Thread: Dare I let the cat out of the bag?

Dingo - you are WRONG - I don't use that word often but you are WRONG.

Gotcha!!! )

The amount difference for the Puffin plans is $46 and Ducks will only see about half of that.

So you are getting all steamed up
over a real difference of much less than $26.70

Let me explain

When negotiating be a bit aware of some of the costs that the distributor has to carry.

If they actually stock plans then they have to pay two lots of postage - from the UK plus an overnight bag to the customer for around $9 for bulky plans like Iain's and mine.

So that adds $9

Also when buying plans from Oughtred there is no GST component in the price that Ducks pay - so they can't claim any of it back as they can with locally produced goods - when supplied by someone within our GST system they would be able to claim back 2/3rd of it (ie assuming their markup was 1/3 which is about typical. The same situation is true of plans bought from me - ducks can't claim it back either because I am outside the GST system - I just don't earn enough so can optionally drop out.

So anyway - that adds 2/3 of 16.36 = $10.91

$46 - $19.91 = $26.70

And that is without considering the costs of storing the plans which is now the Duck's responsibility rather than the designer's, the fact that the Ducks are doing much of the promotion here rather than the designer.

Mik/Midge,

I made the comment on the plan difference to highlight the difference in price between buying direct and buying through an agent. Whilst it is only about $46 difference in cost, it all adds up after a while. (especially in business where you want to make money for yourself before becoming generous enough to contribute to other businesses).

I will not use the plans agent for anything during the build and if I have any queries that I can't sort out myself I can ring the designer direct and get it first hand. Whilst I acknowledge that some agents such as Duck Flat have been good for the local small boat scene, I don't believe that Duck have added anything to me as a customer by selling me the plans as opposed to buying from Iain direct. Iain asked me to buy from Duck as obviously he has an arrangement with them. I wanted the plans and did what Iain asked but why should the agent make money from me for nothing?


I don't believe that you should undercut a designers price and I am more than happy to pay good money for good plans but this money should go to the designer. I reckon that small boat plans are cheap enough ( and should cost more if you ask me) given the time involved in developing them to the stage that many designers do these days.

regards,

AD

All your angst seems to be directed at the agent - but Iain is grown man and has made certain business decisions because they are good for him.

The prices are on the Duck's website for him to see and he visited a couple of years ago so I would assume it has his blessing.

He deserves equal criticism - but I don't see any from you - or dingo or Mike.

[quote=bloggs1I reckon that small boat plans are cheap enough ( and should cost more if you ask me) given the time involved in developing them to the stage that many designers do these days.[/QUOTE]

Exactly - you are prepared to send more money the designer's way and he is prepared to send more the agent's way.

Perhaps you can look at it that way and feel better about it.

Michael

Originally Posted by bloggs1968

Whilst it is only about $46 difference in cost, it all adds up after a while. (especially in business where you want to make money for yourself before becoming generous enough to contribute to other businesses).

I will not use the plans agent for anything during the build and if I have any queries that I can't sort out myself I can ring the designer direct and get it first hand.

I'm not picking on you bloggs, but you did raise a few points for which I felt there was a valid argument (and that's what I do for sport! )

If I'm reading this quote correctly, you are in the business of building small boats.

This is a different kettle of fish again. My experience with commercial building (Boats and houses as it happens!) albeit on a much larger scale, is that you would expect to pay the designer's costs on the first item and a royalty thereafter.

Often this would be the complete design and documentation cost, not some sappy $100 token though.

You wouldn't normally be expected to pay for the entire planset over and over, neither should you be!

In the exact case you mentioned, if you are contemplating production of a number of them, I'd speak with both designer and agent, pay the agent full freight for the first set as preferred by the designer, then strike a deal with the designer for royalties on subsequent boats. Surely that way everyone wins including yourself?

If you are building one-offs, and the end product is not sufficiently attractive to justify the additional 46 dollars, then I suggest you look for another design that is, you haven't got your market research quite right!

Cheers,

P

Originally Posted by Wild Dingo

But getting into a discussion on pricing is going to achieve stuff all in real terms... and is actually a waste of time since the price wont be dictated or changed by us discussing it here... it becomes argumentative and leads to sometimes quite angry discussions which isnt our purpose.

Sorry Dingo,

thread seems to be getting a bit hijacked on this issue - you must be able to see in to the future. The one thing I enjoy about this forum is the diverse range of views.

So what have you decided to actually go ahead with??????

regards,

AD

Originally Posted by bloggs1968

So what have you decided to actually go ahead with??????

**hysterical laughter**

I tell yer what mate... I will tell you all once Ive laid the keel put up the frames and am starting to lay the planks! hows that?

Ive been down the road of price disputes and price reasonings a hundred times in a hundred different places... and it never seems to end on a good note so I guess I just dont enjoy it for that reason.

I dont believe in going behind the designers back and doing things as Mik says dishonest... I do however believe in seeking the best price for whatever you are buying why pay a prenium for something when by going another route you can get exactly the same item for considerably less? Doesnt make sence...

Wanting the design? I mean come on Mik!! You of all people must know that building a boat is nothing if its not an EMOTIONAL thing!!... emotion and compromise = boat!

Im bloody emotional when I think of the Peterson Susan design I love so much... but at the price of plans + conversion + cost of moulds being sent down its really emotional!!!... but thats okay cause thats where compromise kicks in... I compromise and say buggar the Susan I will look seriously at Paketi or another Aussie boat design... and so it goes

A choice of design is first and foremost an emotional thing... the bloody design HAS TO APPEAL to your emotions!!... then its a closer look can you compromise giving up the gaff sails for the macoroni rig can you compromise by giving up the solid timber planking for ply and googe etc etc etc... emotion and compromise = boat!

I have yet to bring myself to seriously COMPROMISE what I want in a boat... but by gar Im bloody close!!... Cause I just dont intend to be stuck down here and miss yet another summers fishing!!... well okay I can miss ONE more but after that by all thats holey I better have a friggin boat behind Effys ass and be heading NORTH to the bara and trevalli fishing grounds!!

So... I think I will leave it now till I have a few things done... then I will jump all over this forum Yaaaaaaaahoooooing and Wahooooing like some demented chook!!

Shut up Richard!

Hang on, what a weak bunch of lilly livered.... just as I get you on the ropes you all go back to the topic!!

WHAT'S THAT ABOUT? :confused: :confused: :confused:

Cheers,

P

aahh Midge mate... see now what happened was the thread started life as a thread generally does right on topic... but then cause threads have this wonton desire to wander all over the place so did this one... we however in this case made sure it wandered just the right way that would bring you in otherwise as we all know you would have had nothing to do and been rather bored and as we all know all too well a midgey that is bored is not a happy camper and tends to get their stings and barbs happenin all over the forum so we lead this thread in such a way as it would lure you in... and so it did... good thread!!

Then just as we realized you were having lots of fun and "sport" the thread did as threads do at times... it turned back upon itself and reverted to the original topic!

Now the thread and those contributing other than your own good self have had some wonderful "sport" at your expense! :eek: Damnably good of the thread!

And mate? Thats how a good thread allows us all to get our sport!!

Cheers!

Oh... and... Shut up Richard!!! strewth! I can hear your hyena cackling all the way over the damned nallabour man!!

No Midge, I'm not "slagging off at the opposition," as you said or implied at least three times in the course of your little sermon. We are not in competition with that company (whose name I deliberately refrained from mentioning, I might point out.) For the record, we do not sell Iain's plans. Nor have we ever done so. Nor have we ever sought to do so.

I have no idea where Bloggsy first saw that plans for Puffin were available, or what the vessel looked like. It may indeed have been on "that company's" website, but it could equally as well have been from a variety of other sources -- including Iain's own book of drawings and descriptions, which has been around for years and is available from I don't know how many boating outlets. Or he may have seen photos of other people's boats built to that design. Or he may simply have been asking questions in general terms on the WoodenBoat Forum or elsewhere. I don't know. (Nor, I suspect, do you.)

What I do know is that your repeated assertions that my company is in competition with the other one are unfounded. To the best of my knowledge, not one of our products -- or even our agents' products -- is on their product list, nor is any of their products on ours.

We do have some agents for our products however, and we offer them significant discounts in order to encourage them to market our products for us. That's a very good way for an agency agreement to work -- it encourages the agent to sell on behalf of his supplier, which is good for both. And n a free market, market forces will determine the price at which the product sells, whoever is the seller.

Whether in fact there is a free market in Oz for Iain's plans I don't know. It would depend on the terms of his agency agreement, one of which might restrict him from selling his own plans here. (That's what I suggested Bloggsy might like to find out.) Iain would enter such an agreement presumably only if he thought his agents would sell plenty of plans for him.

Now Midge, you said that "agents deliberately undercutting designers RRP can only serve to drive down the value of the designer's work in the long term, placing a price expectation in the marketplace (so the like's of Dingo won't buy except at the discount).."

Please let me explain something.

The designer sets a price on his product at which he's willing to sell. Please read that again. The designer sets his own price. No agent can decide, on behalf of the designer, what the designer's selling price is going to be. He can only determine his own selling price.

If the designer is selling his own products in competition with his agent, then an agency agreement can only work properly if the agent knows at what price the designer is selling to end-users, and at what price he himself can buy from the designer, for on-selling. The arrangement works because the producer forgoes some profit in return for having some marketing, sales, and client-management undertaken by the agent.

If the designer sells direct to end-users, then an agent will only want to be involved if his buying price is such that he can undercut the designer's price to end-users (should he want to) and still make a profit. Otherwise of course people will buy direct from the designer. That is, they will if they know who he is, how to contact him, and what his prices are. And herein lies a method by which an agent can sell at a higher price than his supplier -- he keeps his customers in the dark about his sources. (At this point I might say that that's not the way my company operates. I'll happily point you to David to buy your plans if you want to buy them from him. But because of the agency agreement that exists between us, and because we don't rip off our customers, I know you'll pay more by buying direct than if you bought from us.)

If the designer binds himself to not sell to end-users, then the agent's on a good wicket whatever the buying price -- he knows he won't be in competition with the designer. And if his marketing is such that people know about him while they don't know about any of his competitors, or if his agency agreement allows him sole rights (so he has no local competitors,) then he can charge whatever he likes -- as much, in fact, as he thinks the market will bear.

And in so doing he does a disservice to his clients and possibly also to his supplier.

Yes Midge, you're quite right in saying there's no such thing as a free lunch. But if you're an agent like the one I've just described, your lunches can be quite inexpensive....

Going on a bit further, you said, "It's too easy for the fringe dwellers who never provide sponsorship, provide minimal service, don't support local events or clubs, to live off the hard yakka of the ones that do, without needing the same overhead (or providing the same level of service)."

I confess I'm not quite clear about what you mean here. I take it when you refer to "fringe dwellers" you're talking about suppliers, not end-users? Are you saying that some suppliers live off the "hard yakka" of other suppliers, and that this hard yakka consists of providing sponsorship, providing a high level of service, supporting local events or clubs, and paying high overheads?

How does that work, exactly? How can one supplier's high overheads help support another supplier whose overheads are lower, for instance? Or how can one supplier's sponsorship of some sporting event or other help another supplier? Indeed, the total market might be made a little larger for all, but this is not some altruistically-intended outcome. Let me assure you that if a supplier spends a lot of money on up-market premises, or employs a lot of staff, or carries a large range of product, or if he sponsors some club or event, or even if he gives away freebies to all and sundry, believe me, the only reason is because he expects to recover his entire outlay and more in due course.

Now, if any of those comments of yours that I quoted earlier are aimed at my company (as I suspect,) then let me go on record by telling you that we don't provide sponsorship, we do support local events,) we don't support clubs, we live off no-one's hard yakka but our own, and we provide a superlative, not a minimal, level of service.

You say, "From my rather limited observation, the blokes that charge slightly more in this business are the ones actively promoting the industry, providing the backup and support." I think perhaps you need to be a bit more specific here. What industry? The boating industry? the boatbuilding materials industry? the boat fittings industry? the boat design industry? What backup? Quality or service guarantees? Ours is ten years, no holds barred. What support? Our advice can be lengthy and detailed, but it goes on being free for simply ages....

========

Gentle reader, the reason for this treatise is this. Midge has publicly posted here what I believe to be an erroneous and I might say cynical point of view about agents, agency agreements, and supplier competition. His views appear to be designed to stop people looking round for good-value pricing. But if you don't shop for good value -- whoever you are, and whatever it is you want to buy -- but settle for the first thing you come across with whatever price-tag it has, then you're doing yourself and the rest of us a disfavour because you're discouraging competition.

The other issue is that you generally (not always) get a better deal from a smaller company, because to them your business is relatively more important than it is to a big company. Unless the small concern is having a closing-down sale you can be sure they won't want to sell to you at a loss; but you can also be sure that they're not loading their prices to cover all those huge overheads or wonderful advertising campaigns like the sponsorships Midge talked about. Shop around, and you'll help keep all of us honest.

=========

And having now said my piece, I'll conclude by saying that I'll happily respond privately (although not here) to anyone who wants to discuss this further. Feel free to send a PM or email.

Mike
.

G'day Michael,

Thnaks for your comments. I agree that having a (written) contract might be irrelevant. Indeed, a handshake usually works fine with me. I have about seven agency agreements (both ways) and each one is based on a handshake only. They're only enetered into with people I'm inclined to trust in the first place, of course.

Since we're talking about Duck Flat, I need to tell you that while I haven't always seen eye-to-eye with the way Rob Ayliffe goes about things, I'm in no doubt that he has a good business and provides a good service. I don't know the price he charges for that service though, so I can't comment on its value (except that judging by the figures quoted earlier it seems like it's a bit higher than it might be.)

And yes, I know about Goolwa and DF's sponsorship and Iain's presence there. (Indeed I was there myself, and talked to Iain for a little about this and that -- as I say, he's a very nice bloke.) So I have no argument with you about DF's contribution to building the industry or their business. Good luck to them.

Nevertheless, I stand by my point that competition's good for everyone. When you get down to a small oligopoly, or worse, a monopoly, levels of service fall. (Think of your local grocery store. Now it's either Woolworth's or Coles, their products are the same, and their prices are identical -- and high.) That's really the key point I was trying to make. And I think that's how the world is made a worse, less diverse, and less interesting place.

Now, as to discounting plans. I don't know how your own arrangements work of course, but I will only act as an agent if I can be given a large enough discount to be able to sell just below the producer's RRP and still make a margin. And I treat my agents exactly the same way. The theory behind this is that if they can find customers for me, and if they do all the middleman work associated with that, then my discounted price to them is a form of payment for their services. (I certainly wouldn't expect anyone to go out of his way to sell my product for no return, as I'm sure you wouldn't.)

I think David thinks much as I do -- at least we've discussed it in some detail. I think he'd rather an agent (or several) do some of his marketing for him in order to let him get on with designing, than do both himself. It means his margins on agent's sales are less, but so are his overheads on achieving them. And if agents can produce additional sales through their own efforts (as I have, and as Duck Flat has) then the principals make additional money -- additional over and above what they would have made on their own, because for whatever reason the agent has been able to gain new customers that they wouldn't otherwise have had. This seems to me to be perfectly equitable.

If people are going to, say, David directly, then it's because they know of him. That means he's been doing some marketing (Duck Flat over again.) That in turn means firstly, he hasn't been designing, and secondly, he's been spending some money to do the marketing. Using an agent need not at all cut his profits -- in fact, it might actually increase them. If I can find David a customer for his plans that he wouldn't otherwise have had (say Shane buys Paketi's plans because he knows of them through me, but if I hadn't have told him he'd have bought a set of GlenL's) then both David and I can be better off.

So I can't really agree with your later comments. Yes, ther are only so many people wanting to build so many boats, and you can't conjure new customers out of thin air. But what you can do is to make sure they know about your plans. The choice will still be theirs, but they can't decide to buy your plans if those plans aren't in their decision set because they've never heard of them, or perhaps you. But if I can tell them about your plans, then those plans can be in their decision set. (Whether they then buy or not will depend on how well your plans satisfy their needs, of course.)

I agree with you about designers being poorly-paid. I think almost everyone is, who works with wooden boats. It's the price we pay for doing what we love, unfortunately. Robert Towsend (Avis CEO) once asked, rhetorically, that if you're not working at what you do for either love or money, then what the hell are you doing it for? And since there's so little money in wooden boats, one assumes that those who work in the field are doing it for love. It certainly applies to David and me, anyway. Maybe to you too?

Mike

Originally Posted by Mike Field

No Midge, I'm not "slagging off at the opposition,"

Well Mike, I apologise, but how else was I meant to interpret:

I'm sorry to hear about that. But surely Rob hasn't got Iain stitched up too, has he? At that sort of price differential, it might be worthwhile getting back to Iain and explaining the situation again.
<snip>
If nothing works, then tell him he's going to miss out on some commission, because sure as hell you're not paying the extortionate price his agent wants

I guess when you say you deliberately didn't mention the company you thought that the name of it's high profile founder was fair game?

None of the rest of my was aimed at you personally (the bit about slagging off was!) and if I didn't make that clear enough when I said

(I have no bone to pick with Mike, other than the above and have had no dealings with him and he may indeed provide the best service in the country, I don't know.)

Then I apologise for that too! I again confirm I have never met Mike, neither for that matter have I ever had any dealings with "Rob".

My thoughts are exactly that; thoughts, and unlike yourself, I haven't had the benefit of being up hours before dawn on this fine Sunday morning, so aren't any shape to add further to the debate... yet! My motivation whenever I get into a stoush is threefold;

a) To think about the subject some more, and maybe learn something.
b) To have others think about the subject some more, and maybe learn something.
c)To get right under the skin of all who are not pure of heart, thought and deed. (No I'm not having a go at you, I really do use that as motivation!! )
d) At no stage do I seek to cause personal hurt, (unless the side of truth and justice seems threatened!)

I will PM you, and I will post further, as I think it would be a shame not to continue this discussion (and more importantly the thread hijack!).

So Mike, IF I had misread what I took to be your very pointed remarks, I'm sorry, and will continue the debate, if I didn't misread them, I'm not sorry and will continue the debate anyway.

Either way, I guess you've got to keep getting up at 4.30 am to read them eh? What do you do at that time of the morning? :eek: :eek: :eek:

Cheers,

P

Dingo:

Mike,

Thanks for bouncing back. The following may take a bit of reading, I hope I haven't snipped too much from your comments, again I stress when I say "you" I am not speaking of "Mike Field". None of this is targeted at you, (unless specifically noted) just he industry (and the customer) as a whole !:eek:

What I do know is that your repeated assertions that my company is in competition with the other one are unfounded. To the best of my knowledge, not one of our products -- or even our agents' products -- is on their product list, nor is any of their products on ours.

Well I made one assertion, and you said you were an agent for one Designer's Plans and that you sell them below list. I also know another mob that sell them, so there's a bit of new knowledge for ya!

We do have some agents for our products however, and we offer them significant discounts in order to encourage them to market our products for us. That's a very good way for an agency agreement to work -- it encourages the agent to sell on behalf of his supplier, which is good for both. And n a free market, market forces will determine the price at which the product sells, whoever is the seller.

As long as you are happy to position your product in a discount environment, that's fine. Eventually all your agents will be making so little that they'll come back to you for a reduced wholesale price, or stop stocking your stuff.

Do you know anyone that's ever bought a rug that wasn't on sale?

Whether in fact there is a free market in Oz for Iain's plans I don't know.

There is a free market. The Trade Practices Act says so, and if I had a bone to pick, I'd have no hesitation in having the ACCC pick it for me.

The designer sets a price on his product at which he's willing to sell.

Yes, and under the Trade Practices Act is only able to RECOMMEND a price at which his agents can sell.

No agent can decide, on behalf of the designer, what the designer's selling price is going to be. He can only determine his own selling price.

Correct, and accordingly can use that selling price as a "loss leader", selling the plans at little or no margin, or even at a loss, in the hope that the customer will be so pleased at the price, he will buy all his material/fittings and other supplies from the agent.

This is one of the reasons that the plans-only agencies (whom I may inadvertantly have referred to as "fringe dwellers") do not undercut. They have to make their profit out of selling plans.

the designer is selling his own products in competition with his agent, then an agency agreement can only work properly if the agent knows at what price the designer is selling to end-users, and at what price he himself can buy from the designer, for on-selling. The arrangement works because the producer forgoes some profit in return for having some marketing, sales, and client-management undertaken by the agent.

And in exchange for the forgone profit, the designer in turn receives substantially more exposure, thereby hopefully consolidating his market position. Legally the designer has no ability to prevent undercutting, and can't even refuse to supply agents who do, but that practice does have an impact on the designer's business, whether he is concerned about it or not.

If the designer sells direct to end-users, then an agent will only want to be involved if his buying price is such that he can undercut the designer's price to end-users (should he want to) and still make a profit.

You see, that's the only bit I have real problems with - why undercut? Who is going to provide the after-sales service?

I think you described some of my previous comments as cynical, (I do that well) but undercutting in this way is in my view about as cynical as one can get! The messge it is sending is that the design is not quite right, maybe it's a bit old hat, in anycase it's not up to being sold for it's true worth, so come in and pick one up from the bargain bin. It's an end of season clearance mentality, and it doesn't do the industry any favours at all.

Otherwise of course people will buy direct from the designer.

You see, I don't agree with you. Daddles has said it above, in the long haul, people will buy from where they get the best service.

Providing the agent provides adequate support he'd have no shortage of customers. A $10 saving on a plan purchase doesn't pay for much telephone time does it?

Yes Midge, you're quite right in saying there's no such thing as a free lunch. But if you're an agent like the one I've just described, your lunches can be quite inexpensive

That's my point. I'd rather deal with someone who can provide the full roast and three veg. I'm tired of toasted cheese on yesterday's bread!

Stay tuned for the next instalment!

cheers,

P

Going on a bit further, you said, "It's too easy for the fringe dwellers <snip>
I confess I'm not quite clear about what you mean here. I take it when you refer to "fringe dwellers" you're talking about suppliers, not end-users?

I was indeed referring to suppliers (AGAIN I STRESS NO T YOU) however there are many customers who work in the reverse principal as well, using the services of those who provide them, then scarpering off to save the price of a cup of tea at the end of the day. I'm sure you know them well.

Are you saying that some suppliers live off the "hard yakka" of other suppliers,

yes

and that this hard yakka consists of providing sponsorship, providing a high level of service, supporting local events or clubs, and paying high overheads?

In part, but whatever the detail of the hard yakka, the result is that some suppliers through their reputation , effort and money have what the marketing people call "top of mind awareness" and the spinoff from their efforts supports the rest of the industry. A bit like the little fish cleaning up below the shark feeding frenzy really, and that's how nature works, but when the feeding frenzy finishes where do either find their food?

How does that work, exactly? How can one supplier's high overheads help support another supplier whose overheads are lower, for instance?

I'm happy to go further, but it's a bit hard in this format, are you ever up this way?

Now, if any of those comments of yours that I quoted earlier are aimed at my company (as I suspect,)

THEY WERE GENERIC NOT AIMED AT YOUR COMPANY, I have stated before, but will repeat that I have not to date had dealings with your company, have not met you, and have no axe to grind with you or your company, and do not wish for any of this discussion to reflect apon either. Hopefully that is clear.

cheers,

P
(One more and my turn at the computer is done!)