Why do companies charge more than retailers?

gregnice37

gregnice37

Bar Banger, Cue Collector
Silver Member
As some of you may know, I've hit the carbon fiber craze hard and have tested and tried over 30 combos of CF shafts and cues. Recently saw that Viking has one out now called the Siege. Can't find much info about them or see them listed much anywhere. So back to my thread topic, I found some info on the Viking site and they are selling them for $499.99. Now I've found a online company selling them for 449.99. You might think it's a bit odd but I've seen this trend in many places. Take Seyberts for example. Most of their prices beat a lot of the actual companies prices. I assume the companies themselves set the maximum discount allowed on the MRSP on each product, but don't understand why the actual companies don't offer the same prices. Wouldn't they prefer direct business because it makes them more money? Or do they make more money selling to the retailers buying in bulk who actual discount the items?
 
It's very simple. Mfgrs have an obligation not to undercut their dealer networks. It's all greed of course. If you want, figure you are paying 100 times too much and just pay.
 
Once the sales volume of any product becomes large enough to be manufactured efficiently it's usually best to focus on the product and leave the retail sales to others. Direct retail sales is messy, leave it to someone else.

Nobody is going to sign up to retail your product if you are going to turn around and compete with them.

The primary reason manufacturers do this is often more strategic. In your Viking example the retail price is 500 and the street price is 450. People need to feel like they are getting a deal so this 50 spread has to exist. The illusion only works if you belive that 500 is really the retail price....that is the reason it is 500 on the Viking site. They don't want to sell cues there, they want to maintain the credibility of the 500 price.


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straightline said:
It's very simple. Mfgrs have an obligation not to undercut their dealer networks. It's all greed of course. If you want, figure you are paying 100 times too much and just pay.
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What "is all greed"?

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It is very common for price structures such as you initially describe to be seen.

And you forgot one layer, cheaper than either you acknowledged: the unauthorized retailer. Fakes are usually found here.
 
Marketing. Same as going to a sears and seeing something on sale. They make money by selling to distributors. You see the products for x. You see seyberts, muellers, pooldawg sell for x-15%. The company sells to the distributors. The company does not need to pay someone to take individual orders. The is a manufacturer sale price and there is an actual selling price. Just makes people feel they are getting a deal. Marketing.
If you are willing to pay full msr they will be glad to take your order. I have purchased thing from manning. He puts out some good free instructional vids on his website. So I try to support him.
 
Most cue companies are wholesalers. Their retail operations aren't meant to match or surpass actual retailers. So prices reflect this.
 
If you could buy the exact same product at the exact same price or less from the maker of that product rather than a distributor- you would be more inclined to buy it from the maker as to the logical belief that they would give the best functioning warranty on their own products - and stand behind it!
So, they do not therefore compete on price with their distribution channels; and as others mentioned; a manufacturers' selling price to the consumer is just the price created; usually way above what it actually needs to sell for, to allow room for expected actual retail discounting, so that all in the sales channel can make a profit on it.
 
straightline said:
THE ECONOMY STOOPID

:D just kidding. Also basing inflation on circa mass production by Henry Ford which instead of making things affordable, made manufacturing affordable. Doh...
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Which is why custom cues are so much less expensive than production cues...

Good grief.
 
The only cue company I know of that doesn't do this is Predator. They don't give a wholesale price to retailers that sell their products.
 
The simple answer is a manufacturer designs a product, establishes a dealership network to sell and distribute that product. Each entity is doing this to make a profit. The manufacturer only has to deal with their distributors and not the much larger volume (hopefully) of customers so they can keep manufacturing steady or increase it if need be and improve the product. Imagine investing in a General Motors franchise then having them open A GM dealership a block away and undercutting any price you give your customers. As strange as it seems to me this actually happens.
 
straightline said:
THE ECONOMY STOOPID

:D just kidding. Also basing inflation on circa mass production by Henry Ford which instead of making things affordable, made manufacturing affordable. Doh...
Click to expand...
My question is where exactly do you think there is greed in this equation? You know, the pool cue thing.

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Why do companies charge more than retailers?

Because some people will blindly pay that msrp. Others are looking for the best deal possible. I personally would call listed prices the asking prices, not necessarily what is charged at purchase time. I just recently bought a few items from Jacoby Custom Cues. Paid 20% off what the listed prices were. It doesn't hurt to ask for a deal if you find something you like from the manufacturer.
 
The manufacturer might sell 100 shafts or cues to a jobber at a time, a major distributor who may sell to other distributors. These transactions are usually smooth with no fuss or muss and the jobber might place an order for that hundred units to go on every month or quarter until they say differently. Does the manufacturer make more off of retail at a higher price or jobbers and distributors they discount to but sell thousands of units to in many cases?

Price fixing is illegal and a practice that often gets even big players some pretty sharp raps on the knuckles. This often leads people at all levels of marketing to try workarounds to control pricing without doing it by contract. One way is with suggested retail pricing. Naturally the manufacturer has to sell at this MSRP although they will occasionally have sales and may be dealing far different prices "under the table."

Retailers can discount under this suggested price but the public is rarely willing to pay more than the MSRP so the manufacturer has effectively put a price cap on the product. They will often find a way to squeeze or quit selling to people that market their product so cheaply it hurts the perceived value of the product or sales of other dealers. If MSRP is $499 and one person is heavily advertising selling the product at $199 it is going to be very hard for anyone else to sell the same thing at hundreds more.

MSRP has it's purpose as does strangling supply to anyone dumping your product. Everybody needs to make a buck to stay in business and while I think the supply chain has flattened somewhat it wasn't unusual for a product to pass through eight or ten hands before being retailed. The retail price may be four or five times or more what the manufacturer sold it for. In the eighties an automotive part passed through an average of eight hands before being retailed. If you figure a modest 20% average mark-up you can see that the retail has no resemblance to what the manufacturer sold the part for! A $20 part has tripled in price to $60! Nobody got greedy and raped anyone. Just a lot of fingers in the pie.

Hu
 
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