Quote:
Originally Posted by hdwhit
Price and Cost are two different things.
Cost is a measure, expressed in monetary terms, of the inputs used in creating a product. There are many types of cost. Direct Costs represent the value of the inputs used to create one particular product. Fully Absorbed Cost represents the value of all inputs (engineering, support staff, advertising, the cost of the factory, etc.) used in the creation of one particular product. I suspect there are as many cost definitions as there are Managerial Accountants to come up with them.
Price, on the other hand, is what someone is willing to pay to own a particular item. The principles of marketing tell us that price is to be set on the basis of "what the market will bear". And we see this in action with this very rifle. The Sport II you say now retails for $499 was flying off the shelves of my LGS six months ago for $649 - and then they raised the price to $679 and still couldn't keep them in stock. The cost of building a Sport II didn't drop by nearly $200 in that time, but what people were willing to pay did.
S&W clearly intends the Sport II to be its "mainstream" product and so it's price hews close to what the most price-sensitive buyers are willing to pay. Adding a chrome barrel doesn't double the cost for S&W to make an AR, but because people perceive a chrome lined barrel to be vastly superior to a melonited barrel, it does nearly double the price because people are willing to pay it.
So, the answer to your question is that just like adding $125 worth of leather upholstery to a car raises its price by $2,000, the market is willing to pay dramatically higher prices for M&P-15 models with comparatively inexpensive additions.
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Fully understood except that no one buys the S&W 1:7 so the market does not see any additional value in the differences. I have seen a lot of posts here of people with M&P 15Ts, Sport II, Sport Is, Magpul Moes etc.... but never 1:7s.
Also all I can say to some one paying $679 for a Sport II is "There's a sucker born every minute." The Sport II is a good rifle but at $679 that local dealer is taking advantage of the people.
When I am talking about cost I am talking directly about what it "cost" S&W to build the rifle. They will never tell us but we can speculate. They certainly have cut some corners on the Sport II but none that have been problematic for the rifle within its intended use.
Since we do not know and will never been told what it "costs" we end up talking about "price." I believe that price is so dependent on market factors like fear and panic. I also believe that S&W is trying to tier their offers but that the Sport II and the earlier Sports are so solid not many people buying S&W ARs are moving up their food chain.
Most people looking for premium ARs are looking at other brands.