Thread: Why are tools so expensive

Looks like the cat has been surfing on the web again

Alan...

I thought Brett's post purrfectly appropriate

Originally Posted by rwbuild

I thought Brett's post purrfectly appropriate

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Sorry Sir

Australia has a free trade agreement with the USA. I understand power tools may be a bit dearer due to 240v, but $100 more for a hand tool seems outrageous to me

Originally Posted by Baddabing

Australia has a free trade agreement with the USA. I understand power tools may be a bit dearer due to 240v, but $100 more for a hand tool seems outrageous to me

As one who used to use it the FTA for importing from the US only applies to anything sourced and manufactured in the US. Even if the raw material is imported and the product manufactured in the US the FTA does not apply.

Originally Posted by Baddabing

Australia has a free trade agreement with the USA. I understand power tools may be a bit dearer due to 240v, but $100 more for a hand tool seems outrageous to me

If the comparison was that simple I am pretty confident that the little privately owned hardware/tool stores would be undercutting Bunnings with their products and be making a healthy profit.
From what I have seen that doesn’t seem to be the case.

If you try to import something you might be staggered at all the extra fees that get added to the bill. We're inefficient and everyone pays for that inefficiency.
We are also over regulated. All those regulations translate into costs for the consumer. Our wages are very high. Our fuel excise taxes place a big cost on every aspect of our economy. Especially being a big country with a small population. I could go on but basically we are a high tax, high fee, over regulated economy and someone has to pay for all that.

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Originally Posted by Baddabing

It really annoys me that we seem to be getting ripped off big time, in Australia when it comes to the price of tools.

For example: DeWalt 10" table saw XE 745. In USA you can pick up with a stand for around US$299. https://www.lowes.com/pd/DEWALT-10-i...Saw/1000465645
In Bunnings, the same saw is $949, occasionally with a stand via redemption. Our Range | The Widest Range of Tools, Lighting & Gardening Products
Now US$299 is around A$399. Some will say freight is the killer...I say BS to that. I import around 300 containers a year from the USA and sea freight is pretty cheap, around A$5,000. I expect you would get around 16 of these saws on a pallet, 20 pallets per container = 320 saws at a cost of around A$15 per saw. So, if retailer margins are consistent across both countries, the saw should cost A$415. Where does the other $534 go? Now maybe because we run at 240 volt and the US at 110 volt, some additional cost may be in the motor. It still leaves a huge hole and someone is profiteering big time. It is pretty much the same with Bosch, Milwaukie etc across all power tools.

Now lets look and hand tools. A Stanley block plane is USA is US$36.00 or A$48.00. Lets assume freight is about $5 per plane (probably only a couple of bucks) we are up to A$53.00. Stanley Bailey 6 in. Low Angle Block Plane-12-960 - The Home Depot. The same plane in Bunnings is A$159.00 Stanley 50 x 35mm Adjustable Block Hand Plane | Bunnings Warehouse. How do we get from $53.00 to $159???? !!!

It really pees me off. We are getting ripped off unbelieveably.

My guess would be that it's what the consumers will pay. If no one bought at high prices, the prices would have to come down. That's the nature of basic economics.

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Originally Posted by DaveVman

If you try to import something you might be staggered at all the extra fees that get added to the bill. We're inefficient and everyone pays for that inefficiency.
We are also over regulated. All those regulations translate into costs for the consumer. Our wages are very high. Our fuel excise taxes place a big cost on every aspect of our economy. Especially being a big country with a small population. I could go on but basically we are a high tax, high fee, over regulated economy and someone has to pay for all that.

Australia is about the most over-regulated country in the world and we seem to be getting worse. As an example - before any model of chainsaw can be commercially imported into Australia it has to undergo emissions testing to an Australian standard. I honestly don't think that there would be enough chainsaw use hours across an entire year in Australia to really warrant the cost and effort required - but some numpty or committee of numptys has somehow been given the power to decide that it is a requirement. So who ends up ultimately paying for the testing - we do.

Originally Posted by Baddabing

It really pees me off. We are getting ripped off unbelieveably.

Mate, you are certainly right about a few items/brands, but that's all it would be.

Firstly, U.S. prices are always advertised net of state sales taxes which average about 5.5%. Freight varies depending on inland freight to the port, and whether you're shipping full containers or consolidating with others. Don't use the published exchange rate, subtract 4% for the foreign currency buy rate so one USD will cost you $1.52 today.

You may have to pay the bill at the time of order, in which case you put up the money roughly 8 weeks ahead of receiving the goods. Customs, GST, clearance & local freight come next before you end up with a cost into the warehouse. The lead time also determines the minimum stock level so you'll end up holding a minimum of four weeks stock but almost certainly more than that. So you pay interest at around 12% on the goods for about 12+ weeks, plus warehousing etc. as well as spare parts, people to handle or repair returns, sales people to sell the stuff, store men to ship it, bean counters etc. etc.

When a retailer buys your product, you may well have to wait up to 120 days to be paid because the big guys have you by the family jewels. They're the ones who really have the power. If they discontinue your product, you end up with a lot of stock to sell elsewhere. Their specials are your specials and their advertising costs are yours.

At the end of the day, the price of any item is what the market will bear. None of us like it; but that's life in Oz. On the positive side, I reckon things saved for are better appreciated. Many of us kicked off with minimal gear and made good things with it before upgrading when we could.

mick

LOL Wesfarmers
I think what they do is, they have their people buy huge quantities of anything they can find cheap (or force someone to sell cheap to them because they have all the power). Anything at all.
Then they give this item to an average housewife and observe what she's going to do with it. The housewife test. If she sticks it in the fridge, they sell it at Coles. If she wants to take it outside to the porch or the shed, it goes to Bunnings. She goes to kitchen/bedroom? Send it to Target. If she looks confused, Kmart.

Bunnings sold $13bn last year and made $1.6bn profit, so that's a 12% margin, which is high but not outrageous. The only problem I see with that is that Bunnings is a high volume supermarket with about zero specialisation and technical expertise, not much different than Coles. They just take what the housewife test sends to them. Then they put it on shelves and try hard to not answer your questions. They do that by running the shop with as few people as possible until you get bored of waiting and go and read the instructions yourself. That's what most Bunnings staff would do anyway. And they're honest about it, it's a warehouse, it's literally on the name of the business, they're not your woodworking consultant. So that kind of business if it had any competition whatsoever (which it doesnt because Australia), typically would make about 5% margin, not 12%. 12% is what you'd expect from a specialised low volume merchant in a technical industry, not a supermarket.

So yeah we do pay our businesses a little too much for what they offer. But most of the high prices we pay reflect decisions we consciously made decades ago. We decided to pay ourselves high wages, we floated the dollar because we didn't want to pay what it takes to peg it, and we let our businesses deal with it (which they did, and built it into the price of course), then we let the cost of land go nuts because we basically love it and couldn't help ourselves borrowing to buy more and more (and in the process made our banks the most profitable in the world) and of course our businesses built that into the price as well. And we demanded government intervention and protection when things go sideways, which of course we pay upfront for, very expensively, in taxes and overregulation.

And to be honest? On the whole, those decisions were not all terrible. Far from perfect but we could've done a lot worse.
We can still complain and finetune some of that when it goes too far, and we should. But generally I like it here, most people do. I break the law in little things pretty much every day because I hate over-regulation, but you know, you take the good with the bad. And there's plenty of good to come with it.

The US market is a bad comparison. It's one of the cheapest markets in the world for a long list of reasons that we can't copy (currency, size, power and preferential commercial arrangements with most countries) and some other reasons that we don't want to copy like liberal labour laws, low wages and lack of insurance and benefits. Fk that.

Anything else that could be copied I believe we already have and maybe improved on, like beaurocracy and ease of starting a business. Maybe we could work on the over regulation a bit.

Yes, ignore the US market. It may not be around for too much longer in its current state anyway.

Think about the European market. Tools from there are directly compatible with Australia's electrical system. In fact tools from (say) Germany only need a change of plug and you are good to go.

Now I have imported *rather a lot* of power tools for people over the years and have done extensive research into various brands, so I know (at least knew) precisely what I'm talking about. There is a brand that this is very worthwhile for because of the extraordinary margins that are applied locally, particularly to the accessories for said tools. The tools themselves usually worked out to be 65-80% of the local cost after air freighting them in, but there were some (larger/heavier) tools that freight made uncompetitive, depending on the exchange rate at the time. There was no GST applied as the packages were always sub AUD1000 ex freight. SOme of the accessories were 25% of the local cost and the average for accessories was about 40%.

There were many many other brands like Makita, Bosch, Hitachi etc that were not worth bringing in because the local prices here were "sensible" and more or less in line with European prices. Note too that Makita is now a Germany based company, btw.

Forget all the bricks and mortar, GST, wages, blah blahdie blah excuses that are always trotted out to defend higher prices for some tools here. They are as substantial as a shoji wall in a light breeze. If Makita et al can remain competitive to the point where it's not worthwhile privately importing them, then so can the greedy brand(s). It really is as simple as that.

Makita et al don't seem to feel the need for making illegal retail price maintenance exclusively legal either, funnily enough.