Equipment Prices

[icastle]

[quote name='molan' timestamp='1421018146' post='2656360']
The ones at I never quit understand are some European (including British) brands that are available at lower prices in the the US than over here. We had a recent example where it was cheaper for our customer for us to buy a European brand of pickups in the US from another retailer, ship them over here, pay duties and VAT and then pay UK postage costs. We actually undercut a 'large German online retailer' this way and the product we bought was made in Germany!
[/quote]

Maybe the German manufacturer has subsidised the prices in the US to gain some market share?

[blue]

I paid $500.00 a piece for these Fender MIJ P Re-Issues with hard shell cases and $800.00 for the 1991 Gibson Thunderbird.

Were they good deals?

Blue

Edited January 12, 2015 by blue

[andy67]

Sure are! were they second hand or new? If they were new when bought, the $500 is equivalent to £331 whereas we would have to pay around £800 each for the two fenders.

Edited January 12, 2015 by andy67

[molan]

[quote name='icastle' timestamp='1421033898' post='2656428]


Maybe the German manufacturer has subsidised the prices in the US to gain some market share?
[/quote]

I think there's a bit more to it than that Ian - there's loads of similar examples.

A simple one is a John East pre-amp. Currently £195 direct from the manufacturer in the UK.

Last time I checked it was readily available in the US for around £165.

Obviously it wouldn't be worth re-importing one because the duties would take it up above the UK price but, if you live in the States you can buy a UK product for £30 less than it costs in the UK. Could just be differences in sales taxes but that would ignore any shipping costs and U.S. importation duties.

[crez5150]

As I mentioned on another thread.... the route to market for some manufacturers is part of the problem. Distribution channels can be a real big problem for price discrepancy and cross border selling. It shouldn't happen as most distributor contracts will state, but, the fact that some will take the large quantity order to be shipped to x country is to bigger fish not to catch.

[icastle]

[quote name='molan' timestamp='1421063715' post='2656642']
I think there's a bit more to it than that Ian - there's loads of similar examples.
[/quote]

I'm sure there is more to it than that, it was just a different possibility to throw into the pot.

I'm far removed from being any sort of financial whiz kid, but could exchange rates perhaps play a part in this as well?

[molan]

[quote name='icastle' timestamp='1421077213' post='2656869']
I'm sure there is more to it than that, it was just a different possibility to throw into the pot.

I'm far removed from being any sort of financial whiz kid, but could exchange rates perhaps play a part in this as well?
[/quote]

Yeah, exchange rates are a nightmare to deal with on things like custom orders with a longer build time. We're not money brokers so we don't have a nice fat $ or € reserve to work with.

Can have a huge effect on a $10,000 order if the £ falls fast against the $ after an order has been placed. Obviously this can be a 2-way street but we generally reduce prices when the £ is strong & try not to increase if it's weak.

An associated issue (not just to the exchange rate one) is that quite a few of the more bespoke suppliers insist on payment in advance before releasing any goods. With so many retailers going under I can understand where they're coming from but it really increases the cost of stock for any small independent seller. Some large shipments come by sea so you can be out of pocket for 6 weeks before something even arrives in the UK. It's then highly unlikely that you'll shift an entire pallet load of speakers in a few days or weeks so the cost of capital tied up in the business, and any associated interest rates, can be quite painful

Supplier views can be 'interesting' on exchange rate fluctuations - we have at least one that regularly increases prices in the UK if the exchange rate is against them. Strangely thy don't tend to fall back again when it's the other way around. . .

[skej21]

[quote name='kodiakblair' timestamp='1421008726' post='2656176']
Molan

There's no way I'm going to ask what the order was for. That's company business alone.

Judging from the products for sale the charge could be on products retailing at £2000 odds and the company would go bust

up to a retail value of £32,000 where it's about 5%. That's still a lot of money but in line with normal business practise.

Import duty is 3.5% and Customs Clearance is £8 so the importing company's fee isn't high.

As the VAT is pasted on to the customer it's not at issue here nor is the cost of importing and insuring small quantities of valuable
instruments.

My problem is Fender,Gibson et al banning companies from selling direct to the UK and forcing us to pay prices they set, not what the UK
shops have to charge.It costs no more to ship a container from the Far East to the UK than it does to ship to the US. That's why I used the
Squier example.

I said those companies won't get my money not the shop used as an example. Hope that's clear, this is not a dig at UK shops.
[/quote]

You're actually right about Guitar Center having much lower prices. However, it is well known that that single store turns over more instruments (not profit!) from a single, well-known brand that has been mentioned by itself than ALL UK retailers combined.

With that in mind, I imagine they are given a 'bulk buy' discount which they can pass on to consumers. In the UK, even chain stores don't have that kind of buying/negotiating power as they don't turn over stock as well, therefore prices are more even.

[dieseldalziel]

[quote name='molan' timestamp='1421063715' post='2656642']
I think there's a bit more to it than that Ian - there's loads of similar examples.

A simple one is a John East pre-amp. Currently £195 direct from the manufacturer in the UK.

Last time I checked it was readily available in the US for around £165.

Obviously it wouldn't be worth re-importing one because the duties would take it up above the UK price but, if you live in the States you can buy a UK product for £30 less than it costs in the UK. Could just be differences in sales taxes but that would ignore any shipping costs and U.S. importation duties.
[/quote]

I work for a small UK company that makes parts for guitars/basses & while I'm not involved in the sales side our sales manager has said that a U.S buyer wouldn't have to pay sales tax & so would pay less than a U.K. buyer...& yet the product is made here

[karlfer]

I've done a couple of deals with Barrie and his shop.
Both aware of each others needs, his being to make a profit. That he does, but he doesn't PROFITEER. And his/shops service is absolutely second to none.
So there are realistic businesses businesses out there, with realistic prices AND trade in prices.

[molan]

[quote name='dieseldalziel' timestamp='1421095219' post='2657135']


I work for a small UK company that makes parts for guitars/basses & while I'm not involved in the sales side our sales manager has said that a U.S buyer wouldn't have to pay sales tax & so would pay less than a U.K. buyer...& yet the product is made here
[/quote]

Import duties are only about 2% to USA and sales taxes are maybe 4-5% unless you buy online, in which cases you're exempt from sales tax.

However you have to get the item there and insure it. On an item by item basis this is expensive. Shipping in bulk reduces prices but you're potentially in for warehousing and/or local distribution costs.

[dieseldalziel]

[quote name='molan' timestamp='1421097192' post='2657173']
Import duties are only about 2% to USA and sales taxes are maybe 4-5% unless you buy online, in which cases you're exempt from sales tax.

However you have to get the item there and insure it. On an item by item basis this is expensive. Shipping in bulk reduces prices but you're potentially in for warehousing and/or local distribution costs.
[/quote]

These products would be online sales..the specific conversation was about a customer in the U.S. asking about discount, he wasn't aware that he wouldn't be paying the sales tax & when informed said he felt like he was getting a discount.

[blue]

[quote name='andy67' timestamp='1421052928' post='2656481']
Sure are! were they second hand or new? If they were new when bought, the $500 is equivalent to £331 whereas we would have to pay around £800 each for the two fenders.
[/quote]

All 3 are used /second hand.

I might be wrong, but I don't think you can touch a Fender re-issue P bass new for under a grand.


Blue

Edited January 12, 2015 by blue

[John-E-Retro]

[quote name='molan' timestamp='1421063715' post='2656642']
I think there's a bit more to it than that Ian - there's loads of similar examples.

A simple one is a John East pre-amp. Currently £195 direct from the manufacturer in the UK.

Last time I checked it was readily available in the US for around £165.

Obviously it wouldn't be worth re-importing one because the duties would take it up above the UK price but, if you live in the States you can buy a UK product for £30 less than it costs in the UK. Could just be differences in sales taxes but that would ignore any shipping costs and U.S. importation duties.
[/quote]

A bit of input on the J-Retro / pricing etc.

The current list price of a J-Retro in the USA is $299 and with current exchange rates from XE 299 USD = ~ £198.

Prices would normally be set roughly equivalent in order that potential buyers get the best deal more locally, but certainly a world market now, where fenced off sales territories don't work any more.

It may be that with exchange rate fluctuations and or an outlet doing a deal, a J-Retro could be bought for the equivalent of £165. That could be beneficial if you just happened to be there with £s/$s in your pocket and you could bring it back. But if it was shipped, the VAT alone would take it to £198 without duty or shipping. Shipping is free with some dealers but some carriers charge a handling fee to collect VAT and duty, so as already pointed out, doesn't necessarily add up.

Is a J-Retro cheaper to a player in the USA? If it's £165 deal, ie not $299, then yes in direct monetary comparison. But taking account of what a $ buys in general goods compared to a £, having been to the USA a few times, it seems their buying power is fairly close. So a J-Retro is deemed an expensive item comparatively, especially since a home grown Audere on a J plate is $150, I believe.

One other point, it's my understanding is that each state has its own sales tax where the price listed, ie £299 is multiplied by the local sales tax ratio

It's pretty shocking to me that a Marcus Retro on the Fender plate lists at $350, close to the price you'd pay for an old road-worthy car in the USA! (I appreciate they're far from cheap here too!)

[gareth]

[quote name='chris_b' timestamp='1420799982' post='2653481']
It seems you don't get the costs and overhead argument. Online sellers have none of the fixed expenses so there is no way for a shop to beat the prices offered by online sellers. All a shop can do to stay in business is to reinvent the company as an online seller and use the shop as a loss leading front for it's online business.

In the 60's a Fender would cost you an average of 3 to 4 months wages, so good gear has never been cheaper.
[/quote]

I agree

It must be a miserable business trying to run a retail music equipment shop.

[gareth]

[quote name='goingdownslow' timestamp='1420909949' post='2654927']
In 1973 I bought a Gibson EB3 from a local music shop that had not been in business long. He never had one in stock so rang Selmer, who sent one up the next day on which I paid for the delivery.
The bass cost me £240. My brother who worked in the shop later showed me the invoice which was for £144. Not a bad profit for a phone call.
Not long after the shop owner was driving around in a Rolls Royce.
[/quote]

This is a very important point

My view is that retail music businesses were once very profitable businesses. I emphasise were

Here in Southend essex I can think of several examples - honky Tonk music, monkey business music and tim gentle music - all those guys went on to be very rich - the most recent example would be pmt

Pmt set up some 20 years ago, probably bought the freeholds of their shops and were around enough years before the internet to make some serious money which has probably cushioned them in the current trading enviroment

[MiltyG565]

[quote name='chris_b' timestamp='1420799982' post='2653481']
It seems you don't get the costs and overhead argument.
[/quote]

Well said. Prime retail space is a massive premium. Check with an estate agent and see how much it is to rent a small ground-floor retail unit on the main thoroughfare in your local town.

Compare it with the price of renting a warehouse on the periphery of the town.

As discussed on another thread - Fender is an ever-more exclusive brand, due to their high minimum order, so any business selling them can be more brazen about the price they sell it at.

As well as that - Fender (and most suppliers) will absolutely HATE their resellers to sell too cheap. The only time they'll be ok with it is through volume sales, which is usually easiest achieved with online sales.

There's much more to it than a business owner being greedy and stubborn as to how much they make on a sale.

[Leonard Smalls]

[quote name='JTUK' timestamp='1420803153' post='2653550']



If I owned a shop and knew this was what you were going to do..without even asking me if I could or would price match, I'd charge you to try out the kit
[/quote]

aye! If everyone only tried kit out in a shop then went and bought from an online retailer who had nowhere near the same overheads there would soon be no shops left.
However, as a shop owner (not a music shop) I realise that to try and minimise this sort of behaviour I have to give the sort of service an online retailer can't, and hope the customer appreciates it enough to buy from us.
Unfortunately lots of shops of all types don't seem to understand this might be their only way to survive!

[andy67]

[color=#282828][font=helvetica, arial, sans-serif][size=3][b]chris_b, on 09 January 2015 - 10:39 AM, said:[/b][/size][/font][/color]

[color=#282828][font=helvetica, arial, sans-serif][size=3]It seems you don't get the costs and overhead argument.[/size][/font][/color]


[quote name='MiltyG565' timestamp='1421247676' post='2658911']
Well said. Prime retail space is a massive premium. Check with an estate agent and see how much it is to rent a small ground-floor retail unit on the main thoroughfare in your local town.

Compare it with the price of renting a warehouse on the periphery of the town.

As discussed on another thread - Fender is an ever-more exclusive brand, due to their high minimum order, so any business selling them can be more brazen about the price they sell it at.

As well as that - Fender (and most suppliers) will absolutely HATE their resellers to sell too cheap. The only time they'll be ok with it is through volume sales, which is usually easiest achieved with online sales.

There's much more to it than a business owner being greedy and stubborn as to how much they make on a sale.
[/quote]

Really?? I never once called a business greedy but if the cap fits huh? And in terms of the argument, surely or given the times we live in, shops must find a way of reducing the price? £869 against £1067 (Mike Dirnt bass) is a huge difference. Considering most shops have an on-line presence surely same rules apply as to the likes of SoundsLive who sell it at the lower price? I have bought a lot from SL and have to say their service is first class imo.

I don't want to see shops disappear but can't help think they are bringing it upon themselves.

Edited January 15, 2015 by andy67

[crez5150]

[quote name='andy67' timestamp='1421316817' post='2659671']
[color=#282828][font=helvetica, arial, sans-serif][size=3][b]chris_b, on 09 January 2015 - 10:39 AM, said:[/b][/size][/font][/color]

[color=#282828][font=helvetica, arial, sans-serif][size=3]It seems you don't get the costs and overhead argument.[/size][/font][/color]




Really?? I never once called a business greedy but if the cap fits huh? And in terms of the argument, surely or given the times we live in, shops must find a way of reducing the price? £869 against £1067 (Mike Dirnt bass) is a huge difference. Considering most shops have an on-line presence surely same rules apply as to the likes of SoundsLive who sell it at the lower price? I have bought a lot from SL and have to say their service is first class imo.

I don't want to see shops disappear but can't help think they are bringing it upon themselves.
[/quote]


It's race to the bottom for a lot of stores.... The big EU online stores are dictating street pricing. Customers go there because they are cheap. UK Bricks and Mortar stores try to compete with that pricing, make less margin, have less to re-invest into the company.

If stores try to keep pricing higher they lose custom because majority of customers do not value paying a bit more for a Bricks and Mortar store. They just want to pay less.

It's a whole headache for the industry..... stores advertising lower and lower prices is a pain for everyone involved except for the punters

[andy67]

Edinburgh used to be a happening place for music and music shops but now its pretty awful. The cost of rent/rates in Edinburgh is horrendous and I do understand what this means for the local retailer. Edinburgh Council seem hell bent on charging more just because of our European Status and amount of tourism. I think there are 6 music shops left in Edinburgh, all populated by good guys who give great service. It seems places like Cash Generator and Cash Converters do cheaper musical instruments than the shops although they trade at the entry to mid level instrument.

I do think though that this thread and a couple of others on this forum (General Discussion) provide some valuable info for shop owners and an incite from shop owners to musicians.

Edited January 15, 2015 by andy67

[MiltyG565]

[quote name='andy67' timestamp='1421316817' post='2659671']
Really?? I never once called a business greedy but if the cap fits huh?
[/quote]

I wasn't suggesting that you had said that, but I suppose you have said it now, so what odds?

As explained - Suppliers only like companies selling their products cheap if they're high-volume sales (i.e. online).

But the fact is that selling things too cheap devalues the product, the brand, and the market. The only people it benefits are certain businesses (high-volume internet sales again), and consumers who buy from them. Absolutely everyone else in the chain suffers. The people who suffer the most are the high-street shops who absolutely can't compete with online sales.

It isn't greed. It's trying to keep your business in profit.

[crez5150]

[quote name='MiltyG565' timestamp='1421329911' post='2659919']


As explained - Suppliers only like companies selling their products cheap if they're high-volume sales (i.e. online).


[/quote]

This isn't true...... Suppliers cannot dictate pricing by law so they have no choice. If the re-seller decides they want to make a small margin or even sell at a loss they can and the supplier can have no say in that.

[MiltyG565]

[quote name='crez5150' timestamp='1421330106' post='2659926']
This isn't true...... Suppliers cannot dictate pricing by law so they have no choice. If the re-seller decides they want to make a small margin or even sell at a loss they can and the supplier can have no say in that.
[/quote]

True, but the suppliers aren't happy about that. They generally like to see their products sold around RRP.

But there is a very simple technique that can be deployed - Minimum advertised price. Suppliers can dictate the lowest price you can advertise a product for, although they can't dictate the final sale price. Apple has MAP for all their products, that's why there's no retailer who undercuts another retailer on Apple products, on the surface at least. Once you've committed to buying, sometimes the price drops, but I've never encountered that myself.

Edited January 15, 2015 by MiltyG565

[molan]

[quote name='crez5150' timestamp='1421330106' post='2659926']


This isn't true...... Suppliers cannot dictate pricing by law so they have no choice. If the re-seller decides they want to make a small margin or even sell at a loss they can and the supplier can have no say in that.
[/quote]

They can simply refuse to supply in the future though and give other reasons than discounting as to why they won't sell to the retailer any more.

I've seen lots of examples of this and there are definitely ways around things. The 'smart' thing to do is not to put the refusal to supply because of discounting in writing.

Thomann is a perfect example. Every now and then products disappear completely from their stock list. There's a general assumption that this is because the manufacturer won't sell to them at heavily discounted prices but in some cases the manufacturer won't sell to them because they have the potential to wreck the pricing market for the manufacturer.

I'm in discussions right now with a major manufacturer who has made it very clear there is a price point that a retailer can never go below or supply will dry up. All conversations are on the phone rather than in writing.