With dealer networks collapsing and the established distributors increasingly bringing sales, especially top-end sales, ‘in-house’ there’s less and less justification for their existence and the substantial increase in resale prices it creates. With prices rising and sales the unit sales dropping, they are no longer ordering products in the quantities they had been, or stocking them in anything like the depth. The old dealer mantra of “One to show, one to go” hasn’t been heard in years and, more often than not, even distributors are drawing the line at “One to show…
Knowing the cost of everything…
The bottom line here is that, once you reach a certain (surprisingly low) price level, the whole industry is sliding in an uncontrolled and haphazard manner towards a two-tier model, while the hold-outs and established practice means that three margins are still generally applied – and then raped for discounts. And that’s before you even start to consider single-tier, direct to customer sales, which introduce a whole new and very different cost structure. In other words, the relationship between manufacturing cost and asking price is now utterly unfathomable and ranking products, or choosing them on the basis of price is a fool’s errand.
The really big mistakes (and the ones that are most corrosive to system quality):
Assuming that because something costs more (or has/had a higher published price) it must be better.
Because you can buy something with a big (or bigger) discount, it must represent better value.
The sad truth is that price and performance were never really equivalent and that any relationship they once enjoyed is long gone, muddled and obscured by competing technologies, competing production methods and competing interests. These days, it’s as likely as not that a really big price-tag is there to attract attention -= safe in the knowledge that it allows for massive (and thus highly attractive) discounts. Consider a customer, offered one product at $40K and another at $35K – but discounted from $70K! If that second option sounds like a bargain, you need to think again. It might be a genuine discount. There might be other incidental reasons for the pricing. But ultimately none of that really matters. The only thing that does matter is whether the product fits your system and what it sounds like for the price being asked. Ignore the discount – concentrate on the cost. Caveat emptor has never wrung so true…
