Equipment prices! Will they stop going up?

[maw lod qan]

Saw on the internet the EQ6R I bought has gone up from $1695 to $2025 in six months.

Do you foresee it stopping anytime soon or is this going to be the new deal.

It sure doesn't make it easy on someone wanting to get into this hobby!

[Shimrod]

20 hours ago, maw lod qan said:

Saw on the internet the EQ6R I bought has gone up from $1695 to $2025 in six months.

Do you foresee it stopping anytime soon or is this going to be the new deal.

It sure doesn't make it easy on someone wanting to get into this hobby!

With the cost of oil and gas driving higher inflation, I expect to see prices of astronomy kit rise further. No because of the inflation figure itself, but it is going to put pressure on companies to increase wages, production costs (energy) are going to increase and it will cost more to distribute the goods. On top of that, you still have complete lockdowns occurring in China which are continuing to disrupt the supply chain. 

With predictions of recession and GDP contraction next year, that might be the trigger for prices changing direction - if the result is a drop in overall demand for astronomy kit and some of the fuel/wage pressures ease.

[cajen2]

When this sort of thing happens, I always wonder how many companies jump on the bandwagon. "Everyone's increasing their prices....I know our costs haven't risen, but if we do the same nobody will notice or can blame us....." Perhaps I'm just an old cynic.

[OK Apricot]

9 minutes ago, cajen2 said:

When this sort of thing happens, I always wonder how many companies jump on the bandwagon. "Everyone's increasing their prices....I know our costs haven't risen, but if we do the same nobody will notice or can blame us....." Perhaps I'm just an old cynic.

I've always wondered why, in this situation, a company wouldn't keep their prices lower than a competitor. Assuming margins are similar, surely a company selling the same product at a lower price will move more of those products, and make more money as a result? 

[Space Hopper]

The Celestron C8 Edge HD is another good example.

For a good while over here it was attractively priced (compared to its bigger C9.25, C11 & C14 brothers) at around £1100 - £1200 UK £

Its currently listed at an almost crazy £1895

Even my fairly limited maths tells me that a 50% + price increase in a fairly short timeframe of a couple of years or so, maybe less.

But thats where we are.

 

 

[Deadlake]

Look at petrol and gas prices, they really have increased and I cannot believe they will come down regardless of which way the war in Europe resolves itself.

LPG is also used for making plastic, so it’s not just transportation costs that will rise and with China going into recession it will get very scary out there.

To add ta data point I’m told that a 105 mm APM triplet with Phenolic tube and FT3545 will now retail for £5500. When I looked 2 years ago they where around £4000.
 

I’m also not surprised that Chinese made products have gone up, the free lunch is over, I.e. relative pay will equalise.

I guess manufacturers will relocate to more stable geo political areas….

[Astro Noodles]

19 minutes ago, Deadlake said:

Look at petrol and gas prices, they really have increased and I cannot believe they will come down regardless of which way the war in Europe resolves itself.

LPG is also used for making plastic, so it’s not just transportation costs that will rise and with China going into recession it will get very scary out there.

To add ta data point I’m told that a 105 mm APM triplet with Phenolic tube and FT3545 will now retail for £5500. When I looked 2 years ago they where around £4000.
 

I’m also not surprised that Chinese made products have gone up, the free lunch is over, I.e. relative pay will equalise.

I guess manufacturers will relocate to more stable geo political areas….

I think that the cost of Astronomy equipment is the least of our worries at the moment - what with spiraling prices and high inflation. It probably is a case of if you could afford it before, you probably still can, and if you couldn't afford it before, you definitely won't be able to now. ☹️

[Shimrod]

2 hours ago, Space Hopper said:

The Celestron C8 Edge HD is another good example.

For a good while over here it was attractively priced (compared to its bigger C9.25, C11 & C14 brothers) at around £1100 - £1200 UK £

Its currently listed at an almost crazy £1895

 

The rapidly changing prices has also given us some anomalies - for a while, the Edge 8" was around £1895 but the same OTA with an AVX was only £2049 - practically a free mount!

But not everything has gone up-  I've just checked back on some of my old FLO invoices:

ZWO ASI533 - Sep2020 £899, today - £899 (and it has been £100 cheaper in the regular ZWO sales)

AZ GTI + Tripod - March 2021 £39, today £319 - £20 cheaper!

Which isn't to say the price of other stuff I have ordered hasn't gone up - but some of them are quite reasonable increases 5% on the ipolar over two years for example.

[Gfamily]

• According to the Wayback Machine, the cost of an 8" Edge HD (at FLO) was
• £1079 in  April 2016
• £1400 in Sept 2020
• £1469 in Jan 2021
• £1750 in April
• £1889 currently

Given the significant problems with getting stock, vendors have to consider what margin they have too apply to maintain profitability when you might only have capacity for selling half the normal number of units. 

Edited May 8, 2022 by Gfamily

[Xsubmariner]

Undoubtedly the new equipment price increases will translate into higher used prices, that said there are some good used bargains to be had if you are quick.

[Giles_B]

Another factor that's not being talked about much that is driving price increases (generally) here in the UK is that the £ has weakened considerably in relation to other currencies - about 10% over the last three months, and no sign it will pick up soon. This will impact on astro equipment prices when it's imported - which is often the case.

[Carbon Brush]

Here is a thought.

To make a refractor telescope, you need a few bits of metal, a few bits of glass.
These days add in a bit of electronics for a goto.

The value of the finished product is largely determined by the intellectual effort, machinery costs, and labour to produce the product.
The raw materials (before processing) are cheap and lightweight.
The finished product is lightweight.

This means that if steel or aluminium double in price, it has little impact on the product price.
A 5Kg decent refractor that costs £1000 contains only a couple of Kg of steel & ali.
If you are making (by comparison) filing cabinets, much of cost is the steel.

If it costs $10000 instead of $2000 to ship a container, it has little efect on the cost per small scope or eyepiece.
You can fit thousands of ED refractors in a container. In other words shipping cost is a $ or two per scope.
If you are shipping bulky patio furniture, that is affected hugely by a container cost.

If the above thoughts have any truth, then we should see low cost and big scopes subject to significant price increases.
So your Skywatcher newt (lots of empty space in a container) and a bulky chipboard dob base become more expensive.
Your premium eyepieces and high end refractor OTAs should be largely unaffected.

I leave it to others to see if these ideas have any merit 😁, or whether we may be getting ripped off 😡.

David.

[vlaiv]

I see that many people blame gas and oil price increase for inflation (seems to also be predominant narrative in the media), but I think that is not the case.

Both EU and US were printing money like crazy in last 6-7 years (remember quantitative easing?) - trying to get target inflation and to make their products competitive against China, and then we had C-19 which caused demand to plummet - all the time money was printed.

As world economy returns to normal - suddenly there is massive amount of money floating around and yes, you bet its going to cause inflation. Quite possibly that inflation is going to go out of control.

War in Ukraine and associated sanctions and gas and oil price increase are just nice excuse for poor decision making in past half of a decade or even more.

Inflation was already increasing from beginning of 2021

[Elp]

This is the main problem, it's a model which is not sustainable in the long term, if it were why is almost every country in debt to another? GDP and taxation is supposed to balance out debt to a degree but it never will. Currencies now are classed as fiat, they are no longer backed by gold reserves as they were before the 1970's. The US took the "initiative" to start printing more money which wasn't backed by gold reserves but only government bonds and the issue has escalated since. Even gold reserves are a mess now, as they don't move physically more than one source may lay claim to an ingot. The system has spiralled out of control where money isn't backed by anything, all governments do now is print more money to try and reduce inflation. If it were a sustainable model how come the average wage hasn't increased in line with inflation? It just makes the general population poorer and more likely to borrow and get further into debt. If you don't believe it, do some research on fiat currencies and its history.

 

[Steve]

This is a good and important conversation but a difficult one to have without including politics.

We don't want to close the conversation so please, everyone, try to focus on the economics. Not the politics. 

[PeterCPC]

I saw in the paper that the inflation rate in Turkey is now 70% 🙀

I pity any astronomers in Turkey.

Edited May 9, 2022 by PeterCPC

[DaveS]

For anyone on oil fired heating the cost of energy has made buying astro kit a non starter.

[teoria_del_big_bang]

4 minutes ago, DaveS said:

For anyone on oil fired heating the cost of energy has made buying astro kit a non starter.

Yes heating oil has just gone crazy but for many on lower incomes, or on pensions (myself recently semi retired so took a big drop in income even when taking some of my pension) then even gas and electricity prices will stop many new astro purchases.

My thoughts are to get back to visual along side the imaging and turn the heating and lights off all night at least, and compensate that way. Maybe will also have to buy the wife a thick coat 🙂 

All joking aside, certainly for me I can see no big purchases in Astro gear for next year or two at least, something has to give and I cannot justify spending large amounts on my hobby at moment when there are everyday bills to pay.

Steve

[Shimrod]

1 hour ago, vlaiv said:

I see that many people blame gas and oil price increase for inflation (seems to also be predominant narrative in the media), but I think that is not the case.

Both EU and US were printing money like crazy in last 6-7 years (remember quantitative easing?) - trying to get target inflation and to make their products competitive against China, and then we had C-19 which caused demand to plummet - all the time money was printed.

As world economy returns to normal - suddenly there is massive amount of money floating around and yes, you bet its going to cause inflation. Quite possibly that inflation is going to go out of control.

War in Ukraine and associated sanctions and gas and oil price increase are just nice excuse for poor decision making in past half of a decade or even more.

Inflation was already increasing from beginning of 2021

The measure of inflation is derived from a basket of common goods that a household would typically consume - in the UK you can download the latest basket from here:  ONS - CPI Basket of goods Inflation started rising last year because of ongoing supply shortages (and increasing transport costs) and also economic recovery after severe lockdowns in 2020. This year we have seen oil and gas prices jump hugely - I have just come off a fixed price tariff for gas and electricity and unit charges for both have trebled. It is primarily these costs (along with petrol/diesel) that are driving the inflationary pressures, because they feed into every other part of life.

The good news is that the baskets represent the typical household and your personal rate of inflation may be much lower (or sadly, much higher!). 

The basket of goods doesn't include any astronomy equipment, so the inflation rate isn't going to be an exact indicator of where prices go and I think price rises will differ depending on the kit, as @Carbon Brush has described above.

 

[ONIKKINEN]

On 07/05/2022 at 23:58, maw lod qan said:

Saw on the internet the EQ6R I bought has gone up from $1695 to $2025 in six months.

Do you foresee it stopping anytime soon or is this going to be the new deal.

It sure doesn't make it easy on someone wanting to get into this hobby!

Mount prices have varied a lot in the past few years due to component shortages and probably other things so i wouldn't try to build a general price increase model based on mounts alone, but from what i can gather it seems that prices have generally gone up by about 10-20% depending on the kit in question. I dont really see this trend decreasing that much, if at all and dont think much of it.

If i couldn't afford an item before price hikes, the 20% increase means nothing to me. If i could barely afford the item before, saving up for the extra 20% is probably not that big of a stretch. My view on whats expensive and whats not has become really deranged since starting astrophotography so maybe that's why i dont think the price situation is a big deal right now.

[vlaiv]

3 minutes ago, Shimrod said:

The measure of inflation is derived from a basket of common goods that a household would typically consume - in the UK you can download the latest basket from here:  ONS - CPI Basket of goods Inflation started rising last year because of ongoing supply shortages (and increasing transport costs) and also economic recovery after severe lockdowns in 2020. This year we have seen oil and gas prices jump hugely - I have just come off a fixed price tariff for gas and electricity and unit charges for both have trebled. It is primarily these costs (along with petrol/diesel) that are driving the inflationary pressures, because they feed into every other part of life.

The good news is that the baskets represent the typical household and your personal rate of inflation may be much lower (or sadly, much higher!). 

The basket of goods doesn't include any astronomy equipment, so the inflation rate isn't going to be an exact indicator of where prices go and I think price rises will differ depending on the kit, as @Carbon Brush has described above.

 

Well, could be the case, but how do you explain the fact that we already had these oil prices in the past and we did not have massive inflation at that time?

On the other hand - look at ECB balance sheet over time:

[Mandy D]

18 hours ago, OK Apricot said:

I've always wondered why, in this situation, a company wouldn't keep their prices lower than a competitor. Assuming margins are similar, surely a company selling the same product at a lower price will move more of those products, and make more money as a result? 

Competing by undercutting prices is a potentially dangerous tactic which can start a price war that leads to no-one making money. This is Economics 101. The better thing to do, as a manufacturer, is to keep your prices slightly above the competition and focus on quality and benefits to the customer.

[M40]

20 minutes ago, Mandy D said:

Competing by undercutting prices is a potentially dangerous tactic which can start a price war that leads to no-one making money. This is Economics 101. The better thing to do, as a manufacturer, is to keep your prices slightly above the competition and focus on quality and benefits to the customer.

Many moons ago, I used to work for a company called Satchwell, wholly owned by GEC. GEC applied a very strict regime of a minimum gross margin. Time goes by, a few GEC directors changed and with it the GEC policy. The GEC money mountain was consigned to history as was Satchwell. I think that you will see gross margins maintained or the businesses will go to the wall. Not good news for us, but I would rather save for my toys a little longer than see companies disappear.

[Shimrod]

42 minutes ago, vlaiv said:

Well, could be the case, but how do you explain the fact that we already had these oil prices in the past and we did not have massive inflation at that time?

 

This is getting beyond a discussion for the astro lounge - the short answer is that inflation is measured by consumer prices not wholesale prices. The last two years other factors kept fuel prices down at the pump (primarily low demand), but diesel prices have gone up form £1.53 per litre to £1.74 per litre in three months - last year it was around £1.10 per litre. Transport costs feed into all other pricing and a shortage of lorry drivers has also pushed up wage costs. 

[Mandy D]

7 minutes ago, M40 said:

Many moons ago, I used to work for a company called Satchwell, wholly owned by GEC. GEC applied a very strict regime of a minimum gross margin. Time goes by, a few GEC directors changed and with it the GEC policy. The GEC money mountain was consigned to history as was Satchwell. I think that you will see gross margins maintained or the businesses will go to the wall. Not good news for us, but I would rather save for my toys a little longer than see companies disappear.

This illustrates my point nicely. I have been in business for more than 25 years and never work on the basis of undercutting the competition. I've seen far too many businesses go to the wall by failing to maintain margins. On the same principle, recessions serve a purpose by getting rid of poor businesses that do a great deal of damage to marketplace. If your business can survive a recession, it will come out the other side with greater potential for profits as much of the low-price competitors will have gone to the wall. Of course, if you can lower prices without lowering margins or profitability, through technological innovation, etc, then by all means do so.