What Are We Actually Paying For?
When you buy something and you have the item that you bought in hands
, you should every once in a while stop for a moment and think about the price and the facts that form the price of the product. Not only is it fun but it helps you to understand the complexity of product lifelines and for example why there are coming more and more similar products with minor updates.Lets think about a different type of product, which you dont every day notice, but most of us still needs and have it in active use almost all the time. The product is tire. How does the cost of a tire form and where do all the money go. If you think about tires first you have to think about the materials needed to produce the tire which are rubber, oil etc.. The materials itself form a solid cost on the tire. Then there is the logistics, branding, retailing and naturally the viable business model includes some profit for the company. What most of us forget usually is the research and development work that is put into the product. How many people have been working on the tire and the innovations regarding it, how has it been tested and most of all how has all of this been implemented on the ready product. This is something that we definitely pay on the price of the end product.
Why I took the tire (in Finnish: rengas) as an example is because I am really fascinated about all the innovations and research that is being done around tires. Tire business is a lifesaving business and most of us trust ourselves and our families on these tires when we go on the road.
The innovations that are put into tires are usually around friction and therefore consumption, grip for safety and durability for lifeline. This means that somewhere there is a team that is thinking about how to make my tires consumer less, keep me on the road whether its snowing or shining and of course endure the wearing and therefore saving me more money. This is definitely something I am happy to pay of.
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