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Re: New Piano Pricing Rant
#224885 10/24/08 05:46 PM
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Originally posted by Beacon Chris:
Hey Everyone!

After following this a little bit (I must admit I didn't pay close attention to some of the back and forth stuff) I deciding to jump in with some observations.

First, I agree with many of the points made. Piano dealers do need to generally upgrade their business model quite a bit, and there are some terrific opportunities out there for those who do. I think the points made by Caz are to be well taken. Furthermore, I think that many in the business only listen to the narrow industry trade ideas. There are many ways to "skin a cat" and kudos to those dealers who innovate.

Second, it is completely the customers right to try for the best price. This is the customers responsibility. Absolutely. We also know as customers that there are traps (car shopping comes to mind) in making a high end purchase. The intelligent consumer has every right to study up and walk into a purchase informed and ready to go.

Third, the dealer of pianos has every right to his confidential relationships and pricing. Transparency insofar as landed cost to the dealer is his/her business alone. If a dealer were to be so cavalier to post his wholesale and retail on the piano he would go quickly out of business. Why? Because 90% of consumers could not understand a profit margin of 40%. The dealer would be forced to sell at $500 or $1000 over cost or lose the sale. Could you imagine the low margins on extremely expensive pianos? No one would stock them.

Now, in exploring the 40% margin, there are all sorts of proposals made by very sharp people for a model which would reduce operating costs thus enabling a lower margin. However, I think where Steve and Marty are coming from is that in the history of piano stores so many business models have been tried in so many economic climates and practically the only ones that have survived (not counting stores operating under the table) are the dealers selling at 40 margin or close to it.

I hate to bring the bad news, but no matter how you skin the cat, (and it has been done MANY ways) as an owner of a store, you have to come back to the 40 margin. Some can do it lower for a certain time, but without the 40 there is just not the ROI.

Bear in mind, I love to sell under margin and make a friend. Most dealers want to be the good guys. Problem is, numbers are numbers. They are cold, hard facts for all of us.

By the way, congratulations are in order for those who can survive and prosper under standard margin running legitimate business. They are the innovators.

My thoughts...

BC cool
Great post Chris.

Our industry is not stuck in the past with outdated business models.

I for one read Music Trades, Music Inc., Music Retailer and the PTG Journal every month. I am sure most other dealers also do. We talk to our shoppers and customers every day. It's not like we talked to the years ago and sequestered ourselves.

Through all of the posts and rants in this and many other threads, I still have not heard of a pricing structure, other than the status quo, that would work.

Additionally, between Larry Fine, The Piano Blue Book the Piano Forum, and other Internet sources we are considerably price transparent. Moreso that most other industries.


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My postings, unless stated otherwise, are my personal opinions, not those of my clients.
Re: New Piano Pricing Rant
#224886 10/24/08 06:05 PM
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Originally posted by Steve Cohen:
No. Pricing transparency isn't viable as competitors would use it to drive us out of business.
That's quite a change of tone about pricing transparency, isn't it?

Nevertheless, we are making progress on pricing transparency. On the C2 the best price seems to be aroud ~ $17.5K and on the RX-2 the best price seems to be around ~ $14.5K. That's important because they are 2 popular pianos for the general public.

I'm sure that best prices will inevitably emerge for other popular pianos. Thank you PW and the Internet at large!


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Re: New Piano Pricing Rant
#224887 10/24/08 06:17 PM
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Oh, BTW, I got the quote from article #69 in this thread.

Quote
Originally posted by Steve Cohen:
Quote
Originally posted by AJB:
[b] But I do feel that dealers (generalizing here obviously) are hopeless at marketing. They stick to an ancient and desperate business model that is not well structured for recessionary times. They are very conservative about marketing - placing far too much reliance on passing trade and traditional advertising. There is very little, if any, pro active activity to widen the market. And they are very risk averse when it comes to developing longer term sales opportunities and relationships - if that costs money or takes them outside the shop.

I know there are exceptions, but in my experience piano dealers are all but invisible.

Manufacturers are equally blinkered about developing the markets with some lateral thinking.

Adrian
I disagree. I think that, also generalizing, piano dealers and manufacturers have done pretty much everything they can to expand the market both locally and nationally (thru NAMM).

We have pushed lessons, organized efforts to promote and protect music in our public schools, bid pianos at very low prices to schools, built thousands of teaching studios, etc. Yamaha has invested millions in music education programs.

On a personal level, I developed The Public, Private and Parochial School Piano Loan Progrm which provides about 100 pianos to local schools each year at no cost.

It is easy to say that the industry should do more, but you and others don't seem to have viable suggestions as to just what else we can do!

As an industry we are still innovating. One dealership is working on setting up a foundation to encourage donations to public school music programs. NAMM has invested hundreds of thousands of dollars into programs to expand our industry. (Go to NAMM.org).

I would ask that, instead of posters whining about our industry's shortcomings that you realize that we are struggling as an industry and that we are doing what we can to be able to continue to serve you, and make a living.

No. Pricing transparency isn't viable as competitors would use it to drive us out of business. Having more than one dealer representing each major brand, as is often suggested, isn't survivable either.

It is easy to be a critic, and, I'll admit, there is much in the status quo to criticize. But I don't hear, and have never heard what anyone would do differently. All I hear is whining that we should fix prices, or publish costs, or "do a better job marketing", and other suggestions that are made by those who do not really comprehend our complex industry.

Easy for them to say....

[Sorry for the rant!] mad [/b]


I am 'doremi' because I play scales smile
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Re: New Piano Pricing Rant
#224888 10/24/08 06:35 PM
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I just looked through the day's proceedings here. Marty reported a restless night thinking about all this. Another member reported his joy at being back to join in the fun. This ain't right. If consumers and retailers are both frustrated, there should be no fun...just a mutual effort to listen to each other and learn.

Marty labeled his thread a rant. Rant usually means that the pot has boiled over spilling its contents in some unintended directions. Personally, I think his brushstrokes were too broad, but I can understand his frustration. At the end of the day, all he is asking for seems quite reasonable.
Quote
Don't report the price your aunt Lucy got. You don't know the details and she may not reveal all. Don't report prices you read elsewhere. This is second hand information and may or may not be reliable. If you got a great deal and want to crow, go for it. But, please add any mitigating details to be fair, i.e. was it a school loan, rental return, used, ding/dent floor model, age dated, big trade, etc.
I've never reported a price I paid here publicly and I won't. It's my business. But I will bear in mind Marty's admonition to not put much stock in second-hand reports. My own suspicion is that any malicious price-posting done here is done by competing dealers hiding behind false identities, but no matter.

On the bigger issue, I can't imagine that prices will firm up to any degree of consistency as long as the supply is so much greater than the demand. With all the desperation out there, the number of special circumstance sales are going to get in the way of consistency. I remember reading on Bluebook that the prices listed there were not a reliable guide because in this economy every transaction is a unique event. I think there's some truth to that.

If more piano retailers close their doors, I hope the ones with integrity make it and the charlatans are the ones eliminated. Unfortunately things don't always work out that way. Integrity and intelligence are two different things.


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Re: New Piano Pricing Rant
#224889 10/24/08 06:51 PM
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Turandot, it's not often I say this, but here I go: Great post. thumb

Marty, I'm sorry if you have found this thread more aggravation than it was worth. I think some good points were made here (along with some, er, not so good ones), and I personally believe that if the thread helps prospective shoppers put the prices they read here in (healthy) perspective, it was worth it.

Hope you have a terrific weekend. smile

Re: New Piano Pricing Rant
#224890 10/24/08 07:03 PM
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turandot, Marty PM'ed me and I responded: "I have nothing against you personally. I have something against the piano trade at large."

I have nothing personal against ANY piano dealer here, I don't know ANY of them.

I do have 'something' against the piano trade at large, that 'something' being pricing obfuscation that is being twisted like a nose of wax in all directions. I have watched this twisting since well over a decade, it is still the same.

Luckily, some of the underlying facts are beginning to shine through. I disagree that we should not report prices paid. On the contrary, I strongly recommend that we all should report prices paid.

But it does not matter a yota whether you and I are pulling on one end of the rope or the other. There are a growing number of "prices paid" threads as for any other products discussed on the Internet.

All in all pricing disclosure is a good thing, although there will be shakeout 'hiccups' no doubt. I bet that you and all of us have looked up prices on the Internet many, many times.


I am 'doremi' because I play scales smile
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Re: New Piano Pricing Rant
#224891 10/24/08 07:07 PM
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Originally posted by Monica K.:
I personally believe that if the thread helps prospective shoppers put the prices they read here in (healthy) perspective, it was worth it.
Good, that presumes pricing disclosures in the first place.


I am 'doremi' because I play scales smile
My teacher is 'domisol' because he plays chords shocked
Re: New Piano Pricing Rant
#224892 10/24/08 07:52 PM
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Originally posted by doremi:
Quote
Originally posted by Monica K.:
[b] I personally believe that if the thread helps prospective shoppers put the prices they read here in (healthy) perspective, it was worth it.
Good, that presumes pricing disclosures in the first place. [/b]
Yes, but not because I necessarily think it's a great idea to share prices, only that I think it's inevitable. I believe some piano-related forums don't allow price disclosures at all. I think PW is too big to permit that kind of policing, and I happen to be a big fan of the first amendment in any case.

Re: New Piano Pricing Rant
#224893 10/24/08 08:05 PM
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Re Monica K's - as usual sensible post - on sharing prices, members should look at Australian and New Zealand prices to see just how cheap accoustic pianos are in the U.S.!!

ILH


"Oh for a world with no 'muzak' in stores ...."
Re: New Piano Pricing Rant
#224894 10/24/08 08:26 PM
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Originally posted by doremi:
An exit from this thread, after the PW jury gave an unfavorable verdict for pricing obfuscation,
I almost bought a t-shirt once that said "Eschew Obfuscation" but decided instead on one with a picture of Stonehenge that read, in cyrillic letters: "Gimme that old tyme religion"


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Re: New Piano Pricing Rant
#224895 10/24/08 09:25 PM
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Originally posted by Semper Bösendorfer:
Re Monica K's - as usual sensible post - on sharing prices, members should look at Australian and New Zealand prices to see just how cheap accoustic pianos are in the U.S.!!

ILH
See here the clearest benefit of sharing prices. Larry Fine started it in the US and the Internet does the rest.

Get a Larry Downunder


I am 'doremi' because I play scales smile
My teacher is 'domisol' because he plays chords shocked
Re: New Piano Pricing Rant
#224896 10/24/08 09:29 PM
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Originally posted by U S A P T:
Quote
Originally posted by doremi:
An exit from this thread, after the PW jury gave an unfavorable verdict for pricing obfuscation,
I almost bought a t-shirt once that said "Eschew Obfuscation" but decided instead on one with a picture of Stonehenge that read, in cyrillic letters: "Gimme that old tyme religion"
The old tyme religion says in cyrillic letters: Thou shalt confess (not obfuscate) thy sins.


I am 'doremi' because I play scales smile
My teacher is 'domisol' because he plays chords shocked
Re: New Piano Pricing Rant
#224897 10/24/08 09:29 PM
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Originally posted by Monica K.:
Quote
Originally posted by doremi:
[b]
Quote
Originally posted by Monica K.:
[b] I personally believe that if the thread helps prospective shoppers put the prices they read here in (healthy) perspective, it was worth it.
Good, that presumes pricing disclosures in the first place. [/b]
Yes, but not because I necessarily think it's a great idea to share prices, only that I think it's inevitable. I believe some piano-related forums don't allow price disclosures at all. I think PW is too big to permit that kind of policing, and I happen to be a big fan of the first amendment in any case. [/b]
Not to be too fussy about any of this Monica, but it is important to note that a moderated, sponsored internet forum does not qualify as 'public' so Frank has every right to impose whatever restrictions he wants on the discussions here. It is also interesting to me that the American concept of 'free speech' is far more liberal than what would be allowed in many other Western nations, including my own. I'm not suggesting it is good or bad, just that different nations take different approaches to collective vs. individual responsibilities. I apologize in advance for getting off topic.


Doug
Re: New Piano Pricing Rant
#224898 10/24/08 10:38 PM
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Go to work, come home, and, wow, this thread continues to keep right on flowing. So I'd like to elaborate on the theme I wrote about called gone with the wind. It's not quite the same as what happened in the old South when an entire system was uprooted.

Piano dealers have traditionally had three sources of sales: institutions, walk-ins, and referrals from teachers/technicians. Since there were virtually no sources of information about pianos pre-Internet, except through the dealers, that gave those dealers a strong control over buyers, especially those who were new to the industry.

Today, those three sources still exist, except an increasing percentage of the prospects are finding out valuable information from independent sources, which changes the sales equation. The big questions are what is that percentage and what is the rate of change, so you can project that number into the future.

Okay, now let's tie this all together. As we all know, the 40% margin is a gross profit, not a net profit. Even the best dealers probably end up with a net profit of 5 to 10%. Hence, it doesn't take much of a change to customers to impact the bottom line, and require serious rethinking of the company's sales and marketing strategies. Rather than be a wholesale change like what happened in the deep South, gone with the wind to piano dealers is more like a tipping point, following which they must react or go out of business.

Furthermore, there is no historical data or best practices to look at to help make those changes. Basically, the leading edge is still figuring out what to do.

All we really know is that pianos aren't going away because people still want them; and when there is demand, there will always be smart people who figure out how to meet that demand.

The case in point on this particular thread is pricing. The Net opens the door to various forms of price sharing in an industry that traditionally has not had any.

In fact, Larry Fine filled a vaccuum with his pricing addendum, no matter how imperfect it is. As soon as a more efficient source is found, the Fine addendum will decline in popularity. Until that happens, however, those customers doing outside research will continue to use it, and both manufacturers and dealers have to develop a strategy for working with it.

Personally, I'd use that as my MSRP unless the manufacturers actually publish one. Then I'd put an asking price that falls somewhere within the Fine range of 15% to 30%. Finally, I'd make sure my sales people were conversant with the Fine book, so they could talk intelligently to those customers who had read the Fine book.

I think the idea of publishing dealer invoices and trying to emulate the auto industry is a total non-starter because the piano industry isn't remotely like the auto industry.

I might, however, consider the idea of no-haggle pricing, although I'm not a big fan. As imperfect as the present model is, I think it's the best one available. In short, I don't think pricing or transparency (disclosing margins) is a serious problem. I think it's training your sales people to know the market well and to be able to give real reasons why your products have a strong bang for the buck, so they can talk with more informed customers.

Anyway, that's my 2 cents and I'm sticking to it ...

Re: New Piano Pricing Rant
#224899 10/25/08 01:26 AM
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I might, however, consider the idea of no-haggle pricing, although I'm not a big fan. As imperfect as the present model is, I think it's the best one available. In short, I don't think pricing or transparency (disclosing margins) is a serious problem. I think it's training your sales people to know the market well and to be able to give real reasons why your products have a strong bang for the buck, so they can talk with more informed customers.
Caz,

I agree with you that price transparency as you define it [transparency = disclosure of margins] is not such a big deal when compared to having confidence that there is reasonable consistency in actual selling prices. Now a lot of the blame for inconsistency can be attributed to supply and demand, a tough economy, dealer desperation, declining interest in the instrument, gullible uninformed consumers, declining cultural values, the musical insolence of the younger generation laugh etc. etc. etc. However, there is something wrong with prices and pricing that has nothing to do with the economy, the level of interest in the product, or where sales are sourced from.

Manufacturers have set up bogus retail prices to permit their dealers to offer huge bogus discounts.

from Larry Fine
Quote
For example, if a dealer buys a piano for, say, $10,000, the MSRP might be $20,000, $25,000, $30,000, etc., depending on the formula a particular manufacturer uses for its MSRP. The purpose of the MSRP is to set an artificially high price from which a dealer can appear to be magnanimously offering a tremendous discount. Manufacturers differ in how they figure their MSRP. Dealers rarely actually sell a piano for anything close to the MSRP. The actual selling price will be the wholesale price plus whatever markup the market will bear. If I were to print the MSRP, the book would be chaotic and useless. It would be impossible to compare prices of different brands, or the offerings of different dealers. What would stop a manufacturer of a $10,000 (wholesale) piano, for example, of setting an MSRP of a million dollars so that dealers could offer a 98 percent discount?...

Most manufacturers want their published retail prices to be as high as possible so their dealers can appear to be offering a generous discount and still make above average profit margins. There is nothing wrong with this desire -- it is normal. But my job is to represent the interests of the consumer in making sense of otherwise confusing and deceptive practices. If you apply typical industry discounts (pages 113-117) to my list prices, in most cases this will serve as a reasonable guide to what you should expect to pay after some negotiating.

Dealers use these deceptive prices to offer a range of discounts from token, to modest, to dramatic depending on the sophistication and persistence of the buyer. Steve Cohen says that this is part of an 'optimal' situation in that it is the only viable solution. You have just said "it's the best one available". Here's what someone who sells far more pianos than Steve and you put together has to say.

from Ori
Quote

1. Can there be price transparency for customers physically visiting a store?
What does “price transparency actually means and what can dealers/consumers do in order to get this price transparency?

I believe, unlike what is apparently the prevalent notion in the piano industry, that price transparency within the showroom is possible.

Yes, there are many disadvantages to a dealer implementing such an approach within the showroom, especially when competing dealers take the more prevalent, “vague pricing” approach, but I think that many consumers can appreciate at the end of the day a dealer that is being straightforward, pricing each piano at the best price he think it should be sold for, and stick to this price without discriminating between his customers.

In spite of these disadvantages, I put my business for over a decade on the line, going against the mainstream, and providing my customers with a transparent price approach, witnessing and weathering the disadvantages of such and approach regularly.

Every customer gets the same price for the same pianos, at the same time, and under the same circumstances. I set the lowest price, which I think is going to be fair for both my customers and me, and do not negotiate from it.
I have sold a good number of pianos to forum members who visited here, some of which are likely to be reading this, and have had other forum members who visited me, yet decided that the right piano for them was not an instrument that I carry…and I think that they can all attest that this is indeed my pricing policy.
I am not afraid to discuss with the customers coming to my store the wholesale cost of the pianos I carry, as well as the costs involved in running a piano business, stocking inventory, maintaining, presenting and servicing it.

At the end of the day, most consumers understand this approach, and decide for themselves whether the value of everything provided by my business suits them or not. I’m sure that I have lost some customers who could not believe that the price I provide is really my bottom line, but these were usually consumers that did not have much time on their hands, and were not willing to do much research.

They were looking for a “percentage” of MSRP (which I completely disregard), or were looking to get thousands more for their trade in over its true value.

But I don’t think that the loss of these customers really hurt my business, which over the long run developed a very loyal customer base referring friends and family to me for their purchases, sometimes specifically because of the openness and direct approach that they found here.

Yes, the focus of my business is performance-oriented pianos, but I give the same transparency and respect to a family looking for a beginner upright as I do to those looking for a high-end grand.

I believe that in the long run, the straightforward and clear approach is the best way to go. The more dealers take this approach, consumers could focus on the VALUE each and maker and dealer is offering (including the musical value), rather than waste time making sure that they are not taken for a ride, or getting the best “deal”.

And what is the best “deal” anyway?
It is mostly smoke and mirrors , and an attempt to provide consumers with the feeling that they are getting something they often don’t.

The prevalent lack of transparency in the industry may not necessarily be done as an attempt to gouge consumers, but rather as an attempt to provide consumers with a sense that they are getting a better “deal” than they really do on their new piano, or better price on their trade in.

Historically, MSRP’s are based on a formula of double the wholesale cost. Nowadays, however, while some manufacturers still use this formula while setting their MSRP’s,others within the main stream of manufacturers use larger multiplier and even triple, in some extreme cases, the true wholesale cost to calculate their MSRP.
Two instruments may have the exact wholesale price, yet “discounting” one MSRP by 30%, may only lead to the other manufacturer MSRP before any discount…

This lack of transparency is coming, in my opinion, due to a demand from dealers, asking manufacturers to aid them presenting their pianos as better “deals”, without trying to invest the time to educate the customer.
This approach is largely responsible for the confusion and suspicion among customers, often leading them away from purchasing a quality instrument.

We as dealers must understand that for most consumers the piano is a luxury item, and if we intimidate and confuse our customers, they will forgo the piano lessons idea and find other activities for their children.
For this reason, it is particularly pity that the largest confusion is found at the lower end of the market, where most beginners start their search price wise (whether they end upgrading their budgets or not is a different story).

At the very low end of the market, within the segment of store brand stencil pianos that are often sold through one dealer only, the inflated and completely theoretical MSRP’s can even be four times or more the wholesale, allowing the dealer to offer discounts of “70%” in an attempt to create a sense of “an opportunity “. Usually other misleading tactics are used in an attempt to present the instrument as something, which it really isn’t....

If the demand from consumers for price transparency will be clear enough, and the tone of such Internet forums sets a mature approach, taking all into consideration and emphasizing the value each dealership and instrument can provide, rather than just be a board to whom got the lowest price (and especially when often the buyer doesn’t disclose, or is not aware of the particular circumstances that led him to get a certain deal), that will be a good first step.

This may bring more dealers to ask the manufacturers they work with for greater price transparency, and to the return to a more uniformed formula for MSRP’s, rather than the pricing chaos existing now.

As this happens, dealer-by-dealer, one at the time, MAY reconsider the benefit of a true straightforward approach versus the disadvantages, and decide to go this route.

Knowing the mindset of many dealers from one side, the approach of the “deal conscious” consumers from the other side, and the many disadvantages in maintaining a transparent price policy in my showroom… I won’t hold my breath waiting for this to happen on an industry wide basis.

Toss it around for a bit Caz. After you do, see if you still think the status quo is "the best available" model.


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Re: New Piano Pricing Rant
#224900 10/25/08 03:43 AM
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Marty clings to the refrain that the shoppers don't understand the floor costs etc that the dealers have to bear. I maintain that shoppers do not care. Marty's position may be factual - but simply does not feature among the average shoppers considerations.

I a not sure that they care much about price transparency either - I certainly do not. Mainly, I think, from reading threads here over the years and talking to people, I think piano shoppers simply want to feel that they are not overpaying - or being "ripped off" to use common parlance.

So logically the piano industry needs to find a way to deal with this.

Shoppers may accept that in very expensive areas, such as Manhattan or whatever, they may need to pay a premium - and they will pay that premium as long as there is no cheaper alternative reasonably nearby. But there comes a point where the price differential is unacceptable. This either drives a shopper to another district, another brand or a deferred or cancelled purchase. None of these is helpful for the original dealer where the piano was shown.

In many ways the Steinway model is what dealers should aspire to. There is a published recommended price that applies everywhere in a territory. There is a common perception that dealers do not discount much )though we know this is not really always true, it is still a helpful perspective for the industry). The Steinway model creates a perception of fairness and value - you will pay pretty much the same for a Steinway wherever you buy it (without going abroad).

So I hold that the Steinway model is the gold standard that dealers and manufacturers must aspire to.

Yamaha clearly grasped this point when they introduced minimum selling prices a while ago. Squeals of protest from consumers, but from an industry perspective clearly a good idea and likely to protect both dealer margins and territories (as there is no arbitrage opportunity).

So piano retailers - following this logic - need to lobby their manufacturers to adopt the same policy as Steinway and Yamaha for their brands.

This would stabilise prices for a brand. The shopper therefore does not need to worry that if he goes tro teh next state he will get a significantly cheaper deal.

This restores a degree of market stability whereby the shopper now mainly worries about which brand to buy and which size of piano.

It would make far more sense to me if manufacturers and dealers got together to establish a realistic retail price for pianos (not daftly over inflated ones against which huge discounts are applied) and then limit the permissible discount to a modest range of say up to 10%. Then, if dealers do not comply - they lose the franchise.

Adrian


Currently playing 2017 C212 with carbon fibre soundboard, WNG action. Working on Bach, Beethoven, Grieg mainly.
Re: New Piano Pricing Rant
#224901 10/25/08 06:29 AM
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I've read this thread with some interest. I don't claim to know a great deal about the piano industry. (However a post mid-thread attempted to eliminate people who owned pianos as non-potential-customers, so I can at least offer that at some point in the future I'd like to purchase an acoustic.)


Quote
Originally posted by AJB:
Marty clings to the refrain that the shoppers don't understand the floor costs etc that the dealers have to bear. I maintain that shoppers do not care. Marty's position may be factual - but simply does not feature among the average shoppers considerations.
This is probably the best observation in the whole thread. Why should the shopper care about the shop? People always lament the slow demise of small shops and customer service in the face of department stores and online businesses in various industries, but the customers ultimately hold the power in any market. Their choices directly cause one business model to fail and another to succeed.

Why is the piano industry different? The claim that 90% of the dealers would fail if pricing was more transparent strikes me as meaningless. The market will support exactly what it will support. This is supply and demand. The point being that if you end up with only 10% of the dealers, but those dealers can sell more pianos, at lower margins, over a larger area, with clearly marked pricing, then everyone wins. The industry would move more pianos. The customers would get cheaper pianos. This is how most industries work, and I struggle to see why the piano industry is any different.


To relate back to the start of the thread: If an anonymous post on an internet forum can threaten your sale because someone walks into your shop and has only that post as a price reference, then the issue is not the post, or the forum, but the inability of the consumer to check prices against a number of sources as they would expect to do in most other product markets. This does not mean the consumer is wrong. The customer is always right, or so the saying goes. Like it or not, people are used to being able to make an informed decision on their purchases these days, and withholding information as a sales strategy sets off alarms in peoples heads. The alarm that says "You're getting ripped off!"


Also:
"It wasn't a bad idea, Wash, but eliminating the middleman is never as simple as it sounds. (...) 'Bout 50% of the human race is middlemen, and they don't take kindly to being eliminated." - Malcolm Reynolds, Firefly.

Re: New Piano Pricing Rant
#224902 10/25/08 06:56 AM
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Fair pricing disclosure? Which price should the consumer know? The wholesale price or the MSRP? I'm all for the public knowing what the MSRP is. There is sufficient mark up for the dealer's profit with the MSRP.

Let's just cut to the chase here. No one should presume to tell a dealer how much to charge for a piano.

The suggested retail price from the manufacturer is double what the retailer pays. The dealer has the option of reducing the MSRP in order to sell to his particular market.

If his cost is $12,000 for instance, then the MSRP is $24,000. The dealer may choose to sell that piano for $18,000, which by most retail standards is a very reasonable price to the consumer.

Making a profit is the only reason a dealer is in business and selling pianos at cost is the quickest way into poverty.


Registered Piano Technician
Serving Colorado Since 1978
randy@karasikpiano.com
www.karasikpiano.com
Re: New Piano Pricing Rant
#224903 10/25/08 08:05 AM
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Well, I thought this thread was done a few days ago but I guess not.

I don't remember reading the resurrected Ori thread before. Interesting. In it, Ori describes the pricing policies in his store. Other dealers (Rod, for one) also claim to operate this way. Unfortunately, fixed instore pricing does not address the general issue of price uncertainty in the piano market which has become the subject of this thread. This uncertainty means simply that a shopper must always assume that the initial price quoted in any piano store (other than a Steinway dealer) is much higher than what the seller will actually settle for. There is no way to know that Ori or any other dealer will not negotiate and that his tagged prices are final, internet forum declarations notwithstanding. Customers must always attempt to negotiate for their own protection whether they like it or not. Just as importantly, there is also no way to know that Ori's (or any other dealer's) prices, fixed or not, are competitive without a lot of research that must be done, unfortunately, with no help from the piano business. IMO, this situation makes it more difficult to buy a piano and it makes it more difficult to sell a piano. Nobody benefits when shoppers cannot easily determine the price of the piano that they want to buy. I can think of no other product where this situation prevails (not even digital pianos); overall piano sales are almost surely lower than they would otherwise be as a result. I believe the situation persists because of entrenched interests and fear of the inevitable shakeout that follows change in any business. As an aside, I think demands for access to dealer costs are a red herring. Nothing is more useless or of less interest to me when shopping. All I want to know is that the price I pay is competitive and that the next customer will not pay a significantly different price for the same thing in the same store or across town. I think that Steve's claims that these objectives cannot be met are wrong and that change is inevitable and coming. The longer it is resisted, the harder and more difficult it will be.

By the way, I believe that Steinway is almost there now. All that's missing is pricing on the Steinway web site. Why they don't provide it is a mystery because their list prices are freely available for the asking in every Steinway store and they all seem to sell at prices very close to those list prices. That would set an example for the industry from one of the industry leaders.


Buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it.
Will Rogers

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Re: New Piano Pricing Rant
#224904 10/25/08 08:37 AM
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Hi T,

I think there's a middle ground. No haggle pricing may be the best theoretical model, but I believe there are lots of people who think that some haggling is a part of the process of buying certain types of high-ticket items. They like to haggle a bit as part of buying in the competitive world. Dealers also don't have uniform pricing needs, i.e. their cash flow needs vary, so they may sell at a lower price on occasion to meet those needs. While that may not be perfect, it meets the realities of the market.

Adrian in a post on this page wrote, "I a not sure that they care much about price transparency either - I certainly do not. Mainly, I think, from reading threads here over the years and talking to people, I think piano shoppers simply want to feel that they are not overpaying - or being 'ripped off' to use common parlance."

I think that's the key, The customer wants to feel comfortable he's not being ripped off. I very much agree with you, for example, that it's a very bad model when stores treat their customers with disdain by jacking up the MSRP to a ridiculous number, so they can make customers feel that they're getting a superdeal, or by playing tricks on customers. That's the kind of store that the industry could do without -- and that this type of forum can help people avoid.

To me, Larry Fine tried to create this type of middle ground by publishing what amounts to a reasonable MSRP, and telling customers that there's a certain amount of wiggle room in the pricing.

Would it be better if manufacturers really did publish real MSRPs, like Steinway, and expected dealers to largely keep to it? I certainly can't disagree with that. But that doesn't appear to be how the world really works. It happens with cars because of federal disclosure laws, but it certainly doesn't carry over to other big ticket items, such as major appliances. Competition drives low prices.

Where this ends up is that what customers want drives the market. If customers flocked to a dealer who established no haggle pricing, then that's how dealers would sell pianos. It hasn't worked in autos and its the rare piano store that sells that way. Ori's strategy, for example, works well for him, but it did not lead to a chain of superstores across the country that has changed how everyone buys pianos.

I'd also like to add that stores that cheat customers aren't the norm either. Most stores have reasonable pricing where they start at an asking price that's 10% to 20% off MSRP, and then have a bit of room to haggle. Most customers end up making a deal with which they're satisfied, and the industry keeps plugging away.

While the Net has certainly impacted sales models and has led to some unrealistic expectations, which led to Marty's rant, the Fine addendeum helps right those unrealistic expectations by providing everyone with a realistic place from which to reach reasonable deals.

To me, the long-term answer to this issue is education. Dealers can no longer expect to control sales, and have to keep up with what's going on in the market, and expect their sales people to do the same if they want to match today's more educated consumers.

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