Background

Wikipedia article: Google Glass

Analysis

We could look at the future price on a cost-plus basis for similar hardware gadgets. However, that model is best for non-differentiated hardware. Given the device's uniqueness, we also need to look into strategic pricing and into value pricing.

Cost-plus basis

Google expects the device to go into mass market production by the end of 2013 with a retail price of under $1500. [1] According to Jason Tsai, researcher at Topology Research Institute, Google Glass could retail for $299, in consideration of the cost of its display sourced from Himay Inc at an estimated $30 - $ 35. [3] This opinion was criticized by Andrew Grush of Android Authority who predicts a price range of $450 to $800, arguing that the hardware cost is but a part of Google Glass's cost structure, including R&D. [4] Kevin Tofel of GigaOM supports Tsai's prediction, comparing Glass's hardware cost to a $199 Motorola MotoActv smart watch with similar components. [5]

Strategic pricing

At the time of Google's IPO, Larry Page and Sergey Brin chose a lower IPO price to ensure the attractiveness of the issue. Given the importance of a successful launch of a highly visible new product, they could repeat this strategy with a basse version of Google Glass. Profitability could still be substantial, through the benefits of the learning curve and through appropriate premium model differentiation.

Value pricing

Google Glass might serve new purposes of higher utility for users or certain user groups, thus allowing a premium price. (Which are the high-value applications?)

External links

1. Google publishes new Glass 'how to' video - PC World Australia, 1 May, 2013
2. Google Glass Videos - Google YouTube Channel
3. Google Glass likely to be priced at US$299: researcher - The China Post, August 8 2013
4. Google Glass for just $299? - Android Authority, 12 August 2013
5. Why Google Glass costs $1,500 now and will likely be around $299 later - GigaOM, 8 August 2013