Now we have two widely travelled product manufacturers online - one US based, one UK and Oz based - I thought I'd raise this subject.
Actually I've been more motivated since yesterday. I picked up a gear recommendation from one of the other threads. The item sounded pretty handy. I went to the US manufactirers website, lots of tempting information including reviews mentioning said item was particularly 'good value for money'. The US rrp being $1,499 BTW.
I started to look for a UK dealer, found one and was shocked to find a price quote of £1,599. That's a difference of about £688 - approx $1,000 depending on the exchange rate.
OK, so that's a valid point, distributors and dealers have to protect themselves against fluctuations in exchange rates. But a margin of $1,000 just appears to be profiteering IMHO.
I've often thought the UK was a fertile ground for profit making whilst manufacturers found margins much harder to realise in the competative US market.
BTW, I emailed the US company involved in my example. They said they had no control over prices charged by overseas distributors/stores, but surely this effects their company profile and chances of success. BTW, they were very nice and offered me the item even cheaper 'factory direct'.
Do either of our venerable guests worry about price differentiation? Do they have any say in the prices charged outside their home market?
Just for the record I've priced the Smart C1 through both UK and US online dealers and it comes out about even - maybe a few dollars more in the US. As I say, this is slightly subjective because of different tax regimes, fluctuating exchange rates and I haven't even begun to negotiate 'street' prices.
Out of interest I've done some other rough price comparisons:
API 550b EQ $1,195 US - £899 ($1,480) - 1,778 Euro ($1,914!)
API 560b EQ $795 US - £549 ($904) - 1,082 Euro ($1,165!)
Coles Ribbon Mic $1,200 US - £599 UK ($986)
Digidesign 192 Interface $3,995 rrp - £3,330 UKRRP ($5,400!)
EL Fatso jr $3,199 list - £2,262 UK ($3,725)
The differences can be worse because the $ prices aren't 'street' and the
£ prices are usually minus 17.5% tax.

Over the last few months, I've stopped purchasing products overseas(especially England). The exchange rate is much to high(sometimes 1.8-1) and that is not counting the VAT and import charges. Also the charges incurred when doing wire transfers. I was shocked especially with the C1 where I thought it would be cheaper to buy it overseas.

I'm happy to pay the same for a C1 as anyone around the World.
If you lived in the UK you'd be paying between $500 and $1,000 extra for a lot of other things though - if my brief research is a pointer.
That's a big margin on products priced under $5k!

Good point....my aim is also that there are no differences. Ultimately I have no control over street prices, but as we also sell direct customers having this option prevents too creative pricing elsewhere...

so far pretty good, I hope....but please let me know..

Al.

Prices tend to be pretty outrageous in my neck of the woods also (Japan).

you'd have a freak if you saw what the poor people of oz have to pay for gear. and i can tell you, the margin between fair & gluttonous is what the dist's pocket.


ml

The funny thing on all this is, some distributors prices are fair some boast every item the distribute. I often wonder why the manafactures do not keep an eye on it.
Also you think that they would keep and eye out to make sure that they actually carry some stock.
This is my main problem in OZ you have to wait 6 odd weeks to get most things that I could order over the net and have here in a week.
If that distributor of the product also over boasts the price you are better going grey or just buying another manafactures item in stock at the time.

Then having some friends that have worked at distributors the prices some things come into the distributor to compared with the price in the shops. You know who makes the money here and it is not the manafactures, or some times the shops.

Unfortunately, Japan is the worst case, and the prevailing view is that they decide their own rrp's. But, excellent relationships and service are everything to the Japanese dealers too, hence keeping everyone on side for the incresed pricing.

Two day UPS, and the internet intercede at the boundaries of courtesy...

Al

Oh, and davemc we sell direct in Aus and I've got piles of stock ! tell that to the other importers...!

The only problem with buying direct is if an item arrives with a fault it can swallow up any savings you might have made shipping it back and forth to sort it out.
Having said that, I buy a lot of gear from the US.
What's up with Digidesign??? Everyone here is using Pro Tools. If you factor in their inflated margin on everything like upgrades you are paying a huge amount more than US customers.
As far as I'm concerned it reflects badly on the original manufacturer. So is there anything you can do -as a small company trying to get a foothold in studio sales- to control price hiking?

That's so true!

Every time I go to Japan, we bring all of our backline, because it's cheaper to rent it here, friegt it there, than to rent it there...

Guys, don't feel singled out. There are some mfgrs that sell stuff cheaper on the internatioal market than in teh USA - hence the booming grey markets here. Unfortunately, it's mostly video/optics stuff...not audio.


NYC Drew

Oh, we do have the worst case........that is actually somewhat relieving to know.

It's not that every distributor here charges outrageous costs, but quite a few of them do, and have been doing so almost to the extent of the practice being "traditional". It is very gradually changing though.

Mutual lack in understanding each other's perspective and language is probably the main cause, with higher fixed costs such as overhead also being involved.

I personally shop both ways, both from local distributors and through grey market. I understand English so no problems there and can also find sources of maintetance if it had to be.

But, it is a shame since if the market here adapted a bit more, it would probably bring in a bit more end users, who either do not have access/awareness of products, or are a bit lucking in budget.

It is very upsetting.

"Rip off Britain"

It's called..

It can drive you insane when contemplating new studio set up costs.

grudge

It is! But it really bites when you are competing against similar facilities in the US.
At the end of the day a lot of my 'profit' goes straight back into the studio. A US person on the same level as me is making the same kind of money but able to afford more equipment. I'd love to be able to afford a HEDD or SLAM but I've just spent a fortune on the HD upgrade. I reluctantly stopped short of the 192 interface - which I know is crazy - I just couldn't bring myself to shell out the equivalent of over $5,000 when they can be found on Ebay for less than $3k.
Manufacturers like to blame 'government taxes' BTW.
My original beef was over a very new, niche boutique studio piece, available in the US for as little as $1,200, priced by Digital Village in London at $2,600.
OK, I'll try not to bore you with the details again, but it makes me mad evileye

Japan... have you noticed the difference in the rent you'd be paying for the same apartment you're living in there, as opposed to an apartment about triple the size in New York City? Not that anyone is giving anything away in NYC... but Japan is without a doubt the most expensive place I've ever been... Paris included.

Let's take a moment to look at all the different factors that go into a 'global pricing model'... first you have the price of the unit. Exchange rates have been pretty unstable in the last few years... so you have to figure in 12-24 months of currency exchange wiggle room. A year ago the "Euro" was between $.85-90 to the US dollar... today the "Euro" is around $1.10-$1.20 [depending on where you buy your "Euro"s!!!]. This obviously has a profound effect on global pricing [in both directions].

Next, each country has it's own set of import tariffs. The audio equipment we deal with generally comes into the country of sale classified as 'audio frequency amplifiers'. Here in the US, the harmonized schedule for the importation of 'audio frequency amplifiers' is 3.9%... but it's different in pretty much every country.

Add to that the shipping costs to move product across an ocean or two. Most of this stuff moves via 'air freight', which is a hell of a lot more expensive than sea freight... but also doesn't take a month or two, and the hardware isn't exposed to as heavy a salt concentration in the air.

After exchange rates and import tariffs you have marketing expenses. Each importer in each country is responsible for marketing the product to that country. Those nice full page advertisments you see in "the trades" ain't cheap. For a comprehensive ad campaign, you're looking at $12-!5,000 USD per month!!! No ****.

The 'Catch-22' is that in order to move a serious amount of steel you have to make the investment in that kind of an ad budget... or wait the few years for 'word of mouth' to start to get around... which in the case of the 'boutique' manufacturer isn't necessarily a bad thing as it allows the 'boutique' manufacturer to grow their production in an even, orderly manner that keeps up with unit sales... because when sales exceed production, you have a whole other set of ugly mother****ing problems that can be as bad, sometimes even worse, than having a whole lot of steel on the shelf that hasn't found a home.

The next problem is keeping your distribution's ass covered. In the model employed by Smart Research, you have the manufacturer selling the units direct, the US importer selling the units direct... and some pimps selling the units retail.

Obviously... the manufacturer has the ability to under cut the importer and the pimps in terms of price... but it's definitely not in their best interest to do so. If the importer can't make a living importing the units, then they won't. If the dealers can't make a return on their investment from the product, they're not going to deal it.

At any given moment you'll find $10-20,000 worth of 'Smart Research' stock on our shelves... there is a capital investment there that requires a reasonable return on that investment, otherwise we're going to invest that money in products that will make a return on the investment. Unless you're able to find a pimp with a serious case of Chrematophobia, in which case they probably won't be around too long so take advantage of the situation while it exists.

Obviously, we, as pimps for 'Smart Research' aren't able to buy the product at the same price point as the importer... we also don't have to pony up the capital outlay for the importation of as many units as the importer [we can pretty much stay with a "one to show-one to go" kind of thing... which is far less expensive than having 10 of each product on the shelf], we also don't have the costs of advertising the product as that's handled by 'Raata', the US importer.

So... why have pimps? Simple... more mouths talking about the product leads to a better understanding of the product... it's capabilities, etc... which leads to wider distribution of the product, which in the end, adds up to better service for the end user [hopefully]. The idea with this kind of 'boutique' product is to have a network of good, educated pimps... as opposed to a whole lot of 'uneducated weasels' [see Banjo-Mart for details].

Back to the 'global pricing' thing... with the advent of popularity of the internet, it's quite easy to shop globally. Neumann distribution is a classic example of what happens when you don't keep an eye on the globe.

There were [hell, there still are, but not to the same egregious extent as a couple of years ago], dealers in ze fatherland exporting copious quantites of Neumann product to the US... pimping the stuff off on "eBay"... and providing the end user with a substantial savings over 'sanctioned US pimps'... the problem was that Neumann/USA [an independent US company owned by the parent company, Sennheiser] was becoming unstable.

Neumann/USA was still doing all the marketing... Neumann/USA was still responsible to their dealer network... however, the US dealers had to compete with 'no overhead' one man operations that were buying mics by the dozen from the pimps in ze fatherland... in other words, Neumann/USA was in deep **** as their dealer base began to not give a rat's ass about moving Neumann product.

So the price in Europe goes up a bit, the price in the US dropped a bit... a promotion here, a SPIFF there, and everything is almost back on track. There are still gray marketers for their product, but gray marketers don't have the deep market saturation they had before.

This could go on to be a 'masters thesis'... but I think the general idea has been espoused...

Fletcher,
Thanks for taking the time to contribute such a fullsome explanation. I can go along with your thesis pretty much all the way.
Where I find all these explanations hard to swallow is where there is such a hugeprice differential.
OK, in the case of Smart, as I said there is a small dollar difference between official dealer prices in the US and the UK. That's great.
Still looking at official dealers (not ebay offers or discount warehouses), the price of a Digi 192 interface is at least $1,000 more in the UK. Likewise my little boutique unit, which is not incidentally being advertised in the UK, a difference again of $1,000.
These $1k margins are on products that only cost $2k or $3k in the first place!
I'm sorry if I'm being a dickhead but it just seems to make sense that if profit margins are cut to the bone in the US - because of competative pricing - manufacturers will look to other markets to make up the difference.
It's already been proven in auto markets and airline ticketing. You can buy a UK manufactured car cheaperin Belgium or Germany than you can at the showroom a mile down the road from the factory.

Sadly... prices are "cut to the bone" in the US mostly when a product is 'overdistributed' [greater number of outlets than the market will stand].

In that case, it's not necessarily the manufacturers who stand to profit, it's the local countries importer having to: A) pay the same price, or possibly more than some of the US outlets [a joint like Sweetwater orders the **** by the truckload... because of this vast buying power they will order the stuff at significantly reduced pricing to a regular "dealer"... it's not fair to their distribution network... but the lovely folks at the 'Mother of Alsihad' are driven by 1/4erly earnings... a short run game for a short run player]; B) the local importer has to bear the brunt of all the local marketing expenses... seminars, promotions, advertising, etc.

While I'm sure the local distributor is making a few bucks... they also have to compete against the global market as "MOA" is doing zilch to discourage gray marketing of their hardware... nor are they doing jack **** to stop the proliferation of cracked plug ins... after all, MOA sees cracked plugins as bonus to assist them in selling more hardware!!

There is a ton of shady **** that occurs when a product becomes a 'commodity'... especially a 'global commodity'...

Hi,

Nah, NYC is pretty expensive (having been there quite a few times now not with a tourist wallet). Not equally the same as Tokyo, but still, pretty close. London is really expensive now also.

Yes, I understand this totally........I'm not disagreeing with you at all.

I won't elaborate much, but I used to do some work for one of the very few Pro Audio mags here, so believe me, I know more than the average end consumer.

In Alan's case, I have seen one of the earlier units that are used at Metropolis in the UK over 10 years ago, and have been aware that it has taken quite a while for his name to be known here (and quite a few people I know are digging it).

However, a lot of the importers do not carry ads at all, I know first hand of some manufacturer(s) that are (probably) not enjoying as much as they originally hoped to. Which is a downright shame.

On the other hand, I am starting to see some cases where X brand is pretty much at around the same price, or a "fair" price compared to say the US price for US products. One case is Digidesign stuff, their pricing here is ok (understandably, they do have a Japanese operation). Please check recent magazines for other examples. In such cases, I'm sure the pricing is only realised with effort from both the manufacturer and local distributor/importer, and their sales are probably not bad at all. If this can be done, I do wonder why some other brands cannot, and possibly suffer from a lack of sales.

I'm not dissing the whole distributor/importer system at all, in fact, with distributor/importers I respect for their effort and knowledge/expertise/experience, I do buy from them. However, there are things out here that are so ridiculously priced (I'm sure you can think up of some things) that one begins to have a "?" at times.

Some of the distributor/importers are infamous for such practices amongst the end users and unfortunately, they end up buying grey market stuff most of the time, anyone that has a credit card and understand some English can do this. I do think that distributor/importers have to realise or swallow this fact for them to continue in the long term.

fletcher wrote:

".. but Japan is without a doubt the most expensive place I've ever been... Paris included."

i'm moving to paris in a couple of weeks, so i did some research:

hong kong is the most expensive city in the world, followed by tokyo and some other japanese places

london is number 7 on the list

sydney is number 20

paris is number 75(!)

i'm not sure where nyc fits into it, but there you go

FWIW... the one time I'd been to Hong Kong everything was 'comped'... from cab rides to bartabs to cigarettes to hookers and smack... I got on the plane with the exact same amount of money in my pocket as when I got off the plane...

Now I don't know who made that list... but I've always found Paris to be a ****load more expensive than London... it may be that the list you found is relative to general 'resident' living expenses... but as someone visiting... I've found hotels on the same "level" are more expensive in Paris... food is more expensive in Paris [but a hell of a lot easier to find than in London!!!... and yeah, I know the food in London has gotten a lot better over the years... but you still need a guide to show you where to find a decent meal... same thing with Sydney], cabs seem to be about even, though traffic seems to be a bit less ****ed in Paris than London... but not by a whole lot.

... and for me, one of the quintessential "ugly Americans" when traveling abroad... I have found it far easier to communicate with the "locals" in damn near anywhere on the face of the earth than it is to communicate with the locals in Paris... which has usually led to me having an "equalizer" in my possession nearly all the time I'm in Paris (for some reason I end up getting in a tussle damn near everytime I've been to Paris)

Fortunately, it's damn easy to buy switchblades there... though I have gotten some funny looks and questions from some of the customs dudes that decided to search my bags and they discovered my 'wet stone' (it's very rare to find a switch with a decent blade on it) "uhhhh... it's for my job... they're great for filing frets on a guitar (which they ain't, but customs dudes never seem to know that).

What this has to do with the original thead is beyond me...

Wow !
Great thread. I for some reason didn't bother reading it until today. The European export thing to distributor thing has always been somewhat problematic and in some instances like some people in Spain, pretty bizarre, but I'm new. I have some promising people involved now in the UK and Italy that seem into it. Selling direct in the onset looks good, but if any problems occur, any back and forth shipping immediately eats up any profit. Having a bone head distributor or dealer is just as bad. I suggest if you are looking for a product check your local dealer, if he's an idiot or is charging what you feel to be unreasonable mark up, call or e-mail the manufacturer. The manufacturer wants to support the dealer or distributor, but the manufacturer wants to know if the product is being properly represented. Or should I say, I sure do. Hey Fletcher let me know your hook up in Hong Kong, that sounds like my kind of trip.rollz I'll probably go to Amsterdam AES to get a better feel for the Euro market . It's cheap to fly from LA at the moment anyone else going?
Jonathan

Fletcher,

Digidesigns new software revision PT 6 out now for OSX will be a huge 'crack buster'. Cracked software simply wont work with it.

Yet.

You forgot the word "yet"... give it a few months, there will be a plethora of "cracked" versions of pretty much everything... available for the asking.

There is no building that can't be broken into should somebody want to badly enough... there is no car that can't be stolen should somebody want to badly enough... and there ain't no software anywhere that can't be "cracked".

I don't know, nor care how to do it... but there is some evil little thieving **** out there who will make it their goal in life to make cracks for the latest and greatest release.

Don't believe me? Give me a call... let's make a wager on it... I could use the money...

"military grade encryption"

Are the buzz words bandied about these days

That and "Pace".

But good points there.......

movies are downloadable in dvd quality before they are even in the theaters

on the pc platform theres nothing you cant download ,
for the mac , stuff is just harder to find .

i have no clue how all that cracking stuff works .

i read an announcment on a ftp server that PT 6 is already broken . they also talked about how to build your own updateable i-lock system grggt grggt grggt

but i am still on the search for :

" HOW TO SOLDER YOUR OWN PROTOOLS HD FOR 49 $$$ "

those guys have their skills , even if some dont like em

Fletcher,

Paris is definitely less expensive than London. Next time you come to town, give me a call a little before and I'll set you up for the hotel, places to eat, bars, rental ride, billiards, whatever...if you like.

US has really nice prices compared to europe most of the time, I expect it is about a quantity (as Fletcher said about sweetwater). But do anyone see THE GEAR is more expensive in non-EU states and people in non-EU states have only fraction of "standard" UK or US income? It's really unfair to compete to UK studios (even project ones) at the given prices/earning coeff. It isn't surprice, major part of cracked software works on the east of the europe and further...

... at least there are much chaper musicians here ;-) ( ;-( )


do you see it? do you mind? do you care? is there anything to do more than wait? I don't think so...

Absolutely!! Is the 'Crazy Horse Saloon' still there?

Norway is a non-EU country and the income here is higher than both UK and US .....
But we are the only non-EU country with this situation....
The gear is still VERY expensive though, in fact everything is expensive. Some examples:

A gallon of gas :$6
Set of guitar strings(electric) $14
A CD: $25
Mix magazine: $16
RNC: $427
RADAR Project: 6500
A beer(in a bar): $8(!!!!!!!)
A bottle of Jack Daniels: $64

Here, only the rich are alchoholics.....

Amund

we have beer for less than $1 so we dfegad very often and there are many alcoholics in the Czech Republic.... but we are no russia though ;-)))

UAD1 is here for ~$1000 for ex.

and average month income? way under $700... and recording/music biz is not very strong right now ;-( labels are poor and only fools (like me) invest money in the gear...

I remember finding out in 1965 that U-67s were the same price in England as EV 666s were here and 666s were the same price in England as the 67s were here. For this reason you almost never saw the same mikes used in both countries. Most US indi studios had a pair of 67s, a pair of 47s if they were more than 10 years old, a few RCA 77s and a forest of Shure and EV dynamics Meanwhile European studios had a forest of Neumanns.

Here in 1965 a 666 went for $155 and a U-67 was $500.

Multiply by 5 to get today's equivalent currency value!