Breedlove Price Increase

[multidon]

A few days ago there was an ad in the classifieds from the Mandolin Store about the 2012 Breedlove price increases, stating that they will sell at 2011 prices while they still have stock. They stated that in some cases the price increases were 50 percent! But they didn't say which models went up that much. I assumed that it would be the F's or maybe the master models. Then I got an e-mail from Guitar Center with a 10 dollar off coupon. So I figure maybe I can get an even BETTER deal. 999 for an OO with 150 off on top of that is a great deal. So I go to the GC Web site. Guess what? They are ALREADY charging the 2012 prices!!!!! I was wrong in my guess about the models. It is the O (A style) mandolins that went up 50 percent! O's are now 1,499. The other styles went up too but not as much percentage wise.

This is a sad day indeed. Anytime someone asked "Can I get a quality American-made carved top mandolin for under a thousand bucks?" we used to be able to say "Breedlove". But no more! Guitar Center seems a little premature in those price increases, don't you think? It's still 2011 for crying out loud! And they have the nerve to call it a "Guaranteed lowest price"?

[MLT]

I remember the less than $1,000 days as well--I have two Breedloves (OO & OF).

I have to wonder if the price increase was based on this scenario. Breedlove has direct competion from other factory builders for their share of the market, many if not all of their competitors are offering their equivelent mandolin models at prices higher than Breedlove and hold a good portion of the market doing so. It could be said that Breedlove gets overlooked in this market share based on their low prices, "If the price is that low it is must not be that good of a mandolin." This is a real phenomon, I have seen this in other markets and have heard from actual Marketing professionals that this does happen.

I have no idea if this scenario was the impetus for the increase on Mandolins for 2012, but it may have been.

Breedlove is a great product and their mandolins are worth the increase...but if you are in the market and asked me my opinion, I would say buy now at the 2011 price if you can.

[greg_tsam]

Yea, that happens all the time. Buyers perceive value based on price and often think if it's inexpensive then it's cheap. So sellers increase the value by increasing the price. Psychology doesn't always make sense. Another factor here addressing the competitors charging more for the equivalent product is price is usually set by what the market will bear. So if consumers are paying $1500 for A styles why should Breedlove keep charging $800? People may start to think they're not "good enough".

Sad but true.

[joshtree]

Similar thread in the breedlove owners corner. I will pass on what I said there.
Breedlove moved into fancy new space just befor the market tanked. Higher overhead. had to merge with Two-Hippies (?) corporate finger in the pie= higher prices
So ya if you want one now is the time. Folk Musican still has the 2011 prices and nice return policy. I am eagerly awaiting the arrival of the one I just bought from him. BTW great guy on the phone there. he told me all that he did to set up my KO. and gave me some backstory inthe Breedlove company and prices etc.

[multidon]

Yea Josh, I posted in the Breedlove area too but thought I should post here also because it gets many more viewers and this is information people need to know. If anyone is in the market for a Breedlove, and can find them at 2011 prices, ESPECIALLY OO or OF, the time to pull the trigger is NOW!

[Ed Goist]

Yea, that happens all the time. Buyers perceive value based on price and often think if it's inexpensive then it's cheap. So sellers increase the value by increasing the price. Psychology doesn't always make sense. Another factor here addressing the competitors charging more for the equivalent product is price is usually set by what the market will bear. So if consumers are paying $1500 for A styles why should Breedlove keep charging $800? People may start to think they're not "good enough".

Sad but true.

In fairness to buyers and the market, I'd like to point out that quality and price track remarkably well in the mandolin world (IMO).
Granted, there are values out there, but more often than not quality and price go hand-in-hand.
If Breedloves are as good as their proponents say they are (and I believe they probably are), the price increase is perfectly justified.

[multidon]

Well, this thread, as seems to be usual with threads I start, is going in a different direction than I intended. I just wanted to give people a heads up so they could get 2011 prices if they are on the fence right now. But since Ed brought it up, as far as"justified" goes, it depends on what you mean by "justified". A 50 percent increase in price? Of course, Breedlove/Two Old Hippies can do whatever they please and the market will decide. Justified? Well, I like Breedloves. For several years they have been a great bargain. Are they worth more that their past asking prices? Absolutely. That's why they were bargains. Whether they are worth half again in January what they were in December, that I'm not so sure of. And one thing I am absolutely sure is NOT justified is for a retailer to start charging 2012 prices when it is still 2011!

[Ed Goist]

Justification of pricing is quantifiable...If the market will support the new prices, they are justified. It's that simple.

[allenhopkins]

...And one thing I am absolutely sure is NOT justified is for a retailer to start charging 2012 prices when it is still 2011!

Happens all the time. Oil companies price their products based on what the oil being pumped out of the ground now costs them, and sometimes on the price in the "futures" market -- even though the gasoline they're selling was made from crude they bought months ago. The dealer who sells you a Breedlove today, that he bought at "2011 prices," will have to replace it with a Breedlove he'll pay "2012 price" for. Understandably, he wants to get the extra buxx he'll need to restock his inventory.

I am a bit surprised at the size of the price increase. Were I in the market for a Breedlove, I'd be thinking "used" right now. Creeping price inflation's been a fact of life as long as I can remember (yeah, I recall the 1972 Dodge Dart I bought for $2,800 new), but this is leaping inflation.

[Clement Barrera-Ng]

Were I in the market for a Breedlove, I'd be thinking "used" right now.

I must say I was surprised by the increase as well, as well as the extent of the increase. But I remember thinking to myself when I first heard the merger, that I hoped it didn't mean the end of the mandolin line of products for Breedlove. So I guess I should be thankful that the company will at least continue making the mandolins in the near term.

But I am with Allen on thinking of buying used if I were in the market right now. There seem to be an endless supply of used Breedlove here as well as on eBay, that will at least cushion the impact of the price increase for the time being. Of course, I am sure the used prices will likely go up as well as word of the price increase spreads.

[Mandobart]

Breedlove is located in Bend, Oregon. At one time the most rapidly inflating real-estate bubble in the Northwest. It also burst more than many other bubbles. So if they relocated just prior to the bust, they may be in the hurts now. Haven't had the chance to play many, but the ones I've played were definitely good mandos. Better, IMHO, then the imports selling for about the same or higher price. And it is very real, the sentiment exhibited on this cafe by some that a high-dollar instrument is by definition a "better" instrument than one that sells for less.

[GDAE]

I was talking to a guitar store owner about this yesterday, and he said Breedlove isn't the only one with huge price increases for 2012. Goldtone is doing the same thing, maybe others as well.

[multidon]

The dealer who sells you a Breedlove today, that he bought at "2011 prices," will have to replace it with a Breedlove he'll pay "2012 price" for. Understandably, he wants to get the extra buxx he'll need to restock his inventory.

I do not buy this logic. The dealer already is sitting on inventory he paid 2011 wholesale prices for, that he was planning on selling at 2011 retail prices, therefore making a reasonable profit. He purchased that inventory BEFORE he knew about the coming retail price increases. So he was obviously satisfied with his anticipated 2011 profit margin. He will have to replace his inventory at 2012 wholesale prices, but he will in turn sell those instruments at 2012 retail prices, again making a reasonable profit. If he chooses to sell inventory purchased at 2011 wholesale prices for 2012 retail prices this strikes me as taking unfair advantage of the situation and some might call it "gouging".

Of course, sometimes the manufacturer TELLS the retailer what they MUST charge for the product. Perhaps Breedlove TOLD Guitar Center they MUST start charging the new prices? That does not appear to be the case here, since our friends at Folkmusician.com and the Mandolin Store have made it clear that they will be selling 2011 inventory at 2011 retail prices as long as possible. They are taking advantage of the situation in a different way from GC, by ENCOURAGING people to buy now and therefore BEAT the price increase. That strikes me as a much better way of doing business than the apparent GC business model. But of course, if someone wants to buy their Breedlove mandolin at Guitar Center, and they REALLY want to spend 500 dollars more for the EXACT SAME PRODUCT, far be it from me to tell them they shouldn't! Perhaps there is some sort of value attached to that which I don't perceive. By the way, Guitar Center advertises that they have the "Guaranteed Lowest Price". I wonder what would happen if someone contacted them regarding a Breedlove OO and pointed them towards one of the above Web sites? By their own policy, would they not be compelled to beat those prices?

[greg_tsam]

What is so hard to understand here? Yes, the retailer is taking the opportunity to increase prices early and increase their profit. Believe me, I understand why you're perturbed but it's the same thing as the gas prices at the pump. As soon as the crude oil price increases the gas station attendant is at the sign raising his prices but when crude lowers the public is given an explanation that it takes at least 45 days for the lower priced crude to get into the stations and prices remain high. How does that make any sense? It doesn't unless you take into account greed and profits.

Same thing here but at least it doesn't happen as often as gasoline increases.

[Dale Ludewig]

Used prices on Breedlove mandolins will rise. And why wouldn't they? I've seen prices on used mandolins by builders of some reknown going at higher prices than new prices that the builder quoted someone standing in line.

[pdb]

the breedlove quartz/american line has been a great value in mandolins. I can certainly understand a price increase if their expenses have gone up. It's a gutsy call in this economic time but even with a price increase, breedlove will still be a good value for the quality of instrument. The market will decide if the price is justified or not. If not, you will see dealers discounting breedloves more than usual or breedlove giving incentives to dealers. The street/market price will sort itself out.

[multidon]

What is so hard to understand here?

The thing that is hard to understand is, why would a big box music instrument retailer think that someone would pay 500 dollars more for an instrument than the same instrument elsewhere? If you were buying gas and one station was selling it for 4 dollars a gallon and the station across the street was selling it for $2.50 a gallon why would anyone buy it for 4 dollars? And why would the station owner believe anyone would choose his 4 dollar gas over the 2.50?


How does that make any sense? It doesn't unless you take into account greed and profits.

I believe I understand greed very well. But it is not universal. As I previously pointed out, some of our Cafe' sponsor stores seem to have a much more ethical business model and are not greedy, not taking advantage of the situation, not trying to gouge people, and are satisfied with their originally projected profit margin. In other words, they are more interested in satisfied customers than the almighty dollar. In the long run, this is a smarter business model, because happy customers=repeat customers.

Greg_tsam, I do understand what's going on, believe me. That doesn't mean I have to like it. Certainly not the first time in my life that I have run into corporate greed, and it's not likely to be the last, either. My intention here in this forum is to expose this situation to the light of day, and hold it up to others as just another reason to support and patronize our sponsors!

[greg_tsam]

I agree with you and avoid Guitar Center and Musician's Friend like the plague. I took my business and money to The Mandolin Store. The Breedlove mandolin I own is simply great. It's not the best ever but it's no slouch and I don't worry about standing next to the guy with a $10K Ellis or the $5K Gibby. But it is an American made, custom instrument. (I had them put black binding, top and bottom, and the glossy finish.) I paid right under $2K for all that and installed a K&K pup internal and the endpin is my output. Run it thru an Ultra Acoustic 50W amp when I need to. Sounds great. I know now I could have gotten a pretty good mando for that cash here on the classifieds but then I wouldn't have the privilege of owning a new one that still smells new when I open the case and know all the dings and dents are mine and someday I'll give it to my son if he shows interest and warrants such an instrument.

Maybe in 20 years I can send him to college by selling it but I doubt it and don't care. I bought it b/c it was a great deal, sounded nice and have grown too used to it to part ways. I own 3 Webers and 1 fender and they never get played. Gotta sell them but the BL stays. Maybe I can trade Scott T. my Webers, my truck, my cat and my next born for his Nugget he has for sale.

[Bob Borzelleri]

Justified is a very good TV show. The main premise is that people sometimes do things that they might have to be held accountable for later. If what they did stands up to the law, logic and fair play, they can go on about their business.

Justified in the world of price increases is something different altogether. It has more to do with straying out beyond the norm of pricing to the point where people begin to ask whether the increase makes sense. In the world of mandolin manufacturing, that answer might be much more attainable than in some other pricing comparisons that inevitably come out of the woodwork such as gas prices. Having chaired a national task force to investigate fuel formulation practices, I spent enough time around oil company executives to state to a certainty that tracing any single or combination of events in the world market to a specific gas price increase or decrease is now and will likely always be fruitless. By design, the decision tree leading to gas pricing adjustments is convoluted in time and interaction in order to ensure that nobody will ever be able to argue that any particular increase was not "justified".

If Breedlove and their new partners believe that they needed to increase prices 50%, then they will have a chance to learn if that decision was justified. It wasn't that long ago that another Pacific northwest builder (Tacoma) sold to Fender. If memory serves me correctly, one of the first things Fender did with the Tacoma line was to increase MSRP on most models, some way beyond what many folks might have considered "justified". The next significant thing they did was stop selling Tacomas.

Will Breedlove's price increases ultimately be accepted in the same way most of us view gas prices as inevitable? Well, mandolins are not necessities in the minds of most people. Gas, on the other hand, is. The only similarity between the two products with respect to pricing decisions is that a transfer of ownership from the producer to the consumer necessitates a transfer of funds, which may or may not be justified.

[Elliot Luber]

Breedloves sound very good to me, and probably could be increased a reasonable amount and continue to sell fairly well. We'll see.

[allenhopkins]

Hey, the market will determine if the Breedlove people have made a big error in pushing up their prices. Still don't find it surprising -- and surely not admirable -- that some dealers are increasing prices on current inventory, but I'll bet that happens with a lot of other "durable goods" (automobiles?) as well.

I guess the issue stands out a bit more when a manufacturer "bundles" several years of possible price increases, into one major jump. Put the price up 5% a year for five years, no one notices; put it up 25% in one year, major discussion.

[John Hill]

...why would a big box music instrument retailer think that someone would pay 500 dollars more for an instrument than the same instrument elsewhere?

Most folks buying a mandolin from a BBMIR probably don't know better. Sayin'.

[Dale Ludewig]

It could be that Breedlove has needed to raise their prices for a number of years and just hasn't. I don't know their story. Just a thought.

[whyner]

...Certainly not the first time in my life that I have run into corporate greed, and it's not likely to be the last, either....

Ok, I have a Breedlove OO on the wall I bought for $650 wholesale, I'm asking $1000 for it.

I sell it then go to Breedlove to purchase a recplacement for my wall. After I paid the rent, the bills and the wages of the employee that's been there for 10 years I have my $650 and $50 (5% margin) for evil profit, $700 bucks total.

But Breedlove says it wants $900 wholesale for their OO now. So I go back to the shop empty handed. I guess I should've been asking more for the OO, eh?

This isn't hard to understand.

Steve
Oregon

[multidon]

Steve-
You oversimplify the situation. Of course your scenario makes sense if retailers replaced their stock one instrument at a time, but you and I both know that's not how it works. Every competent businessman would devote a certain percentage of their gross to the acquisition of new stock. Most manufacturers have a minimum number purchase in order to receive wholesale pricing from the manufacturer or distributor. Nobody can buy just one instrument at wholesale prices. If that were the case we would all be paying wholesale prices for our personal instruments. Tell me where I can get a deal like that and I'll be all over it! So NOBODY goes back to the shop "empty handed". It just doesn't happen. Stores need inventory to sell to generate income. Maybe at the new higher wholesale prices the retailer can only buy, say, 9 or 10 mandolins where they were previously able to stock 12, but the high retail prices that inventory will generate will probably help the bottom line stay pretty much the same. Now, I'm no businessman, and I certainly don't have an MBA, but from friends and professional contacts in the music retailing world I think that what I have laid out above is a pretty accurate rendition of what goes on behind the scenes.

[Clement Barrera-Ng]

But Breedlove says it wants $900 wholesale for their OO now. So I go back to the shop empty handed. I guess I should've been asking more for the OO

Or, simply sell off the remaining inventory at the current prices, drop the line next year and pick up something else. Businesses do have a choice and there are more than enough ways and choices to fill one's inventory.

I seem to remember Gibson had at one point requiring dealers to place a high minimum order each year in order to carry their products, and not just a handful of small to medium dealers simply said 'no thanks', and ended up carrying something else. I'm sure many of them are making good living selling these other brands, and Gibson is happily letting their smaller dealers go in favor of the larger, national ones.

[mandobassman]

the breedlove quartz/american line has been a great value in mandolins. I can certainly understand a price increase if their expenses have gone up. It's a gutsy call in this economic time but even with a price increase, breedlove will still be a good value for the quality of instrument. The market will decide if the price is justified or not. If not, you will see dealers discounting breedloves more than usual or breedlove giving incentives to dealers. The street/market price will sort itself out.

I think this could hurt Breedlove. With a 50% increase, it's putting the Quartz/American OF (for example) in a much closer price range of the Collings MT or the Gibson A-9 and others, I'm sure. And while I think Breedlove makes a fine mandolin, those are some pretty good, and popular, models to compete with. The Breedlove line has been a good value, but with that much of a jump in price, it is too close to other, well established names.

[JeffD]

Its hard for me to think of it as unethical. Unethcial?, it doesn't even seem all that unreasonable. We are in December of 2011 already. They make more than planned on whats left of their 2011 inventory, and are ready for the 2012 prices.

If there is no decrease in sales, the new higer price must not be unexceptable. If sales go down they will have to adjust. They are taking the risk (that increased prices will drive away customers), they get the rewards.

I have seen cases of corporate greed, where things are manipulated at both ends and things that are just technically legal by the letter of the law, but and dubious from an ethical view, (the stuff of a different thread on a different forum) but this isn't that.

Kind of sucks though.

[MikeEdgerton]

That's assuming they have 2011 inventory left. Anybody know when their model year ends? They may have been manufacturing in their 2012 year for a few months. Car makers do it. There's no magic about December 31st in business. They might also go by their own fiscal dates. To assume that Musicians Friend has a ton of old stock mandolins might be wrong. Beyond that what Breedlove does and doesn't do is really their business. They will pay the price if they haven't read the market right. Who knows, maybe they've discovered they were losing money of those mandolins. You can't just assume that you know what is driving this. Everybody foresaw the demise of Gibson when they slimmed down their dealer network. If it hadn't been for the floods in Nashville I think they'd still be moving forward. If what they are doing makes you unhappy then you have the option to vote with your wallet.

[multidon]

With a 50% increase, it's putting the Quartz/American OF (for example) in a much closer price range of the Collings MT or the Gibson A-9 and others, I'm sure.

Actually, the Gibson A9 is still 300 dollars higher than the new OF price and the Collings MT is a good 700 dollars higher. What they are lining themselves up to compete directly with are the Weber Hyalite (1599) and Gallatin (1659). That is some mighty tough competition they are setting themselves up for.

For the record, I don't believe I ever said the price increase was "unethical". That is very debatable, after all. I called it unjustified. And shortsighted. And poor business practice. All of the above especially in the case of Guitar Center. NOT in the case of the Mandolin Store and Folkmusician.com, who chose to honor the 2011 prices. I realize it's December but last time I checked, it was still 2011, right? Does "2012 Price Increase" actually mean December of 2011 in the age of language parsing? Now, as far as Breedlove/Two Hippies goes, of course they obviously did nothing unethical here. They can charge whatever they please. Was it a smart business decision? Well, the market will decide if a Breedlove OF is actually the equal of a Weber Hyalite or Gallatin.

[JeffD]

That's assuming they have 2011 inventory left. Anybody know when their model year ends? They may have been manufacturing in their 2012 year for a few months. .

Excellent point.