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#318795 - 05/23/06 11:01 PM What's wrong with making a profit?
MartinJ. Offline
Full Member

Registered: 12/12/05
Posts: 316
Loc: Iowa
I recognize that "list price" has little meaning, and that it is hard for a piano buyer to know if the next person in the store will end up buying the same piano at the same price or if another authorized dealer will offer the same piano at the same price.

I also realize buying a piano is not like buying consumables that we all just pay for and don't expect to negotiate.

BUT...

...there are what seem to be dozens of posts each month where people are trying to get something for nothing,

...there are posts in which dealers look to be giving fair deals but many repliers in the forum are urging the post-er: "he's ripping you off-get 12 more free tunings with that!" "make sure you get a dampp-chaser and player thrown in for that price!"

...there are variations in price depending on market, yet so much of the advice seems to be like: "this is it-50% off of Fine or no deal at all."

Nobody complains of 200+% mark-ups on shampoo, running shoes, lawn mowers, clothes, etc., but for a piano dealer to make more than 50% profit on a piano, *gasp*...if I could see them, some members would have veins popping in their heads, I'm certain.

What's wrong with a dealer making money on the deal? What's wrong with a dealer making different profit on the same piano?

What is it about piano sales that brings out what in my opinion looks like less than decent behavior? Maybe the saying ought to go, "never talk religion, politics, or piano sales..." Maybe the question ought to be, "why are people insecure about their piano decisions?"

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#318796 - 05/24/06 12:07 AM Re: What's wrong with making a profit?
cerulean5 Offline
500 Post Club Member

Registered: 07/19/05
Posts: 678
Loc: USA
I think you have an interesting perspective.

HOWEVER:

1) Remember, a dealer is NEVER obligated to sell his piano for a particular price. If he feels he can't sell it for a price that the consumer demands, then there will be no deal. It's as simple as that!

2) For the people lucky enough to find this forum OR run across Larry Fine's book, they have a chance to become savvy consumers. All the more power to them, I say! Remember, there are still a ton of people who go in into a dealer's shop without a clue. I'm sure dealers are happy to sell a piano to those customers for a more than adequate profit margin!

3) People don't fuss about markups on shampoo, running shoes, etc., because unlike pianos, they don't cost a couple to tens of thousands of dollars each. Piano, at least in my view, is a luxury item, not really a consumable.

4) People are insecure about their piano decisions PRECISELY because "fair" price for a given piano is hard to determine!

Anyhow, these are just my views as a consumer. I'm sure there are people who disagree.

--c5

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#318797 - 05/24/06 12:25 AM Re: What's wrong with making a profit?
psychopianoman Offline
500 Post Club Member

Registered: 11/29/05
Posts: 608
Loc: Oklahoma
That is why I stick to my digital piano, and next in the line up will be a synth.

$10000 for a piano. I would rather have a mini home recording studio.
_________________________
pianolessonaddicts.com

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#318798 - 05/24/06 12:26 AM Re: What's wrong with making a profit?
Captain Obvious Offline
Full Member

Registered: 05/13/06
Posts: 182
Bottom line: The dealer won't sell if they aren't going to benefit from the sale.

Dealers know they are going to make a killing on some customers, and less on others.... just like car dealerships.

Piano's are a big ticket items. It's foolish not to negotiate a good deal.

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#318799 - 05/24/06 12:28 AM Re: What's wrong with making a profit?
ntman2 Offline
Full Member

Registered: 08/09/05
Posts: 205
Loc: Abingdon, Maryland
I can only talk about the deal of my piano with my dealer. I wasn't insecure about our purchase for one moment. I knew what the Fine book said about the list price on our piano, and also what percentage off list would constitute a reasonable deal. Our dealer gave us what I consider a reasonable but not rock bottom deal but one that I could afford and live with. My wife and I are VERY happy and have never had anything close to buyer’s remorse. We are just very happy piano owners.

That being said, I know that our dealer probably made a nice profit on our sale but so what? I want them to stay in business and enjoy the fruits of their labor just as much as we enjoy our piano. Now, I'll have to admit that I speak from a partially selfish motive since I hope to continue to do business with this dealer in service as well as a later possible 2nd piano sale. Our dealer (as previous posts by them show [1])goes to what some might characterize as extreme lengths to prep their pianos. Admittedly because they are all musicians themselves, but nonetheless I want them to continue in business for many years so that everyone in our area can profit from their extraordinary talents.

My never to be humble opinion
Nelson
[1] Old thread on what constituted the correct amount of dealer prep.
_________________________
My two cents -- Mason & Hamlin Model A

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#318800 - 05/24/06 03:53 AM Re: What's wrong with making a profit?
JohnEB Offline
500 Post Club Member

Registered: 04/20/06
Posts: 754
Loc: Belgium
Like with any high-value purchase, the buyer just wants to think that they personally have got a good deal, and that they have not been 'cheated' out of anything, or that the seller hasn't got more out of it than the buyer - so the sale has been fair.

That's why the attitude of the salesman (I've never met a woman selling pianos, at least in a shop) is so important: if a salesman seems trustworthy the average buyer will accept a higher price than if the salesman appears like a money-grabbing rat-weasel who cares more about profit than about providing service. If their attitude makes you think that they are trying to pull a fast one then you will be more likely to push harder on the deal.

Hence the best salespeople tend to be those you feel like you trust - the ones that listen to you, discuss with you, appear to throw things into the deal. You may end up not having achieved the ultimate rock-bottom price which could have been possible, but you feel fine about the sale, which is important. Also if you leave the salesman having made a decent profit you are more likely to have a long lasting sales/client relationship, if that's what you're looking for.

For pianos I think you need that since there is after-care involved. For cars I'm at the point where I'll just pull all the tricks I know to get the lowest price as I know I won't get any after-sales service anyway, the guarantee is with the manufacturer, not tied to the seller, and I have a choice of garages I can go to for servicing.

My experience with piano salesmen is just as I described above (funny that): of the 3 I ended up negotiating with 2 came across as interested in me and the piano, and 1 purely in getting the sale, even to the point of rubbishing the other makes I was looking at. No trust - no sale.
_________________________
John

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#318801 - 05/24/06 08:27 AM Re: What's wrong with making a profit?
mikhailoh Offline
4000 Post Club Member

Registered: 07/20/04
Posts: 4288
Loc: Cincinnati
Martin, you are right on the money. There are people here who share your views, but they do tend to get shouted down by the consumer advocates.
_________________________
Michael

====

He is so solemn, detached and uninvolved he makes Mr. Spock look like Hunter S. Thompson at closing time.'

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#318802 - 05/24/06 08:37 AM Re: What's wrong with making a profit?
Allazart Offline
Full Member

Registered: 03/16/02
Posts: 389
What's wrong with not getting ripped off?

My parents bought the piano I currently have and I now figure that we paid way too much for it. Furthermore, it was not even tuned in home after delivery.

Never again!

The dealer knows how much he can sell for and the fact that there is often so much mark down after negotiation means that that the original price was often grossly inflated. For many people, the cost of the piano is AT LEAST a month's wages and most likely much more. They should just give away money (for a non-essential item to boot) like it grows on trees without trying to get a fair price?

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#318803 - 05/24/06 08:55 AM Re: What's wrong with making a profit?
Piano*Dad Offline
Yikes! 10000 Post Club Member

Registered: 04/12/05
Posts: 10422
Loc: Williamsburg, VA
The problem with discussions like this is that people are talking past one another. MartinJ has said virtually nothing that is controversial. Allazart has certainly said nothing controversial. [Well, he edited it and made it a bit harder edged!] And yet they seem to represent the opposite ends of this "debate." The two groups here seemingly are disagreeing about the tone of the language we use ...how consumerist or dealerist we are.

In past threads, many posters have held up stereotypes as our bug-bears.

In one corner we have the "floor lizard" who sidles up to customers and senses insecurity and ignorance. He then fills the ear of gentle and trusting mothers and fathers with subtle brand bashing and/or hype in order to separate said customers -- who only want the best for their dearest children -- from far more of their hard-earned cash than is "fair."

In the other corner we have the horse-trading peasant type of consumer with a chip on his shoulder. This "dealer's nightmare" always assumes the worst about the dealership and the piano. I can imagine him on hands and knees forcefully rapping the soundboard because he doesn't trust that Mason&Hamlin hasn't substituted a laminated soundboard in the BB he's examining (as if he'd know the difference).

We do indeed have posters here who view the world from one of these two perspectives. Thankfully, no one on this thread seems to have jumped off of this particular deep end, but a simple archival search will reveal threads where this has happened. JohnEB seems smack in the middle ground, where most of us happily tend to live.
_________________________
Grotrian 192 #156455

https://www.youtube.com/user/dhfeld/videos

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#318804 - 05/24/06 08:58 AM Re: What's wrong with making a profit?
mikhailoh Offline
4000 Post Club Member

Registered: 07/20/04
Posts: 4288
Loc: Cincinnati
Edit: This post was directed at Allazart's comment above, which has been edited.

Your post shows EXACTLY the attitude I am talking about. A dealer offers a price that is 30-40% off list and posters here say they are cheating you because you might be able to get them down a little further.

Piano dealers that try to overcharge you are easy to spot IF YOU SIMPLY BECOME EDUCATED. They are also pretty few and far between. But what is happening here (see RX3 thread) is not education anymore but group negotiation, and cheerleading for driving a fair price down to a ridiculous one.
_________________________
Michael

====

He is so solemn, detached and uninvolved he makes Mr. Spock look like Hunter S. Thompson at closing time.'

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#318805 - 05/24/06 09:12 AM Re: What's wrong with making a profit?
Piano*Dad Offline
Yikes! 10000 Post Club Member

Registered: 04/12/05
Posts: 10422
Loc: Williamsburg, VA
Geez, if my piano cost only a month's wages, I'd be in a much higher income bracket. \:D \:D :p

Despite its expense, I knew within minutes of walking into any particular dealership whether pricing was reasonable or not, or whether the dealer inspired trust or not.

Each of us brings so much personal baggage into the process. The problem we seem to have here on the forums is that many people have great difficulty in seeing outside of the box we have constructed out of our own experiences, and I'm not entirely innocent of this as well.
_________________________
Grotrian 192 #156455

https://www.youtube.com/user/dhfeld/videos

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#318806 - 05/24/06 09:20 AM Re: What's wrong with making a profit?
Allazart Offline
Full Member

Registered: 03/16/02
Posts: 389
 Quote:
Geez, if my piano cost only a month's wages, I'd be in a much higher income bracket
Maybe your buying a spinet and you're Donald Trump! ;-)

Anyway, It seems to me that many dealers will quite happily charge as much as possible for a piano and render as few services as possible. This is likely whenever you have a middle-man.

The dealers have the relevant information. They KNOW how much work they have to put into the piano after it comes from the factory. They KNOW what the intrinsic value of the instrument is as set by the manufacturer. The potential buyer knows none of these things.

In this model, the piano shopper has to be a detective to be able to infer what a reasonable price is. Negotiation is a potent weapon in his arsenal and he shouldn't give it up. In most cases, you'll probably pay too much if you do.

The dealer also has a weapon, it's called "NO". Based on what he knows, the dealer can reject any offer that is financially unreasonable.

So, I'm sorry. I never really get these threads that beg consumers to have mercy on dealers, "Pay as much as possible!". Savvy shoppers are doing nothing unfair, they hold no guns to the dealers' heads. If anything, it's more fair when consumers are armed with some knowledge.

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#318807 - 05/24/06 09:26 AM Re: What's wrong with making a profit?
AJB Offline
3000 Post Club Member

Registered: 10/01/05
Posts: 3655
Loc: Surrey, England
I think this whole issue is complicated by the way in which the market behaves. It is often described in a polarised and emotive way, as this thread tends to do in places.

If dealers display a piano at $40,000 but will actually sell it at somewhere around $25,000 (for example), then he has marked it up by 60%. Many buyers are aware of this, from forums like this one.

The snag with this approach is that it commoditizes the piano and undermines the concept of a piano representing true value. It has similarities with a street bazaar because the asking price and the final price is often so far apart. This creates value uncertainty and affects buyer behaviour accordingly.

It also sometimes creates an impression that dealers may be greedy - otherwsie why display a price that is much higher than they will sell at.

I have long thought that this appoach to selling does and will disadvantage dealers in the long run. They may get a superb mark up on some sales, with customers who negotiate less, but as data is exchanged more readily on the internet, real price transparency becomes more available.

If dealers mark up pianos in this way, then they invite the kind of attitides and behaviour that many customers exhibit. We see it daily on this Forum "is this a fair price for x?"

Customers do not control the price setting mechanism. Manufacturers and retailers do. Customers just react to it. Looking at this even handedly, customers are given no chocie but to bargain. The alternative is knowingly to pay far too much. Dealers can therefore hardly complain about this.

If dealers wish to reduce or elimiante the constant street style haggling, and also avoid the sleazy reputation that sometimes goes with trading in this way, then they need to start being more honest (yes HONEST) about what REAL prices are.

No one begrudges a businessman making a decent profit. But in order for a customer to have confidence, the dealer needs to behave in a more professional way with respect to pricing.

There are many more strands to this argument, including all of the other differentiating factors that influence buying decisions.

It is not possible for a customer to "drive a fair price down to a ridiculous one". This is a very weak argument however much support the customer gets from a forum. The dealer always has the option not to sell. It is his or her job to persuade the customer to pay a price that meets the dealer's profit needs. If he cannot do that then there is either a fault with his business model (inclduing product, pricing and margin) or he is a poor salesman - or both.

If dealers want to address this issue - and I am not convinced that they really do yet - then they need to revisit the way in which they present themselves and their products to potential customers.

In practice, most dealers seem to fear getting out of step with generic market behaviour. Hence the herd instinct prevails with most dealers behaving in much the same way, in the probably false belief that this protects their market share and profitability.

Somewhat at a tangent from the main theme, from the little I have seen of the piano business, it is not a brilliant way of generating what I would call a good return on capital.

Kind regards

Adrian
_________________________
S&S Hamburg D, Yamaha CLP 280


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#318808 - 05/24/06 09:36 AM Re: What's wrong with making a profit?
Allazart Offline
Full Member

Registered: 03/16/02
Posts: 389
Wonderful AJB!
Excellent, superb post!

If I could be confident that the listed price represented the true value of the piano (with reasonable profit for he dealer) I'd walk in with the cash and walk out with a piano. However, when prices are deceptively set high, you're obviously expected to either:

a) be ignorant that it is too high,
b) be very rich and not care,
c) negotiate it down, or
d) be a jackass.

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#318809 - 05/24/06 10:25 AM Re: What's wrong with making a profit?
Captain Obvious Offline
Full Member

Registered: 05/13/06
Posts: 182
Michael,

Do you know what the dealer's actual cost is on this piano? Do you know how much prep they're putting into the piano (I would be most dealers don't do much with a Kawai)?

How can you call the deal ridiculous if you don't know the dealer's true cost? It might be $13k, in which case $20k is ridiculous... for the consumer.

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#318810 - 05/24/06 10:31 AM Re: What's wrong with making a profit?
Beacon Chris Offline
Full Member

Registered: 01/06/06
Posts: 465
Loc: Idaho
Hey everyone

These are great posts! I think that one of the sticky issues involved is exactly how one defines "reasonable profit". All business people have radically different ideas as to what this is.

I was travelling in northern California this weekend and was struck by the extremely high standard of living in the particualar town where I stayed (I was doing some performing with a symphony) I'm sure many of these people in the multi-million dollar homes have a very different idea of a "reasonable profit" than someone living in Nebraska for example. (Warren Buffet excluded)

I would be curious to know what most customers think is a "reasonable lifestyle" for the owner of a piano business.

How wealthy (or poor) should dealers be? Bear in mind that most piano store owners tie up significant assets in inventory and infrastructure in giving the business a go and require significant fall-back measures for when business is slow.

Your thoughts?
_________________________
Musician, Singer, Teacher, Humorist, Dad...

I don't want to achieve immortality through my work; I want to achieve immortality through not dying. I don't want to live on in the hearts of my countrymen; I want to live on in my apartment. - Woody Allen

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#318811 - 05/24/06 10:36 AM Re: What's wrong with making a profit?
JohnEB Offline
500 Post Club Member

Registered: 04/20/06
Posts: 754
Loc: Belgium
Manufacturers have RSPs and wholesale prices to allow the dealer room to add services and generate competition: this happens on pretty much every item we ever buy. If there was a fixed price and that was it - there would still be competition: price would be the same at all sellers but differentiation is introduced via additional services. And people would still argue about if they're getting value for money from the total deal or not.

Sellers are in business to make a profit - in the cases we are talking about they have chosen to do that by selling pianos. So they have a right to ask whatever price they want. After all, the customer can choose - if it's too high they just won't buy. The seller has to consider if they want a long term relationship with the buyer: if yes, then they're unlikely to screw around with the price.

Equally what is a fair price to you as a buyer might not be fair to me. If someone walks into a shop and buys a piano at $25,000 and they believe they've paid a fair price, then who's to say they are wrong? I saw that happen recently: family walks in, says to the salesman they have no knowledge of pianos but they've got $25,000 to spend, so what can they get. I'm willing to bet that both seller and buyer walked away from that deal feeling they got what they wanted from it. So it was a fair price for them.

I agree with AJB's final point - dealers need to revisit the way they present themselves to potential customers. There's plenty of information to allow people to investigate pricing of pianos if they want to - so then it's down to the salesman and their ability

Now, perhaps we should all go and take a course in elementary economics.
_________________________
John

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#318812 - 05/24/06 10:59 AM Re: What's wrong with making a profit?
mikhailoh Offline
4000 Post Club Member

Registered: 07/20/04
Posts: 4288
Loc: Cincinnati
 Quote:
Originally posted by Captain Obvious:
Michael,

Do you know what the dealer's actual cost is on this piano? Do you know how much prep they're putting into the piano (I would be most dealers don't do much with a Kawai)?

How can you call the deal ridiculous if you don't know the dealer's true cost? It might be $13k, in which case $20k is ridiculous... for the consumer. [/b]
No, I don't know what the dealer has in it and neither do you. Pulling a figure like $13K out of the air does not contribute anything useful to the discussion. Even if that were true $20K would not be an outrageous price. A little high maybe but not outrageous.

A customer is highly unlikely to ever know exactly what a dealer has in a given instrument. What you need to know is:

1. The MSRP, which is widely available. I think it is around $30K on a RX3?

2. The prices of pianos that are reasonably competitive. For this one we are talking about 6' - 6'4 pianos. So we're looking at the Yamaha C3, the Estonia 190, CW 190, YC Platinum 185, etc, etc, etc.

3. How much you like the piano in question.

4. Your budget.
_________________________
Michael

====

He is so solemn, detached and uninvolved he makes Mr. Spock look like Hunter S. Thompson at closing time.'

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#318813 - 05/24/06 11:17 AM Re: What's wrong with making a profit?
TX-Dennis Offline
4000 Post Club Member

Registered: 12/09/05
Posts: 4126
Loc: Texas
 Quote:
Originally posted by MartinJ.:


Nobody complains of 200+% mark-ups on shampoo, running shoes, lawn mowers, clothes, etc., but for a piano dealer to make more than 50% profit on a piano, *gasp*...if I could see them, some members would have veins popping in their heads, I'm certain.

[/b]
If shampoo and lawn mowers are going at 200% markups in your area you are being sereiously ripped off. Shampoo, for most drug & grocery retailers, averages about 15-20% gross profit. Beauty supply houses and salons do operate at a higher margin (about a 50% gross profit, I believe.) They have to due to lower volumes.

Yes, if you pay full retail for clothing or shoes (almost no one I know does - we buy when it's on sale or from discounters) then you are paying something in the neighborhood of 3x wholesale.

Piano retailers, like other retailers, need to make a reasonable profit to stay in business. This is obvious. It is also obvious that not all retailers can meet the same price due to a variety of factors. However, it is in the consumer's interest to pay as little as he can for what he buys. Therefore many people will ask for advice on pricing and "good deals." Now, as we all know, advice on internet forums should be filtered through your own common sense, assuming you have some. Many of us posters have no idea what we are talking about; others have a biased point of view.

I would imagine that for every informed customer at a piano dealer, another one walks in and pays whatever price is on the tag whether that is Ancott list or some another inflated "list price" that the dealer has created out of thin air. Yes, many (not all) dealers do make up higher "list prices" for the pianos they sell. A dealer may make so much on those kind of deals that he can afford to give a better price to savvy shoppers and still make a living and stay in business. If, as has been posted, a dealer needs to average 43% profit to stay in business that does not mean he must make 40% on every deal. Perhaps he makes 65% on some deals (those uninformed purchasers), 40% on some, and even 20% on a few sales to really savvy customers that he otherwise wouldn't make a sale to.
_________________________
Dennis

flickr


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#318814 - 05/24/06 11:38 AM Re: What's wrong with making a profit?
lucy_amanda Offline
Full Member

Registered: 04/07/06
Posts: 84
I think it's fair to try and get the best price but I don't think it's fair for consumers to "advertise" their purchase price publicly. If we expect good selection of pianos, than we should protect dealers/manufacturers privacy.

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#318815 - 05/24/06 11:46 AM Re: What's wrong with making a profit?
apple* Offline


Registered: 01/01/03
Posts: 19862
Loc: Kansas
the costs of running my husband's construction company are astronomical.. insurance, licensing, workmen's comp, state, local and federal taxes, vehicles, machines, tools, etc. etc. etc.

i would be interesting in reading about the actual costs of running a piano dealership...
_________________________
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love and peace, Õun (apple in Estonian)

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#318816 - 05/24/06 12:03 PM Re: What's wrong with making a profit?
Derick II Offline
1000 Post Club Member

Registered: 10/13/05
Posts: 1426
Loc: New York
The buyers and the sellers are no different fellows than I profess to be...

Remember that song? It was a little before my time. Nevertheless, how many of you piano purchasers or possible piano purchasers have sold a used car? Did you not try to get as much as possible for the car?

Even if consumers knew exactly what a dealer paid the manufacturer for a piano, how could you determine a fair price when you don't know the dealers expenses such as overhead, prep work, etc...?

Years ago when I almost bought a Steinway B which was the outrageous price of $32,000 (thems were the days), I saw a woman walk in off the street and watched as her 6 year old banged out Chop Sticks on a Louis IV 5'7" grand that sold for $40,000. She bought the piano in 3 minutes flat.

Ok, so this was Steinway Hall where there are no discounts (or very slight discounts), but suppose, for example, it was a Bosendorfer dealer. Today that same woman would have written out a check for $100,000 and not batted an eyelash.

We, PW cheapskates (myself included), want to get everything for as little as possible. And why should we not? We are also armed with a little knowledge, and I do mean little, by hanging out on this forum. Therefore we can make an educated guess as to whether it is worth it to buy from the pricier dealer.

The bottom line is that a dealer is not going to sell a piano unless they can make money on it. And the consumer is not going to purchase it if he is asking too much.

People buying pianos are not helpless little lambs lost in the wood where the big bad wolf dealer can take advantage of them THAT easily. Piano dealers are not like the "contractors" or prey on the elderly telling them they need a new roof, collect a deposit, and then vanish off the face of the earth.

A piano is a luxury. If you have the money to afford such a luxury, you have the brains and the ability to not be taken advantage of. And if someone wants to pay full list, so what?

Derick
_________________________
"People demand freedom of speech to make up for the freedom of thought which they avoid."[/b] - Soren Aabye Kierkegaard (1813-1855)


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#318817 - 05/24/06 12:04 PM Re: What's wrong with making a profit?
Steve Cohen Offline
Yikes! 10000 Post Club Member

Registered: 05/26/01
Posts: 10528
Loc: Maryland/DC/No. VA
 Quote:
Originally posted by Captain Obvious:
Michael,

Do you know what the dealer's actual cost is on this piano? Do you know how much prep they're putting into the piano (I would be most dealers don't do much with a Kawai)?

How can you call the deal ridiculous if you don't know the dealer's true cost? It might be $13k, in which case $20k is ridiculous... for the consumer. [/b]
Based on the national average Gross Profit Margin a piano selling for $20,000 would have a dealer cost of about $11,500.

Are you agruing that the actual national average margins are "ridiculous"? Since the average NET Profit after taxes is under 4% there isn't much room for even lower prices.
_________________________
Piano Industry Consultant- http://www.linkedin.com/pub/steve-cohen/6/b92/b80

Consultant & Contributing Editor - Acoustic & Digital Piano Buyer

Jasons Music
Maryland/DC/No. VA
Since 1937.

www.jasonsmusic.com
My postings, unless stated otherwise, are my personal opinions, not those of my clients.

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#318818 - 05/24/06 12:04 PM Re: What's wrong with making a profit?
Derick II Offline
1000 Post Club Member

Registered: 10/13/05
Posts: 1426
Loc: New York
 Quote:
Originally posted by lucy_amanda:
I think it's fair to try and get the best price but I don't think it's fair for consumers to "advertise" their purchase price publicly. If we expect good selection of pianos, than we should protect dealers/manufacturers privacy. [/b]
I agree 100%

Derick
_________________________
"People demand freedom of speech to make up for the freedom of thought which they avoid."[/b] - Soren Aabye Kierkegaard (1813-1855)


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#318819 - 05/24/06 12:08 PM Re: What's wrong with making a profit?
Climber Offline
Full Member

Registered: 02/16/06
Posts: 224
Loc: Colorado
So...why haven't many dealers or manufactures commented in this thread?

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#318820 - 05/24/06 12:10 PM Re: What's wrong with making a profit?
Giacomo Offline
Full Member

Registered: 04/07/06
Posts: 145
There are two themes in this vexed debate that I feel would be worth separating and emphasizing. Bargaining and fairness.

Bargaining[/b]

AJB makes the main point here: it's the supply side (the industry, dealers) that chooses bargaining as a price-determination mechanism.

People today mostly shop, they don't bargain. E.g. I have never bought anything more expensive than my computer, and I've never had to bargain, although I do a pretty thorough price-comparison search. Perhaps bargaining is inevitable for ultra-expensive, highly durable goods, such as real estate, motor vehicles, pianos.

Anyway I think this answers in large part MartinJ's question:
 Quote:
why are people insecure about their piano decisions?
Because they are insecure about bargaining: they are not accustomed to it, they probably dislike it, and they are wary of an opponent who has chosen to bargain and who presumably has daily opportunities to hone his bargaining skill. Estate agents and car salesman are not, I gather, the most beloved professional categories; piano dealers join them in being professional bargainers, with all this entails.

Probably some eyebrows have been raised by my writing "opponent". I think this is right, yet not because shoppers hate dealers and want to screw them (or vice versa), but rather because bargaining is intrinsically a competitive endeavour. It can be done in a civilized, gentlemanly way, but ultimately the parties have opposite interests: one wants the highest possible price and the other the lowest possible price.

Thus, in theory, bargaining means that the dealer tries to assess the highest price the customer will pay, and the customer the lowest price the dealer can accept.
Ultimately, I think this answers MartinJ's other question
 Quote:
What is it about piano sales that brings out what in my opinion looks like less than decent behavior?
Obviously, in practice, there are mitigating factors: the dealer also wants a good reputation, the customer also wants service, both are also (hopefully) friendly human beings and not just cool-headed businessmen; but how far do these thing go?

Funnily, each side is attacking the other on this forum precisly for behaving as predicted by the simpler theory, which suggests it is not terribly wrong, sad as this may be.
Also, let me ask both buyers and sellers: do you actually pay the dealer a bonus or tip, or give the customer a gift or discount, after everything has been settled on? If so, hats off to your goodwill, but I suspect this is rare.

Fairness[/b]

Frankly, I personally think the notion of "fair" pricing is over-rated; but the term is used so often in the discussion that it is a major part of it in its own right.
The problem is that people have different, and often quite self-serving, notions of fairness.

From the point of view of the buyer, price discrimination is typically considered unfair. Wouldn't you hate it to know that someone else got the very same thing you did, but for a lower price, simply because he was a better bargainer? Of course you would!
The industry knows this, and that's surely part of the reason why dealers would prefer that consumers did not know the prices paid by others. This generates another problem for the more paranoid consumers (a majority?), namely that they don't know if they have been price-discriminated, and may still feel bad about the doubt.
Naturally, all this is unpleasant for the customer. But is it unfair?

From the point of view of the dealer, a certain profit margin is considered fair. I've read more than once on this forum that it is fair for a dealer to have higher prices if he has higher costs, and so on. This is just a version of the late and unlamented Marxian theory of value.
A business that has higher costs than its competitors for providing the same service does not deserve to charge higher prices: it deserves to have lower profits, and it may well deserve to fail.
Obviously this is not just unpleasant but outright tragic for the businessman that is being crushed by competition, but that does not make it any less true. And is it unfair?

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#318821 - 05/24/06 12:28 PM Re: What's wrong with making a profit?
Steve Chandler Offline
2000 Post Club Member

Registered: 02/18/05
Posts: 2789
Loc: Urbandale, Iowa
 Quote:
Originally posted by apple*:
the costs of running my husband's construction company are astronomical.. insurance, licensing, workmen's comp, state, local and federal taxes, vehicles, machines, tools, etc. etc. etc.

i would be interesting in reading about the actual costs of running a piano dealership... [/b]
And don't forget the cost of prepping a piano for sale. This alone can be thousands and that's why cheaper pianos don't get a full prep (and that's why they don't play as nice as they could). It's true that you can't say that by paying the full asking price you'll get a fully prepped instrument you can be pretty sure that if you negotiate the price into the ridiculous range you probably won't get a full prep.

It seems to me that dealers would do well to respond to knowledgeable customers by discussing the details and cost of prep and asking if they want to pay before delivery or after delivery for the work that will allow their instrument to perform to its full potential.

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#318822 - 05/24/06 12:29 PM Re: What's wrong with making a profit?
AJB Offline
3000 Post Club Member

Registered: 10/01/05
Posts: 3655
Loc: Surrey, England
Giacomo

I agree with your development of arguments I tried to present.

But is there a solution to this problem?

Commentators here seem generally to migrate towards two camps:

1) people are too hard on dealers, trying to bargain them down too low, using supposed internet leverage in suport of this sometimes

2) dealers are unfair to customers by obscuring real prices and forcing customers to bargain

Your point that dealers who have operataing costs and/or selling prices that are uncompetetive, will likely suffer or fail, is simply a business fact. Nothing special about piano dealers in that regard.

Sadly I think this is a debate that will run and run, because the industry in general tries to prevent price transparency. Some forums even refuse to allow price posting because it is damaging to the industry (they say).

The piano insdustry is being naive.

Adrian
_________________________
S&S Hamburg D, Yamaha CLP 280


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#318823 - 05/24/06 01:00 PM Re: What's wrong with making a profit?
Dorrie Offline
Full Member

Registered: 12/09/05
Posts: 438
I think the saddest thing about the current state of piano sales is that it is so complicated that many families who would otherwise have purchased a mid-price upright will just go buy a digital - not so much because they think digitals are better, but because the whole process appears so much easier.

Piano sale trends look pretty flat to me.

Dorrie

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#318824 - 05/24/06 01:07 PM Re: What's wrong with making a profit?
Captain Obvious Offline
Full Member

Registered: 05/13/06
Posts: 182
 Quote:
Originally posted by Steve Cohen:
Based on the national average Gross Profit Margin a piano selling for $20,000 would have a dealer cost of about $11,500.

Are you agruing that the actual national average margins are "ridiculous"? Since the average NET Profit after taxes is under 4% there isn't much room for even lower prices.
Are you telling me that your net profit is going to drop if you sell a piano to me for $6000 over cost?

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