In November 2010 I bought a Skytec starter motor for my IO360. The price then was 278.85 plus VAT.
Today’s price?
A staggering £1263.21 plus VAT.
That’s a 353% increase!
That amounts to 10.6% inflation over 15 years
Inflation “by stealth” is a huge problem in business.
One point is that on small items nobody cares. I’ve just re-ordered a little sticky label, 3000 pieces, after 1 year, and it went up from 24p to 28p. Now most people would just pay 28p… I told them this % is completely outrageous. But nobody will climb down because they will be admitting to trying to rob you if they do, so you have to give them a ladder to climb down with dignity. So I said if they can do 24p I will order 4k of them. They accepted that But if that label is one of 150 items on a parts list for that alternator, and each goes up 10% every year (a rate which is completely outrageous) then that alternator will go up in price as you found.
It is a basic economic fact that everything you pay is for labour. Raw materials come out of the ground for free (we are not paying nature, or some religious figure, for having put them there). So what we are seeing is that a lot of people upstream are being paid a lot more. Probably not the child slaves in China/etc who dig the stuff out, but all those in the 1st World who like to have two Teslas in their drive. Not many people are getting 10% pay rises, but plenty do when they leave (because they have only 1 Tesla) and get a new job for 10% more.
Basically almost everybody is taking the p1ss, whenever they can, out of their customers. And in aviation you are over the Form 1 barrel so there is nowhere else to go. This route would have been good but EASA blocked it by ridiculous wording, plus maintenance companies like to make the money on expensive parts.
When I bought mine in 2017, it cost 780€ (Spruce EU)
IIRC there has been an ownership change, and the current PE owner will price acc. to affordability ;-) i.e. milking it to the max
Peter wrote:
It is a basic economic fact that everything you pay is for labour.
That’s not entirely true, even in perfect competition market sometimes you also pay for capital costs, which depend on current interest rates.
…and then there are scarcity mark-ups.
If there is no alternative, you only have to avoid “monopoly pricing”, proof of which seems even more difficult than of a cartel…
(Otherwise you would not see the steep increases in branded aviation parts)
Peter wrote:
It is a basic economic fact that everything you pay is for labour.
That sounds quite marxist.
Well, it is obviously true that materials start off free – unless you believe (as some do, without any logical basis) that the assertion that raw materials are free is why the earth is so “environmentally buggered” i.e. we owe a payment to [insert your favourite Creator’s name] for the materials we extract from the earth. Quite how that payment would be made, is a mystery to me. The earth does not have a bank account with an IBAN number
IMHO a lot of people are taking the piss out of everybody downstream, always have been (it is a natural thing), and it got much worse after covid, due to the multiple social changes which that event drove.
IOW, I see a marked reduction in general stability in the last 5 years or so.
That’s not entirely true, even in perfect competition market sometimes you also pay for capital costs, which depend on current interest rates.
That – the entire financial services industry – is just moving money from one pocket to another. All manufacturing still starts off with raw materials extracted for free.
The earth does not have a bank account with an IBAN number
No, but those that own it do
Mineral rights and land ownership are obviously costs that add to the cost of production. One can argue that these resources are God given, but governments established individual property rights for good reason and in the here and now they provide a return on passive investment to those that buy and hold them.
The earth does not have a bank account with an IBAN number
But the “representatives” of [insert your favourite Creator’s name] on the earth do have bank accounts