Bare Knuckle Pickups Forum
At The Back => Time Out => Topic started by: Jonny on July 14, 2009, 10:49:05 PM
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In a nutshell.
Price: ASK/CALL
WHY!? WHY MUST I ASK FOR THE PRICE!? I know it may slightly mean I am interested, but I instantly LOSE interest when I don't see a $%&#ing price. WHY must you hide it from me, is it some kind of $%&#ing secret!? NO! You're selling the damn thing. The damn thing has a price.
If it's expensive beyond what I can pay. I won't buy it.
If it's reasonably close or just a little out, I will possibly go to the shop to see if I can try it. Or include that in a possible hunt for a specific guitar taking that guitar into consideration.
No price? $%&# that. What kind of moron thought to write CALL, or ASK all the time. It's like you could not be arsed with putting prices up. I rather read a price than have people block up the phone line asking for a price of a guitar. It would go thusly:
Me: Hi, how much is the <guitar brand and model> on your website?
Shop: It's <price>
Me: Ah, OK, bye.
Excluding the usual chit chat. If it is too expensive it is the most wasteful time I've had on a phone ever. If it isn't expensive then I'd like to try it obviously and that generally happens VERY VERY VERY VERY unlikely for me.
I want a website or a shop. I want a price. I will buy. I won't buy. Not this phone up or ask shite.
</rant>
PS. The above rant is explosive and my opinion may ultimately change over time, please consider this.
Also, this isn't for special one offs, like a PRS Private Stock or some really obvious Limited Edition guitar that most of the time even shows the price but it does happen for them. This is for more £1000-2000 or even lower or what not.
They are retards, imo.
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Listening to: All That Remains - Do Not Obey (http://www.foxytunes.com/artist/all+that+remains/track/do+not+obey)
via FoxyTunes (http://www.foxytunes.com/signatunes/)
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i agree, that's annoying.
it might not be their fault, though, they may have some agreement with the manufacturer.
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i agree, that's annoying.
it might not be their fault, though, they may have some agreement with the manufacturer.
Why would such an agreement exist!?
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i dunno, price fixing mainly? :lol:
probably trying to stop dealers from undercutting each other. which is kinda illegal (cartels), but they've probably found some loophole.
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Got to admit that if I see I a POA, I've never once asked, even if I wanted to buy one.
Does my tit's in too.
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I agree, it is off-putting. Partly because I'm usually looking in the evenings, so I can't "Call Now"... and the moment passes.
There are probably all sorts of reasons:
- not wanting to spend time updating their site when the prices change
- giving leeway to negotiate a price with savvy buyers (and to bump up the price for less-savvy buyers)
- getting you to call even though they don't actually have the item ("We just sold out of that Les Paul model, but you might be interested in this really nice Marlin Strat copy...")
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yeah, i'm always really wary of shops which don't have their actual prices on things, because I think they charge what they think they can get the punter to part with.
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I find that shops unwilling to advertise their prices are rarely the cheapest when you ring round.
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There are a number of reasons for this practice
1) the shop wants to show a cheap competitive price undercutting everyone else, except the manufacturer would withdraw their dealership if they did that.
BKP for example don't want to see the "street price" of their pickups lowered to £65 just because some shop is willing to take a loss or make bugger all, as then no other shop will get away with selling them for a workable price and decide its not worth stocking that brand as you cant earn a living and BKP has no stockists.
I was once 100% sure that there was a large store that didn't actually bother to stock a particular line that I was selling , but they advertised it at a rock bottom price which ensured that I couldn't shift a single item at the sensible price I had them at.
They didn't care as they didn't have any to make a loss on anyway IMO, but they spoilt it for anyone else.
The Uk distributor confirmed that they hadn't been buying any and in the end got some lawyers to send a cease and desist letter to them over it as it almost caused sales of that line to dry up in the UK as every punter expected it for half the real price and chose to buy something else instead.
2) Sometimes it takes a long time to go from giving the advert ideas to your artwork guy to it finally appearing in print in a magazine, and exchange rates or item prices can change quite a bit - either up or down and you either make a loss or are uncompetitive as a result.
3) A lot of companies would hate to print a price like New Les Paul £1599 (which might be a very reasonable price) and have Jonny ring around to see who will beat it, and end up losing the sale to another store who went to £1575 to get the sale.
4) Most shops want to sell to you on a mix of price and customer service rather than just low price alone.
So they may list the price as £15xx or £ring for best price in town.
Then it would be up to highly motivated and friendly sales staff to close the sale , maybe offering a good price with a setup and some extra strings type of deal which would be a really good deal for the customer, but isn't entirely about price.
5) it is true that sometimes the shop may try to "switch sell" the customer onto another similar product (having established that it may be even more what the customer was after. Or tell them about a newer version of the model thay were asking about which has only just come in.
I have to confess that I have been deeply offended when a customer has come in to talk pickups with me , spend an hour of my precious time discussing their needs , played every guitar in my shop to explore what will be right for them, and having worked out a perfect setup for them, they say thanks - I'm just off home to get it £10 cheaper on the web (from a shop that wouldn't have my experience or give them the opportunity to try stuff out.)
So sometimes the discussion of the price needs to be held back till more discussion is had - not because you want to take advantage of the customer, but rather that the customer doesn't take advantage out of you. You want to be fair, but a mix of service and price is usually the best mix for everyone
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I have to confess that I have been deeply offended when a customer has come in to talk pickups with me , spend an hour of my precious time discussing their needs , played every guitar in my shop to explore what will be right for them, and having worked out a perfect setup for them, they say thanks - I'm just off home to get it £10 cheaper on the web (from a shop that wouldn't have my experience or give them the opportunity to try stuff out.)
This is infuriating, and progressively more and more common. I actually blame mags and forums in part, for encouraging punters to basically make a fool of shops by going in as often as possible, trying out as much gear as they can gear for as long as possible and taking up as much of the staff's time as possible, then after five months of doing so turning up with a print out from Thomann and a "Match that" and thinking that the chap in the shop (who's probably on minimum wage and gets a pittence of a bonus every quarter for fairly unachievable targets in this climate) shouldn't be in the slightest bothered.
Also, as Feline mentioned, if your advertised price is £5 more than the next guy on the net, people simply wont phone you unless they're already a dedicated customer, so just by their ad going to press or going online a day later, they steal ALL the enquiries for said product. It's all fine and well if you have a dedicated internet department who can update everything on the spot, but if you're a smaller shop or a store that needs third party help for web stuff, then that's you losing sales for days/weeks.
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There are countries where you are forced by law to add a price to any advertised good in a shop. I don't think that's so bad.
But hey, it's a (relatively) free market, so there are alternatives, the next shop is just a mouse click away, and the one who doesn't show price will sit in front of the phone and wonder why it's not ringing, whereas the other one, who shows price, will be busy fullfilling orders.
Regarding the price dictates (or minimum prices) of manufacturers, this is illegal. If a manufacturer is telling retail how to set a price, a call to the competition law administration of the EU can make this a very inconvenient and expensive experience for that manufacturer. Many big companies have made that experience.
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Interesting thread.
I can understand all the arguments given by those in retail, condoning not giving a price in an advert.
However, at the end of the day, just like others, it really gets on my tits !! and I will not phone them if they do that.
It feels too much like being manipulated somehow when there is no price offered.
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I can appreciate the reasons for not advertising prices, but I think I've only ever rung somewhere about a guitar with no price once. Can't even remember what it was! It certainly puts me off, and several others too by the sound of it.
What I do, if I see something I like, is to Google around a bit and find the going rate and look at other examples. Then if there's a particular guitar I'm interested in, I see if they can get close to the cheapest price I've found. If they're reasonably close, they'll get the sale. I won't pay huge amounts extra, but I will pay a bit more to support a local or small shop etc.
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Slightly off-topic, but still on the subject of websites: all sites should have PICTURES OF THE ACTUAL GUITARS!
It makes such a big difference to see that the thing is actually in stock! And also if there's anything obvious about it which is going to put you off, before you buy online or travel a few hours to take a look at it.
So three cheers for places like Guitar Village and Guitars4you!
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I agree Phil!
Add Peach to that list of the good guys too ;)
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Regarding the price dictates (or minimum prices) of manufacturers, this is illegal. If a manufacturer is telling retail how to set a price, a call to the competition law administration of the EU can make this a very inconvenient and expensive experience for that manufacturer. Many big companies have made that experience.
Really? Because a lot of high end PA manufacturers do it, Bose particularly will simply withdraw your dealership if you're selling their gear cheaper than they dictate.
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With Twinfan on this one - I use the Net to benchmark the going rate and then see if my local shop can get close - if they can, then they get the business - does not mean they have to meet or even better the price, just get close enough to remove the hassle factor of going elsewhere.
Not just for guitar stuff - I do the same for white goods, electronic items, etc. I am usually upfront with them too - along the lines of "This is what I can get it for on the web. I'd prefer to deal with a local supplier. How close to this price can you get?" It works most of the time too.
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A Cartel is illegal in most (all?) countries where there are free-markets. As free-markets are intended to reduce price and increase quality (Adam Smith), Cartels act against the free-market. If you believe in that stuff :P
Cartels exist in all free-market economises, the problem is obtaining sufficient legal proof that the Cartel exist.
In nfe's example, Bose will refuse to supply a seller with goods they suspect are being sold bellow RRP but will give some-other reason in the official record. This is common in the car industry. Didn't the VAG Group receive a large fine from the EU for doing something similar.
Some years ago I was a moderator for a USA based Flash developers forum that had a 'jobs' section. We needed to be very careful about posting cash quotes for jobs, i.e. how much would you charge to do the following web site. If other developers posted prices, this could be taken as collusion to fix prices.
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Not just for guitar stuff - I do the same for white goods, electronic items, etc. I am usually upfront with them too - along the lines of "This is what I can get it for on the web. I'd prefer to deal with a local supplier. How close to this price can you get?" It works most of the time too.
I'm exactly the same for my local hardware shop. He does me a deal if I know I can get it cheaper elsewhere, normally he can't match people like RS (just had to buy a load of plug sockets) but I'd much prefer to give him the money than anyone else. If you don't use it then it'll dissapear and I'll have to buy screws and sandpaper from places like B&Q where they just take the piss something royally. Same goes for guitar shops.
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Like Feline mentioned, some manufacturers do not allow the retailer to advertise below a certain price.
I would like to see that change. At some point the retailer has to mention a price. Might as well post it and be done with it.
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Don't know if it still the case but PRS used to be like this - you see it in the USA when retailers cannot advertised discounted prices on PRS...
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Regarding the price dictates (or minimum prices) of manufacturers, this is illegal. If a manufacturer is telling retail how to set a price, a call to the competition law administration of the EU can make this a very inconvenient and expensive experience for that manufacturer. Many big companies have made that experience.
Really? Because a lot of high end PA manufacturers do it, Bose particularly will simply withdraw your dealership if you're selling their gear cheaper than they dictate.
yeah, hunter's right. As i suggested in my earlier post. :D As i said, there are probably a ton of loopholes which they can use to get away with it in practice- but it is technically illegal. Cartels are illegal, as they should be.
Regarding those things feline posted: I agree that many of those reasons are probably justified. However, you run the risk of alienating the good customers to avoid getting screwed over by the bad. Look how many members here said they'd be put off by seeing no price- most (if not all) the members here would presumably qualify as "good" customers.
That thing about the dealer advertising at an unrealistic price while not even stocking it was ridiculous, though, that should be illegal too (if it's not already).
Personally, I'd buy online if I were making a big saving, but I wouldn't do it for a fiver or tenner (depending on the overall price of the item, of course- if i can get it for 99p online, I'm not paying £10.99 in a local shop!)- that's daft.
With Twinfan on this one - I use the Net to benchmark the going rate and then see if my local shop can get close - if they can, then they get the business - does not mean they have to meet or even better the price, just get close enough to remove the hassle factor of going elsewhere.
That's exactly what I do, too. I did that with my valve junior- I paid more than it was online, but they got close enough to make it worth my while. :)
Big problem is that 95% of the time a local shop won't have what I want in stock- and I've had bad experiences in the past with getting stuff ordered in (had to wait for months), so I'm not doing that again. Plus getting something ordered in removes a lot of the advantages of buying locally in the first place (other than it being easy to return if it's faulty)...
A Cartel is illegal in most (all?) countries where there are free-markets. As free-markets are intended to reduce price and increase quality (Adam Smith), Cartels act against the free-market. If you believe in that stuff :P
Cartels exist in all free-market economises, the problem is obtaining sufficient legal proof that the Cartel exist.
In nfe's example, Bose will refuse to supply a seller with goods they suspect are being sold bellow RRP but will give some-other reason in the official record. This is common in the car industry. Didn't the VAG Group receive a large fine from the EU for doing something similar.
That's what I'm talking about. :)
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There are a number of reasons for this practice
1) the shop wants to show a cheap competitive price undercutting everyone else, except the manufacturer would withdraw their dealership if they did that.
BKP for example don't want to see the "street price" of their pickups lowered to £65 just because some shop is willing to take a loss or make bugger all, as then no other shop will get away with selling them for a workable price and decide its not worth stocking that brand as you cant earn a living and BKP has no stockists.
I was once 100% sure that there was a large store that didn't actually bother to stock a particular line that I was selling , but they advertised it at a rock bottom price which ensured that I couldn't shift a single item at the sensible price I had them at.
They didn't care as they didn't have any to make a loss on anyway IMO, but they spoilt it for anyone else.
The Uk distributor confirmed that they hadn't been buying any and in the end got some lawyers to send a cease and desist letter to them over it as it almost caused sales of that line to dry up in the UK as every punter expected it for half the real price and chose to buy something else instead.
2) Sometimes it takes a long time to go from giving the advert ideas to your artwork guy to it finally appearing in print in a magazine, and exchange rates or item prices can change quite a bit - either up or down and you either make a loss or are uncompetitive as a result.
3) A lot of companies would hate to print a price like New Les Paul £1599 (which might be a very reasonable price) and have Jonny ring around to see who will beat it, and end up losing the sale to another store who went to £1575 to get the sale.
4) Most shops want to sell to you on a mix of price and customer service rather than just low price alone.
So they may list the price as £15xx or £ring for best price in town.
Then it would be up to highly motivated and friendly sales staff to close the sale , maybe offering a good price with a setup and some extra strings type of deal which would be a really good deal for the customer, but isn't entirely about price.
5) it is true that sometimes the shop may try to "switch sell" the customer onto another similar product (having established that it may be even more what the customer was after. Or tell them about a newer version of the model thay were asking about which has only just come in.
I have to confess that I have been deeply offended when a customer has come in to talk pickups with me , spend an hour of my precious time discussing their needs , played every guitar in my shop to explore what will be right for them, and having worked out a perfect setup for them, they say thanks - I'm just off home to get it £10 cheaper on the web (from a shop that wouldn't have my experience or give them the opportunity to try stuff out.)
So sometimes the discussion of the price needs to be held back till more discussion is had - not because you want to take advantage of the customer, but rather that the customer doesn't take advantage out of you. You want to be fair, but a mix of service and price is usually the best mix for everyone
I would agree with all of this.
I would add that vintage dealers often don't put a price on commission sales so that the owner doesn't know how much the shop are making on the sale...........
Unfortunately most consumers only ever look at price, and want the cheapest regardless of quality. This is why Ryan Air are still in business.
Regarding manufactures setting the minimum retail price of there products (Bose was mentioned), well I don't see that as anti-competitive per se.
If a manufacturer wants to maintain a retail price for their product so that all sellers provide the product at the same price and thus can compete on after sales service etc., that is fine as far as I am concerned. Indeed, in the long run this is probably much better for the manufacturer as their product will ultimately be sold by retailers who compete on the basis of service rather than price.
If the customer thinks that the product is too expensive, they have the choice of buying a rival companies products. How many brands of pickup are there out there?
What would of course be anti-competitive would be for all the pickup manufacturers to collude together to fix the price of all their products across the market, ie a cartel. Several industries have been pulled up on this one under EU legislation, including car manufacturers, airlines and software writers.
"Price fixing" is illegal under EU legislation; however so is predatory pricing ie selling goods at a loss either to destroy competition, or as a "loss leader" to try get other sales off the back of the initial sale.
I was chatting to a shop owner the other day who told me Thomann are selling SM58s for less than Shure sell them to him! All the guys I know who work in guitar shops regularly get someone trying an item out and then saying "I can buy this for £X in the internet so can you sell this to me for £X." Ultimately it is impossible for a small retailer to compete on price with a very large internet retailers such as Thomann.
Shops selling predominantly new low to medium value guitars/ related goods are definitely suffering from internet-based retailing.
For many areas of retail, Cds/ books, many electric goods etc, other than having the convenience of being able to buy these item and have it in your hand straight away the retailer really doesn't add any value. A lot of retailers selling these type of goods have gone bust and I expect most of the slack has been taken up be internet-based retailing, and quite frankly good riddance to many of them as they often provided appalling service.
Good guitar shops add value to the items they are selling buy providing specialist advice, repairs, set ups etc, so they hopefully should survive.
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Some interesting points in here.
One thing that JPF suggests - thomann selling gear for less than a little guy can buy it for: that, seems to me, is in the interests of fairness, so long as the price the manufacturer sells it to the dealer for is pretty level as the amount they buy goes up. Its tescos syndrome - vast buying power allows bulk purchase at a lower rate than the little guy pays, but in far greater quantity than the little guy can afford - little guy is priced out of the market.
Which begs a question we arent seeing here - are the cartel manufacturers selling to everyone for the same price per unit? If thats the case then I think that a retailer can set themselves whatever profit margin they want or dare and come what may from it. There are lots of rationales for everything from barely breaking even (even making a loss, so long as its not on everything) to huge markups, and its not the manufacturers place to dictate that. That said, it is up to the manufacturer to withdraw dealership if they wish, so what are you gonna do?
Manufacturer wants a good price for the gear, plus profit margin
Dealership wants a good profit margin
Punter wants lowest price possible
Lots of different people are selling, in shops and online
Punters will shop around
Its a tough one. Driving prices down at the retail end will also invariably drive materials and construction spending down at the manufacturing end, so how do you know if a manufacturer is fixing the prices to maintain quality or because they're greedy? Some builders probably do both. I think that when a punter sees a witheld price they probably assume the latter, and probably (rightly) assume that its very expensive, in general and compared to other places as well, and look elswhere pretty automatically. I know I do.
As far as the guy in the shop goes, I agree with feline and nfe totally. Never, not $%&#ing once, have I gone in a shop, played the gear, quizzed and pestered the staff, driven away other customers with teh br00talz that "I HAVE to play for a least a little while at gig vol or I'm buying nothing" and gone and bought it online. Aside from all the (correct) reasons stated - its just rude. (I also like to get that exact one, for various reasons, and wont buy guitars online at all)
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i'm not talking about loss-leaders; that should be illegal too. Good point about tescos syndrome too, mark.
assuming we're not considering loss-leaders and tescos syndrome (which, granted, is a pretty big assumption), allowing manufacturers to set the price IS anti-competitive.
I dunno. Like most things, it's a balancing act. While I hate tesco, I'm also aware that if you prevent bigger concerns from buying in bulk at a lower price, prices will rise. Of course, stores like tesco aren't passing on all the savings to the punters or they wouldn't be making multi-billion pound profits year on year, either.
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Vast buying power has its downside for the manufacturers/ suppliers.
Supermarkets are an example of companies that put massive pressure on suppliers to cut prices, even to the point where they are selling produce at cost or less. This has been of massive detriment, for example, to the UK farming industry (and indeed ultimately to the consumer).
Additionally, supermarkets have put loads of independent traders out of business. Many town centres are now full of empty retail space due to out of town shopping.
Generally if there is an opportunity for big businesses to make more money by shafting a small business they will take it.
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Mark's point about it being rude not to buy from a local shop when you've used its facilities is fine, except for two things- it assumes your local shop(s) stocks what you want (mine frequently don't), and it also assumes the local shop isn't charging extortionate prices. Frequently my choice is between buying something in a local shop which i consider to be mediocre, or buying something online which I can't try, but which I suspect I would like much, much more. :( I would also say it's not rude not to buy if the normal street price on something is £500, while in a local shop it's twice that. Better service is worth a slight upcharge, if you ask me- not a gigantic one.
and yeah, i hate tescos etc. too. They make something half as good and charge 95% of the same price, then say they're great value. :rolleyes:
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i'm not talking about loss-leaders; that should be illegal too. Good point about tescos syndrome too, mark.
assuming we're not considering loss-leaders and tescos syndrome (which, granted, is a pretty big assumption), allowing manufacturers to set the price IS anti-competitive.
I dunno. Like most things, it's a balancing act. While I hate tesco, I'm also aware that if you prevent bigger concerns from buying in bulk at a lower price, prices will rise. Of course, stores like tesco aren't passing on all the savings to the punters or they wouldn't be making multi-billion pound profits year on year, either.
Mark's point about it being rude not to buy from a local shop when you've used its facilities is fine, except for two things- it assumes your local shop(s) stocks what you want (mine frequently don't), and it also assumes the local shop isn't charging extortionate prices. Frequently my choice is between buying something in a local shop which i consider to be mediocre, or buying something online which I can't try, but which I suspect I would like much, much more. :( I would also say it's not rude not to buy if the normal street price on something is £500, while in a local shop it's twice that. Better service is worth a slight upcharge, if you ask me- not a gigantic one.
Allowing a manufacturer to set the retail price of their products is NOT anti-competitive.
Allowing a group of manufacturers to fix the retail price of a type of product IS anti-competitive (and is the correct definition of a cartel).
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Regarding the price dictates (or minimum prices) of manufacturers, this is illegal. If a manufacturer is telling retail how to set a price, a call to the competition law administration of the EU can make this a very inconvenient and expensive experience for that manufacturer. Many big companies have made that experience.
Really? Because a lot of high end PA manufacturers do it, Bose particularly will simply withdraw your dealership if you're selling their gear cheaper than they dictate.
If you provide evidence for this to the EU competition department (I think it's called "DG 5"), Bose will suffer first and then stop this practise.
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Allowing a manufacturer to set the retail price of their products is NOT anti-competitive.
Are you sure? Isn't that exactly what VAG got in trouble for?
It's my understanding that wholesalers can suggest a RRP but enforcing one is illegal price fixing?
I worked in high volume wholesale for over a decade and we were always careful to point out that any retail price published in our literature where only examples of suggest selling price.
We used a complex discount system that resulted in large customer purchasing large volume could get the item for almost cost price. Small customer buying low volume could be paying 25%+ more for the same item. I presume most wholesalers operate a similar system. This means that large resellers can sell product at a lower price than the small-guy and make larger margins. I don't like it but that's how the fee-market works.
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Mark's point about it being rude not to buy from a local shop when you've used its facilities is fine, except for two things- it assumes your local shop(s) stocks what you want (mine frequently don't), and it also assumes the local shop isn't charging extortionate prices. Frequently my choice is between buying something in a local shop which i consider to be mediocre, or buying something online which I can't try, but which I suspect I would like much, much more. :( I would also say it's not rude not to buy if the normal street price on something is £500, while in a local shop it's twice that. Better service is worth a slight upcharge, if you ask me- not a gigantic one.
and yeah, i hate tescos etc. too. They make something half as good and charge 95% of the same price, then say they're great value. :rolleyes:
If the shop dont have what I want, I dont buy it.
I rarely go to a shop that has what I want at an extortionate price, and if I do I always try to get them to reduce it. "So and so does it for" and "its on the net for" are good, the former being better because they cant say "well thats the net price, no rent, wages, blah blah". I rarely try and haggle lower than the lowest advertised price - if I wasnt prepared to pay that for it I wouldnt be trying it out.
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^ same here. :)
Allowing a manufacturer to set the retail price of their products is NOT anti-competitive.
Allowing a group of manufacturers to fix the retail price of a type of product IS anti-competitive (and is the correct definition of a cartel).
you're wrong (or at least, no more right than I am).
http://dictionary.reference.com/browse/cartel
car⋅tel
/kɑrˈtɛl/ Show Spelled Pronunciation [kahr-tel] Show IPA
Use cartel in a Sentence
–noun
1. an international syndicate, combine, or trust formed esp. to regulate prices and output in some field of business.
car·tel (kär-těl')
n.
1. A combination of independent business organizations formed to regulate production, pricing, and marketing of goods by the members.
It's not just production, it's pricing too. If a manufacturer forces dealers to sell at a specific price, that could be considered cartel behaviour too.
http://en.wikipedia.org/wiki/Cartel#European_Union
"European Union
The EU's competition law explicitly forbids cartels and related practices in its article 81 of the Treaty of Rome. The article reads:
1. The following shall be prohibited as incompatible with the common market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market, and in particular those which:
(a) directly or indirectly fix purchase or selling prices or any other trading conditions;"
and so on.
EDIT: don't get me wrong; I'm aware that cartels tends to apply more to independent producers in the one industry. However, if you ask me, shops should also be considered to be independent, so if they're being forced to adopt the same prices, that's also a cartel, if you ask me. Independent shops are getting together (or are forced to) to set the prices, kind of thing. Producers of course should get to set the wholesale price of the goods, but shouldn't be allowed to influence the retail price (other than the retail price will of course be influenced by the wholesale price). Having a quick flick through wikipedia, perhaps "price-fixing" is a better term for what I mean, but it's more or less the same thing in effect, and is illegal. It's certainly anti-competitive.
EDIT #2: sorry for the length, but I've got it:
http://en.wikipedia.org/wiki/Resale_price_maintenance
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With respect I would disagree with you on this. And I am fully aware of the definition of a cartel!
A single manufacturer deciding that they would only supply retailers who did not discount the recommended retail price is not collusion between the retailer and the manufacture: it is a unilateral decision made by the manufacturer.
Furthermore this in not anti-competitive behaviour. If the product is not priced competitively then another manufacturer's product will get the sale. That's how competition works in a free market (in so far as there is anything approaching a free market). Certainly competition in the MI is pretty fierce. How many distortion pedals are there on the market?
However, if all manufacturers decided that the trade price for an item, then this would be anti-competitive cartel behaviour.
If you follow your argument to its logical conclusion, then why should the manufacturer determine the trade price? Furthermore, should all manufacturer be forced to sell to all retailers rather than use a restricted number of dealers, as this might too be deemed anti-competitive? And surely predatory pricing should be legal.
Of course if the manufacturer might not mind retailers selling at a discount (or at a premium see below).
What the EU price fixing legislation is really designed to target is manufacturers setting different prices in different countries within the EU and then preventing "grey" importing of goods from cheaper countries. This practice was rife in the car and pharmaceutical industry (which which I've had significant contact with). For example, Audi were trying to prevent people in the UK from importing cars from Holland at a significant discount.
Using the SM58 example (see above), it would be illegal for Shure to stop a shop in the UK buying SM58s from Thomann and retailing them, even though Thomann are selling them at below the UK trade price.
What I think you are objecting to is the idea that you are prevented from getting a better deal on an item due to some dodgy restrictive practice by retailers colluding with manufacturers.
I had an very interesting argument with someone about this who was saying how great the free market is, but objected that retailers were charging well over the recommended retail price for some X-BOX type item (don't know much about these) when there was a shortage coming up to Christmas, so I suppose it works both ways.....
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I accept what you're saying- I'm not saying you're wrong per se, just that you could make an argument that the practices which I am talking about could be considered anti-competitive too. to go through the specific points, to point out more what I mean:
"A single manufacturer deciding that they would only supply retailers who did not discount the recommended retail price is not collusion between the retailer and the manufacture: it is a unilateral decision made by the manufacturer."
that is a good point. However, you could probably argue that it's semantics- in effect, it's preventing/minimising competition between independent retailers for that one product/range of products.
"Furthermore this in not anti-competitive behaviour. If the product is not priced competitively then another manufacturer's product will get the sale. That's how competition works in a free market (in so far as there is anything approaching a free market). Certainly competition in the MI is pretty fierce. How many distortion pedals are there on the market?"
Of course. But again, if you ask me, it's fostering anti-competitive practices among supposedly independent retailers. Whether directly or indirectly, the end result is the same. Plus if every manufacturer indulges in that kind of price maintenance, competition (between retailers) is still severely restricted. Even if it's not collusion among independent manufacturers.
I guess, my problem is that you're considering the retailers as different to the manufacturers. I don't.
"(i)If you follow your argument to its logical conclusion, then why should the manufacturer determine the trade price? (ii)Furthermore, should all manufacturer be forced to sell to all retailers rather than use a restricted number of dealers, as this might too be deemed anti-competitive? (iii) And surely predatory pricing should be legal."
(i) As i said, and as you've suggested, even if you make price maintenance illegal, the manufacturer can influence the RRP greatly by where it sets the trade price. I'm not sure how to fix that, but I guess at least it makes them be a little less open about it? Not sure. Just tacitly accepting it doesn't seem right, though (at least if you agree with me).
(ii) in a perfect world, probably, and assuming the manufacturer doesn't have a good reason not to want to deal with a specific shop (if the shop is rubbish at customer service, for example). But not wanting more than one dealer per region is, again, anti-competitive, if you ask me.
(iii) again, I disagree. I guess I make a distinction between "fair" competition (i.e. you're just better or cheaper at something) and "unfair" (cartels and similar stuff, undercutting an opponent on his/her one product to drive him/her out of business, while you can prop up your own with the profits on another line of products, etc.).
"What I think you are objecting to is the idea that you are prevented from getting a better deal on an item due to some dodgy restrictive practice by retailers colluding with manufacturers."
Of course, exactly.
"I had an very interesting argument with someone about this who was saying how great the free market is, but objected that retailers were charging well over the recommended retail price for some X-BOX type item (don't know much about these) when there was a shortage coming up to Christmas, so I suppose it works both ways....."
Yeah, it does go both ways. I've never said how great the free market is, though. I'm no libertarian (in terms of economics, anyway).
Anyway, I'm not trying to cause a fight or anything, I just enjoy debate. I reckon (correct me if I'm wrong) my entire argument boils down to this:
If a manufacturer is able to set (not suggest) a minimum price, how is that not anti-competitive when a major part of the competition between retailers is that based on price?
Just as another thing on a slight tangent- how do you feel about one manufacturer refusing to sell to a retailer if the retailer stocks a competitor's products?
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A single manufacturer deciding that they would only supply retailers who did not discount the recommended retail price is not collusion between the retailer and the manufacture: it is a unilateral decision made by the manufacturer.
What you describe is called Resale Price Maintenance and is illegal in the UK, unless you can prove (in court) that what you are doing is in the public interest. Between member states of the EU it's totally illegal, which is why VAG got a large fine.
http://en.wikipedia.org/wiki/Resale_price_maintenance
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A single manufacturer deciding that they would only supply retailers who did not discount the recommended retail price is not collusion between the retailer and the manufacture: it is a unilateral decision made by the manufacturer.
What you describe is called Resale Price Maintenance and is illegal in the UK, unless you can prove (in court) that what you are doing is in the public interest. Between member states of the EU it's totally illegal, which is why VAG got a large fine.
http://en.wikipedia.org/wiki/Resale_price_maintenance
That's quite correct, this is indeed illegal, although I know in practice it does go on.
The problem, as always, is actually proving that there has been any collusion on pricing, although there have been some very high profile cases.
VAG got a substantial fine for stopping dealers selling cars across borders.
The problem with a lot of the issues raised in this thread is that, as usual, small businesses end up getting shafted by larger businesses because they are increasingly unable to compete on price, which ultimately is the major concern of the vast majority of consumers.
I find it ironic that we also have to have legislation against predatory pricing as well.......
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^ i don't. Most things work best when there's a happy medium, and extremes at either end often work much worse in practice.
Regarding the whole price maintenance thing, I found another couple of reasons why it's indeed anti-competitive. Credit goes to wikipedia, I hadn't thought of these, but I agree wholeheartedly with them.
http://en.wikipedia.org/wiki/Suggested_retail_price#Minimum_advertised_price
"Because the rule of reason applies, minimum RPM agreements may still be unlawful. In fact, in Leegin, the Court identified at least two ways in which a purely vertical minimum RPM agreement might be illegal. First, “[a] dominant retailer ... might request resale price maintenance to forestall innovation in distribution that decreases costs. A manufacturer might consider it has little choice but to accommodate the retailer's demands for vertical price restraints if the manufacturer believes it needs access to the retailer's distribution network." Second, “[a] manufacturer with market power ... might use resale price maintenance to give retailers an incentive not to sell the products of smaller rivals or new entrants.”
In both of these examples, an economically powerful firm uses minimum the RPM agreement to exclude or raise entry barriers for its competition."
I also find it funny how you admitted (that's what i looks like to me, anyway- if I'm wrong and you didn't mean to admit that, I apologise) to plexi ken that price maintenance was illegal and anti-competitive, and not me, despite his posting of the exact same link i did. ;)
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The problem with a lot of the issues raised in this thread is that, as usual, small businesses end up getting shafted by larger businesses because they are increasingly unable to compete on price, which ultimately is the major concern of the vast majority of consumers.
That's something we can all agree on :)
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yeah, of course. :) I don't agree that all small businesses are great, but certainly it's in no-one's interest (bar the big businesses) to have fewer businesses/competitors.
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^ i don't. Most things work best when there's a happy medium, and extremes at either end often work much worse in practice.
Regarding the whole price maintenance thing, I found another couple of reasons why it's indeed anti-competitive. Credit goes to wikipedia, I hadn't thought of these, but I agree wholeheartedly with them.
http://en.wikipedia.org/wiki/Suggested_retail_price#Minimum_advertised_price
"Because the rule of reason applies, minimum RPM agreements may still be unlawful. In fact, in Leegin, the Court identified at least two ways in which a purely vertical minimum RPM agreement might be illegal. First, “[a] dominant retailer ... might request resale price maintenance to forestall innovation in distribution that decreases costs. A manufacturer might consider it has little choice but to accommodate the retailer's demands for vertical price restraints if the manufacturer believes it needs access to the retailer's distribution network." Second, “[a] manufacturer with market power ... might use resale price maintenance to give retailers an incentive not to sell the products of smaller rivals or new entrants.”
In both of these examples, an economically powerful firm uses minimum the RPM agreement to exclude or raise entry barriers for its competition."
I also find it funny how you admitted (that's what i looks like to me, anyway- if I'm wrong and you didn't mean to admit that, I apologise) to plexi ken that price maintenance was illegal and anti-competitive, and not me, despite his posting of the exact same link i did. ;)
Sorry for any confusion, I think we got a crossed wire here.
I am fully aware of the illegality of "price maintenance". What I was trying to argue that it isn't always anti-competitive, although there are clearly many cases where it is: VAG being an excellent example.
I will still argue that a manufacturer setting the retail price isn't anti-competitive, with the caveat that this is done on a unilateral basis: ie not in collusion with other manufacturers and/ or retailers. Of course it is very difficult to prove that the latter situation hasn't occurred.
All the above examples, which I would consider anti-competitive, relate to other practices, e.g. a large retailer taking advantage of a manufacturer because of their extensive distribution network. A good example of this is the food industry: if you are a major food producer you have to deal with the supermarkets as they the only show in town, thus they can (and do) dictate prices, payment terms etc.
I didn't bother looking at the links........
By the way, this actually doesn't affect me directly as we don't really retail.
Regarding small businesses: no they aren't all great (I've first hand experience of this!). We try to do as much business with UK companies as possible, and sadly several of them have been poor. We obviously don't deal with them again. Bad businesses should and do fail.
However, it would be good if there was a level playing field so everyone had a fair chance to do business and make a living.
Having a situation where a small number of retail outlets control the market is not good for anyone (other than the senior executives of those companies!), as you outline above, as they can really shaft the manufacturers AND customers. The demise of Sound Control left a load of manufacturers "in-the-hole". Yamaha got burnt for $20 million, and most other manufacturers who dealt with SC got shafted.
The fact the no one has established a UK-wide guitar supermarket chain would suggest that a) there isn't that much money in selling guitars, and b) punters don't want to buy guitars in a homogeneous environment.
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(a) Sorry for any confusion, I think we got a crossed wire here.
(b) I am fully aware of the illegality of "price maintenance". What I was trying to argue that it isn't always anti-competitive, although there are clearly many cases where it is: VAG being an excellent example.
I will still argue that a manufacturer setting the retail price isn't anti-competitive, with the caveat that this is done on a unilateral basis: ie not in collusion with other manufacturers and/ or retailers. (c) Of course it is very difficult to prove that the latter situation hasn't occurred.
All the above examples, which I would consider anti-competitive, relate to other practices, e.g. a large retailer taking advantage of a manufacturer because of their extensive distribution network. A good example of this is the food industry: if you are a major food producer you have to deal with the supermarkets as they the only show in town, thus they can (and do) dictate prices, payment terms etc.
I didn't bother looking at the links........
By the way, this actually doesn't affect me directly as we don't really retail.
(d) Regarding small businesses: no they aren't all great (I've first hand experience of this!). We try to do as much business with UK companies as possible, and sadly several of them have been poor. We obviously don't deal with them again. Bad businesses should and do fail.
However, it would be good if there was a level playing field so everyone had a fair chance to do business and make a living.
(e) Having a situation where a small number of retail outlets control the market is not good for anyone (other than the senior executives of those companies!), as you outline above, as they can really shaft the manufacturers AND customers. The demise of Sound Control left a load of manufacturers "in-the-hole". Yamaha got burnt for $20 million, and most other manufacturers who dealt with SC got shafted.
The fact the no one has established a UK-wide guitar supermarket chain would suggest that a) there isn't that much money in selling guitars, and b) punters don't want to buy guitars in a homogeneous environment.
(a) no worries, that always happens online :lol:
(b) ah, ok. that makes sense. I still say I don't like price maintenance; however, I'd agree that, if done the way you're suggesting, it's not as anti-competitive as a true cartel among producers (your definition probably was correct, i think i got my wires a bit crossed too). I'd still say it's a bit anti-competitive- preventing competition between retailers. Although the trade/wholesale price will influence the shop's selling price greatly, it's not 100% guaranteed that all shops will arrive at the same price (as some shops may be more efficient, and be able to charge lower prices), as happens with price maintenance. But you're right in that it's not necessarily preventing competition among producers (unless done in that collusive way already mentioned).
(c) yeah, definitely. :lol: Regarding your next point- I suspect it's getting into semantics again. While I'd cautiously agree that they're using price maintenance in a way other than the "usual" way, they're still using price maintenance to get up to gip, kind of thing. And as i said, it is preventing shops from competing on price, which they should be allowed to do, if you ask me (as long as it doesn't go as far as predatory pricing or loss-leaders).
(d) yeah, definitely.
(e) just out of interest, are you saying there's no UK supermarket guitar shop because now SC has gone bust, or did you not consider SC a supermarket guitar shop? Funnily enough, I actually liked going to sound control the odd time I was on the mainland- because it was a chain, I didn't feel so bad going in to try stuff. :lol: Maybe I'm strange, though- and I'd definitely agree that having all the shops like sound control (i.e. having tons of mediocre beginner to mid-range gear) would get boring very, very quickly.
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I did consider Sound Control a supermarket-type shop i.e. it was a country-wide chain selling musical instruments in large stores with large "purchasing power", which in fact turned out to be a large credit line from manufacturers.
Interestingly there have been several attempts to start a country-wide chain in the past (anyone remember Carsboro Sound Centres?), but so far no-one has been successful.
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hadn't heard of that carlsboro one... We're a bit isolated over this side of the irish sea, unfortunately.
now that i think of it, there are a couple of other ones like dawsons, PMT, etc., but I don't think you could call them "country-wide". There actually is a dawsons in northern ireland for some reason which doesn't seem to make any sense (but i'm not complaining, just it's way out of my way :( ).
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I did consider Sound Control a supermarket-type shop i.e. it was a country-wide chain selling musical instruments in large stores with large "purchasing power", which in fact turned out to be a large credit line from manufacturers.
That's not strictly true, they didn't have an inordinately high credit limit with distributors, not for the size of company (the biggest instrument retail chain in Europe by a LONG way), just ones that were much higher than everyone else. What killed them was not being able to resist buying Academy of Sound and having to borrow so much and become part owned by the bank to do so, a bank which then wanted out and knocked £1,000,000 off their overdraft on the spot.
I don't think it's possible to have a big chain that really stocks a lot of good gear though, it's simply too expensive to have that much high end stuff to sit and walls. Cheapies pay the bills.
Plus, guitar shops with loads of good stock are usually the places where everyone who works there likes Steve Vai and play neo-classical nonsense and inoffensive yank radio-friendly rock on their stereo. I'm glad I work in one wherre we all hate that and listen to Suicide and Nick Cave and Electric Wizard. :lol:
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some people like that music, just like you like your favourite styles of music. I assume you realise that the people who like the music you hate think that the music you like is nonsense too? By and large, anyway.
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See sig.
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touche. that's my opinion too, obviously. :)
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some people like that music, just like you like your favourite styles of music. I assume you realise that the people who like the music you hate think that the music you like is nonsense too? By and large, anyway.
In my place you are stuck with Planet Rock or my own album collection which is like Planet Rock without the playlist
And you might be forced to listen to steel Panther if I know you well :P
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:lol: I could listen to steel panther, i like the music, just not the lyrics... :D