Thread: Festool Pricing is very high

While I'm well aware of the difference in operating costs in a relatively small market et cetera et cetera, and I do love my Festools, I am a little disappointed that we haven't seen a modest drop in Festool's pricing (at least that I've noticed) since the rise of the Australian dollar. Another company whose products I am fond of, Apple Computers, are quite similar in some ways to Festool, ie: high end, price control, and have managed to drop their Australian prices significantly. While the dollar hasn't appreciated against the Euro as much as the greenback, a small cut in prices would, I expect, be feasible. I hold no issue with retailers, this is solely at the discretion of Festool Australia.

Originally Posted by FenceFurniture

G'day Paul, I noticed that you declined to justify the prices! Garn, avvago!

Brett

The prices are indefensible; madness even. They are artificially generated to prop up the American market because it is currently deemed essential. I am not sure this will be the case for very much longer, but that is another story and perhaps could be the subject of separate thread.

I would dearly love to see a major manufacturer pull out of the American market saying that it is financial suicide to keep selling there at a loss. I would really love to know their reasoning behind continuing to sell at a loss or near loss beyond that "it is a prime market."

I have no knowledge of profit margins in the hardware and tool retail industry in Australia. Also be aware that when talking of profit percentages it depends on whether you are marking up the wholesale price or looking back fom the retail price.

If a product is is bought wholesale for $100 and you mark the price up by 50%, it is sold retail for $150. However if you ask what the profit margin is on that retail price the answer is one third (33%) as $50 is one third of $150.

My point is how misleading margins can be depending on which way they are expressed.

Until we have rationalisation of the global pricing strategy there will be an anomaly in relative prices around the world and as you have pointed out, Australia being out on a limb, the freight is very likely to be high.

Regards
Paul

Scissors

I suspect Apple are feeling the pressure of competition from other manufacturers. Even though these other manufacturers are not competing for the same market, the money still comes out of the same basket.

Presumeably Festool are not yet presssured to the same point. We are back to my comments about supply and demand.

If Festool see a drop off in demand you may well see a change in direction. Until that time...... You may also have to wear a change in product too.

Regards
Paul

Bushy, where's ya bad manners, ya mug?

Originally Posted by Bushmiller

They are artificially generated to prop up the American market because it is currently deemed essential.

Nah, it's always been the case.

Originally Posted by Bushmiller

I would dearly love to see a major manufacturer pull out of the American market saying that it is financial suicide to keep selling there at a loss. I would really love to know their reasoning behind continuing to sell at a loss or near loss beyond that "it is a prime market."

Hear here. I get a strong impression that the "get the profits from other markets" is all too true. But this argument doesn't hold a cup of water - what if the economy of the profit making market goes catatonic? The idea that selling below cost to maintain market share is preposterous for obvious reasons.

Originally Posted by Bushmiller

Also be aware that when talking of profit percentages it depends on whether you are marking up the wholesale price or looking back fom the retail price.

Yes, that;s what I did. 25% on is 20% off etc.

Originally Posted by Bushmiller

Until we have rationalisation of the global pricing strategy there will be an anomaly in relative prices around the world and as you have pointed out, Australia being out on a limb, the freight is very likely to be high.

And that rationalisation will come about because....what, the companies suddenly develop a soul? IMO, there's only one thing that they'll listen to: the deafening silence of an unworking cash register.
Executif A: I vant a neu Maybach, but dis year's proffits are down! Vy?
Executif B: Vell, all the basstard Aussies haf been buying from der US, mein Geschäftsführer (Managing Director)
Executif A: Das ist der grosse bugger! Vot ve do now? Ve haf to charge der same pries across der vorld, and maybe ewen make more proffit! HA! I tink I just outsmarted meinself!

In other words, if we buy more and more from the states, then they will be forced to change their practices. Hip pocket nerve is the only sensitive one.

Jesus Brett.
Your French is atrocious!

I am the happy owner of a Kapex 120 mitre saw named Fritz. When I first heard about Festools 5 or 6 years ago I was impressed by their advertising and reputation but I nearly fainted when I heard the prices. I was absolutely fascinated and puzzled as to how they could stay in business when something like a Festool router could be 4 or 5 times the price of a Bosch, GMC or Triton.

Then I began to think that Festool is a bit like Mercedes Benz cars. They have targeted a part of the market that is not looking for the rock bottom price. And I think that Festool, like Mercedes, is exploiting the value and status of its brand. Because when you compare a $120,000 Merc with a $40,000 Commodore you are not getting three times more of anything tangible. The Merc is not three times faster, more reliable, fuel efficient or comfortable. But the Merc has 3? times more status, street cred etc than the Holden.

Festool strike me as being innovators, always looking to improve design and functionality. And that costs in research, design and testing, so their prices have to recover that expense. Od course, Bosch, Makita etc do their own R & D but they can spread the cost of that over many more products.

So what can we do?
Festool seem to be happy with their share of the market and don't want to triple their production, which may reduce prices. (Personally, I think Festool should get a licence to make every power tool in the world!!)
We could stop buying Festool products ( a consumer boycott) which would force Festool to reduce prices, or they may just stop exporting to Australia and NZ.
Or we can buy them from overseas with the complications of voltage, freight costs, customs, warranty etc.

I have no complaints about my Kapex (apart from the price!) and I know that there is no compromise in its accuracy or performance, and I fully expect it to outlive me. So maybe it's worth paying more for that piece of mind.

Perhaps we could organise a bulk buy through Festool and the dealers here, with a large discount of course.

Can the ACCC or ASIC examine the prices of Festools here compared with the USA or Europe? Price gouging?

Cheap tools do have a downside. Remember GMC? Their tools were handyman quality, but they suited the occasional (not everyday use) that most of us require. But they went broke with some help from the Ryobi-Bunnings deal and that I considered to be too low. Nobody wins a race to the bottom.

the last thing i want is for festool to turn into a makita or dewalt or heaven forbid, a ryobi type company.

i dont like their pricing either, but i do keep buying because i can normally factor some of the price into a job.
when i am not working, i dont buy tools.

personally, i dont think they are price gouging.
i think they are saying this is our product, this is the price, buy it or don't buy it, your choice.

i would be very surprised if festool germany where losing money in the u.s. market.
i reckon they are making a fortune over there.

yes, the u.s. market pay less for their festools.
but compared to other tool brand names such as makita and dewalt, they are paying the same as we pay. (2 or 3 times more than the makita/dewalt tools).

justin.

Coming in late here as just returned from a couple of months overseas.

Did'nt look at Festools for price comparisons but understand that everyone is entitled to their view but again an observation that has not been made but has been stated in previous discussion on this topic.

Try buying a Festool overseas direct and getting it into OZ its been said before that unless you have someone buying on your behalf it will not happen.

For example ebay has listed Festool product from a site in the UK in the past ,they will not ship outside of the European Union ,I think the USA is the same as Festool generally will not permit selling outside of the region market.

I do have a lot of Festool gear and honestly I have'nt always justified the expense but I have justified buying good gear that should last me out .I believe that in cases of really good tools buying once is justification.

Cheers

Just a bit of required.

Originally Posted by beer is good

Then I began to think that Festool is a bit like Mercedes Benz cars. They have targeted a part of the market that is not looking for the rock bottom price. And I think that Festool, like Mercedes, is exploiting the value and status of its brand. Because when you compare a $120,000 Merc with a $40,000 Commodore you are not getting three times more of anything tangible. The Merc is not three times faster, more reliable, fuel efficient or comfortable. But the Merc has 3? times more status, street cred etc than the Holden.

This is a good analogy and I think very true as far as the comparison in cost between Festool and their rivals, but it doesn't address the price differential between countries for the same product.

Theatre seats are a similar story. Front row seats are many times the cost of seats in the gallery. Are they better? Yes. Are they that much better? No. Nevertheless, those that can afford them buy them.

Two issues here:

Premium pricing
Pricing across markets

The first one is a marketing strategy for a premium product. The second is a very strange and difficult to understand quest for market position at any cost. It is not, however, unique to Festool.

Regards
Paul

Originally Posted by FenceFurniture

"Bushy, where's ya bad manners, ya mug?"

I don't think you'd like to see the other side to my nature! Even I'm afraid.

"Nah, it's always been the case."

I expressed myself badly. I meant it has been and still is for the moment.

I can see that your multiple telephone conversations with Jeurgen for the "Colt Buy" have really paid dividends. You seem to have picked up the language and almost speak it like a native.

Sorry, gotta head off to work and pedal the bicycle to keep the forums running. Will look forward to developments.
Regards
Paul

Well I'll be damned: a well mannered lord of darkness. How refreshing.

Originally Posted by FRB Design

Quality is remembered long after the price is forgotten.

Why people feel the need to some how justify why they dont buy Festool is of no real concern to the ones who do. I have not met a Festool owner that thinks he was ripped off either.

We have a great distributor of Festool in Oz and many,many happy customers.




Frank.

Frank, I gather we haven't met then.

Hello.

I'm a (very) disgruntled Festool owner, and I know that I've been ripped off.
Some Festool products are imitated but unrivalled. Their sanders are a prime example of this. Their range of circular and plunge saws are almost as good as the world's best (Mafell), and the finest available on the domestic market.

Some are innovative and unique, such as the Domino.

Some, however, are little more than poor imitations of better products from alternative manufacturers. In this latter category, I'd tender their range of Jigsaws, battery drills and the Kapex saw. My personal experience as an owner and user of these products has been both frustrating and irritating. I've had to purchase alternatives to these products, which is the basis for my personal feelings of being ripped off. I loathe and detest paying premium prices for inadequate products.

I'm also not alone. A local TAFE workshop has experienced problems with SEVEN of their Kapex saw stations.

In regard to pricing, however, I don't really know whether blame should be attributed to the manufacturer. Any company's pricing structure is based around a delicate balancing act . Tooltechnic systems sell less product, but at a greater margin than its competitors. This is the model they've adopted within our domestic marketplace. I suspect that they use an entirely different strategy within North America, where volume is increased at the expense of unit margins.

Is no different from any purveyor of goods and services. We all charge the maximum price that the market will bear. Charge less, and we sell more, until we saturate the market. Charge more, and sell less, or price yourself out of the market. For Tooltechnic to stay represented in the Australian marketplace as a low-volume supplier they need to charge premium prices. Remember that it's a relatively small company that lacks the R&D and marketing resources of its competitors. Yet it has a pricing and supply structure that is the envy of all others. Disregarding their obviously superior products for a moment, what other producer can charge a 50% price premium for products that are so glaringly inadequate?

Caveat emptor. Some will continue to buy product irrespective of price, suitability for purpose or percieved quality. There's legions of Holden and Ford fan(atics) out there that continue to purchase the automotive equivalent of dinosaurs. Others seek alternatives.

Originally Posted by FRB Design

Quality is remembered long after the price is forgotten.Frank.

In which case Frank, it would be best to only start buying Festool after Alzheimer's sets in. That's my problem - I've an excellent memory! Just kiddin' yer sport - I agree with the basic premise of your statement.

RATTY! Wondered were you were. Like your provocative remarks there, now we're getting somewhere. So, at the risk of asking you to step into the firing line, what would be your brand picks in terms of supreme quality in the basic categories of tools (and would you mind establishing your creds?). So far you've said:

Sanders - Festool (followed by anyone?)
Spinning blade saws - Mafell, followed by FT
Domino - No contest (literally)

So what do you rate for:
Jigsaw
Drill (cordless)
Impact Driver
Drill (240v)
etc

Like your car analogy. About 9 years ago I had the option of purchasing a new Commodore for around $30-34,000 which would be a little above the base chassis with wheels model. Or I could have purchased a five year old 60,0000km Eunos 800 Miller Cycle 2.3 litre that went like a scalded bloody Rat, with all the trimmings, and leather to boot for $27,000 ($85,000 new). I chose the latter, and it was a magnificent vehicle. I always wanted a car that I could play Classical music in.