Why don't NVIDIA and AMD just charge market rates for their GPUs? Why let scalpers coinflip with bots to make 50% profit on their cards?

[Jobgh]

I really don't understand why NVIDIA and AMD bother selling their cards at "normal" prices. Even if you were to get a 2070 into the hands of a gamer at MSRP, that person is likely to just turn around and sell the card for a few hundred bucks.
I would much rather stick with my old card until crypto crashes and let the chip makers cash in right now instead of having them let scalpers take half of the "end price" of a card. NVIDIA also seems to be producing cards destined for the landfill to cash in on some of that crypto money that scalpers are taking.

 

If AMD and NVIDIA were honest and chased the money the simple way, then we would avoid thousands of cards destined for the landfill, and perhaps the shortage will introduce more gamers to the second hand market. Reusing old components is great for the environment, and will prime gamers to open to the idea of snapping up old mining cards on the cheap.

What do you think? Am I missing something?

 

[curiousmind34]

Just now, Jobgh said:

I really don't understand why NVIDIA and AMD bother selling their cards at "normal" prices. Even if you were to get a 2070 into the hands of a gamer at MSRP, that person is likely to just turn around and sell the card for a few hundred bucks.
I would much rather stick with my old card until crypto crashes and let the chip makers cash in right now instead of having them let scalpers take half of the "end price" of a card, and produce cards destined for the landfill to make some of that money.

 

If AMD and NVIDIA were honest and chased the money the simple way, then we would avoid thousands of cards destined for the landfill, and perhaps the shortage will introduce more gamers to the second hand market. Reusing old components is great for the environment, and will prime gamers to open to the idea of snapping up old mining cards on the cheap.

What do you think? Am I missing something?

Likely some contracts/obscure legal stuff holding them back.

[Dedayog]

2 minutes ago, Jobgh said:

I really don't understand why NVIDIA and AMD bother selling their cards at "normal" prices. Even if you were to get a 2070 into the hands of a gamer at MSRP, that person is likely to just turn around and sell the card for a few hundred bucks.
I would much rather stick with my old card until crypto crashes and let the chip makers cash in right now instead of having them let scalpers take half of the "end price" of a card, and produce cards destined for the landfill to make some of that money.

 

If AMD and NVIDIA were honest and chased the money the simple way, then we would avoid thousands of cards destined for the landfill, and perhaps the shortage will introduce more gamers to the second hand market. Reusing old components is great for the environment, and will prime gamers to open to the idea of snapping up old mining cards on the cheap.

What do you think? Am I missing something?

You're missing a LOT.  There is so much in the economics and business decisions of companies, logistics, supply chain, budgets, returns, etc.

 

Long term issues as well, Nvidia has a balanced model to sell and continue selling products.  They're looking at this as a short term blip. If they raise prices too high, consumer goodwill erodes even more than it has. 

 

Again, way too much to get into.  

[FIXXX]

4 minutes ago, curiousmind34 said:

Likely some contracts/obscure legal stuff holding them back.

Wasn't there some hullabaloo last mining crisis that Nvidia did exactly that? 50k cards were sold more or less directly to some huge Chinese farm? Wouldn't be surprised there was some contract where the farm paid extra for the privilege.

Or am I misremembering it all? 

[Jobgh]

2 minutes ago, Dedayog said:

You're missing a LOT.  There is so much in the economics and business decisions of companies, logistics, supply chain, budgets, returns, etc.

 

Long term issues as well, Nvidia has a balanced model to sell and continue selling products.  They're looking at this as a short term blip. If they raise prices too high, consumer goodwill erodes even more than it has. 

 

Again, way too much to get into.  

Would you mind being a bit more specific? From where I'm sitting, it looks like prices have already been raised "too high". It just seems like scalpers are doing it after NVIDIA sells them the cards for cheap. Also, "short term" blips can be very profitable. NVIDIA makes billions on their card generations at these prices. Even a 20% increase in profit on their cards would be massive. No?

Also, it's not like that cash can't be invested to regain consumer trust. NVIDIA still dominates the high end, and I wouldn't be surprised if AMD joined in with their cards.

[Dedayog]

4 minutes ago, Jobgh said:

Would you mind being a bit more specific? From where I'm sitting, it looks like prices have already been raised "too high". It just seems like scalpers are doing it after NVIDIA sells them the cards for cheap. Also, "short term" blips can be very profitable. NVIDIA makes billions on their card generations at these prices. Even a 20% increase in profit on their cards would be massive. No?

Also, it's not like that cash can't be invested to regain consumer trust. NVIDIA still dominates the high end, and I wouldn't be surprised if AMD joined in with their cards.

Long term effects can be catastrophic.  20% increase now and 50% of buyers shift to AMD or Intel when THEIR prices don't rise, for example. I know I'm looking at other options even now as Nvidia is playing fast and loose with their relationship with us consumers.

 

I think Nvidia is pushing the envelope as far as pricing goes right now.  We're at the stage where the mid-range is heavily contested and THAT is where the billions come from.  3090 sales?  Bah.

 

BMW and Mercedes had this issue a bit ago.  They got cocky, pushed prices up.  A few other marques stepped up and stole a good chunk or market share of the upper middle-ground.

 

[curiousmind34]

2 minutes ago, Dedayog said:

Long term effects can be catastrophic.  20% increase now and 50% of buyers shift to AMD or Intel when THEIR prices don't rise, for example. I know I'm looking at other options even now as Nvidia is playing fast and loose with their relationship with us consumers.

 

I think Nvidia is pushing the envelope as far as pricing goes right now.  We're at the stage where the mid-range is heavily contested and THAT is where the billions come from.  3090 sales?  Bah.

 

BMW and Mercedes had this issue a bit ago.  They got cocky, pushed prices up.  A few other marques stepped up and stole a good chunk or market share of the upper middle-ground.

 

This ^^

Brand loyalty is more powerful than you would think, and a few hundred dollars an opportunistic company extracts from its customers now could costs 2 or 3 graphics card purchases down the line.

[Donut417]

11 minutes ago, Jobgh said:

What do you think? Am I missing something?

A few things. Firstly while AMD and Nvidia might sell directly to consumers at MSRP when they have stock, MSRP is just a "Suggested" Price for retailers to charge. Keep in mind that generally AMD and Nvidia are selling pallets of GPU/GPU dies, which means they are selling for bulk price. Its kinda how Walmart might buy 500,000 of a particular TV, and sell it for rock bottom prices. Because they are not paying MSRP for it. Retailers get the products for less and MSRP in a lot of cases MSRP will have a little bit of profit built in for the retailer. 

 

You also have to consider the supply chain. Not all retailers deal with AMD or Nvidia, some times 3rd party distributors are in the mix. Each distributor is going to want a piece of the pie. Then the retailers take their piece. The scalpers are only effective because demand is super high because Bit Coin is super high, which has pushed other coins in to being super high. Scalpers know that crypto miners will pay out the nose because Greed is Good. At least thats what Wall Street keeps telling us, before they tank the economy. 

[Dedayog]

Also, if I recall... Nvidia SELLS their cards to AIB's, either the design or the actual cards.  If they price their own high, they run the risk of AIB';s undercutting them.  If they raise ALL prices then the AIB';s may be fucked.

 

[Jobgh]

8 minutes ago, Dedayog said:

Long term effects can be catastrophic.  20% increase now and 50% of buyers shift to AMD or Intel when THEIR prices don't rise, for example. I know I'm looking at other options even now as Nvidia is playing fast and loose with their relationship with us consumers.

 

I think Nvidia is pushing the envelope as far as pricing goes right now.  We're at the stage where the mid-range is heavily contested and THAT is where the billions come from.  3090 sales?  Bah.

 

 

 

A 50% shift from NVIDIA to AMD would happen in NVIDIA doubled their prices on mid range GPUs, except AMD GPU prices are equally f***ed as it is. I would assume that retailers, board partners, and the chip companies would have their interests aligned to make this happen. The biggest issue I see would be allowing retailers to buy the cards at "normal" prices, sell them at 50% margin, and then make the retailers send back NVIDIAs cut. A system like that would mitigate the inventory risk of a Best Buy purchasing 50k cards at 1,000 USD right before a crash renders them only worth $350 as cards flood the market.

This is all stuff I'm thinking of myself, so there might be a major issue in a system like that. Idk

[Zodiark1593]

20 minutes ago, Dedayog said:

You're missing a LOT.  There is so much in the economics and business decisions of companies, logistics, supply chain, budgets, returns, etc.

 

Long term issues as well, Nvidia has a balanced model to sell and continue selling products.  They're looking at this as a short term blip. If they raise prices too high, consumer goodwill erodes even more than it has. 

 

Again, way too much to get into.  

Goodwill doesn’t matter much if both vendors happen to raise prices (as there are no other choices), and it is likely that if one does so, the other will follow suit. At the very least, I don’t think consumer goodwill is a factor. 

[Jobgh]

3 minutes ago, Dedayog said:

Also, if I recall... Nvidia SELLS their cards to AIB's, either the design or the actual cards.  If they price their own high, they run the risk of AIB';s undercutting them.  If they raise ALL prices then the AIB';s may be fucked.

 

Ok, from what I'm gathering in this thead, it looks like the biggest reason why this isn't happening is because AMD and NVIDIA don't have as much control over retail prices of cards as I thought, and if they increased the end retail price, that profit would be split amongst everyone in the "design to your PC" pipeline.

[small guy64]

If nvidia upped their prices what's to stop scalpers from doing the same?

[Moonzy]

Because then they'll take the blame for the high prices

 

Who is to say that aren't already charging that price behind the curtains? Many retailers in many countries are selling GPU 2-3x MSRP, someone in that chain is making the money and we don't know who, HUB covered this

[Jobgh]

3 hours ago, small guy64 said:

If nvidia upped their prices what's to stop scalpers from doing the same?

GPUs are currently priced at their market value by scalpers. A scalper can't buy a card that the market values at 1k for 1k, and then sell it for more than 1k.

[Mark Kaine]

7 hours ago, Jobgh said:

Am I missing something?

 

Yes. It would look like it. 

 

So you want Nvidia to have *higher* prices? 

 

Then you're looking at $2,500 here instead of 1,249...  personally I'm against that idea,  and also Nvidia *purposefully* priced their cards very low this time around precisely because of that reason,  it was obvious scalpers and miners would drive prices up.

 

If you make a higher base price this will only get worse,  not better. 

 

1 hour ago, Jobgh said:

GPUs are currently priced at their market value by scalpers. A scalper can't buy a card that the market values at 1k for 1k, and then sell it for more than 1k.

Yes, they can and they do. 

 

 

There's a reason manufacturers don't raise prices nilly willy as you suggest,  explained above. 

 

This is just really simple economics 101.

[mousesnob]

Its pretty simple.

 

Its irrelevant what price Nvidia or the retailer sets, the scalpers will simply slap a margin on top for themselves.

 

I cant predict the furture but i think that if this were to be done those hoarding gpus would be pretty pleased about it. Your idea is to literally give them free money.

[Arika]

Ok, lets look at it like this. I have no idea what the current scalper prices are, so the numbers are made up

 

RTX 3080

MSRP $699

Scalper Price: $2300

 

If NVidia bumped it up their price up to say $2000, scalper price would go up to maybe $3080

 

it wouldn't solve anything, it just puts it more out of reach of EVERYONE by increasing the base price.

[LogicalDrm]

Manufacturers have raised prices, but they do it slower. If they would do it now, they would probably lose big time. Be it by the competitor going significantly lower in price, and driving more marketshare to their direction, or by customers just mass-stating "nope, our limit has been reached".

 

So if you have followed tech for longer time, even just on review level, you will hear about manufacturers cutting prices. This means that they have their price levels for products which may be at same level as previous generation or bit higher because of more performance given. So cutting there means that they will drop some prices to better compete with the other manufacturer. Those cuts may be significant or not, but they will be made. For example Intel cutting prices of their highest end stuff to compete with Ryzen 7 CPUs year ago. This meant that AMD could raise their prices for next launch a tad, knowing that people would still go AMD because price/performance was worth it.

 

From where we come to raising the prices. It can't happen too quickly or with too big steps. Raising prices rapidly always leads to public out-cry and people trying to find cheaper ways. If all manufacturers would do it, countries with tight monopoly/cartel laws would hit them with fines. So raising the prices must be done generation to generation, with small steps. Like I've said in multiple threads, midrange GPU price level some 7 years ago was at €200-300. Now same level cards are twice or more in price. Thats maybe €50 to prices in a year.

 

MSRP is already priced in a way that manufacturer makes money on each card. Its also in a way that when retailer buys stuff in bulk, they don't need to go much over it to be able to make their cut on it. What would it actually do if Nvidia for example raised the MSRP to $1000 (if current is $700). It would mean that retailer could then add another $100 to that price, and having just those prices there, scalper could ask even more. And if people buy from scalpers, or even retailers with prices significantly over MSRP, it all tells to manufacturer that they can raise the price for next gen. Because people are willing to pay more.

 

Thats how this thing works. Competition drives prices down and quality/features/performance up. Willingness to pay more drives prices up (along with high demand and low availability which are the basics of modern economy). Cartel is when two or more providers of same field set prices for their product to some level in agreement and don't drop them in order to gain bigger marketshares.  This is illegal in most countries with working consumer protection system. Monopoly is when one company has very notable lead in their field and uses it to set prices etc. For example Google has been fined for this for search results and advertisements, and Microsoft for product placements in Windows.

[Donut417]

1 hour ago, LogicalDrm said:

Competition drives prices down

I wonder how Intel will effect the market? Thats if they ever bring those GPU's they been working on to market. I haven't seen any news on them. 

[small guy64]

10 hours ago, Jobgh said:

GPUs are currently priced at their market value by scalpers. A scalper can't buy a card that the market values at 1k for 1k, and then sell it for more than 1k.

I don't think you understand how things work.

[LogicalDrm]

6 minutes ago, Donut417 said:

I wonder how Intel will effect the market? Thats if they ever bring those GPU's they been working on to market. I haven't seen any news on them. 

If they are competitive, then they will be a factor. Like AMD has been one with lower prices, and lower performance for years now. If Intel could bring better performance than AMD and price range something in between the two, with availability, they can quickly take over marketshares and then increase prices next gen.

[Jobgh]

None of you guys understand why prices are what they are. Cards are being priced to their market value by scalpers. The market value of the cards are what they are because miners can buy the cards and get ROI at current prices. If NVIDIA raises the price of their cards to market value, miners can buy them and make ROI. If a scalper buys a card at market value and doubles the price, miners won't be able to make money on them, and gamers wont buy them. I don't think you guys understand why cards are worth what they are.

[Jobgh]

12 hours ago, Mark Kaine said:

Yes. It would look like it. 

 

So you want Nvidia to have *higher* prices? 

 

Then you're looking at $2,500 here instead of 1,249...  personally I'm against that idea,  and also Nvidia *purposefully* priced their cards very low this time around precisely because of that reason,  it was obvious scalpers and miners would drive prices up.

 

If you make a higher base price this will only get worse,  not better. 

 

Yes, they can and they do. 

 

 

There's a reason manufacturers don't raise prices nilly willy as you suggest,  explained above. 

 

This is just really simple economics 101.

 

12 hours ago, mousesnob said:

Its pretty simple.

 

Its irrelevant what price Nvidia or the retailer sets, the scalpers will simply slap a margin on top for themselves.

 

I cant predict the furture but i think that if this were to be done those hoarding gpus would be pretty pleased about it. Your idea is to literally give them free money.

 

11 hours ago, Arika S said:

Ok, lets look at it like this. I have no idea what the current scalper prices are, so the numbers are made up

 

RTX 3080

MSRP $699

Scalper Price: $2300

 

If NVidia bumped it up their price up to say $2000, scalper price would go up to maybe $3080

 

it wouldn't solve anything, it just puts it more out of reach of EVERYONE by increasing the base price.

 

4 hours ago, small guy64 said:

I don't think you understand how things work.

I'm new to the forum. I didn't realize my multiquote wasn't attached to my above post.

[small guy64]

 

8 minutes ago, Jobgh said:

None of you guys understand why prices are what they are. Cards are being priced to their market value by scalpers. The market value of the cards are what they are because miners can buy the cards and get ROI at current prices. If NVIDIA raises the price of their cards to market value, miners can buy them and make ROI. If a scalper buys a card at market value and doubles the price, miners won't be able to make money on them, and gamers wont buy them. I don't think you guys understand why cards are worth what they are.

OK, can you backup that up with proof?