Thread: Festool Price Maintenance...or not?

Originally Posted by FenceFurniture

Indeed with one person alone spending $20,000+ in one hit (AND he's used naff all of it in three years, AND he's a so called perfessional - he thinks he is, anyway.)

Geez. That's a bit rough! 😀

Originally Posted by woodPixel

Geez. That's a bit rough! 

Well he's not qualified except for the school of life (which is not invalid but....). Put it this way: he told me he was a Timber Miller and so we discussed backsawn vs quarter sawn. Well I did anyway. He said "Wot dat?" and so I explained it to him no less than 3 times in three months. He still doesn't get it, but still claims he's a miller. "Course I am!". He does own perhaps 3-4 chainsaws.....

From my experience dealing with Miele, they issued firm pricing for 12 months in advance so assume would have to hedge their price to cover dollar fluctuations. I have never thought about it before but assume they would address each country differently based on the volatility of the exchange rate.
I would assume Festool operate in a similar matter.

With these international price comparisons being being done, I note that taxes have been factored and current exchange rates but no mention of the different business overheads and the huge disparity in wages

As far as retail markups go, it is not appropriate for me to disclose the details but will say that the margins are skinny and would not be keen on offering say a 10% discount unless it was done as a loss leader to get people into my shop to upsell other products

Originally Posted by Beardy

no mention of the different business overheads and the huge disparity in wages

It has been mentioned in this thread already:

Originally Posted by Beardy

The USA would be cheaper like they are for most things because their wages and overheads are low by comparison.

Originally Posted by FenceFurniture

Prices that are commensurate with doing business in Australia In other words the cost of doing business here

Apart from that, those facets of the argument have been absolutely done to death over the years, and no need to trawl over them again.

Originally Posted by Beardy

...assume would have to hedge their price to cover dollar fluctuations. I have never thought about it before but assume they would address each country differently based on the volatility of the exchange rate. I would assume Festool operate in a similar matter.

Yes, exchange rate volatility is a very tricky situation for any importer in any country, but that doesn't particularly make it any better or worse here. The only way I can think of to mitigate it would be to bring in the whole year's stock and base the prices on that landed cost, but that ties up substantial money in stock of course.

However, "they" (and I assume you meant .de) would not be doing that assessment - it would done by each individual importer. I'm pretty certain the the USA is operated by Festool itself, not an independent company like it is here.

Originally Posted by FenceFurniture

Indeed it is not, but the wholesale price

Originally Posted by FenceFurniture

into the country
ain't the problem. The problem is the markup in the middle of the equation.

Originally Posted by FenceFurniture

Originally Posted by FenceFurniture

There is no set or uniform figure.

With no set or uniform figure, you can't know what the distributor-to-rrp markup is, which was the "problem" as you said. All the RPM allows them to do is guarantee that the disti-to-rrp margin is protected for the retailer, and sure that means that the retailer has no discretion to do a deal, but it also means that their margin is protected and they will still be around for years to come when you need them for after-sales support or the next acquisition. So what's the part of the problem you're concerned about?

Originally Posted by poundy

So what's the part of the problem you're concerned about?

Post 114 - the para under "For the 5th time".

Originally Posted by FenceFurniture

It has been mentioned in this thread already:Apart from that, those facets of the argument have been absolutely done to death over the years, and no need to trawl over them again.


Yes, exchange rate volatility is a very tricky situation for any importer in any country, but that doesn't particularly make it any better or worse here. The only way I can think of to mitigate it would be to bring in the whole year's stock and base the prices on that landed cost, but that ties up substantial money in stock of course.

However, "they" (and I assume you meant .de) would not be doing that assessment - it would done by each individual importer. I'm pretty certain the the USA is operated by Festool itself, not an independent company like it is here.

Yes fair enough, even mentioned by me I was particularly referring to the hard dollar comparison figures posted
With the exchange rate it would vary country to country with how they predicted a particular countries dollar would fair during the next 12 months. There are third parties that you can use that will hedge the figures for you to save you taking the risk but that comes at a cost as well
In Miele’s case they are company represented here so they themselves are taking the “punt’ but regardless someone has to take that gamble. As I recall they used to bring stock shipments in quarterly

Originally Posted by Beardy

With the exchange rate it would vary country to country with how they predicted a particular countries dollar would fair during the next 12 months. There are third parties that you can use that will hedge the figures for you to save you taking the risk but that comes at a cost as well

I would have thought that the majority of businesses running an import-based retail operation would use currency options, futures, or ETF's to hedge against movements in the relevant exchange rates - unless they want to simultaneously be rolling the dice / investing in exchange rate fluctuations. I imagine that hedging against currency movements is the standard practice, not an exception, and certainly far cheaper than buying a heap of stock in advance (unless one is absolutely sure the exchange rate is favorable - which nobody can be - it would just be a gamble). Buying a heap of stock in advance would cost a lot to store, manage, incur a large opportunity-cost due to tied-up unproductive capital, create exposure to currency appreciation risk as well as potential overstock issues or holding out-dated stock in the event of new models etc - it wouldn't make sense to me if the reason for buying the stock was purely to hedge against currency fluctuations.

I'd be shocked if a large operation like the parent company of Festool didn't have forward contracts in place to hedge against currency movements.

Cheers,

Dom

Originally Posted by DomAU

I would have thought that the majority of businesses running an import-based retail operation would use currency options, futures, or ETF's to hedge against movements in the relevant exchange rates - unless they want to simultaneously be rolling the dice / investing in exchange rate fluctuations. I imagine that hedging against currency movements is the standard practice, not an exception, and certainly far cheaper than buying a heap of stock in advance (unless one is absolutely sure the exchange rate is favorable - which nobody can be - it would just be a gamble). Buying a heap of stock in advance would cost a lot to store, manage, incur a large opportunity-cost due to tied-up unproductive capital, create exposure to currency appreciation risk as well as potential overstock issues or holding out-dated stock in the event of new models etc - it wouldn't make sense to me if the reason for buying the stock was purely to hedge against currency fluctuations.

I'd be shocked if a large operation like the parent company of Festool didn't have forward contracts in place to hedge against currency movements.

Cheers,

Dom

That was what I was referring to with the third party options. Regardless that still gives different outcomes for different economies.

Originally Posted by Beardy

That was what I was referring to with the third party options. Regardless that still gives different outcomes for different economies.

Yes, you are quite right. Even if you started off with prices perfectly equal between countries at a point in time, then assume currency hedging 1-3 years in advance, if exchange rates vary then that will translate directly to pice disparity between countries. I wonder if people would prefer price swings week to week in Festool pricing but have balance between countries (obviously not practically possible) or steady prices in Aud but possible disaparities between countries? Of course the odd thing in the case of Festool is also inconsistent price levels within the product range vs other markets.

Cheers, Dom

Originally Posted by DomAU

Yeah I saw that offer and that would suck. Sorry mate. Maybe email Festool Australia and see if they are willing to do anything for you. You never know, maybe they'll suprise you!

Cheers, Dom

Big shout out to Justin at Tooltechnic. After replying to a promotional email regarding the HKC, they were kind enough to send out a free 1400mm guide rail bag.
Paying a premium price not only gets you a premium quality product, but it also comes with premium quality backup and service.

In other festool pricing news, margins must be tight...here is some troll seller on ebay marking up the rotex 150 from $1090 to $1800 and quoting a three week lead time https://rover.ebay.com/rover/0/0/0?m...2F262783346972

The seller must be laughing all the way to the bank. If you can’t afford his Rotex he has a Bosch sander (skin only) for $285.95 that you can get at Mitre 10 for $130.

You see those random overpriced items on there every now and then, I wonder if it is a genuine mistake maybe doing currency conversion or some sort of scam or something?