In 1965, Gordon Moore (co-founder of Intel) observed that the number of transistors doubled on integrated circuits every year. This observation became the basis of what has become known as Moore’s Law. While the math is unique to the electronics industry, the general concept that manufactured goods progress towards higher quality, greater features and lower prices has been observed since the beginning of the industrial revolution. 

The relentless drive towards improved productivity and efficiency results in lower prices. The stationary stores of fifty years ago gave way to Staples. Family-owned department stores vanish, Wal-Mart thrives. This trend is what Rich Karlgaard, publisher of Forbes Magazine calls “The Cheap Revolution.” It is an essential building block of wealth creation.

I recently read two interesting and somewhat contradictory stories about our industry that speak to this concept. The first was an article about the MIA/Stone World Fabricator forum in Salt Lake City. One of the sessions was titled “How to Maximize Price Using a Sound Business Plan.” I did not attend the session so I cannot critique it, but the concept of “Maximize Price” is one that I often hear, often from some of our vendors. Phrases like “you are leaving money on the table” and “you can charge higher prices” are common among statements by vendors who don’t like our Better! Faster! Cheaper! approach to pricing.  Everyone, of course, wants to increase profits, the question is: “are you more likely to increase profits by raising prices or by reducing prices and selling more?”  

The second story was very interesting.  China has now passed Israel and is second to Spain in the production of Quartz product. When I got into this industry, one of the things that I found most strange was that the price of quartz products often exceeded the cost of Granite.  I am not aware of any other industry where the cost of the synthetic exceeds the cost of the natural. Fake fur may have many good qualities, but mink costs more. Synthetic diamonds are great for tooling, but natural diamonds cost more. It seemed to me that Quartz was an upgrade from laminate, but the marketing concept of putting it ahead of natural stone just did not make sense. Of course I learned in time that the price of Quartz was driven by a European monopoly on the technology. Now that China has entered this market and entered it with a technology that does not depend on Europe, I think that rapid price decreases will occur.   

We have two choices: we can either bemoan the inevitable decrease in pricing, or we can embrace the change and replace the older laminated countertops. Which approach will you choose?

Have a good read,

Rich Hassert

Email responses to: publisher@slipperyrockgazette.net