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The morality of profiteering on scarce luxury items.

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JayR
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Youre opinions please on the morality of cashing in on a scarce luxury item. To be specific, AstroPhysics is a company that makes premium medium/large refracting telescopes in small, closely controlled batches. People go on waiting lists for 10+ years to get their hands on a new telescope from this company, and used examples regularly sell for thousands more than the original owner payed.

They have just finished a production run of 175mm refractors, and will be releasing them to people who have been on the "large refractor list" for upwards of 12 years, they will sell for just over 19K. Whats youre opinion of someone who uses their spot in line simply to turn arounf and sell the scope for 35K? And please note, the owner of the company requests that people who buy a new scope use and enjoy it, not flip it. In fact if you are known to have done this in the past, you wont be allowed to purchase another new scope from AP.

Another issue all together is that AP knows they can get double what they charge for their new refractors, yet still make them available at a small profit in order to get them into the hands of people who will use and enjoy them. But lets focus on the morality of flipping a new scope for profit for now.

I hadnt planned on being nearly this long winded......

j..

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AstroPhysics is doing its customers a disservice by charging below-market prices and rationing the product. The sellers are doing the end buyers a corresponding service by making the product available to them sooner than it would otherwise have been.

The manufacters seem to want power over who gets the product more than they want to make money. They are within their rights, but this is an eccentric way to do business. I'm glad that so few sellers behave that way.

Much of the standard complaint about free markets comes down to the fact that resources go to whoever has the money rather than to the people the complainer wants them to go to.

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Thanks for the reply. I was under the assumption that the availability of large glass blanks suitable for making premuim lenses, and the small size of the company itself were the driving factors behind the limited supply. Maybe I should check that assumption. But yes, they certainly charge below market prices, in fact this latest run at 19K is by far their most expensive new scope, yet still below market value which my estimates would put at about 33K.

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This is a weird story. Do you have to pay to get on the waiting list? If so it makes better sense, and whether reselling is ok depends on the contract, I suppose.

This calls to mind the Bayreuth Festival in Germany. You have to mail away to get on a waiting list, every year for an average of 10 years, before you get your chance to buy tickets. But the Festival is heavily subsidized, they could probably run all year and do better, but they choose to keep it the way it was in the early days. Just a few weeks in the summer, always 100% sold out. The tickets aren't expensive at all, if you go through the process. Then, on the "secondary market" they're outrageously expensive, and supposedly you can get kicked out if you're not the person who properly bought the ticket. Meanwhile you have no way of knowing if the production you'll finally get to see is going to be any good. Their latest Lohengrin has the chorus dressed up as mice! With big ears and tails trailing behind. It's on YouTube. People are known to walk out, in spite of all the trouble they went through to get tickets.

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No you dont have to pay to get on the list, just sign up. There is no contract. Im still trying to find the correct answer to the question of the limited supply. I mean, these are hand made, certainly not mass produced items, so thats a part of it. But is the company keeping the supply artificially low? I dont know. I was always under the impression that perfection takes time, and this is more a "labor of love" sort of thing. But supply is not meeting demand, and Im of the opinion that if someones willing to pay 15K over retail to get one now, thats their business. Ive run into quite a few people who think otherwise.

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... ...this latest run at 19K is by far their most expensive new scope, yet still below market value which my estimates would put at about 33K.
Sometimes, companies like wait-lists because of the buzz it creates. Harley Davidson was like this once. Not sure if it is still true.

Even if the company wants to allow people to wait and pay less, they should sell a certain number @ $33K so that customers who really want them can get them from the company rather than this round-about method of buying it from a third party (black-market style). That way, the additional money flows to the manufacturer. Also, it will remove the incentive for people to get on the list only with an intent to resell, thus resulting in a shorter wait-list.

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The Von Braun Astronomical Society in Huntsville has one of the StarFire telescopes, a very impressive instrument. Even if they where the only maker of premium telescopes, I find nothing objectionable in this practice. I think these instruments are more like great works of art in engineering. Do you find the practice of breaking the mold to be objectionable?

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Is this "no resale" policy just the company asking customers for a favor, or is it in their TOS agreement that the customer promises not to resell the items purchased?

If it's the former, customers are under no moral obligation to ignore their self interest to do any favors. It is perfectly moral to make a profit by ignoring their request.

If it's the latter, then agreeing to a TOS you are planning to ignore is fraud.

P.S. As for why the company is limiting supply, it could just be a misguided sense of morality, but it's probably a marketing gimmick to make their brand more valuable and to attract people to their business. While their supply of certain telescopes is indeed less than demand, I bet with most of their products that's not the case.

Who's to say that they're not making a killing through the sale of those products, because of the attention they gain with this gimmick?

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That would not be profiteering, just profiting. There is no government policy that either forces telescope or precison manufacturers to produce less than they would be able to, or that creates an overall climate of scarcity. This is a deliberate decision by the company, and since their product even if precious is neither intellectual property or a service, so once they sell the good they relinquish all rights yoto it in exchange for 19,000 USD. I believe that's the end of the story, you can do with your newly acquired item as you want. Imagine if you needed to sell the scope beause of dire need and not because of financial ambition.

As for the company's right to sell the way they sell, I have no problem with that and it's not unusual in luxury items.

Many gourmet restaurants offer limited options and limited seats, and it would be inmoral to demand a little restaurant you like to go franchise so you can eat your favorite dish in any place.

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This calls to mind the Bayreuth Festival in Germany. You have to mail away to get on a waiting list, every year for an average of 10 years, before you get your chance to buy tickets. But the Festival is heavily subsidized, they could probably run all year and do better, but they choose to keep it the way it was in the early days. Just a few weeks in the summer, always 100% sold out. The tickets aren't expensive at all, if you go through the process. Then, on the "secondary market" they're outrageously expensive, and supposedly you can get kicked out if you're not the person who properly bought the ticket. Meanwhile you have no way of knowing if the production you'll finally get to see is going to be any good. Their latest Lohengrin has the chorus dressed up as mice! With big ears and tails trailing behind. It's on YouTube. People are known to walk out, in spite of all the trouble they went through to get tickets.

That whole thing sounds like a confidence scam. And here I thought the show, "Sprockets" was a German stereotype...

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  • 3 weeks later...

I think that the problem lies in high quality low volume production ,in which demand outstrips supply

.And glass supply is a problem with such low volume production ,companies like to produce glass in large volumes by the tonne to make it economically viable for them so a few dozen blanks even a few hundred dosen't interest them and with big glass companies even roland christians name and reputation counts for nothing if he's not placing a large volume order.

Roland christian controls all aspects of the production process ,including checking and re-checking each lens until it meets specification .

The result of this attention to detail is an outstanding telescope with an independatly tested reputation for performance and quality and exclusivity .

Which will attract the flipper an individual with no intrest in the item other than how much they can make and profit from it.

However most flippers are of the moment speculators looking for a quick return and profit from the investment.They would have to be pretty

masochistic to wait 12 years to buy one to flip for a profit .So i would like to think that most of these scopes will go to genuine enthusiasts who will love cherish and use them.

That said i would pose another question what is the morality of profiteering of an owner of a 1992 -1998 180 EDT Which cost between $4995 and $5495 at that time and is on the notification list getting the good news that he is to be the recipient of a new 175mm if he wants it and then advertising his old scope for sale for up to $30 000 Good for him you might say ,and it does release another astrophysics large refractor onto the market ,for someone who would otherwise have no chance to buy one ,but is it right ?

But it's a common practice with all low volume luxury items , like ferraries morgan cars etc where demand outstrips demand ,and their is a waiting list .And when anything is availiable for a price.

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