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Re: What does the percent increase from SMP to MSRP indicate? [Re: dogperson] #2863910 06/29/19 11:07 AM
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Originally Posted by dogperson
Originally Posted by Steve Cohen
There was a thread I started and posted heavily in called The Taboo Issue of Piano Pricing (or something like that).

I can't find it, but if someone can find it, it would answer many questions raised here.


Here is the link


http://forum.pianoworld.com/ubbthreads.php/topics/909088.html


Interesting points in this link.



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Re: What does the percent increase from SMP to MSRP indicate? [Re: pianoloverus] #2863913 06/29/19 11:25 AM
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I do not see why one should feel guilt about asking a
question ???
Even if one decides to buy (direct from the factory)
it would cost a huge amount especially bringing the
piano to N America !
Now one is told to feel bad about what you are thinking! !
J&J There are so MANY real things things in this present world to feel bad about !!!

Re: What does the percent increase from SMP to MSRP indicate? [Re: Lady Bird] #2863949 06/29/19 01:47 PM
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LadyBird- I never said you should feel bad. Feel however you want. I just stated the reasons why the piano dealer’s markup isn’t disclosed and all the things that markup covers.


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Re: What does the percent increase from SMP to MSRP indicate? [Re: j&j] #2863952 06/29/19 01:57 PM
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Originally Posted by j&j
LadyBird- I never said you should feel bad. Feel however you want. I just stated the reasons why the piano dealer’s markup isn’t disclosed and all the things that markup covers.

Good ! I prefer you saying it this way !

Re: What does the percent increase from SMP to MSRP indicate? [Re: Lady Bird] #2863969 06/29/19 02:24 PM
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Originally Posted by Lady Bird
Originally Posted by j&j
LadyBird- I never said you should feel bad. Feel however you want. I just stated the reasons why the piano dealer’s markup isn’t disclosed and all the things that markup covers.

Good ! I prefer you saying it this way !


+1



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Re: What does the percent increase from SMP to MSRP indicate? [Re: pianoloverus] #2863985 06/29/19 04:01 PM
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During my shopping and visiting many dealerships, this is the pattern I noticed.

MSRP is an imaginary number that the manufacturer hopes to sell the piano for. It could be reasonable (like for Yamaha U1, because there are so many out there and Yamaha is competing with itself in the used market), or totally bogus.

Piano Buyer SMP (Suggested Maximum Price). The use of the word Maximum is interesting. The authors explain that this is based on dealer wholesale price plus "reasonable" yet "maximum" markup. I imagine the editors are paid via advertising, so they are unable to print wholesale prices without losing all of their advertisers. Piano Buyer is a very useful publication and I wish them to continue.

I have been quoted anywhere from 0% to 50% off the SMP for pianos, but never outside this range. So I think SMP is probably twice (2X) the wholesale price. As mentioned in Piano Buyer, I personally observed that Kawai was willing to be more aggressive on discounts than Yamaha.

Dealers need to make a profit on each piano because the risks are high--pianos take up a lot of room, and can sit for many years, requiring several tuning per year ($$$). Unlike grocery stores where they can lose money on milk and eggs and profit on snacks and cola. Or Amazon, where they don't make any profit from goods, but from membership fees.

As a customer, I want to pay the lowest possible price (dealer wholesale cost), but I also want the dealer to stay in business (some markup above that). This is where negotiating happens, with many factors involved. I was quoted 40% off SMP for the piano I purchased, excluding tax and delivery. I recognized this as a good price based off my understanding of the SMP. I was happy with the price.

The only exception for SMP was for Steinway. I think it's their policy to not offer ANY discounts for new Steinways and Bostons. Occasionally I've heard of (but have not seen) 10% discounts off SMP. But they want to play in their own league separate from all the other piano manufacturers, and they've been successful so far: I've never seen so many brown, old, tired, worn out pianos praised so much and sold for so much just because it had "Steinway" on the fall board. Good for them!

Re: What does the percent increase from SMP to MSRP indicate? [Re: pianoloverus] #2864055 06/29/19 07:36 PM
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Well I really do not think I would have been able to get
40% off my piano unless I waited until the instrument had been a floor model for 4 or 5 years.
It may vary as you imply on the brand but I think also
the dealer and the many variables as Steve Cohen suggests in the older thread where he gave answers
to this.
I am glad you were able to receive this discount.

Last edited by Lady Bird; 06/29/19 07:39 PM. Reason: Missing word
Re: What does the percent increase from SMP to MSRP indicate? [Re: pianoloverus] #2864065 06/29/19 08:16 PM
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Steinway, as far as I know, actually requires dealers to report sales figures including all sales prices on new pianos, monthly. If dealers are caught cheating (discounting pianos but reporting full price sales), they can land in trouble. This generally discourages them but I think you will find a few who, if they trust you not to squeal, may be persuaded to offer discounts.

Re: What does the percent increase from SMP to MSRP indicate? [Re: oldMH] #2864070 06/29/19 08:25 PM
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Originally Posted by oldMH
Steinway, as far as I know, actually requires dealers to report sales figures including all sales prices on new pianos, monthly. If dealers are caught cheating (discounting pianos but reporting full price sales), they can land in trouble. This generally discourages them but I think you will find a few who, if they trust you not to squeal, may be persuaded to offer discounts.


If that is true, wouldn't that be "price fixing"? Restrain of trade? If not, why not?


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Re: What does the percent increase from SMP to MSRP indicate? [Re: Steve Cohen] #2864088 06/29/19 10:57 PM
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Originally Posted by Steve Cohen
Originally Posted by oldMH
Steinway, as far as I know, actually requires dealers to report sales figures including all sales prices on new pianos, monthly. If dealers are caught cheating (discounting pianos but reporting full price sales), they can land in trouble. This generally discourages them but I think you will find a few who, if they trust you not to squeal, may be persuaded to offer discounts.


If that is true, wouldn't that be "price fixing"? Restrain of trade? If not, why not?

https://www.ftc.gov/tips-advice/com...alings-supply-chain/manufacturer-imposed



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Re: What does the percent increase from SMP to MSRP indicate? [Re: pianoloverus] #2864097 06/30/19 12:49 AM
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IIRC, master88er once posted an informative breakdown of salary and commission structures. Discounts, margin and markup only tell a small part of the story.



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But there are dreams that cannot be
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Re: What does the percent increase from SMP to MSRP indicate? [Re: pianoloverus] #2864217 06/30/19 10:36 AM
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Thanks to Retsacnal for the very informative link on the FTC rules for pricing. In the case of Steinway, they have also moved toward a company owned store model. The store that we have visited in the SF Bay Area as well as many others in the Bay Area (maybe all?) are company owned. Clearly Steinway wants to have control of pricing levels for their pianos. I am guessing that the amount they offer in trade for your old piano may be a way to have some pricing flexibility.


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Re: What does the percent increase from SMP to MSRP indicate? [Re: pianoloverus] #2864326 06/30/19 02:55 PM
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If a dealer can sell her entire stock, then she has little incentive to lower prices.
If a producer can sell his entire production capacity, he has little incentive to lower prices.

Maximizing profits is a delicate balance between a number of factors, but, in the large, it's a balance between marginal profit per unit sold, and the number of units sold. For example, Steinway could sell more units by lowering their prices, but they'd earn less per unit. And they could earn more per unit by producing fewer, but then obviously they'd have fewer to sell. Steinway has probably found the sweet spot -- or "equilibrium" -- at which they are maximizing the number of units produced times the sales price for their mass-produced premium product.

So, why might a dealer be tempted to discount? Well, the market is dynamic, so that sweet spot is always changing. When prices have historically risen at a rate higher than inflation, my gut, and the law of supply and demand, tells me that there must be a corresponding decrease in demand for the product. How does the company determine that there's an oversupply? One significant symptom is that there's unsold inventory in the pipeline. A manufacturer eases oversupply by slowing or cutting production. If the "glut" manifests itself as unsold inventory in a dealer's showroom, she may feel the pain a little more personally and be tempted to lower the price to sell it, lock in some profit and/or recoup the resources she has tied up in stagnant inventory.


Anyway, back to the original topic...

In North America, prices are essentially set relative to Steinway. They enjoy a hegemony of mindshare. Most folks would buy a Steinway if it weren't for other considerations or constraints, and that's the space in which other brands compete.

In short, MSRP is indicative of the manufacturer's quality claims, and SMP is something of a reality check about how much a piano will actually sell for.



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But there are dreams that cannot be
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Re: What does the percent increase from SMP to MSRP indicate? [Re: pianoloverus] #2864343 06/30/19 03:19 PM
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I just re-read what I typed above and see a major typo (or oversimplification). Price increases can also be driven by increases in demand as well. I wrote the above with the benefit of knowing that the US piano market is shrinking. Supply and demand can move in the same direction, or opposite, or change magnitude without changing directions. It's dynamic. It's complicated.

Anyway, my overarching point is that if a dealer who traditionally "doesn't haggle" does, it's indicative of a change, and probably downward pressure on prices, at least in the short term.



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Re: What does the percent increase from SMP to MSRP indicate? [Re: Retsacnal] #2864348 06/30/19 03:23 PM
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Originally Posted by Retsacnal
In North America, prices are essentially set relative to Steinway. They enjoy a hegemony of mindshare. Most folks would buy a Steinway if it weren't for other considerations or constraints, and that's the space in which other brands compete.
I don't think most piano buyers are even aware of the cost of a Steinway when they purchase their Yamaha, Kawai, Baldwin, or other piano. So I don't think the prices for those pianos or others are set relative to Steinway.

Last edited by pianoloverus; 06/30/19 03:24 PM.
Re: What does the percent increase from SMP to MSRP indicate? [Re: pianoloverus] #2864353 06/30/19 03:28 PM
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The buyers don't set the prices. Sellers set the prices.



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Re: What does the percent increase from SMP to MSRP indicate? [Re: Retsacnal] #2864361 06/30/19 03:45 PM
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Originally Posted by Retsacnal
The buyers don't set the prices. Sellers set the prices.


On this I must disagree (kinda sorta).

If a seller's prices are to high, buyers offer less.

So who is really setting prices!

wink


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Re: What does the percent increase from SMP to MSRP indicate? [Re: Retsacnal] #2864382 06/30/19 04:08 PM
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Originally Posted by Retsacnal
The buyers don't set the prices. Sellers set the prices.

In the vein of Steve Cohen's comment: the market sets the price. MSRP -- and SMP, for all we know -- are arbitrary figures. The amount on a paid-in-full invoice is the price.

Re: What does the percent increase from SMP to MSRP indicate? [Re: pianoloverus] #2864403 06/30/19 04:27 PM
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Originally Posted by Steve Cohen
Originally Posted by Retsacnal
The buyers don't set the prices. Sellers set the prices.


On this I must disagree (kinda sorta).

If a seller's prices are to high, buyers offer less.

So who is really setting prices!

wink




If people could get a Steinway for the price of a Yamaha, Kawai, Baldwin, then why don't they?

Why won't people pay as much for a Yamaha, Kawai, Baldwin as they will pay for a Steinway?

What causes the relative difference in actual paid prices?

wink



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That we will live the years together
But there are dreams that cannot be
And there are storms we cannot weather
Re: What does the percent increase from SMP to MSRP indicate? [Re: mcontraveos] #2864405 06/30/19 04:30 PM
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Originally Posted by mcontraveos
Originally Posted by Retsacnal
The buyers don't set the prices. Sellers set the prices.

In the vein of Steve Cohen's comment: the market sets the price. MSRP -- and SMP, for all we know -- are arbitrary figures. The amount on a paid-in-full invoice is the price.


Of course, these are somewhat arbitrary numbers. But they are more accurate for some than for others. For most, MSRP is a pie in the sky number. For many, even SMP is a pie in the sky number.

Are people more likely to pay closer to MSRP for a Steinway, or a Yamaha, Kawai or Baldwin?



And still I dream she'll come to me
That we will live the years together
But there are dreams that cannot be
And there are storms we cannot weather
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