Are Manufacturers Price Fixing?

[resound]

I'm not sure these tactics are limited to pro audio. I'm an Apple user, for one, and they have some sort of minimum sale price with their third-party distributors. I do not like it, though I do not know the legality of these practices. I think competition is healthy and sure wouldn't mind seeing some price drops on gear.

[Sounds Great]

Originally Posted by Plush

Are Manufacturers price fixing?

I read an interesting article in "Pro Sound News" that the Federal Trade Commission (FTC) is investigating whether or not audio and MI manufacturers are engaged in price fixiing.

Minimum Advertised Pricing (MAP) allow manufacturers to police the dealers of their products. Dealers who sell at or close to MAP are delivered a "rebate" by the manufacturer to "reward" them for selling close to the MAP.

I believe that there definitely IS price fixing going on and I'm interested in other reader's thoughts and comments.

Your thoughts please. . .

This has nothing to do with price fixing. Price fixing is multiple manufacturers/distributers getting together to fix the price for the marketplace as a whole. For instance, the oil companies.

A single manufacturer/seller has the right to set the price for their particular product anywhere they want it. If you don't like their price, don't buy it.

[squeegybug]

Originally Posted by Plush

Are Manufacturers price fixing?

Wouldn't necessarily call it price fixing (as in a legal definition), but there definitely are some pro audio mfgrs who are spying on and culling dealers who sell at a lower price than some other "special" dealers. Usually because those "special" dealers complained. Or, as the Mesa example, they have some kind of twisted arrangement to force a certain retail price minimum.

Absolute nonsense IMO. Once a dealer buys a product from the mfgr or distributor, that product no longer belongs to the manufacturer. And the mfgr should have no say in what price the dealer should be selling for. I said *selling for*, not advertising. This has nothing to do with MAP.

But it is not working that way with at least two high end product mfgrs I know of. And I got rid of all their products that I had, and refuse to buy any more. I'm surprised the manufacturers did not call me and demand I sell them for a certain price.

Steve

[hangman]

Originally Posted by squeegybug

Wouldn't necessarily call it price fixing (as in a legal definition), but there definitely are some pro audio mfgrs who are spying on and culling dealers who sell at a lower price than some other "special" dealers. Usually because those "special" dealers complained. Or, as the Mesa example, they have some kind of twisted arrangement to force a certain retail price minimum.

Absolute nonsense IMO. Once a dealer buys a product from the mfgr or distributor, that product no longer belongs to the manufacturer. And the mfgr should have no say in what price the dealer should be selling for. I said *selling for*, not advertising. This has nothing to do with MAP.

But it is not working that way with at least two high end product mfgrs I know of. And I got rid of all their products that I had, and refuse to buy any more. I'm surprised the manufacturers did not call me and demand I sell them for a certain price.

Steve

I dunno steve, I think its a very responsible way to go about doing business. Its in all the manufacturers best interest to make sure that Guitar center doesnt become the sole music store in the USA. because then Guitar center could start making outrageous demands like Walmart... which I would not be surprised if they already do.
Its a compromise. its a way that companies can sell stuff to guitar centers without putting their smaller dealers out of business.
even if it doesnt work perfectly... it works better than nothing.

[squeegybug]

Responsible? You've got to be kidding? We are talking about the concept of free enterprise.

I'm certainly not talking about GC, exactly the opposite. The situations I know of are with small dealers who choose to live with lower margins because they can attract business, selling products they already own. That is none of the mfgrs business.

How would you like it if you were a small retailer and a supplier told you what you had to sell your products for? What if that amount was lower than you wanted to sell?

Steve

[pan60]

if you agree to abided by a set set of guide lines should you not be expected to keep your word?
if your not honest enough to keep your word, ( or just out right lie to get the contract to represent a given product ) then i would have to say that alone would be a brach of the given agreement, would it not?
now granted i am talking about a agreement or contract between a manufacture and reseller.
having said that i thank it is possible their is some price fixing going on, i say this because in my experience not all people are honest rather they are resellers or manufactures.

[resound]

Originally Posted by squeegybug

Responsible? You've got to be kidding? We are talking about the concept of free enterprise.

In danger of going way off topic, nothing in our economy is truly free enterprise. Tax incentives, subsidies, etc. are all counter to the pure sense of free enterprise.

[hangman]

Originally Posted by squeegybug

Responsible? You've got to be kidding? We are talking about the concept of free enterprise.

I'm certainly not talking about GC, exactly the opposite. The situations I know of are with small dealers who choose to live with lower margins because they can attract business, selling products they already own. That is none of the mfgrs business.

How would you like it if you were a small retailer and a supplier told you what you had to sell your products for? What if that amount was lower than you wanted to sell?

Steve

Dude, get out of town... don't give me any free enterprise BS. you tell me why its so hard to find an independent department store, or grocery store for that matter, and why more and more jobs get shipped overseas while americans get paid less and less money. free market in this country is a sick joke, works about as well as communism has.

as someone working in retail music, I can't think of one situation in which I have wanted to sell something lower than map. and map prices are often removed on old products. Roland/Boss regularly send out emails letting dealers know which products no longer have map pricing.

usually I find that Guitar centers and musicians friend sell things cheaper than I can get things for. or they give you an ipod with every strat...

[Mondo]

Originally Posted by hangman

then Guitar center could start making outrageous demands like Walmart... which I would not be surprised if they already do.

citation: oktava

[squeegybug]

Originally Posted by hangman

Dude, get out of town... don't give me any free enterprise BS. you tell me why its so hard to find an independent department store, or grocery store for that matter, and why more and more jobs get shipped overseas while americans get paid less and less money. free market in this country is a sick joke, works about as well as communism has.

as someone working in retail music, I can't think of one situation in which I have wanted to sell something lower than map. and map prices are often removed on old products. Roland/Boss regularly send out emails letting dealers know which products no longer have map pricing.

usually I find that Guitar centers and musicians friend sell things cheaper than I can get things for. or they give you an ipod with every strat...

Seems like you are making my point for me -- more manipulation of pricing does not lead to a more productive economy. I can certainly think of lots of situations where I would want to sell for less than some artificial "advertised price".

And I say that as a business owner. For me to attract and keep business, I have to be the one to decide what I will sell my services or products for -- not have it decreed by my suppliers. Not hard to understand, from where I work every day.

And that is related to the topic -- how can manufacturers legitimately force dealers or distributors to sell for a specific price? When the dealer/distributor already paid the mfgr's price, and now owns the product?

Steve

[Plush]

Good and interesting discussion so far.

The fact remains that the FTC IS INVESTIGATING whether the MI and Pro Audio manufacturers AND retailers are engaged in price fixing.

When everyone on the internet lists the same sales price (and after phoning them up and there IS NO LOWER PRICE) I'd say that there is indeed price fixing going on.

Shure Bros. may be the most strict with this advertised price tomfoolery.

I myself never buy on price. I like to buy from a dealer that I know will support me and who is knowledgeable. I'll pay some extra $$ to someone who's really trying to provide good service and who keeps needed equipment in stock. (that costs money too)

The government's and our investigation and discussion continues here. . .

[hangman]

Originally Posted by squeegybug

Seems like you are making my point for me -- more manipulation of pricing does not lead to a more productive economy. I can certainly think of lots of situations where I would want to sell for less than some artificial "advertised price".

And I say that as a business owner. For me to attract and keep business, I have to be the one to decide what I will sell my services or products for -- not have it decreed by my suppliers. Not hard to understand, from where I work every day.

And that is related to the topic -- how can manufacturers legitimately force dealers or distributors to sell for a specific price? When the dealer/distributor already paid the mfgr's price, and now owns the product?

Steve

I made your point for you??
your point is that you want to sell stuff for cheaper than you got it for?
that seems like a strange business strategy, and I'm not sure its gonna work to well for you.

I can see your point with setting a minimum sale price. that is going too far. But the MAP policy is reasonable.

[Sounds Great]

Originally Posted by Plush

Good and interesting discussion so far.

The fact remains that the FTC IS INVESTIGATING whether the MI and Pro Audio manufacturers AND retailers are engaged in price fixing.

Do you have a link to some details about this FTC investigation?

Originally Posted by Plush

When everyone on the internet lists the same sales price (and after phoning them up and there IS NO LOWER PRICE) I'd say that there is indeed price fixing going on.

Shure Bros. may be the most strict with this selling price tomfoolery.

I myself never buy on price. I like to buy from a dealer that I know will support me and who is knowledgeable. I'll pay some extra $$ to someone who's really trying to provide good service and who keeps needed equipment in stock. (that costs money too)

The government's and our investigation and discussion continues here. . .

Listing prices and actual selling price are two different things. Why should anyone have a problem with setting a listing price?

Shure Bros. is the most strict? I recently bought 2 brand new SM58's from a small Shure dealer for about 50 bucks each. I could hook you up if you like..

[Audiopool]

In Europe, any pressure put on ressellers by manufacturers or distributors to keep a certain price is illegal. M.A.P prices are illegel over here...

[Plush]

Originally Posted by ArtGarceau

Haha....what a joke. Explain Shure's policy to me. I want to know what you THINK the policy is. On the contrary to your statement....Shure has M.A.P. in place on a small list of items and that is it. Dealers can sell product for whatever they want, but have to abide by advertising restrictions on a small list of product.

I made a mistake above. I meant to say that Shure is strict in the MAP policies, not selling price poliices.
Shure Bros. headquarters have told me this themselves, so I have no reason or occasion to question it.

Please enlighten with your experiences.

Those seeking links to the FTC investigation, just use the usual search functions such as Google or other.

[Melodioso]

Maybe this is OT, but maybe related?

I ordered a bunch of things from Music123 (never ever again) some months ago. Using their 45 Day Low Price Guarantee (my *ss), I mailed them a link to a cheaper price on a mic I was buying. After a week and still no answer from them, I called. The guy asked again for the link to this lower price: at my big surprise, the price on that other site WENT UP to match Music123's! The item was a MD 421. It was was listed at $305, while M123 price is $350.

It was like dealers are setting low prices between each other...

[ddageek]

Art is right Map has protected the smaller dealer, without the big guys would rule the net! (AND God Shures map policy has no selling price restrictions) One thing though where the Mom and Pops shout them selves in the foot is what I have explaied time and time again to the Pop's out side of Houston that because they buy so little Shure they would be better oof price wise buying from that big dealer/ Distributor North of Chicago and get a better price and beat up on GC!!! Instead they bu Behringer!

If you think MAP is only in audio Go into any major department store and you will notice that all the CURRENT Highend HARD GOODS MERCHANDISE IS THE SAME PRIC NEXT DOOR! Now go look at High end watches same thing consumer electronics HOW can best buy Circuit city adn everybody else all gaurantee the lowest price its easy when you only sell gear stuuff with a MAP Program!!!!!!!!

Oh Yeah and for years I kept a file of Quotes customers had gotten that were just to low
to make sence other tha someone was trying to buy my clients ( it also protected me when I beat these prices and the other dealer complained ) Guess what 90% of these were from the little guys!
I once had a customer come in and tell me that a dealer said he would beat my price no matter what on a pair of JBL SR series subs that he had in stock! This was just way to much fun because
1. WE payed way less then this small dealer
2 JBL had just cut the price by 10% a week earlier

So I quoted the guy $100 above our new cost on each The little guy coundn't come close complained to the rep that I was selling UNDER COST (well his) rep and JBL VP come in when the customer happened to be in the store I get called into my bosses office get the customer to tell the story show them the invoice for the sale and what we paid for the goods and Jbl has no problem and everybody laughs at how stupid the other sales person was ( last I heard he was a Shure Rep)!

Ma and pa can servie they just got to buy smart and watch what the 3 ton elepant next door is doing and use map to their advantage GC stocking Shure AT and AKG Buy Audix and CAD GC Goes Dig GO Metric halo and no what your selling!

[Plush]

Hiya Garceau,

With your position with the company, you are a good resource for us here.
No need to be sarcastic when I merely ask for your experiences in your every day business life.

May I describe the change I've seen in the last 1 year?

Of course I am familiar with MAP. What is new to me is that when I call the retailer/dealer and ask for the actual selling price, (presumably less than MAP) I'm told that the advertised MAP price IS the selling price. I call the next dealer and am told the same thing. There is much more lock-step sameness in price across the board. I tell the person on the phone to cut the nonsense and get down to calculating the pro user's price behind the fact that I'm not new.

What about the customer who does not know how to grind the salesperson?

The whole basis for the FTC investigation of the record companies some years ago was that MAP was declared illegal in record sales.

I know how to negotiate since I've been in the recording bidniz for 26 years.

What I'm noticing is a new conspiracy.

[Sounds Great]

Yeah, no conspiracy.

I think selling prices have got so low, margins so thin, that there is no where left to go. So the street price has just kind of settled on a low spot and nobody wants to give away the store, it just can't go any lower.

I also think that the internet has kind of leveled the playing field.

[Plush]

I don't think there is a conspiracy theory. I think there is an actual conspiracy.

[pan60]

Originally Posted by Plush

I don't think there is a conspiracy theory. I think there is an actual conspiracy.

well if we are talking conspiracy theory i am all with you their !!!!!!!!!!!
i am not sure about price fixing but their is a conspiracy.
i know i am being watch.

[Mind-Over-Midi]

I think it's hilarious how none of the usual pimps have shown up on this thread yet. I mean if you post something about the Lynx Aurora or the SSL X-Rack you can bet money that Mr. K will show up within two to three posts. The same for Tony if you happen to mention Aurora Audio (or if you say something positive about Vintech Audio ) and of course if you do mention Vintech you'll most likely be seeing Nathan really soon. So where are those guys now? They've kind of stayed away from this one, why? It's seems that they could really shed some light on this subject.........

[ddageek]

Originally Posted by Plush

Hiya Garceau,

With your position with the company, you are a good resource for us here.
No need to be sarcastic when I merely ask for your experiences in your every day business life.

May I describe the change I've seen in the last 1 year?

Of course I am familiar with MAP. What is new to me is that when I call the retailer/dealer and ask for the actual selling price, (presumably less than MAP) I'm told that the advertised MAP price IS the selling price. I call the next dealer and am told the same thing. There is much more lock-step sameness in price across the board. I tell the person on the phone to cut the nonsense and get down to calculating the pro user's price behind the fact that I'm not new.

What about the customer who does not know how to grind the salesperson?

The whole basis for the FTC investigation of the record companies some years ago was that MAP was declared illegal in record sales.

I know how to negotiate since I've been in the recording bidniz for 26 years.

What I'm noticing is a new conspiracy.

Where are you shopping? How much history do you have with these dealers?

Just For grins I thought I woul get quotes from dealers on a KSM32 and 2 57s

out of 8 random dealers 4 at map 4 verying degrees below I did it blind as a new customer and I bet ART can guess who was the lowest!!!!!!!!

[Plush]

Hello ddageek,

I' m a producer/engineer full time in the bidniz for 26 years. I'm oriented towards buying specialized equipment and not usually the garden variety items. I negotiate with my long time dealers who do the best they can for me. I never buy on price. I'm a dream customer. I am always knowledgeable about what I need and I do not rely on any advice from any dealers to choose what I need to do the job. I have endorsements from several super high end esoteric companies.

So the answer to your question is I am very experienced and I have long time, over 20 year, relationships with my dealers.

The subject I've raised here is a different one. It's not about what I'm buying---it is an observation about what is happening in the last two years in the marketplace.
Particularly in the last year there has been a closing of rank on prices. Dealers and manufacturers, it seems to me, have erected a phalanx of unified pricing that smells of price fixing.

I beleive this because, in my own surveying and testing of the marketplace, I find 4 dealers ( I won't name them) quoting me the MAP as the lowest price. That's crap.

Each person I speak to is not knowledgeable about the product either. That's crap---I'm calling them on it.

p.s.--I never pay more than $ 65 for a 57.

[pan60]

Originally Posted by pan60

well if we are talking conspiracy theory i am all with you their !!!!!!!!!!!
i am not sure about price fixing but their is a conspiracy.
i know i am being watch.

Originally Posted by ArtGarceau

What are some examples of the price fixing going on?

read what i said ;)

[pan60]

their is a conspiracy.
i know i am being watch.

;{)

[ddageek]

OK Plush Here is what has happened to the industry People wanted great prices that ment lower margins BAM there's a GC MARS or Sam ASH on every corner! 8 out of 10 small dealers forced out! Because the can't cpmpete on price Those left force manufactures into MAP plans to protect them. The large mail order dealers have no problem Hey we always advertise call for price any way! all thats left no really of big retail is GC and hey 90% of their customers only care about the pereption of a great deal !! Now MAP protects Margin and every MAP Program is different, but if you pay the sales geek nothing what are the chances that he will rember that Bose is a very hard MAP and Shure isn't???? To Protect the line You adopt a Hard MAP line so you can;t lose the line and protect Margin! Again go intp Macy's Dillards ect and compare Prices on current goods SAme thing ( note their sale prices are all the same their vendors have a an advetised sale minimum as well Panasonic consumer had a Sale schedual for years in its price sheet)

Now he industry For pro audio has sort of split Into 3 tiers
Highend Service ori ented strick priceing (Mercenary, High Profile, Atlas) The Catch you pay the Map price you get the service limited product lines!

MI Based MAP Because we are Dumb and can't afford to get caught doing something stupid 80% of the dealers out there

Discount but not that much Highend ( B&H, Full Compass and ect)

The exceptions
Alto Calistro very deep discounts nice Highend inventory Fairly Knowledgeable and great service!

Sweatwater Nice selection, usually very good service, but there individual priceing is pretty Much MAP these days! ( but still competitive on bids and institutional)

Yes MI/ studio biz is still a Nice Chunk of change but the real money is Corp. Edu. and Churches (why do you think Sweetwater looks like a born again haven because that sector is a goldmine and grew after 9/11)
Now shopping is a pain in the ass but you simply set upp an address book of dealers and hidden CC everybody for quotes! or YOU Develop a relationship witha couple of dealers and are rewarded over time with good prices. Just Rember that A Good salesperson will have many clients and very little time and your Idea of a huge purchase isn't always huge to them (their are some $500,00 accounts out there and they pay a good salespersons rent)

Why Go somewhere with the assigned acct because Loyalty is rewarded in the long run if the sales person has 1/2 a brain?

Then again what do I know I was only one of the top sales people while in a coma at one of the biggest dealers in the world and averaged 30% Growth per year for 7 yrs! While building protools systems nd runing there retail division!

Conspericy No! Is someone watching PA60? Yeah I sold them PAn and tilt CCTV Cams 11 years ago!

Note an FTC investigation will go no where HARMON will offer free Gear for both political parties conventions and not even pay a lobyiest to kill it!

[pan60]

i am pretty sure my phone is tapped.
they are always trying to steel my secrets.

[max cooper]

Originally Posted by squeegybug

Responsible? You've got to be kidding? We are talking about the concept of free enterprise.

Right. If those resellers don't like the mfgr's policy, then can switch mfgr's or make a competetive product themselves.

it's like reserving the right to refuse service to someone.

Price fixing is what ADM does.

Originally Posted by Plush

Dealers and manufacturers, it seems to me, have erected a phalanx of unified pricing that smells of price fixing.

Yes, prices are about the same on a lot of stuff wherever you go, but I guarantee you this comes as a benefit to the consumer as there's been a drop in profit per item sold across the board.

Find the lowest price on something on the internet and just about any retailer will match it.

You really wouldn't believe how low the markup has become on stuff like MI gear.

I bought a $300 pair of speakers at a guitar store and the manager (who is a friend of mine) told me they made seven dollars on the sale. ouch.

If Sam Ash and Guitar center are making good profits it's because of stuff like lateral expansion (buying the companies who's wares they sell) and doing huge numbers, not because of "unfair" profit margins.

If there were no MAP, someone would "loss leader" everyone out of business by making nothing but the quick pay discount as a profit. That would be bleak.