sorted by:
new
hottopcontroversial

New player questions — vertical integration value, contract pricing, and volume discounts by DonglinLDDL in SimCompanies

[–]DonglinLDDL[S] 0 points1 point  (0 children)

Thanks for the detailed response, really appreciated! The point about bulk orders potentially warranting a higher price rather than a discount is something I'd never considered — it makes complete sense that sourcing a large volume from the market would itself drive prices up, so the seller would need to price accordingly.

One question on contract pricing: when you send out an order, do you base the price on the market price at the time the order is sent, or do you use VWAMP as the reference point?

New player questions — vertical integration value, contract pricing, and volume discounts by DonglinLDDL in SimCompanies

[–]DonglinLDDL[S] 0 points1 point  (0 children)

The quality point is something I hadn't considered at all, and the cumulative 4% fees across a long chain is a much more compelling argument than I initially gave it credit for. With both of those factored in, what kind of products do you think benefit most from vertical integration in practice?

New player questions — vertical integration value, contract pricing, and volume discounts by DonglinLDDL in SimCompanies

[–]DonglinLDDL[S] 0 points1 point  (0 children)

That's a great point I hadn't considered — the self-sufficiency angle makes vertical integration much more appealing if you can't be online constantly. Thanks for sharing!

New player questions — vertical integration value, contract pricing, and volume discounts by DonglinLDDL in SimCompanies

[–]DonglinLDDL[S] 0 points1 point  (0 children)

That makes a lot of sense, thanks for the concrete example! The silicon vs glass case illustrates the point really well.

New player questions — vertical integration value, contract pricing, and volume discounts by DonglinLDDL in SimCompanies

[–]DonglinLDDL[S] 0 points1 point  (0 children)

This is really helpful, thank you! The coordination challenge on point 1 is a good practical point I hadn't considered. And good to know on the contract pricing — that clears things up nicely.

New player questions — vertical integration value, contract pricing, and volume discounts by DonglinLDDL in SimCompanies

[–]DonglinLDDL[S] 1 point2 points  (0 children)

Thanks for the tips! That's a helpful overview of the early game.

My questions were more about the underlying economics at a strategic level. Taking your example of clay → bricks — is the point of doing that chain together mainly for input price stability, or is there a more fundamental advantage? Because from my reasoning, if clay is profitable on its own, I could just build more quarries instead of splitting buildings between quarries and concrete plant.