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[EDITORIAL] The Price We Pay For GPUs is CORRECT!

NewsBot

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EDITORIAL

View attachment 68077

With the explosion in mining interest, graphics cards have become scarce. From the Radeon RX 570 and RX 580 which are only expected to be readily available after mid September to the GeForce GTX 1060, 1070, 1080 and 1080 Ti which simply don't have ETAs at this stage, there is a massive problem and it isn't only affecting South Africa.

Whereas before we would have gamers buying one graphics cards each (or two in rare cases), we now have a situation where the "small guys" want six or more cards each and the big guys are buying by the 100 or even 1,000.

Gamers who were quite content with mid range GeForce GTX 1050s or Radeon 560s are now wanting multiple high end cards, and the supply chain simply can't cope with the demand increasing by several orders of magnitude.

Sources in the industry have informed us that the back order list for Radeon RX 580 cards alone exceeds 10,000 units, so even once cards start shipping again the demand is so large that it may still be another few months before one can purchase a card at will.

What is the point of this introduction? Well in a nutshell, the price we currently pay for graphics cards is actually correct - high, but correct.

How can this be? you ask. It all boils back down to supply and demand. When supply is high and demand is low, prices drop. Conversely, when supply is low and demand is high, prices increase. This is basic Capitalism 101.

Second hand pricing needs to be directly related to new pricing. You can't sell a second hand GTX 1070 for R 2,500 when a new GTX 1060 6GB is R 4,500, and you also can't sell it for R 10,000 when a new GTX 1080 is R 9,500. Those prices sound about correct, right? Right, but also WRONG!

Those prices were very much valid three months ago when there was high supply, but with inventories dried up there is simply NO supply, which (correctly) increases the value of existing cards in circulation.

One can't play games on money, nor can one mine on money. Both of these tasks require a graphics card, and with a dry market prices need to increase.

The second factor is that pricing and value are always set by the buyer. Forget the cost of manufacture, forget the time involved - if you want R 1,000 for an item but nobody wants to pay more than R 200 you're not going to sell it.

With buyers willingly paying a premium of up to nearly 100 % for high end second hand cards, they too are pushing pricing up. Once again, however, this is correct. When the market price for your house is R 1,500,000 (as set by buyers ;) ) you wouldn't put it on the market for R 500,000 even if you only paid R 450,000 for it.

While true that houses are assets that normally increase in value and IT related items decrease, the current state of the market is such that graphics card, high end PSUs, and other items in short supply for mining are rocketing in value.

That GTX 1060 that was R 4,500 a few months ago is now selling for up to R 6,500 new. Radeon RX 580s that were R 3,800 new? Try up to US$ 750 on Amazon, which equates to over R 9,000 ex VAT at the current exchange rate - and they're selling.

There are only two ways that we can break this cycle of inflated prices - the first is by increasing supply, which doesn't seem likely for the next 3-6 months, and the second is by buyers refusing to pay market value, thereby bringing prices back down to what they were. Is this wise, however, or is it artificial market manipulation given that prices SHOULD be higher due to the supply/demand ratio?
 
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#2
Also the entire GPU creation process is more expensive nowadays. GPU's in general cost more to produce per unit than they used too.
 

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Prices at suppliers are still unchanged. Example Asus Dual GTX1060 3GB Cost price = under 4k. Its the etailers pumping up the prices, so in reality the prices are not correct imo.
Four things:

1. Prices are adjusted as and when stock arrives. Find me someone who has GTX 1060 3GB cards available at under R 4,000?
2. Under R 4,000 used to be the cost price of the 6GB model.
3. I see the odd card pop up at under R 4,500 retail - these were available last week https://www.rebeltech.co.za/12900-g...e-gigabyte-geforce-gtx-1060-windforce-oc.html
4. Regardless of who inflates the price, it is still correct. It's all about supply/demand.
 

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#6
Four things:

1. Prices are adjusted as and when stock arrives. Find me someone who has GTX 1060 3GB cards available at under R 4,000?
2. Under R 4,000 used to be the cost price of the 6GB model.
3. I see the odd card pop up at under R 4,500 retail - these were available last week https://www.rebeltech.co.za/12900-g...e-gigabyte-geforce-gtx-1060-windforce-oc.html
4. Regardless of who inflates the price, it is still correct. It's all about supply/demand.
Its not correct.

This reads likes a paid for advertisement.

If the cost price is R50 and retail used to be R60 and there is suddenly a high demand and the suppliers still ask R50 because the manufacturing and shipping costs has not increased, then it does not mean the new price is now R150 at the retailers. Its just the retailers taking advantage of the situation to make more profit.

Its really simple.

When there is suddenly a spike in the price of the materials that these items are made form or a fuel increase that causes the cost of transportation to increase then the price goes up as it costs the manufacture more to manufacturer these items or more to transport them to the suppliers, this will obviously increase the cost for the suppliers who then sell the items for more to make up for the increase in manufacturing cost or the increase in transportation costs and so the resellers will also be asking more.
 
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Just because those higher up in the supply chain didn't capitalize doesn't mean that it is not correct. Pricing is set by what people are willing to pay - if end users refuse to pay the inflated prices it would be incorrect, but as soon as end users accept the price it becomes the correct price. If the cards didn't sell at the inflated prices they would have to decrease.

Economics 101 :)
 

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#9
Just because those higher up in the supply chain didn't capitalize doesn't mean that it is not correct. Pricing is set by what people are willing to pay - if end users refuse to pay the inflated prices it would be incorrect, but as soon as end users accept the price it becomes the correct price. If the cards didn't sell at the inflated prices they would have to decrease.

Economics 101 :)
JY newsbot! You shouldn't be defending your threads! you are a machine!
 

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#11
Show me one instance where price is NOT set by the buyer? :)

Oh, and you may have missed the bit in the title and the opening post that this is an editorial post ;)
This is just exploitation. :cool:;):p

Buyers want to pay NORMAL prices. That RX570 that costs R2970 from the supplier, they want to pay accordingly after the re seller made his profit, asking 50% more is just exploiting the market. Its not the gamres buying, no its the miners with huge pockets.
Everywhere gamers, the people who usually use GPUs, the target audience, they are not buying, they are complaining about the increased prices everywhere.

;)
 

Flex

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#12
Thats just your opinion, its not news or a fact.
How is Economics 101 an opinion? It is unfortunately fact and how stuff works.
All boils down to supply and demands. Point. No other factors at all. That is not my opinion, or how i feel. It is a fact.
 

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#13
How is Economics 101 an opinion? It is unfortunately fact and how stuff works.
All boils down to supply and demands. Point. No other factors at all. That is not my opinion, or how i feel. It is a fact.
Its just funny how the suppliers have totally neglected to increase all their prices by 50%!
Im curious what there reasoning is for not inflating their prices.
 

Flex

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Its just funny how the suppliers have totally neglected to increase all their prices by 50%!
Im curious what there reasoning is for not inflating their prices.
Such as? from what I can see it is not only the private 2nd hand market pricing that has increased, but the public as well. It is not an isolated case. it is world wide. Including Local and international suppliers. The main problem being that suppliers don't have nearly the same amount of cards as what there are in circulation already. It is pretty basic really, almost common sense actually.
 

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#17
Its just funny how the suppliers have totally neglected to increase all their prices by 50%!
Im curious what there reasoning is for not inflating their prices.
I think it's just because they don't have stock of it at all, so why would they bother to keep altering the price of something they don't even have on hand. But once they get stock in, they'll change their prices.
 

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#18
Prices at suppliers are still unchanged. Example Asus Dual GTX1060 3GB Cost price = under 4k. Its the etailers pumping up the prices, so in reality the prices are not correct imo.
Besides this being untrue. Suppliers prices have changed. You know how we are so effected by rate of exchange in SA? Well check how that's changed since a month or 2 ago if you want public evidence of reasons for change.

Supply and demand is something that has effected prices from the people mining raw materials, to the production line and eventually end user.

Now to defend Etailers that are "pumping up prices". It's the market doing it, not etailers.
And if the etailers kept their prices constant, they would lose out on the profit the end user(now effectively a dealer=etailer) will make several times the profit buy doing the exact same thing. Buying stock and selling it for the price that people are willing to pay(see demand).

Do you know how many times I see people posting tables of best return on investment in terms of GPU and then suddenly everybody orders the GPU with the best return on investment. Purely to make themselves more money.

I really fail to see how you blame etailers when the entire market from end-user to manufacturer, are all just being effected by this.

Did you realize that there is also a secondary effect on the market? GPU sales plummet once supply has met demand. Not to mention the major increase in RMA's due to products not being used how they were designed.

So in conclusion...If the price was not correct. Then why is there such huge shortages from people paying said price(and more on the 2nd hand market).

Same as mc donalds... Prices are not correct there in my opinion. But the world disagrees so I go on eating tastier and cheaper home made burgers. But I am not going to put the blame on a franchisee and say they pumping up prices. Just doesn't make sense
 

akescpt

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#19
Prices at suppliers are still unchanged. Example Asus Dual GTX1060 3GB Cost price = under 4k. Its the etailers pumping up the prices, so in reality the prices are not correct imo.
hook me up please [MENTION=3144]belleraphon[/MENTION] !!
 

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#20
I think it's just because they don't have stock of it at all, so why would they bother to keep altering the price of something they don't even have on hand. But once they get stock in, they'll change their prices.
Yep. Simple as that. How can they know the price of stuff that has not entered the country and been calculated in terms of tax, future costs(RMA's for example). Going to have it's price updated along with a couple thousand other products in the same boat for many reasons. haha
 
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