Spyderco moving to MAP pricing!

[Joe58]

The dealer gets it FOR THE SAME PRICE AS ALWAYS.
The dealer is WHERE SPYDERCO GETS THE MONEY FROM.
Hence, THEY DON'T MAKE MORE MONEY.

A lot of you guys just can't get that point.
Any extra money made will be made by the dealer who sells the knife to you or me.

Just so I'm clear - this move is designed to even the playing field for dealers then? Obviously brick and mortar dealers would need to charge more as opposed to online sales only dealers who may run their business from the kitchen table. Cheaper for them as it'll be a one, perhaps two, person operation, and maybe not even their full time job.

That's all there is to it then right?

So. One type of dealer is bound to benefit depending on how Spyderco sets their MAP price. Spyderco will move all pricing up to the price set by brick and mortars, or down to online only dealers. I'm guessing the former would be the obvious choice?

 

[stabman]

Just so I'm clear - this move is designed to even the playing field for dealers then? Obviously brick and mortar dealers would need to charge more as opposed to online sales only dealers who may run their business from the kitchen table. Cheaper for them as it'll be a one, perhaps two, person operation, and maybe not even their full time job.

That's all there is to it then right?

So. One type of dealer is bound to benefit depending on how Spyderco sets their MAP price. Spyderco will move all pricing up to the price set by brick and mortars, or down to online only dealers. I'm guessing the former would be the obvious choice?

As it is stated, the MAP is set so that prices cannot be advertised at less than 60% of MSRP.
Larger stores/internet retailers have the economy of scale (or lower overhead, as the case my be) to sell for less, while still making enough profit to stay open. Small businesses cannot.

Of course, there is no upper limit on what prices stores can charge...at the local gun store I was at yesterday, they had a stainless steel handle Spyderco Police on display for $199...no discount there.

What Spyderco does as for as MSRP itself is its own category of discussion, but prices in everything go up over time. The one that pisses me off is the continual climb in price of food; I cannot just stop eating.

 

[Sal Glesser]

Large dealers will advertise a product for less than they pay for it. They call it a loss leader, which brings customers into their store/website. Then they can sell them additional products. Smaller dealers cannot do that so MAP is a way to try to stop that type of loss leader advertising and keep more dealers in the game. If we just permitted everyone to do as they wish, we would only have a few customers (Amazon, Walmart, etc.). This doesn't serve everyone.

Also, for many, low price is everything. They don't want the special service, or they will go to a store and take the special service (and not pay for it) and then go to the cheapest source for purchase. Some think that's smart shopping. The dealers providing the service they are giving but not getting paid for do not.

sal

 

[Kevin B]

Ultimately, we live in a free market economy. The manufacturer sets the price they charge retailers, the manufacturer can set minimum prices that retailers can advertise, retailers set the price for consumers (generally below MSRP and above MAP if applicable), and consumers can decide to buy or not based on the prices being charged. With high demand items, retailers will sometimes charge above MSRP and get it because it's worth it to someone although not everyone.

Good manufacturers work with retailers to set up a system that is good compromise for everyone (the manufacturer, the retailer and the consumer). The definition of a good compromise is a solution where everyone is equally unhappy. The manufacturer of course would like to get more from the retailer so they make more money. The retailer wants a cheaper price from the manufacturer and in most cases the highest price from the consumer. Of course, manufacturers and retailers are trying to optimize their total bottom line which is a balance of quantity and profit margin. As Sal pointed out, some retailers are willing to lose money on one product if it allows them to make more money on other purchases enabled by the loss on a limited number of items. I understand the reason companies such as Spyderco implement MAP to avoid the big sites from driving out the smaller specialty sites. Regardless of understanding it and regardless of liking it or not, it IS Spyderco's decision. They have to define their business model that they think works best. I will point out that MAP is becoming more common across many consumer products not just knives. As consumers, our decision is whether to continue purchasing their product.

For those who don't like MAP and feel the price of Spyderco knives are more than what they are worth, they are free to not purchase them or buy them used when the price will be lower and there is no MAP. While I'd like to get a lower price, I also value competition and multiple sources and when combined with the fact that the MAP is not much different than what I thought was fair last month, this change will not affect my decision relative to future purchases. I will continue to weigh the value I perceive from a knife versus what I have to pay for it and I realize my perception of value can differ from everyone else's. When the price is too high to me, I won't buy it. When the value is high enough to me, I will. I'm a pragmatist not an idealist so for me it's as simple as that.

 

[Joe58]

Large dealers will advertise a product for less than they pay for it. They call it a loss leader, which brings customers into their store/website. Then they can sell them additional products. Smaller dealers cannot do that so MAP is a way to try to stop that type of loss leader advertising and keep more dealers in the game. If we just permitted everyone to do as they wish, we would only have a few customers (Amazon, Walmart, etc.). This doesn't serve everyone.

Also, for many, low price is everything. They don't want the special service, or they will go to a store and take the special service (and not pay for it) and then go to the cheapest source for purchase. Some think that's smart shopping. The dealers providing the service they are giving but not getting paid for do not.

sal

Your input is much appreciated Sal. I know it's a tough economy and everyone from the end user all the way up to the makers, need to find a balance on expenses. I imagine it's tougher for you to try and keep all the buyers, as well as your dealers all happy at once. Can't imagine the headaches.

Thanks for the response.

 

[ZuluKilo]

For those who don't like MAP and feel the price of Spyderco knives are more than what they are worth, they are free to not purchase them or buy them used when the price will be lower and there is no MAP. While I'd like to get a lower price, I also value competition and multiple sources and when combined with the fact that the MAP is not much different than what I thought was fair last month, this change will not affect my decision relative to future purchases. I will continue to weigh the value I perceive from a knife versus what I have to pay for it and I realize my perception of value can differ from everyone else's. When the price is too high to me, I won't buy it. When the value is high enough to me, I will. I'm a pragmatist not an idealist so for me it's as simple as that.

+1

Since its the Minimum Advertised Price that's being enforced, not necessarily the ultimate price any one person might pay, I just haven't understood what exactly the "rub" is. Additionally, 40% off MSRP is approximately what my preferred dealer sells for anyway. Everyone is certainly entitled to their opinion and I'm all in favor of folks making statements with their wallets, so... lets see what happens.

 

[THR-Thumper]

The potential upside for me is more dealers carrying Spydercos locally. I sometimes like to put my hands on the knife before I buy.

I'm in Houston. It's the 4th largest city in the country and very, very few local retailers carry stock of Spyderco. It's maddening.

 

[Ankerson]

Large dealers will advertise a product for less than they pay for it. They call it a loss leader, which brings customers into their store/website. Then they can sell them additional products. Smaller dealers cannot do that so MAP is a way to try to stop that type of loss leader advertising and keep more dealers in the game. If we just permitted everyone to do as they wish, we would only have a few customers (Amazon, Walmart, etc.). This doesn't serve everyone.

Also, for many, low price is everything. They don't want the special service, or they will go to a store and take the special service (and not pay for it) and then go to the cheapest source for purchase. Some think that's smart shopping. The dealers providing the service they are giving but not getting paid for do not.

sal

Yes, some very large retailers can do that due to extremely large sales volume so they can absorb the loss.

Your comment about Walmart and Amazon is spot on and a great example of that. :thumbup:

All that ends up doing is squeezing the smaller retailers out of the market and that's never a positive thing in the end. The reason is that once they are gone the large retailers can and do jack up their prices due to lack of competition. Walmart is especially guilty of this and on a very large scale over the years taking over small towns and running out all of the smaller retailers. I have relatives that actually live in a small town up North and that is exactly what happened, the next nearest town that the people can shop in is over 30 Miles away. It actually happened in some of the smaller towns here in NC also, they are dead towns now other than Walmart and the prices are high.

Now in the larger towns and cities Walmart doesn't have that kind of power with all of the competition so their market share is much smaller and the prices are also much lower.

I believe people in general (customers) have put themselves into these situations and or cheaped themselves into them over long periods of time. I know for a fact that happened in that small town were my relatives live, Walmart came in and undercut everyone by a large percentage and guess what happened? Well the people went to Walmart because they really didn't have any foresight and only saw price (cheap). Well now they are all screwed and they cheaped themselves right into it, and the sad thing is that Walmart knew that's what would happen because people are very predictable.

Cheaper isn't always better, it's just cheaper.....

Some may disagree with me and that's fine, however my thoughts are based on over 30 years in retail and marketing, mostly in management.

 

[bld522]

Large dealers will advertise a product for less than they pay for it. They call it a loss leader, which brings customers into their store/website. Then they can sell them additional products. Smaller dealers cannot do that so MAP is a way to try to stop that type of loss leader advertising and keep more dealers in the game. If we just permitted everyone to do as they wish, we would only have a few customers (Amazon, Walmart, etc.). This doesn't serve everyone.

Also, for many, low price is everything. They don't want the special service, or they will go to a store and take the special service (and not pay for it) and then go to the cheapest source for purchase. Some think that's smart shopping. The dealers providing the service they are giving but not getting paid for do not.

sal

I understand what you're saying, sal. But it shouldn't be the concern of a manufacturer to keep dealers who sell their product in business. That's what those dealers are supposed to figure out how to do. The manufacturer's only concern should be maintaining its margins so it can continue to earn profits. What dealers sell its products for shouldn't be any of the manufacturer's business.

That's just my opinion, of course. But unless I'm mistaken, it also used to be the law of the land.

 

[Danke42]

The dealers are the public face of Spyderco. I'm pretty sure that you can find places with decades of history selling these knives.

I see a very weird disconnect in wanting USA made products but not wanting to support any of the other local/USA spokes of the wheel.

 

[Ankerson]

I understand what you're saying, sal. But it shouldn't be the concern of a manufacturer to keep dealers who sell their product in the game. That's what those dealers are supposed to figure out how to do. The manufacturer's only concern should be maintaining their margins so they can continue to earn profits. What dealers sell its products for shouldn't be any of the manufacturer's concern.

That's just my opinion, of course. But unless I'm mistaken, it also used to be the law of the land.

I am not Sal, but you are thinking about this from a customer view.

The problem with your logic is as follows.

If the large retailers squeeze out the smaller ones then what happens next is they jack up their prices, that always happens.

Then what happens next is with the lower sales volume, higher prices equals lower volume in general until the prices are so high on the retail end they stop carrying that brand and sell the cheaper brands.

The retailers have no interest in the makers in general, their interest is only to sell to the public, they don't care what they sell as long as they are making money.

 

[bld522]

The dealers are the public face of Spyderco. I'm pretty sure that you can find places with decades of history selling these knives.

I see a very weird disconnect in wanting USA made products but not wanting to support any of the other local/USA spokes of the wheel.

And I see a very weird disconnect in preventing the market from evolving the way it wants to.

 

[Ankerson]

And I see a very weird disconnect in preventing the market from evolving the way it wants to.

Well we could all go back to the old days when the choices were small and mostly junk on the market.

It was either garbage or get a custom made knife for the most part, and those were very expensive back then.

And that's exactly what would end up happening based on your logic.

 

[bld522]

Well we could all go back to the old days when the choices were small and mostly junk on the market.

It was either garbage or get a custom made knife for the most part, and those were very expensive back then.

And that's exactly what would end up happening based on your logic.

You got me on that one, Jim. Do you honestly believe Spyderco and other large manufacturers with established reputations would suddenly disappear if the market moved in the direction it wants to? I sure don't.

 

[Ankerson]

You got me on that one, Jim. Do you honestly believe Spyderco and other large manufacturers with established reputations would suddenly disappear if the market moved in the direction it wants to? I sure don't.

They would likely be much smaller than they are now and or gone.

All of the higher end models would be gone and we would be left with the Byrd line for example and those would be double the price they are now.

That is how it would go.

 

[bld522]

No. I don't see that at all. People would continue to buy high-end products, they'd just buy them the way most of them are buying them right now . . . from Internet resellers.

 

[Ankerson]

No. I don't see that at all. People would continue to buy high-end products, they'd just buy them the way most of them are buying them now . . . from Internet resellers.

MOST people don't buy high end products, that is a very well known fact based on research.

 

[FriarPhenn]

They would likely be much smaller than they are now and or gone.

All of the higher end models would be gone and we would be left with the Byrd line for example and those would be double the price they are now.

That is how it would go.

Hooooow do you figure that? Amazon and Walmart force out every single other retailer and then jack up knife prices to the point where no one will buy the high-end knives, so they stop ordering from the manufacturer, and the manufacturer goes out of business? Amazon and Walmart would have to collude to do that. That's price fixing. And that's illegal.

Manufacturers aren't retailers. MAP is a system to dictate the manufacturer/retailer relationship that stands to realign the interests of both the manufacturer and the retailers, and—hopefully—create competition between retailers selling the same manufacturer's product.

As such, MAP agreements (which are only newly legal in the US), force retailers to compete in non-price related ways, which necessarily limits (if not eliminates) competition around pricing. If what you're saying is true (and I highly doubt it's that simple giving internet sales), then the same thing will happen with MAP. Companies with a greater profit margin can will afford better non-price-related services, and ultimately be able to force out the little guy just the same. The little guy who, in order to compete in add on services, has to increase markup.

I'm of the opinion that any market manipulation (even vertical agreements like MAP and MRP) is very, very problematic.

MOST people don't buy high end products, that is a very well known fact based on research.

Also, if you're going to say stuff like this, you're gonna need to cite your sources. I'll be happy to provide links to the legal journals where I got the info above.

 

[Ankerson]

Hooooow do you figure that? Amazon and Walmart force out every single other retailer and then jack up knife prices to the point where no one will buy the high-end knives, so they stop ordering from the manufacturer, and the manufacturer goes out of business? Amazon and Walmart would have to collude to do that. That's price fixing. And that's illegal.

Manufacturers aren't retailers. MAP is a system to dictate the manufacturer/retailer relationship that stands to realign the interests of both the manufacturer and the retailers, and—hopefully—create competition between retailers selling the same manufacturer's product.

As such, MAP agreements (which are only newly legal in the US), force retailers to compete in non-price related ways, which necessarily limits (if not eliminates) competition around pricing. If what you're saying is true (and I highly doubt it's that simple giving internet sales), then the same thing will happen with MAP. Companies with a greater profit margin can will afford better non-price-related services, and ultimately be able to force out the little guy just the same. The little guy who, in order to compete in add on services, has to increase markup.

I'm of the opinion that any market manipulation (even vertical agreements like MAP and MRP) is very, very problematic.



Also, if you're going to say stuff like this, you're gonna need to cite your sources. I'll be happy to provide links to the legal journals where I got the info above.

You can't be that naïve.

 

[bld522]

Figure it any way you want to, Jim, but Internet retailers like KC and BHQ and GPK and many, many others can and do sell LOTS of high-end knives. Don't believe me? Ask them.