Quote:
Originally Posted by philjs
They don't call the "loss leaders" for nothing, Jon! I imagine that it's hard for small shops like most CF builders to keep losing money for the sake of advertising...
Phil
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In my business days in a mid sized semiconductor company, one of the problems was cost accounting. How much of the greater overhead do you assign to a newish product. Should it be in proportion to its cost of goods sold, or in proportion to the marketing, sales, research and development, or maybe a free pass since it would not reduce any of the greater overhead to discontinue?
CF guitar companies are not big entities so it might not be as tough a decision to make, but in big companies incremental cash flow positive is not generally enough to keep making something you don't believe will grow to be profitable on a fully absorbed cost basis (note all the judgements that go into that calculation).
I'm thinking if there are unused molds sitting around the RainSong factory or under utilized staff, this was not a great decision.