Wednesday, February 29, 2012

Markups and Price Discrimination in RAM

Dell computers have some smart cookies working out their pricing policies. They've (correctly) estimated that a very large proportion of their customers will pay a substantial premium in order to not have to open up the inside of their computer. This is because when you open up a computer, it seems to the newbie like the electronic equivalent of doing open heart surgery when you've only seen a youtube clip of the operation. Screw it up, and there goes your two grand computer.

I know this for two reasons:

1. Until a few days ago, I was one of those people, and

2. My computer tech guy pointed me in the direction of aftermarket RAM.

The latter only occurred because I'd bought a computer hoping to cannibalise the RAM from an old machine. As bad luck would have it, the old RAM was the wrong specification.

But look at the markups they charge!

A Dell Precision T3500 Workstation with 2GB of RAM will set you back $779.

When you increase your RAM to 24GB, using 1333MHz, DDR3 SDRAM, ECC (6 DIMMS), it will add another $1580 to the price.

Now let's go to my new favourite site, They're RAM finding device lets you locate RAM that will work with your T3500 workstation. How much will 24GB of 1333MHz DDR3 RAM set you back?

As it turns out, about 140 bucks. So Dell is getting a lazy 900% markup on their RAM, and that's assuming they're buying it on without any discount for bulk.

That's a hell of a premium you're paying because you're afraid of opening up your computer.

As it turns out, not checking the specification of the RAM I'd need cost me $150 in the short term, but has saved me at least a couple of grand in expected lifetime savings.

Update: So I decided to not wait for the computer guy (who had shown me where the RAM would go when he opened the computer up), and tried to install it myself. No dice - it wouldn't start up. Tried to install the old RAM - still no dice. Started to think I'd bricked the computer. Read the manual, fiddled around with it, eventually realised from the error lights that it wasn't reading that there was any RAM installed. More fiddling revealed that I hadn't pushed the RAM in hard enough, and my reluctance to push too hard meant that it wasn't fully in place. Ironically, I was only willing to push hard once I'd decided that I'd probably ruined the computer, which was in fact what it needed to fix it.

So overall, a bit nerve-wracking, but still not worth paying fourteen hundred bucks to avoid.

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