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Excellent discussion.

I am glad that everyone has kept it civil, because I know I have learned a great deal from this thread, and look forward to reading more.

-pedagogue

Pedagogue, I totally agree. Civil discussions are so much more interesting and rewarding in the long run....

Barry -- job well done! It doesn't matter how precise/accurate your formulae are. They are 'ballpark' and a great 'starting point' for the average piano consumer. Using your math, I have confirmed that I got a good, but maybe not amzing, deal for my piano. I hope the dealer did OK on it because I'm very happy on my end -- which is what matters isn't it?

john, eh?

Posting prices is not taboo.
Dealers will make you think it is.
Guilt is the most effective tool in their bag of tricks.
Confusing you is next.

Dealers want to keep prices up.
So they are threatened by the forum where buyers can post they prices they got.

Dealers like high prices.
Buyers like low prices.
Neither is a monster.
It is just business.

Information is power.

Putting a price on service isn't all that hard.

In our market a decent RPT gets about $90-$100 per tuning. They can do 4-5 tunings a day, so on the "outside" they can make about $400/day. Based on 8 hours they get about $50/hr.

They have little overhead. Of course they must acquire their customer base, which can be costly. And there is gas and wear on their vehicles.

In-store payment need to be somewhat competitive or they'd work independently.

I really like Beandoc’s post. It is possible to have a customer who is happy knowing that they paid a reasonable price and that the dealer made a reasonable profit!

Kenny, I like your point that “neither is a monster”. I also agree that there are some dealers out there using guilt and confusion, but there are many good dealers out there just trying to make a living in a difficult business.

Looking back at the posts in this thread, I noticed that, aside from Steve Cohen, the regular PW posters who are dealers have been noticeably absent. It just may be that they don’t find this to be an interesting or relevant discussion, but it strikes me as a little curious.

I’m starting to feel like I’ve hijacked my own thread. I really meant for this to be a consumer-to-consumer thread on how to determine what a fair price to pay for a piano is. Somehow it’s morphed in my mind into a crusade to convince dealers that they need to update their business model and that sharing pricing information with consumers will be to everyone’s benefit. I’ve changed my avatar from Van Gogh to Don Quixote for future posts to reflect my change

My theory is that dealers will make more money because customers are currently being turned off by the protective way that the system is set up. I was very turned off from buying a new Yamaha or Kawai

The harsh reality is that with the shrinking piano market it’s going to be hard for dealers, especially in small cities, to keep doing business the same way that they have been. The days of a customer only looking in the local store and believing what the dealer tells them are gone. They are going to have to convince customers that they offer services and conveniences that make it worth it for the customer to shop with them instead of going elsewhere. The jury is still out on whether enough consumers will see the value in this to keep the higher overhead stores in business.

I’d look to the car industry to see how it has changed. While it doesn’t have the problem of shrinking markets, it has been dealing with the issue of consumers knowing the invoice pricing and having to deal with customers shopping around. They’ve still managed to hide a little of their costs in dealer holdbacks and dealer rebates, but car dealers have found that the used car market is now much more profitable than the new one. Most piano dealers still focus on new pianos. Many car dealers have separate Internet sales staff. They deal specifically with the customer that knows exactly what they want and are surfing the Internet for the right deal. The Internet staff sells cars for less than the staff dealing with walk-ins.

I’ve seen my first sign of piano dealers moving this way. I got a great deal on a used piano that I found on the Internet. After the deal was finalized, I was talking with the dealer and he said that he would have charged several thousand more in the store. He said it was because he felt that he needed to do it to get my business. At first it struck me as odd, but he was right that I wouldn’t have been willing to take the risk of buying a piano site-unseen unless it was a great deal.

Barry

I don't have the book in front of me so I can't quote it verbatim but Larry Fine's supplement says that it is not uncommon for one customer to pay 50% more than another customer for the same piano on the same day at the same dealer.
End of sort-of-quote.

Why?
The negotiating skill of the buyer.

You will get the deal you are able to negotiate.
So will the dealer.

Kenny, this is highly variable pricing is exactly what’s wrong with the piano industry! Whether it’s cars or pianos, I’m usually able to get a good deal because I come in well armed with information and am not afraid to haggle, while a less informed customer pays a premium price for the same thing. Not only is this not fair, I’m sure that there are people, who don’t realize that the prices are negotiable, that walk out of the store never to be heard from again.

My wife liked the Pramberger that she tried, but the dealer was asking $30K. A week later, the dealer called to say that it was now on sale for $20K. By that time, we had already bought a different piano.

Barry

double post

In my opinion every price that is agreed to by the buyer and the seller is "fair", unless a gun is involved.

Yes it sucks for the buyers who don't know any better.
But that is the way it is with big ticket items like pianos, cars and houses.
The dealers make more on some sales than others, they make some average.

But something sucks for the sellers too:
The Internet, and The Piano Book.
A higher percentage of customers now come in with some information.

But just knowing someone else got the piano for x dollars is no silver bullet.

Sellers can still say no to any offer.

Kenny, while I’m sure that there are exceptions, I don’t think that most dealers are partying. From what I’ve read, the industry is going through a major shakeup. Piano sales have been decreasing since the 1930s. Any time that an industry is shrinking, things get ugly. As they get desperate, dealers will sell products at margins that are too low to maintain a business. Going-out-of-business sales will take customers away from borderline businesses which pushes them over the edge causing a domino effect.

I believe that the reason that dealers are clinging to the idea of hidden prices is that they are afraid that the customer will come in and beat them down to a margin that they can’t exist on. They’re faced with the choice of taking the deal to make a few bucks so that they can pay employees and keep the lights on or saying “no” and getting nothing. While no gun is involved, I’m sure that it feels like there is one.

As a small business owner, my heart goes out to them. That’s why I keep encouraging them to accept that it’s a changed world and to see if there is a way to make a living in it rather than clinging to a no longer valid business model. It’ll turn out that some dealers just can’t keep their doors open because their overhead is too high or their market is too small or customers don’t find enough value in their services. I’m hoping that by making the right changes before they are desperate that some dealers will find a way to make it work.

Barry

I see the point that dealers will make more profit off of some customers and less off of others, simply due to the fact that different people have a different willingness to pay. That willingness to pay for a consumer is affected by a number of things such as how informed he/she is, income level, necessity of buying a piano, flexibility in tastes for different brands, etc...
And different sellers have different willingness to accept bids from consumers -- this is a function of many things as well -- overhead costs, staffing costs, size of store, volume of sales in a year, etc...

Sellers engage in price discrimination because they can. The question of fairness is more of a judgment call -- depends on what you think "fair" really means.

However, my argument would be that, judgments of fairness aside, it _potentially_ may be in a _dealer's_ interest to be more forthcoming about prices, costs, etc.. and to have less "haggling" so that the dispersion of prices for same model/brand/no trade-ins/etc.. is less.
The reason is that this may build a sense of trust with customers that they won't feel "cheated" and this dealer may end up with much higher volume of sales, though potentially at the cost of lower margin per piano. I'm not saying this will be the case in _all_ markets (some small markets simply have too small of a volume of pianos selling each year), but in competitive ones, it may be the case.

The key is how much consumers value this level of "trust" and forthrightness. If there is a demand for this type of relationship, it will eventually come. So, maybe we will see a shift in how dealers deal with pricing/information.. but it may take a long time..

Analysis Paralysis:

In the end the unit you buy is only worth what you are willing to pay and can afford and how willing the dealer is to make the deal.

Nice formula but not really necessary. I recommend putting more time and effort into negotiations than exacting these calculations.

This goes without saying but I'll say it yet again.
Price isn't everything.

Selecting a good dealer who does good prep and has a good reputation and provides good after-sale support are all part of the equation.

Barry:

Your comments on dealers needing to review their business model for survival in this rapidly-changing industry is very insightful. As a veteran of nearly 40 years in the retail and wholesale piano business, I have witnessed many once-successful dealers close their doors.

Incidentally, there are marketing firms that conduct "Going Out of Business" sale events for insolvent music retailers (just as in the furniture industry), and ironically net much higher gross profit margins than the typical dealer. Just like university sales, armory sales and other piano major events, discount pricing is often an illusion over what a saavy consumer can discover with a little more research.

Perhaps what we need to adapt our businesses to would be a model that seems to work for Saturn and Car Max; that is a "no haggle one-price" policy. Consumers can be assured that they will get the same price as anyone else, and it will never be lower than the first time they visit the dealership. Of course, it would be the dealer's goal to convince every prospective customer that his total package of fair competitive pricing, service and support is enough incentive for them to make a purchase decision. Once the customer leaves the store and goes to other piano stores, or gets on the Internet to research prices, the chances of them returning to the original dealer and making the purchase at the quoted price decrease significantly. If there is no urgency to buy at a special price, the consumer will tend to keep shopping until they find that exeptional deal.

One final note is that the retail prices in Larry Fines latest supplement are not up-to-date with the industry. Most piano manufacturers have increased their wholesale dealer pricing in the last few months. Some annouce the new prices at NAMM in January and use February 1 as a deadline to order at last year's prices. Nearly every European piano builder has had to adjust prices up significantly to offset the 35-40% decline of the US dollar versus the Eurodollar, just to keep pace. Ancott is a service for the piano industry that tracks wholesale and retail prices, and is updated every six months. Even that resource does not take into account the additional discounts and price incentives offered to larger dealers that are buying containers of imported pianos at a time, or committing to larger quantities (100+) per year from a supplier.

Bottom line is that if a dealer loses money on every sale, he will not be able to make it up in volume and will soon be out of business.

Definition of a 'Deal' An agreement, especially one that is mutually beneficial.

For the seller; He / She receives compensation that is satisfactory to sustaining / maintaining his business and more important making a reasonable living at the agreed price. I’d be surprised someone would be in this business to lose money and subsidize another's Piano out of his pocket. If so, please let me know which dealer that might be.

For the buyer; He / She has acquired something they desire at a price they can afford (hopefully) and has tangible value commensurate with the agreed price.

We just finished a month plus long shopping for a high end Grand. I don’t think the high end Piano buyer should be approaching their purchase like a car, or even a house. At least for us I don’t see myself buying another Piano in my lifetime, unlike my Car and or home. For others if it is a stepping stone to another piano or just another purchase for a family member then they will have a different definition/criteria of what a “Deal” is.

Our experience:

Manufacture/Dealer A: We play all of their inventory and multiple models, ask many questions get much literature. We are told to decide and buy quickly since the value is excellent and a price increase is coming in January. What a fine investment this Piano is and it is worth every dollar of the listed prices. Rumor/belief is that this brand/delaer doesn’t negotiate. Piano’s listed price is the sales price.

Manufacture/Dealer B: We play all of their inventory and multiple models, ask many questions get much literature. . The dealer has a posted sales price much lower then the “listed” price in Fine’s book. In the ballpark of what was discussed in the very first post. It turns out the Piano is one of our finalists, we start some serious negotiating, get a additional reduction. It should be noted we have friend that just purchased this Piano from dealer at what some in this thread would consider a 'deal' off the 'listed' price. The friends felt like they got a great deal. Wow, list price x, my price y, a lot better then what I every got off on a car. Suffice to say we got a considerably lower price then that. This confirm's Kenny's and builds on NewPianoSeeker’s post of highly variable pricing! I have no clue did the Dealer get more inventory at a cheaper cost, knew we were considering another Piano brand and was trying to make the sell to us with less profit knowing the only knob left to him was price/ better deal, he couldn't change the piano, who knows, but the difference in price was signficant $$$$$. In the end we didn’t pick this Brand/Dealer because of the few dollars difference between what our friend paid and what it was offered to us. IE the great 'deal' was only a secondary factor in selecting a Piano. We picked another Brand/Dealer C simply it was the Piano we prefered. Price was per the 'Deal' definition.

Brand/Dealer C: We again played all of their inventory and multiple models, ask many questions got the literature. In the end we selected Brand C got what dealer claimed was the best deal he every gave. That was nice, but the bottom line we got the Piano we wanted at a price we were comfortable. Would I have liked a lower price, Yes. Was I satisfied I got a reasonable prices, Yes. Thus, the deal was done.


Charles

Kenny, I totally agree that price isn’t everything and that the other things that you listed also have value. It’s up to each person what they are worth to them. I personally didn’t place a lot of value on them when I bought a piano, but that’s just me. I may be influenced by the less than stellar opinion that I came away with from my local dealers. The piano tech that inspected the used piano that I bought didn’t have great things to say about the store, but recommended the piano after he inspected it. I rely on my local piano tech once I leave the store.

JCS, “analysis paralysis” is an occupational hazard that I deal with as an engineer That’s why I was pleased to discover some pretty simple rules for looking at a deal being offered and deciding if it was reasonable. These rules are just meant to be a general guideline to determine if the price is in the ball park of where it should be. Rarely a day goes by on this forum when someone doesn’t ask whether a price they’re being offered is reasonable. Most of them would have been at least helped by using these rules.

Even though I consider myself an accomplished haggler, I would much rather go into negotiations with a ball park idea of what is reasonable. I haggle to get a fair price, not to beat the dealer down to a margin they can’t live on.

Piano Peddler, you raise some excellent points. It’s been interesting to see that only Saturn has adopted the fixed pricing for new cars. You do a good job of pointing out the fixed price pitfall of having someone else undercut you with a “special” price. You may not be able to tell it from my posts, but I don’t think that I have all the answers It’s a very tough problem! We’ve all seen the “buy before midnight” deals used to rush people into a sale. It’s used because it’s effective. You’re point on the rapid changes in wholesale prices is well taken, especially with the falling dollar.

Again, the pricing rules that I proposed are just to get you started. Other factors like additional services being offered, recent wholesale price fluctuations, and the condition of the piano (in the case of used pianos) must be taken into consideration.

Barry -- self-appointed crusader for transparency in piano pricing

P.S.: Mary Anna warned me that this forum will draw you in even after you think you're done. She was right! My 14 year old son was reading over my shoulder last night and announced that this forum was "just instant messaging for old people!" Kids... can't live with them.

Crusader Barry, (as opposed to Crusader Rabbit for those old enough to remember) :

How would "transparency" work? Would dealers post their actual wholesale cost, or the published wholesale costs? How would they be transparent about their costs, as percentages or $$?

For example, how would the dealer be transparent with the cost of say rent or payroll as their part of margin on a particular sale?

Another question: We often buy large quantities of pianos to get a better price from the manufacturer/distributor. Our hope is that the savings will outweight the interest on the money. How would these kinds of factors be made transparent?

I think that the theory of transparency sounds good, for both the shopper and the dealer. In practice however, it is very complex. How would it work?

Good question, Steve! I didn’t make it clear that my quest is a move TOWARDS transparency. I don’t mean that each dealer should post their business ledger in the front window. I mean that dealers should move away from trying to hide the wholesale costs from the customer because it builds distrust. The other part of transparency is educating the customer on why an average markup of 43% is reasonable.

If a dealer is able to lower their overhead through volume purchasing, lower rent, or other methods then more power to them. This means that they can make higher profits at the same selling price as other dealers or can lower their price to bring in more customers. That’s the free market at work!

On the other hand, I’ve read posts on this forum saying that a dealer with higher overhead should charge their customers more so that the dealer can still make a reasonable profit. It may sound harsh, but nobody has the right to stay in business. It has to make economic sense. If a dealer is charging more than a competitor for the same piano then they need to offer more. It may be through additional or better services. It may be that the value in the customer dealing with someone that they know and trust. Or it may be the convenience of not having to travel to another city. Ultimately, it’s the customer who decides if they value what is being offered. Many small stores are closing when Wal-Mart moves in. The small stores may offer much better service, but too many customers are saying that they like Wal-Mart by where they spend their money.

In case you haven’t figured it out already, I’m not normal I have a much higher “risk tolerance” than most people when it comes to piano buying. Most people probably think that I’m crazy to buy a piano site-unseen. My feeling is that the piano technician is much better qualified to say whether the piano is good than I am. I know that there is the issue of each piano being slightly different in touch and sound, even within the same brand. I’m willing to take what I feel is a relatively minor risk that the piano would not be acceptable even after our technician has prepped it. With the deal that I got, I can afford to have quite a bit of work done. On the off chance that I’m still not happy, I could turn around and sell it for little or nor loss. The dealer that sold me the piano was able to bring in a gray market piano and turn it around quickly for a profit, so he was happy. I got a great piano at a great price, so I’m happy. This is a very different business model than most piano dealers use, but it worked for us.

I’m not trying to convert people to my way of piano buying. I’m just making the point that different customers have different things that they value. Dealers who are going to stay in business will need to figure out how to either satisfy a broad array of customer types or will identify a niche market that they can service. I think that dealers should seriously consider expanding their used piano sales. I think that they could make more money this way and the customer could get a better piano for less.

I swear that I’m not normally this long winded! My writing style has often been described as “terse”. These long posts just seem to pour out.

Barry

P.S.: Steve, I've changed my avatar to reflect my new thinking. I see that you're still a poker player

No. Not a poker player at all.

An ex-professional magician with a specialty in sleight of hand with cards.

Back to the thread...

Crusading for transparency without a methodology is fruitless.

If you owned my business how would you present your pricing? (If you need more info to answer, I'll try to accomodate you.)

Surely we have. I have found myself quietly identifying with previous posts of yours.

I'm not sure that store margins are what is responsible for the confusion amongst shoppers. I think the fundamental problem is inherent in the piano shopping process itself: that some pianos are junk, some are marginal, and some are fantastic, so you see prices from $1,500 to $150,000 and while you stand there scratching yourself in bewilderment the sales weasel is loading all of this contradictive baloney on you. You leave the store not knowing what to believe.

TO ANYONE WHO TRIES TO SELL PIANOS: The more and the longer you talk, the less I trust you and the less likely I am to buy a piano from you. Let the pianos themselves do the talking.

Would open wholesale invoicing published by piano manufacturers really help consumers in buying a piano, if the dealer has to add 40% to cover his expenses? You'll never get a piano from the dealer near his invoice price, so it's pointless to know what it is.

I would guess that it would save a lot of money to fill out a web form on the manufacturer's website and pay the wholesale dealer price to have a piano shipped directly from the builder and dropped on your curb in a crate. You could hire a mover to put it in your house and you could hire a tech to regulate and tune it. Why would this business model fail for the consumer and the builder? Are piano transactions too complex that we must get the value added from a dealer?