It’s always interesting to look back over the last 12 months to get a feel for how prices for USB flash drives might move during the coming 12 months. As we enter 2011 one thing is already certain and that is demand for branded and promotional flash drives is going to show further year on year growth but, what is less certain is how prices for flash drives are going to react to yet another year of rising demand.

USB Flash Drive Price Trends - 2010

During 2010 there were several key events throughout the year that had a marked effect on prices of USB flash drives at the factory gate and these include:

• Chinese New Year – for around 2-3 weeks in February China effectively “closes for business” whilst it celebrates the New Year. The impact is a huge jump in demand before the Chinese New Year Holidays as customers rush to get their orders before the factories close and backlogs in shipping orders once the factories return and start up the production lines again. In the run up to Chinese New Year prices increase by around 10% – 20%.
• The run in to Christmas Production – As production settles down after Chinese New Year there is typically a gradual reduction in price across the range of memory sizes with prices bottoming out around the month of June.
• Christmas Production Begins – As surprising as it might sound the factories that produce flash modules and flash controller chips start to ramp up production to fulfil Christmas orders during July and August. As you might expect the increase in demand during this period pushes up prices with typical increases of around 5% – 10% being common.
• 4^th Qtr Tail – Barring any unforeseen events such as factory fires and power outages prices tend to tail off during the 4^th quarter to end around 30% lower than they were at the start of the year. The price falls are more extreme for higher capacity memory drives, e.g. 16GB drives where prices fell by around 45%, conversely lower memory capacity drives only fell by around 15%.

Assuming the trends in 2011 are broadly similar then we’re about to see prices spike to the highest level they’ll be all year before a bumpy fall of between 15% – 45% during the year.

Assuming you need to buy promotional flash drives during 2011 the optimum points to buy are June or any time in the 4^th quarter. Of course in “real life” it’s rarely pricing that determines when you buy your flash drives but other key events like product launches, press events, trade shows and sales promotions. At least armed with this information you are better placed to understand why prices fluctuate throughout the year and better informed when it comes to negotiating with your suppliers.