Customary discounts: collings and gibson

[jk245]

What is the customary authorized dealer CASH DISCOUNT that you can expect off "suggested retail prices" for new COLLINGS and GIBSON instruments?
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Assume that the dealer includes in-house setup and service.

[250sc]

You won't likely find much of a discount but either instrument will be worth the price.

[fredfrank]

I believe 10 percent is the number for either of those manufacturers. Collings had always been that way, but it used to be Gibson was all over the place depending on the dealer. Now, all Gibson dealers have clear guidelines they adhere to.

[Greenmando]

A few years ago Guitar Center was accepting offers on their discontinued Gibson F9's and A9's. GC was no longer a authorized dealer. We here in the cafe had a party with it. The common offer was to offer 50% of retail. I bought my F9 new for only $1600 in the case.

Go ahead and make a offer, at worse they can only say no.

[Ted Eschliman]

For the last decade+, retailers have pushed on to the consumers the concept of List Price minus "big discount." It worked for a while, fooling customers into thinking they were getting a "victory" in their purchasing, a 25% discount, a 40% discount, a 60% discount, whatever.

I say "fooled" because List Pricing is ordained by manufacturers with a purchaser's "victory" in mind. Nobody sells music products at list price and the consumer has been lulled into thinking everything HAS to be 25%, 40%, 60% off to be satisfied. What you've seen in the Consumer Electronics industry is now seeping into better instrument companies. Can you get 40% off on an Apple iPod? Why does Best Buy sell the same Sony flat screen for the same price as Circuit City? They've evolved beyond this discount mentality, forcing the retailer to compete on service, warranty, display, reputation, etc.

Gibson and Collings are ahead of the game in following this trend. We have to stop thinking in terms of "how much am I getting off the price," and what is the instrument worth, and is the bottom line price I write the check out for (or put on the plastic) what I'm acquiring.

It's a whole new pricing paradigm, and hopefully the music retail industry will catch up to this. Prepare to think differently.

[jk245]

On Collings and Gibson all on line distributors "show" about a 10% off 'list' thou some say to call for price.

IN STORE, with a CASH PRICE, how much negotiated discount is normal.
Like everything else negotiated there must be a drop dead price.

[Greenmando]

Wholesale cost is usually only half of suggested retail price.

[Big Joe]

It is still only a 10% discount. This is becoming the rule rather than the exception for most quality instruments. Not only Gibson and Collings, but G&L, Boureios, Santa Cruz, Gallagher, and Huss and Dalton to name just a few.

[Stephen Perry]

Mandohack has a very valid observation. Some firms post list prices 2.5 or even 3x the raw (prior to setup & shipping) wholesale cost, with "accessories" such as cases even more highly marked up. Others have the usual 100% markup on the main item, but publish highly inflated list prices for the cases etc.

A nasty but understandable trick is end colum pricing. Buy lots and get an extra 5 or 10% off the wholesale cost. Tends to hurt the small shop in price wars.

Fortunately service is really more important in most folks buying decisions. Buying instruments requiring setup and future service on the basis of price alone tends to backfire for instruments requiring periodic service. Instruments from outside tend to be a lower priority in the repair and service end of things.

[allenhopkins]

Wholesale cost is usually only half of suggested retail price.

From my brief music store experience, I found 100% mark-up to "suggested retail" wasn't uncommon. Store paid $500 for a "$1000 list price" instrument, offered a 40% discount, sold it for $600 and still made 20% profit.

I'm sure this varies with different manufacturers and different models. In the end, though, it's still supply and demand. Manufacturers can only exert control over the extent that retailers discount, as long as there are enough purchasers who'll accept a "mere" 10% discount. And of course, a 10% discount on a $25,000 DMM is equal in dollar terms to a 50% discount on a $5,000 instrument.

As pointed out above, what's important is whether the instrument is worth -- to you -- the bottom line price you're asked to pay. Just because you're "saving" many $$$ below some fairly arbitrary list price, doesn't make it necessarily a bargain. Having a local dealer who can help with set-up and service, or a reputable maker who'll stand behind a warranty, may be much more economical in the long run than saving a few hundred dollars and chasing the deepest discount.

[f5loar]

Didn't "Saturn" cars start that "no hassel sticker price" buying? Quality remains long after price is forgotten!
As a teenager in the 60's I worked for our local Gibson music store. The manager taught me early on that here is the Gibson Price list. We pay half that and you get what you can over that. I thought that was so cool back then and still think it's cool today!

[Ted Eschliman]

Store paid $500 for a "$1000 list price" instrument, offered a 40% discount, sold it for $600 and still made 20% profit.

I appreciate Allen's insight into what you pay is more important than what you save, but the above should be clarified a bit. An instrument that is sold for $600 that was purchased wholesale for $500 is actually considered 16.7% profit (100 div by 600). If it cost $30 to ship it to the store (est) the margin drops to 12%. Now factor in storefront expenses, labor, environmental control, new strings, repair staff attention, and this becomes even more abysmal. You certainly wouldn't commit your personal IRA decisions to mutual funds that give those kind of returns!

What the boutique manufacturer wants to do is insure incentive to continue offering all that middle part, the stuff a forklift, a warehouse and a Paypal transaction could never offer. If you've ever wondered why opportunities to experience mulitple mandolins in a retail environment continue to dry up, this should be pretty revealing. It goes without saying, us store owners like to eat...

[jk245]

Didn't "Saturn" cars start that "no hassel sticker price" buying? Quality remains long after price is forgotten!
As a teenager in the 60's I worked for our local Gibson music store. The manager taught me early on that here is the Gibson Price list. We pay half that and you get what you can over that. I thought that was so cool back then and still think it's cool today!

The internet disturbed this pricing.

We can now easily compare the prices of exactly the same item when purchasing from factory authorized dealers.

In the case of mando's, and other musical instruments, it is important to have good dealer luthier service for setup and support.

In the case that the local dealer has prices close to the internet prices, from legitimate dealers, then the local has an advantage.
You can sometimes still negotiate a better deal with the internet dealer.

There is one other consideration, if your State and Locality has a high sales tax then you have to add that amount to the purchase price from the local or the internet.

However, when the local dealer is substantially high then you have two (and more) choices
1) negotiate a better price with the local dealer
2) purchase from the internet and get local service and support.

[dr.jazz]

An interesting point you might consider is that any dealer who makes less than 30% mark-up on an instrument is going to go out of business. #And, in fact, the smaller the dealer the more he has to make to stay in business. #The larger the dealer, the more weight he can pull with his suppliers in order to get his cost of goods down and his profit up for the same item.

However, with a few exceptions It has been my experience that the smaller dealers are the ones that support the local musical community, provide a great service shop, or are just plain fun. #

'Course I do have a vested interest in this thinking, being a small dealer myself. # :-)

[Big Joe]

Not all manufacturers give discounts for volume purchases. Secondly, no handmade mandolin can be purchased in volume. No one can make that many. Third, a low purchase price is not good for the dealer which ultimately makes it bad for the consumer. If the dealer...the good ones...cannot make a living doing what they do, they will not be there to take care of the consumer after the sale is made. If you want, like, and expect quality after care then you have to support the dealers who will offer that level of service. Try going to you mass merchandisers and get a good professional set up on any instrument. It ain't gonna happen. What you save on the front end goes down the drain very quickly when you need the service they CANNOT offer on the backend.

[Crowder]

Joe makes some good points.

I'd think dealers would LOVE the pricing policies of Gibson and Collings, because they can "blame" the manufacturer for having to make a much greater profit on those products. If the math described here holds, a dealer who only discounts a Collings product by 10% is making a gross profit of 80% compared to 60-70% for other brands. All the while, they can say "Sorry, Collings won't let ANYONE sell this item for any less."

On the flip side, we customers have to accept that we'll likely lose money if we decide to sell a Collings or Gibson product for which we paid the mandatory price, the same as we would if we bought any other big-ticket item.

[allenhopkins]

An interesting point you might consider is that any dealer who makes less than 30% mark-up on an instrument is going to go out of business.

This seems a touch arbitrary. Instrument stores earn money on more than new instrument sales. The ones with which I deal do repairs and adjustments, sell strings, picks and accessories, provide music instruction, carry print materials (songbooks, magazines, instruction books). They host workshops with manufacturers' reps, receptions for touring performers -- perhaps an occasional small concert or jam -- sell a limited selection of recordings, even stock "gear" (clothing and gift items) from instrument makers who provide it. And perhaps most important, they sell used and vintage instruments, which they acquire through trade-ins and purchases, exchanges with other dealers, etc. One of the ones here in Rochester with whom I've dealt for over 40 years, even has its own brand of strings (Donel).

There aren't too many stores, IMHO, that deal only in selling new instruments. That niche has really been usurped by the large on-line and mail-order stores, who can carry stocks that no local dealer could ever match, and are willing to discount "to the bone." And, while they do charge for shipping, they usually avoid requiring sales tax, which in my part of New York adds $45 to the cost of a $500 instrument.

That's why in my earlier post I emphasized the benefits of developing a relationshop with a local dealer. Being a friend of both Dave Stutzman and John Bernunzio gives me confidence that what I buy locally will be serviced and supported locally, and that problems -- which inevitably occur -- will be addressed and handled competently, responsively and professionally.