Does this sound fair to you?

Well, if Seller A is moving a particular knife at $15 and selling tons of them, while Seller B is moving them at $20 and barely selling any at all, wouldn't it be smarter for the maker to buy most of Seller B's investment back, sell it to Seller A and move more product? Seller B gets his investment back while Seller A still gets to make as much money as he can sell the knives for. Then if Seller B wants to turn around and buy a bulk quantity so he can try to sell at lower prices and attract more customers, and it doesn't work out, the same thing can be done again.

Or is this just some kind of silly dream?
 
It's a very common practice, I see no issue with it.

The maker builds in a reasonable margin for their distributors. Sets the market price for the item and the incentive to follow agreements comes in the form of better pricing for the higher volume cooperative vendors.

This way vendors have a more even playing field from a small guy to a giant distributor and can differentiate themselves based on service rather than fighting a lower overhead large operation that can live on almost nothing as a margin.

Sure, I like to find a cheap knife deal like anyone else, but if I was making them, I'd likely go into distribution agreements like the above to protect the integrity of the product line.

Ever see the opposite effect where a little guy is trying to sell out of his garage just to cover the expenses of a hobby, but even at low margins, he's still 40% higher than most large retailers? That's the negative flip-side to this, a small guy can't get a foothold in the market. In the 80's I worked selling tools of all kinds. One of my employers went under because the manufacturers undercut all their distribution agreements and we had Home Depot up the road selling tools cheaper than we could buy them as a direct distributor. Home Depot put us out of business after about a 10yr run, in a matter of six months.
 
There are scores if not more, of manufacturers who practice that type of pricing; and not just in the knife world. Surefire tactical lights come to mind right off the top of my head. Is it fair? That is a debate I care not get into on a forum. lol
 
Dealers typicaly are required to sign a contractual agreement with an OEM in order to secure their dealership. If they don't like the agreement, then they shouldn't agree to it, they shouldn't sign the contract, and they should move on.
 
Debates on the pros and cons of MAAP are always interesting, and frequently get heated.

MAAP aside, two thing strike me with this particular scenario.
1. HIGH END knives....I assume we mean relatively expensive.
2. $5

First I thnk it's borderline absurd for the maker and dealer to even be having the conversation over such a piddling amount.
If it's really a big deal to the dealer, he could just offer free shipping on that makers knives and have the same result and no confrontation.

Second, does anyone really make their decision on a "high end" knife over $5? Seriously!
Maybe at a knife show, when the same item is offered at two different tables, but otherwise I doubt most final decisions on an expensive knife are made over $5.
 
ohen cepel said:
The maker has that right, or the right to not sell him more in the future. As does the seller to no longer buy from that maker if he thinkgs his business practices are not fair.

I can see both sides of the arguement. The maker doesn't want his sellers getting into a pricing war which cheapens his work. However, the seller wants to move product.

It's a personal call. They both have the right to do business with who they want the way that they want.
Click to expand...

It helps me out of the (( spam )), Thanks for your analysis! Nice writing.
 
Last edited by a moderator:
MAAP pricing just says that they have to advertise it at the price the manufacturer set, it does not say that they can't sell it for less. That's why some sites have a benchmade knife listed for $170 but it says, email for better price, and they will sell it to you for $140 or whatever.

So in short the manufacturer cannot make you sell at a certain, but they can make you advertise their product at a certain price. I believe.
 
Manufacturers can, and do, sometimes require their dealers to sell at a specific price point. This is typically only found at the high end of a given market.

SawStop table saws and Festool portable power tools and accessories are both sold this way. It remove price shopping from the equation of who to buy from. Any dealer found undercutting those fixed prices is no longer a dealer and may see the inside of a courtroom, too. I am not privy to the terms of these agreements, but they seem to be very strictly followed.
 
You must log in or register to reply here.
Back
Top