Optics Retail Strategy Discounts ?

[django]

May seem a strange question but how do Retail outlets (online and other) manage to offer such huge discounts ? is this just because they can buy in bulk and able to keep overheads down, or are some of the items discontinued or out of fashion eg (Bausch&Lomb Legacy Half price) it makes you think it is just as well we dont know what they are brought in for! would like to hear from anybody who has worked in the trade how the sales strategy is run.

[xenophobe]

Most products carry a MSRP (Manufacturer Suggested Retail Price). This is a figure determined by the manufacturer to be the standard price, or highest fair price that someone should pay for these from a retail store. It includes a fair profit for the seller. A seller is not bound to sell the item for this price, and in some cases hard to get items may sell for premiums over this amount. Generally you will never pay full retail on an item from most stores.

Some companies also have dealer specific requirements on how much they may advertise any paritcular product for. This is called MAP (Minimum Advertised Price). This is done so all dealers have less competition selling any particular product brand, as there is no real advertisable competition on price. Many times, a retailer does not have to actually sell any given product at this price, they just can't advertise a lower price. This tends to give every retailer an equal chance to sell this brand, and also makes getting this item at a discount less likely unless you inquire with the retailer if they can offer a better price, because they cannot show it online or print media. Most MAP does not affect an in-store price, as those can usually be marked at anything they wish.

Some companies require that an item be sold at a particular price as well, and doing so may break a manufacturer requirement for authorized dealer agreement and could jepordize a dealers status... See the consistency of Leica and Swarovski from store to store. I'm not sure if either of these companies have this type of agreement, but you'll never really see either brand at a discount.

Retail price is what you would pay as a non-business-related private party sale from a retail store. This price is usually determined to be the minimum amount a business can sell the item without taking a loss. Factors determining pricing policies include: paying employees, paying the rent, paying advertising, shipping on the item in question, and other expenses plus a profit margin of some sort.

So, the way retail sales works... there is a price the dealer must pay to buy an item for stock. This is usually called Dealer Cost or Wholesale price. There is a MSRP, which can be anywhere from 10% to 100% higher than Dealer Cost. A price is determined by the dealer, or set by dealer agreements with the manufacturer, and a price is set. That price is the price you pay, and why some items can have drastically different prices from one dealer to the next, and the reason why other items are always the same price no matter where you go.

Many times discontinued or refurbished items are offered to the retailer at a much lower price, and usually these items do not have a MSRP or MAP applied, and you can find these at much closer to dealer cost than new items.

Some dealers need to charge more than others. Comparing a retail store with a public business location and an internet dealer without one. The costs of running an internet business is much less, so the markup can be considerably less, so they may offer the item at a huge discount, or rather 5% or 10% over cost, where a retail store would need to charge more. MAP is designed to help level this field, especially with products that have considerable markup or profit designed into pricing structures.

And yes, sometimes there is a price break for a dealer if he buys X amount of items for stock.

Well, I'm tired of typing. lol. Hope that helps.

[django]

Most products carry a MSRP (Manufacturer Suggested Retail Price). This is a figure determined by the manufacturer to be the standard price, or highest fair price that someone should pay for these from a retail store. It includes a fair profit for the seller. A seller is not bound to sell the item for this price, and in some cases hard to get items may sell for premiums over this amount. Generally you will never pay full retail on an item from most stores.

Some companies also have dealer specific requirements on how much they may advertise any paritcular product for. This is called MAP (Minimum Advertised Price). This is done so all dealers have less competition selling any particular product brand, as there is no real advertisable competition on price. Many times, a retailer does not have to actually sell any given product at this price, they just can't advertise a lower price. This tends to give every retailer an equal chance to sell this brand, and also makes getting this item at a discount less likely unless you inquire with the retailer if they can offer a better price, because they cannot show it online or print media. Most MAP does not affect an in-store price, as those can usually be marked at anything they wish.

Some companies require that an item be sold at a particular price as well, and doing so may break a manufacturer requirement for authorized dealer agreement and could jepordize a dealers status... See the consistency of Leica and Swarovski from store to store. I'm not sure if either of these companies have this type of agreement, but you'll never really see either brand at a discount.

Retail price is what you would pay as a non-business-related private party sale from a retail store. This price is usually determined to be the minimum amount a business can sell the item without taking a loss. Factors determining pricing policies include: paying employees, paying the rent, paying advertising, shipping on the item in question, and other expenses plus a profit margin of some sort.

So, the way retail sales works... there is a price the dealer must pay to buy an item for stock. This is usually called Dealer Cost or Wholesale price. There is a MSRP, which can be anywhere from 10% to 100% higher than Dealer Cost. A price is determined by the dealer, or set by dealer agreements with the manufacturer, and a price is set. That price is the price you pay, and why some items can have drastically different prices from one dealer to the next, and the reason why other items are always the same price no matter where you go.

Many times discontinued or refurbished items are offered to the retailer at a much lower price, and usually these items do not have a MSRP or MAP applied, and you can find these at much closer to dealer cost than new items.

Some dealers need to charge more than others. Comparing a retail store with a public business location and an internet dealer without one. The costs of running an internet business is much less, so the markup can be considerably less, so they may offer the item at a huge discount, or rather 5% or 10% over cost, where a retail store would need to charge more. MAP is designed to help level this field, especially with products that have considerable markup or profit designed into pricing structures.

And yes, sometimes there is a price break for a dealer if he buys X amount of items for stock.

Well, I'm tired of typing. lol. Hope that helps. WOW That was a real in depth answer to my post thanks question what is GREY AREA PRODUCTS ?

[DavidP]

WOW That was a real in depth answer to my post thanks question what is GREY AREA PRODUCTS ?


I believe that this usually refers to non US warranted products being sold in the US. They may carry an international warranty but not a warranty for the country thats its purchased in. So if you buy a grey market Zeiss for instance in the US it will carry an international warranty which is probbaly a lot less than the US lifetime warranty, plus you'd have to ship them back to Zeiss Deutschland for service. Maybe not so much of an issue in Europe where I understand the warranties are limited to 10 years or so by the EU, plus most of the companies are Europe based so mailing costs to corporate HQ may not be so bad.

[POP]

In the UK you will not find many if any retailers give a more favourable discount against other retailers.The mark up must be quite high but woebetide if any dealer went into big price discounts,I would think his supply of product would soon dry up.

POP

[xenophobe]

WOW That was a real in depth answer to my post thanks question what is GREY AREA PRODUCTS ?

Thanks! lol.

Grey Market products are legitimate product (not counterfeit) that are destined or marked for distribution in a region different than the one they are being sold in and are diverted from normal distribution channels. Many times these items do not carry manufacturer's warranties out of the area they are destined for.

For example, buying a European Zeiss binocular will not give you USA warranties, and if you have a problem with them, you would have to send them back to Germany, not Zeiss USA. This may cost you a lot more in postage and your might have to wait quite a while longer.

[postcardcv]

In the UK you will not find many if any retailers give a more favourable discount against other retailers.The mark up must be quite high but woebetide if any dealer went into big price discounts,I would think his supply of product would soon dry up.

One or two retailers in the UK are discounting high end optics to an amazing level - the mark ups are actually very low. I know of one retailer who was recently selling one of the high end scopes (with eyepeice and case) for such a heavily discounted price that on a £1000+ sale they were making ~£35!

May seem a strange question but how do Retail outlets (online and other) manage to offer such huge discounts ? is this just because they can buy in bulk and able to keep overheads down, or are some of the items discontinued or out of fashion eg (Bausch&Lomb Legacy Half price) it makes you think it is just as well we dont know what they are brought in for!

I'm assuming this question comes from seeing some of the special offers that warehouseexpress offer - they do buy in bulk discountinued models and sell them at massively discounted prices. This does mean that you are buying a model that is a number of years old, but the prices can make it well worth it. Some recent offers such as the Nikon HGs, Sporters and Swarovski SLCs have proven how good these deals can be.

[Andy Bright]

One or two retailers in the UK are discounting high end optics to an amazing level - the mark ups are actually very low.
East vs West ;) It helps (the public anyway) having two determined to be the lowest.

[POP]

One or two retailers in the UK are discounting high end optics to an amazing level - the mark ups are actually very low. I know of one retailer who was recently selling one of the high end scopes (with eyepeice and case) for such a heavily discounted price that on a £1000+ sale they were making ~£35!

I accept what you are saying but have yet to see any retailer prepared to lift his head above the wall and openly advertise low prices. i still maintain that if any retailer discounts heavily,with top the range products he soon have his supply cut off.

POP

[Curtis Croulet]

Xenophobe's answer refers to marketing and pricing practices that legal under US laws. Do the concepts "MSRP" and "MAP" have any standing in the UK or elsewhere in Europe?

[xenophobe]

I know some countries use RRP (recommended retail price) instead of MSRP. Isn't MAP illegal in some countries in Europe?

[postcardcv]

I accept what you are saying but have yet to see any retailer prepared to lift his head above the wall and openly advertise low prices. i still maintain that if any retailer discounts heavily,with top the range products he soon have his supply cut off.

POP

Just look in the magazines and online and you'll see high end stuff discounted well below the MRSP. A quick example showing RRPs and price readily advertised on the web...

leica ultravid 8x42 BR - rrp £1049 - online £839
leica ultravid 10x42 BR - rrp £1099 - online £889

swarovski 8x32 el - rrp £961 - online £779
swarovski 8.5x42 el - rrp £1013 - online £859

zeiss 8x32 fl - rrp £904 - online £799
zeiss 8x42 fl - rrp £960 - online £849

I'd say they are very significant discounts and were readily advertised on well known websites, no need to 'ring for price'.

[POP]

You will find that those prices are not unique to one outlet they are used as a guide line by quite a few retailers.In this day and age rarely does any retailer sell at the recommended RSP on any product.ring most Retailers that state "ring for price" they will nearly all come up with prices you quote.You miss the drift of my suggestion,that if somebody started do real price cuts for a quick return,their supply would soon be cut off.

POP

[ceasar]

It was like this in the "old days" with camera's. But, even yet, on some purchases, it may be best to stay local and pay the premium for personal service. It can come in handy if the item needs repairing or replacement. Support your local specialist!

[Sid Post]

You miss the drift of my suggestion,that if somebody started do real price cuts for a quick return,their supply would soon be cut off.

POPThat holds true on any product were the manufacturer can control the distribution. MAAP/RRP/etc. are not legal in some jurisdictions but, if you as the dealer sell below their stated price, they will not resupply you with product.

Electronics may be all about low cost service and shipping and huge volume but, as you move to more premium products with smaller distribution that changes. A DVD player or Microwave is a commodity that is based solely on the price at my door step. When you start talking about premium products like Binoculars that cost over $200, how many pair are sold per year? Now take that up to Leica, Zeiss, or Swarovski prices and look at the numbers.

I would venture that Wal-mart in the USA sells more cheap binoculars per year then then those premium companies do in a year. After all, how many threads do you read where the poster says something like, 12 years ago I bought these XXX binoculars and I think I want to upgrade to the newer/lighter/~better model. Tasco and Bushnell are like a disposable Bic pen or lighter - use it a little while and it dies - buy another one in a few months when you need it again.

[Robert Ellis]

More than 99% of binoculars sold lie in the under $100 group. That is selling price not MSRP.

[postcardcv]

You will find that those prices are not unique to one outlet they are used as a guide line by quite a few retailers.In this day and age rarely does any retailer sell at the recommended RSP on any product.ring most Retailers that state "ring for price" they will nearly all come up with prices you quote.You miss the drift of my suggestion,that if somebody started do real price cuts for a quick return,their supply would soon be cut off.

POP

If someone cut prices much below the ones I've quoted they wouldn't make a quick return, they'd make a loss. The profit margins on these high end optics are so small that I doubt any retailer could afford to drop there prices much lower and still make any money.

[POP]

Electronics may be all about low cost service and shipping and huge volume but, as you move to more premium products with smaller distribution that changes. A DVD player or Microwave is a commodity that is based solely on the price at my door step. When you start talking about premium products like Binoculars that cost over $200, how many pair are sold per year? Now take that up to Leica, Zeiss, or Swarovski prices and look at the numbers.

In actual fact the market for optics is quite large for a high end niche product,but the whole drift of my argument is that it is not in the interest of the manufacture to have his product sold at below a certain price.In their marketing strategy to low a price would give the impression of a not altogether uniqe product.They don't want a Rolls Royce to be seen as a Ford.

POP

[POP]

If someone cut prices much below the ones I've quoted they wouldn't make a quick return, they'd make a loss. The profit margins on these high end optics are so small that I doubt any retailer could afford to drop there prices much lower and still make any money.
On the question of margins I cannot dispute not knowing the %s But I am pretty sure,discounts work on a volume bought basis.The margins appear to be between 12%-21% but that is off suggested retail price which nobody sells at anyway.as i original said basically everyone sells at around the same price.The question of margins becomes more interesting when one does a trade in, off a new pair.All products have a ceiling price which nobody can shift if it goes above that,the market is very bouyant at the moment but if it begins to slow, down will go price and margins.
But having said all that,the company that I believe you work part time for has to be one of the best companys I have dealt with and would reccomend them to anyone.

POP

[xenophobe]

Examine the Leica pricing in the US and tell me that there isn't a MAP or required selling price. It has nothing to do with margins that would vary from internet only retailers and in-store prices.