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Pricing, reality, and engineering design

A recent study by Accenture (a highly respected management-consulting company) stated that “ineffective product pricing costs semiconductor companies billions of dollars annually”; you can see their report's press release here.

I don't doubt that IC vendors could probably improve their database tracking of pricing decisions, and maybe even get higher prices from a given customer for a specific order. But how do you capture, in any survey or analysis, the other side of the situation, where the customer has the option of using drop-in second sources, somewhat-similar alternate sources, or even other design approaches?

For example, I might really like to use a fully trimmed, high-performance op amp, but if the price is more than my BOM budget allows, I can go for a lesser part from the same vendor, or a similar part from a competitive vendor, or even modify my design approach and use a non-trimmed part along with high-performance external resistors or field-trimming capability. The very nature of the engineering process is about designers, marketers, and purchasing agents balancing choices and making tradeoffs.

Can a solely price-centric analysis show that vendors could have gotten more for their products? I don't think so! After all, they could always get less if the user switches to a lesser part, or lose the order altogether to a competitor.

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