controller allows your controller to respond to sync() commands without lying (which would be dangerous) or waiting for the disk to get to the part where you can write that data. So it makes small data writes instantaneous, and can't be replicated by more main memory like cached reads can be. These small writes would otherwise have large seek times to find the right disk areas (at least on non-journa
  • A company I used to do IT work for was purchasing BIOS backup batteries from our vendor for $70 a pop. Not the coin-sized batteries but the 9v-looking replacements.

    That is, until I informed them that I could buy them locally for $6 each. The vendor quickly changed the price to $9.
  • Token Ring MAUs (Multi Access Units, I believe) are/were something like $300 a pop.

    And all it got you was one additional connection into the ring.
  • I've wondered about this. Say you buy a large server or a Cisco router or something that costs a lot of money and has a support contract. If you buy the memory on your own for $60, does this void your support contract? i.e. will the company still support your hardware as long as the memory is in place?

    Check the contracts....

  • Anyone knows about 128MB of RAM costs around $50 or less. You could sell it at $300 and show you're insanely expensive, but exceeding $1200 is like saying we don't want to sell it to you. Its just like someone who doesn't want to sell his house but gives an insanely high price to an inquirer just in case it still gets sold. A hardware vendor is interested in selling their own IP, their own routers and other hardware and has to maintain the warranty and sell its memory just for completeness.

    Since they dont
  • I saw that Microsoft actually CHARGES money for their products. Good googly!

    Now for the question...am I a troll or funny? Or just a funny looking troll? Wait...I think we all are. Crap.
  • I worked with IT director who (among other things) leased 8 port hub for $75 a month for 4 years from a company he (as it turned out later after he quit) had financial interest in.
  • In late 2002 I got three used IBM laptops from work. These had been bought in 98-99. One of them missed a little plastic cover in front of the harddrive. Being a geek, I looked up the FRU-number (Faulty Replacement Unit), and called our hardware pusher for a quote. He called back the next day. I don't remember the exact price, but I do remember it was more than $200 plus tax. I laughed a little, thanked him for his time, and went on to sell the laptop without the cover.

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