Price increase?

[Steve R]

It's like trying to guess the stock market..nobody has a crystal ball. My thoughts parallel Heehaws...but that's mostly based on having seen behind the curtain at Hummer's marketing research & development: Price is heading up.

Keeping it simple and implementing typical marketing strategies...the first "wave" of consumers on a new concept are referred to as "innovators". We are innovators: we are willing to pay a premium, take a risk and economically speaking allocate a greater degree of marginal utility towards the aquisition of this good.

(Like....oh my God....in the midst of bong-resin, barley, rye & hops...it would seem some of my college education stuck with me!!??)

Bottom line, GM could have easily taken advantage of our willingness to blow coin in order to get into these bad-ass toys. A typical marketing ploy would be to release these things at $58K and sell as many up until demand slowed....THEN, GM starts offering their oh-so-typical "incentives & rebates" to cheapen the price and bring the next wave of purchasers to the table.

So what happened? I spoke with some Hummer-boys, and what happened was a gross under-estimation of what is now regarded as a sales phenomena. The H2 is a hit well beyond their expectations. They only asked a reasonable price HOPING these things would find a market. When pricing it never occurred to them "How much will people be willing to pay for a Hummer made practical for daily use"...instead they figured what a reasonable mark-up would be and gave it their best shot to get this thing in garages.

I've said it before: some body changes, some interior upgrades, a bigger engine...and through "innovation & improvments" the new H2's will be soaring just under the Range Rover price. And ya know what...they'll sell 'em all!