When "Suggested" Retail Prices Are Mandatory

While I'd love to see a cheaper Sebenza(who wouldn't?:D), I'm OK with how it works. Toyota Canada does pretty much the same thing for its' vehicles and I think it keeps individual dealers from taking customers away from other Toyota dealers. It creates a level playing field in a way. It seems like many custom makers do this as well, and yet nobody takes issue with them.
Just a point of information, but I once inquired about buying a Sebenza through one dealer and he directed me to a dealer who was closer for me to do business with. I thought that was pretty cool. I don't know if there are "agreements" or not, but I still thought it was a nice gesture on that dealer's behalf.
 
Thomas W, could you point me to some links / reading on the US decision / case / ruling to live the restriction on mandatory pricing? as in manufacturers can now set pricing? I've always learned in my anti-trust classes that that was a violation? perhaps I misunderstood?
 
silenthunterstudios said:
This discussion is one of the main reasons why I buy used knives.
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Silent', you ain't dazed and confused! You do what I do.
Most of my knives come from the Exchange forums here.

I get a better price.
I get a knife that another knife knut has found free of obvious defects.
I get a knife I've had a chance to think about, to know I want, not the knife-of-the-month.
I may even get an out-of-production, hard to find knife, like the slipjoint I just got this week.

The market is a many-splendored thing. :)
 
Thomas W said:
MAP is the only way for Company A to survive. Would it be better for Company A to just go out of business?
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No, Thomas. With all due respect, Company A has been surviving quite well and shows no sign of going out of business the way things were before the ruling. Free Enterprise dictates that if you want your knives to sell for $300, you should sell them to the wholesalers and retailers for a price that pretty wells guarantees they'll be sold for the MSRP. I'm sympathetic to the "bricks and mortar" people who have higher overheads, but when they do bone headed things like opening stores in expensive malls where the overhead is astronomical, why should those of us who are more frugal have to pay the ultimate price? I mean, you've got rental, taxes, mall services, employee salaries, benefits, etc. Meanwhile, if your knives are sold in stores like Wal*Mart, Sears, Target and so forth, the overhead is substantially lower because of the variety of items sold. Then, if you buy from Internet suppliers, the overhead shrinks again. Finally, knife stores buy in limited numbers while retail chains can buy bulk.

Is Free Enterprise all about making everyone sell the knives for the same prices? Markets adjust to these sorts of things. I can't even buy a Spyderco Native with S30V steel blades for $40 anywhere but Wal*Mart. But if the consumer pays the same, whether he buys from Wal*Mart, the Internet or The Knife Astro Emporium in the Sky City Mall, it's the consumer who gets the short end of the stick. The ones who walk away with the good deals are the ones who bought more knives in bulk. Their profit margins will soar while the Knife Astro Emporium may make only a modest amount in profits.

You do have a choice on whether to buy a brand or not. Just know you're not going to be able to buy everything at 40% off.
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Nor 20 percent if the manufacturers have their way. Our economy, like it or not, is a bargain-based economy. There are significant numbers of people who will shop in stores with sawdust on the floor if it will land them a better price. We used to have a chain here called BEST Products. It was a runaway success because it was "the" place to come for discounts on jewelry, cameras, luggage, chairs, and audio equipment. The showrooms were fairly run down, but they were all jam packed. Even the Soviets, who were restricted from buying at the military exchanges, showed up in droves from the embassy to avail themselves of bargains. (Being communists, you'd think they'd be willing to pay top dollar to help the working class, but hey, even commies liked bargains.)

Well, finally BEST Products, money overflowing from their coffers, began thinking big. Wouldn't it be great to have bigger, nicer showrooms? Maybe renovate their stores and spiff up the aisles. So one by one they closed their showrooms and renovated them. They brought in health and beauty items, telescopes and bicycles and tools and lawn chairs, etc. When the stores reopened, guess what. The prices had gone up and the bargains had pretty much vanished. In just a few short years, the whole chain folded like an old card table.

In a Free Enterprise economy, protectionism just doesn't work in this sense of the term. That doesn't mean I wouldn't slap a bunch of tarrifs on Chinese-made goods (I'd do it so fast they wouldn't know what hit them); it's just that at home, the system should be allowed to work.
 
the customers of the manufacturers are the resellers. If you want to reduce the number of customers you have, tell them that you're going to institute a policy that will in turn reduce their customer base and potential sales. Why an upstream entity gets to tell someone downstream what their margins have to be confuses me. Where's the competition come in, there's only so much customer service you can provide when after sale warranty/repair has to bypass you and go back to the manufacturer anyway.

Sorry, if all I gotta do is read my digital correspondence for transactions and get a box ready for the shipper to do an in-store pick-up for me, I'm willing to cut the price. If I want to sell boutique brands, I'll price accordingly. BM screwed up there, imo, and I haven't bought a new one since the issue with New Graham popped up.
 
Like many of us, I am accustomed to the idea that I can buy just about any knife online for about 60% MSRP. I understand this is bad (if not detrimental) to the B&M stores who have a much higher overhead and smaller customer base than the internet stores, and I understand why manufacturers don't like people assuming that their knives are worth less than the manufacturer says they are. I feel that MSRP is higher than it needs to be for many knives, and would feel more comfortable with manufacturers enforcing MSRP if they'd drop their prices a bit. Still, the main reason I don't like this ruling is because I'll have to pay more for knives.

The question regarding whether this is congruent with the idea of a free market is not one on which I'm informed enough to speculate extensively, except to say that, regardless of what is said about it, our market is not completely free; it is somewhat free and has some restrictions on it. This, being another restriction (I think) may have good or bad effects overall, I can't say which. Although, it is probably less common for effects to be good or bad overall, and more common for effects to be good for some and bad for others. And even the question on whether this is one more restriction is not completely clear, since it's one more restriction on retailers, but one less on manufacturers.

With regards to the story of what happened with Benchmade and a certain WKIR, I was only able to find this one thread: http://www.bladeforums.com/forums/showthread.php?t=124556 I seem to remember one or three much longer threads, but haven't been able to find them. Perhaps someone else will be able to.

Oh, found this one too: http://www.bladeforums.com/forums/showthread.php?t=155368
And someone needs to fix the search function - it's not functioning as it should be.
 
spyken said:
Thomas W, could you point me to some links / reading on the US decision / case / ruling to live the restriction on mandatory pricing? as in manufacturers can now set pricing? I've always learned in my anti-trust classes that that was a violation? perhaps I misunderstood?
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It's technically termed "vertical pricing".

The name of the case was Leegin Creative Leather Products, Inc. v. PSKS, Inc. (2006)

If you want to read the actual Supreme Court decision, here it is: http://www.supremecourtus.gov/opinions/06pdf/06-480.pdf


It was a 5-4 decision, written by Justice Kennedy.
Agreeing with him with him were Roberts, Scalia, Thomas, & Alito.
Dissenting were Breyer, Stevens, Souter, & Ginsburg.
 
Sigh . . . The more things change, the more they stay the same. Back in the dark ages of 1976 - 1977, I was the manager of the camera department of a department store about 100 miles from NYC. We used to get people come in, get all the information on the camera, lessons on the camera, then tell me they can buy it in NYC for less than our chain's buyers could get it at. There was no Internet back then, but the camera magazines all had the ads. It was cheaper to take a train into Manhattan, still pay NYC sales tax, than our store's sale price and in many instances, cheaper than what we could get them for.

Personally, I have less gripe with the level playing field concept, everyone adheres to MSRP, than deep discounts one place and full MSRP someplace else. The level playing filed now forces retailers to attract, and hold, customers with good old fashioned Customer Service. I agree with Confederate about the lack of knowledgeable sales people at a lot of big box outlets. For some items, I do admit to doing what he does, do my own research then simply find the lowest price, but for a lot of other things, I am willing to support the place with superior Customer Service by buying form those places, even though it may cost a few bucks extra.
 
Confederate said:
No, Thomas. With all due respect, Company A has been surviving quite well and shows no sign of going out of business the way things were before the ruling.
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Exactly, that is because they have always been strict with their dealers, and have no distributor program.

Look, we are talking about a boutique manufacturer here, not Kershaw. Don't look for this ruling to change much on how current pricing is upheld. We are not changing a thing on the Kershaw side, and I doubt any other 2-step manufacturer will either.

It all boils down to survival though, and you have to be smart when it comes to keeping your brand from being devalued in the marketplace. With this particular type of manufacturing you just have to protect your name, or you just won't be around tomorrow.
 
The consumer rules. (Or should, anyway.)

I refuse to buy several brands of optics because the manufacturers are anti-competition, and regulate prices at the retail level.

If I can buy a product from a manufacturer or wholesaler, it then becomes my property. I should be able to sell my propery for whatever price I choose to sell it for.

I can't speak for anyone else, but I refuse to buy so-called "fair trade" items where the prices are artificially inflated by the manufacturers to protect brick and mortar businesses.

If the B&M store, or the mom and pop can't compete, let them go under like the buggy whip makers.
 
Ben Dover said:
I can't speak for anyone else, but I refuse to buy so-called "fair trade" items where the prices are artificially inflated by the manufacturers to protect brick and mortar businesses.
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Big Ben you missed the point. It isn't to protect the B&M outlets, it is to protect yourself.

I'm also unsure what you mean by "artificially inflating" prices.
 
Many manufactuers set minimum pricing. Burton snowboards is a prime example. Check the internet, they are the same price everywhere. Lower it and Burton will cut you off.
 
I think one of the problems is that whether prices can be determined by the manufacturer or not, there will always be people who are prepared to abuse the system.
Unscrupulous discounters can get away with no service, and when the quick profit is made they close down and go out of business.
Unscrupulous manufacturers will artificially inflate the price to increase their profits and lie about the quality of their goods.
When was it any different?
Greg
 
Ben Dover said:
If I can buy a product from a manufacturer or wholesaler, it then becomes my property. I should be able to sell my propery for whatever price I choose to sell it for.
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Are you saying it should be illegal for the manufacturer to sell to you if you insist on selling their product below their MSRP? If the government were to stay out of business entirely, then it would not be illegal for the manufacturer to refuse to sell to discount retailers.
 
Ben Dover said:
The consumer rules. (Or should, anyway.)

I refuse to buy several brands of optics because the manufacturers are anti-competition, and regulate prices at the retail level.

If I can buy a product from a manufacturer or wholesaler, it then becomes my property. I should be able to sell my propery for whatever price I choose to sell it for.....
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But, you know when you buy from one of these manufacturers or wholesalers that the sale is based upon you keeping the agreement not to sell under a certain price.
 
For anyone who wants a quick read on what "Vertical Pricing" "Minimum Advertised Price" and these issues being are...

Here's an article from one of the larger discount tennis shops in Los Angeles. The owner even went as far as to visit the legislators in Washington D.C. to no avail.

http://e-rackets.com/store/pricefixing.html
 
Holy economic misconceptions Batman. Allow me to make some random comments regarding several posts.

A knife manufacturer setting the retail price of their product is just about as far from Socialism as you can get. Nor is it "monopolistic" or "anti-trust" as the entire market has to be in lock step for that to happen. The knife market is wide and diverse. There are no barriers to entry in the market. Anyone with skill and a back yard furnace can enter the market. There is no evidence all makers are following a set price. Last time I looked I could have a 3 inch blade for under $10 to several thousands. No monopoly, nor no collective setting price.

Retail price setting has been ongoing for a lot longer than this ruling. The ruling simply verified it as legal.

As Thomas W already pointed out, many manufacturers haven't nor plan to use the retail price fixing model in their business. The ruling changes nothing about the market.
 
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