RE:Theories on one torch release, especially about pricing7 pages of comments in half a day, so I am sorry if this has been mentioned.
My feeling is that we are pricing a torch. As simple as that. The News Release alludes to the rest of the order having service agreements as well.
Torch will have an up fron price, like a car.
When you order a fleet of vehicles, there is still a sales contract for every single vehicle.
Now there is a default sales contract(Peter gratuitously thanked his legal team) that can be used for all torches going forward. Want 50 torches? Here is 50 torch contracts. Want 50 service agreements? Here is 50 of those to attach.
It is my opinion that a torch is a torch, as long as the specs are the same. I am sure some will outlast others, but in the end, a torch is a torch. A warranty, or service agreement, or rental of said torch can be completely different and taylor made depending on the customer and their needs and business style.
Anyways, that is what is floating around in my head.
Cheers!
MidtownGuy wrote: The one torch order came out, priced at $1.8MM.
Batting some ideas around on other forums, so some consolidation of theories on that...
Why one torch might have been sold now vs later torches being leased (or sold):
1/ maybe because this one torch was customized/modified so much for this customer during trials that they agreed to buy it
2/ it's likely a training torch, that gets delivered to the client so their teams become expert on its use and installation prior to receiving the larger order.
Release this one torch news separately, especially if larger contract is down the road, for promotional, confidentiality, and price benchmarking purposes.
1/ Promotional. One way to look at it is this one torch deal was negotiated in by Peter specifically for promotional purposes. He gets them to agree to "buying" one torch (with the rest being leased), so he can do yesterday's release to show basic details of major client validation to the market.
2/ To protect confidential negotiations. For the bigger contract to follow, they likely won't want to say "Vale bought 200 torches at $1.8MM apiece, with a support deal for $20MM". Neither Vale nor PYR would want that, as it would tip off others on how to negotiate. That's competitive advantage for both companies.
Instead, for the big contract to come, they may just say "Vale signs a $200MM deal for torches and support and service", and doesn't split anything out so they can protect their negotiated price on both sides.
So today, they got a general price out there. And the major customer is revealed later, with yesterday's one torch price having no relevance for them and doesn't reveal any contract details.
3/ Price benchmarking. By releasing the torch news at a price of $1.8MM, PYR gets to reveal to the market the general unit price for major customers. But there's more to that story.
It first gives the market a general sense of price so when they do initial math that's where they can start. But as others have said vis a vis Drosrite, Peter has a knack for selling higher later. This torch could very well be the first mover discount. We shall see.
Just as important, when someone calls about torches now and references the $1.8MM NR price, PYR can now say "hello, new potential customer, that price in the NR was for a customer who has a much bigger deal cooking, so that's the bulk discount price" without revealing too much.
It's a win-win to promote the price that way. It doesn't mean it's the forever price, it was a price that is in context to that deal. Or not. That's the beauty of it, he can spin it anyway he needs to without revealing anything.
It's actually $1.8MM plus $1MM.
Keep in mind that they spent $1M already on modelling... so in one way it's $2.8M for that 1st torch.
So that right there is another key reason whey they do modelling. Because they charge for it. It generates revenue.