You would mind if you knew, and you would choose a similar product from another manufacturer if they had already managed to shave that 4000 off the retail price, so you will eventually lose customers by sticking with the ‘they don’t really know or care’ attitude.

That is true as far as price, however, some things that are bought do not generate additional money for the customer. Such as I buy a car to get back and forth to work. Am I going to buy the least expensive car that I can that has the features I want? Yes. Does the lowest cost producer of that product get my business? Yes. Will it help you be the lowest cost producer if you get rid of waste in your process? Yes. Therefore companies who would like to stay in business better get out the muda. Such as GM and Ford. Higher labor costs than the market will bear is not value-added to the end customer and they certainly don’t see union labor insurance premiums as adding any value to their car.

Thanks for your comment.

What you are arguing is quite elementary. Yes, in basic price theory, the price (not cost) of an item is whatever the market will bear. That’s basic and most people know that.

What I am arguing is a an argument about principle. At Toyota and most firms, pricing goes like the following:

(Profit = Price-Cost)

From the firm’s perspective, it makes absolute sense to eliminate waste, reduce defects, and get the firm’s house in order. Why, well it can increase your gross margins.

From the customer’s perspective, it is almost a question of ethics to have such a crappy process or operation and shifting that to the customer.

It is simply good business to have a cleaner process and have the customer in mind. It’s good for economic profit and, perhaps more importantly, it is just plain thoughtful and nice to do. It’s just the right thing to do.

A price of a product is what a customer is willing to pay for it (which should be lower than the value a customer expects to get).

To simplify – it I can sell you a machine that will generate $10K per month, basically – assuming no overheads you should be willing to pay $9999.99 for it.

You will be very happy to buy it for $6000 and you don’t really care if I wasted time or anything else in the process… as long as you get your ROI. You won’t mind bearing my $4000 of inefficiency.