Are European guns going to get less expensive?
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Are European guns going to get less expensive?
With the euro falling, when are we going to see prices go down? Ever?
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Steve Swartz
Well, this a pretty complicated subject that I could talk about for hours . . . literally (that's what I get paid to do since I left the Air Force).
Reader's Digest version, purposefully deleting a lot of issues like accounting practices, politics, etc. that differ between US and EU:
"Price" in international commerce is dependent upon an awful lot of things. While "Cost," "Profit Margin," and "Exchange Rates" seem to be somewhat important, they are secondary to "What the Consumer Is Willing To Pay."
At the "lower limit" of Price, the price doesn't come down unless "What the Consumer Is Willing To Pay" drops- but still remains higher than "Exchange Rate Adjusted Difference Between Price - Cost + Margin."
This might seem counter intuitive, but Walther (for example) must still be able to pay all their bills (including investor returns) by making money on each sale.
At the "upper limit" of Price, they have a responsibiliity to charge as much as they possible can from each and every customer.
So when the exchange rates flip and Walther suddenly begins earning more on every sale, they must also cover their RISING costs as a result of what caused the exchange rate to change in the first place. AND unless their sales drop off significantly, they have a responsibility to NOT lower their prices. FURTHERMORE, each unit of production is costed at a level that might be quitre different from what it would be valued at if tehy maufactured it today. FINALLY (sheesh) even if people stop buying their ("suddenly overpriced") product, they would be very reluctant to "sell below cost" in any case.
Sorry, but trust me- that *was* the incredibly brief, shortened version . . .
Steve Swartz
Reader's Digest version, purposefully deleting a lot of issues like accounting practices, politics, etc. that differ between US and EU:
"Price" in international commerce is dependent upon an awful lot of things. While "Cost," "Profit Margin," and "Exchange Rates" seem to be somewhat important, they are secondary to "What the Consumer Is Willing To Pay."
At the "lower limit" of Price, the price doesn't come down unless "What the Consumer Is Willing To Pay" drops- but still remains higher than "Exchange Rate Adjusted Difference Between Price - Cost + Margin."
This might seem counter intuitive, but Walther (for example) must still be able to pay all their bills (including investor returns) by making money on each sale.
At the "upper limit" of Price, they have a responsibiliity to charge as much as they possible can from each and every customer.
So when the exchange rates flip and Walther suddenly begins earning more on every sale, they must also cover their RISING costs as a result of what caused the exchange rate to change in the first place. AND unless their sales drop off significantly, they have a responsibility to NOT lower their prices. FURTHERMORE, each unit of production is costed at a level that might be quitre different from what it would be valued at if tehy maufactured it today. FINALLY (sheesh) even if people stop buying their ("suddenly overpriced") product, they would be very reluctant to "sell below cost" in any case.
Sorry, but trust me- that *was* the incredibly brief, shortened version . . .
Steve Swartz
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Fred Mannis
- Posts: 1298
- Joined: Sun Aug 29, 2004 8:37 pm
- Location: Delaware
True. But "what the consumer is willing to pay" is highly dependent on the competitive situation. If all the manufacturers' prices and costs are in the same currency (euros), and only a small part of their business is in US$, they have no incentive to lower the U.S. price. BUT if there were a US, or Russian, or Indian,... manufacturer making a functionally competitive product, the situation would be different and local currency prices would more likely reflect changes in exchange rates."Price" in international commerce is dependent upon an awful lot of things. While "Cost," "Profit Margin," and "Exchange Rates" seem to be somewhat important, they are secondary to "What the Consumer Is Willing To Pay."
Well thats all nice Steve. I have a degree in Finance and Economics and I do understand foreign exchange and market forces, but that is generally not the principle at work here.
The real question is, are the USA dealers going to have the balls/decency to lower their prices as the Euro falls as fast as they raised them when the US$ fell?
Given history, my bet is on the gelding.
The real question is, are the USA dealers going to have the balls/decency to lower their prices as the Euro falls as fast as they raised them when the US$ fell?
Given history, my bet is on the gelding.
I have to be cynical
"if there were a US, or Russian, or Indian,... manufacturer making a functionally competitive product............"
For airguns it won't happen in the US. The interest in true quality just doesn't seem to be there. Firearms are another story, however.
I think the target (high quality) airgun market is too small in the US to provide the required profit making motive.
For airguns it won't happen in the US. The interest in true quality just doesn't seem to be there. Firearms are another story, however.
I think the target (high quality) airgun market is too small in the US to provide the required profit making motive.
My primary dealer/importer - who often does not have items I request in stock and must initiate an order from Europe - quotes the retail price based on that day's exchange rate and his desired margin. (Most probably, items held in inventory are retailed based on the original cost/exchange rate at the time of purchase.) The price I agree to pay for the MatchGuns MG2 I have had on order since late April, will seem to be rather "rich" by the time the pistol is actually delivered,... if the US$ continues to recover.
Therefore, as the US$ strengthens against the Euro, the price should fall ... depending on your dealer and their particular inventory situation.
Therefore, as the US$ strengthens against the Euro, the price should fall ... depending on your dealer and their particular inventory situation.
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pilkguns in Austria
Okay, I have to answer this.
I’m sorry but the tone of some of this, (not all of it! but some of it is really poor in my opinion) The dollar has really been “falling”, what 10 days now???? And relative to what it has fallen, compared to what it had rose from, it really has fallen nothing in the overall scheme of things.
What about the months, MONTHS nearly a year that we kept the same prices thinking that Euro must go down, and even when we (at least us at pilkguns) we did not raise the prices commensurate with our normal profit margin because we thought it would be too much of hit for the consumer, YOU to take. After all most two years of this reduced operating capital, we finally raised our prices again last December to where they really should be…. And go figure , we had the highest volume of sales (this means units sold, not necessarily income in) that we had had in nearly 3 years over the next 3 months.
And of course, the inventory that we have now as the dollar is starting to rise, was bought when the dollar was higher, so it only stands to reason that we will try to maintain the price a little while longer to recoup what we paid, even though we are still not recouping what we lost selling inventory as the Euro was rising and trying to maintain the old price while hoping the price would go back down before we had to buy again.
????Will retail prices fall when the Euro really falls and stays fallen, sure they will get lower when the market is convinced of that. But not now, it really has not been lower long enough to convince anyone, and really it is so little lower that it is not really lower at all as I said at the begininning
I’m sorry but the tone of some of this, (not all of it! but some of it is really poor in my opinion) The dollar has really been “falling”, what 10 days now???? And relative to what it has fallen, compared to what it had rose from, it really has fallen nothing in the overall scheme of things.
What about the months, MONTHS nearly a year that we kept the same prices thinking that Euro must go down, and even when we (at least us at pilkguns) we did not raise the prices commensurate with our normal profit margin because we thought it would be too much of hit for the consumer, YOU to take. After all most two years of this reduced operating capital, we finally raised our prices again last December to where they really should be…. And go figure , we had the highest volume of sales (this means units sold, not necessarily income in) that we had had in nearly 3 years over the next 3 months.
And of course, the inventory that we have now as the dollar is starting to rise, was bought when the dollar was higher, so it only stands to reason that we will try to maintain the price a little while longer to recoup what we paid, even though we are still not recouping what we lost selling inventory as the Euro was rising and trying to maintain the old price while hoping the price would go back down before we had to buy again.
????Will retail prices fall when the Euro really falls and stays fallen, sure they will get lower when the market is convinced of that. But not now, it really has not been lower long enough to convince anyone, and really it is so little lower that it is not really lower at all as I said at the begininning
pilkguns in Austria wrote:Okay, I have to answer this.
I’m sorry but the tone of some of this, (not all of it! but some of it is really poor in my opinion) The dollar has really been “falling”, what 10 days now???? And relative to what it has fallen, compared to what it had rose from, it really has fallen nothing in the overall scheme of things.
What about the months, MONTHS nearly a year that we kept the same prices thinking that Euro must go down, and even when we (at least us at pilkguns) we did not raise the prices commensurate with our normal profit margin because we thought it would be too much of hit for the consumer, YOU to take. After all most two years of this reduced operating capital, we finally raised our prices again last December to where they really should be…. And go figure , we had the highest volume of sales (this means units sold, not necessarily income in) that we had had in nearly 3 years over the next 3 months.
And of course, the inventory that we have now as the dollar is starting to rise, was bought when the dollar was higher, so it only stands to reason that we will try to maintain the price a little while longer to recoup what we paid, even though we are still not recouping what we lost selling inventory as the Euro was rising and trying to maintain the old price while hoping the price would go back down before we had to buy again.
????Will retail prices fall when the Euro really falls and stays fallen, sure they will get lower when the market is convinced of that. But not now, it really has not been lower long enough to convince anyone, and really it is so little lower that it is not really lower at all as I said at the begininning
I certainly realize that the channels have to clear before prices can be dropped.
AND, I was not picking on our host as I have always had fair dealings with Pilkguns. This just happens to be a popular forum and a good gauge of shooters opinions, and for that I think everyone is very grateful.
BUT, the tone is real, and to some may be a bit unpalateable, but it is not directed at any importer/dealer in particular. I know of a lot of dollars being kept close because the value received for the product is not worth the inflated price paid right now. Those that "must have" will always buy at any price. Those that are having to save and make decisions based on their target price are having a hard time making the buy decision right now.
I also know some retailers of European arms, yes more than one, that increase their price almost weekly, because the dollar has fallen, but have not moved their prices lower as the dollar has risen.
All I can suggest is you use your consumer power. If I was in your position I wouldn't purchase from those dealers. You could try contacting them and explaining your reasons but that's about it. You're very lucky one dealer (our host) is prepared to discuss these matters openly - I don't think anyone else would be.TomF wrote:I also know some retailers of European arms, yes more than one, that increase their price almost weekly, because the dollar has fallen, but have not moved their prices lower as the dollar has risen.
Rob.
Perhaps my memory is different from others on the list. I became interested in Airguns about 4 years ago when the Euro was at it's lowest point ever. I was very familiar with exchange rates, as I was traveling to Germany about once a month for business. Between the beginning and end of 2002 the dollar lost about 30% to the Euro, but I did not see many price increases until well into 2003 and really they were small and on specific products until late 2003 when it was obvious that the dollare was going to be weak for a while. My memory is that there was a 12-18 month lag from when the Euro started climbing and when I saw prices significantly higher.
Now, the Euro has dropped about 10% over the last few months. It remains to be seen if this is a new trend or not. My opinion of the people who service our sport is that they want to promote the sport as much as make a living. Yes, I fully expect the prices to come down, if the dollar strengthens, but I don't expect to see it until later in the year at the earliest.
Regards,
Steve Turner
Now, the Euro has dropped about 10% over the last few months. It remains to be seen if this is a new trend or not. My opinion of the people who service our sport is that they want to promote the sport as much as make a living. Yes, I fully expect the prices to come down, if the dollar strengthens, but I don't expect to see it until later in the year at the earliest.
Regards,
Steve Turner
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Steve Swartz
Well, O.K., particularly in an international forum we will all be exposed to a variety of socio-economic theories. I understand and accept that.
However, more than poster has suggested that there exists an economic construct called something like "a fair price" with related terms like "overpriced" and concepts like "If costs go down, the price should go down."
Hmmmmm.
To each their own!
If you personally feel the price charged for a particular market good (like a pistol) is more than you are willing to pay, relative to your ability to buy something else (like food) by all means don't buy it!
The alternatives are chilling indeed . . .
Steve Swartz
However, more than poster has suggested that there exists an economic construct called something like "a fair price" with related terms like "overpriced" and concepts like "If costs go down, the price should go down."
Hmmmmm.
To each their own!
If you personally feel the price charged for a particular market good (like a pistol) is more than you are willing to pay, relative to your ability to buy something else (like food) by all means don't buy it!
The alternatives are chilling indeed . . .
Steve Swartz
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kelly
You have to stay in business in order to sell anything
You should always be trying to maximize your profit or you will go out of business. If you go out of business that would mean one less outlet to buy from. I seriously doubt there is a high volume market for any of the top AP's out there so they will by this very fact be expensive due to the relative scarceness of the product. If a dealer can only sell x number of pieces per year he must price accordingly so that his profit margin covers his living expenses or he will find another thing to do with his time. The best thing to happen would be for the market to expand (ie more shooters) which would give more places to shoot and more dealers would then try the market. As it is now there are just a few dealers needed to handle the US market for high dollar AP's. We tend to be down on business in years they actually make a good profit but forget about them in years they are struggling. If you want low prices go to Wal Mart, but you probably won't find a Steyr there either ;~) For good reason, if a store manager for Wal Mart bought 100 LP's how many years would he have to inventory them before the local market bought them all?
Porche Boxsters are nice too but they can't make a profit on high volumn. Small market = high price, always has and always will.
Porche Boxsters are nice too but they can't make a profit on high volumn. Small market = high price, always has and always will.
pilkguns in Austria wrote:Okay, I have to answer this.
I’m sorry but the tone of some of this, (not all of it! but some of it is really poor in my opinion) The dollar has really been “falling”, what 10 days now???? And relative to what it has fallen, compared to what it had rose from, it really has fallen nothing in the overall scheme of things.
What about the months, MONTHS nearly a year that we kept the same prices thinking that Euro must go down, and even when we (at least us at pilkguns) we did not raise the prices commensurate with our normal profit margin because we thought it would be too much of hit for the consumer, YOU to take. After all most two years of this reduced operating capital, we finally raised our prices again last December to where they really should be…. And go figure , we had the highest volume of sales (this means units sold, not necessarily income in) that we had had in nearly 3 years over the next 3 months.
And of course, the inventory that we have now as the dollar is starting to rise, was bought when the dollar was higher, so it only stands to reason that we will try to maintain the price a little while longer to recoup what we paid, even though we are still not recouping what we lost selling inventory as the Euro was rising and trying to maintain the old price while hoping the price would go back down before we had to buy again.
????Will retail prices fall when the Euro really falls and stays fallen, sure they will get lower when the market is convinced of that. But not now, it really has not been lower long enough to convince anyone, and really it is so little lower that it is not really lower at all as I said at the begininning
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Guest
Re: Are European guns going to get less expensive?
paper currency always falls over time compared to hard goods. The only time something can "cost" less is when a new process comes along to reduce labor hours or materials cost. Just think how much a house would "cost" today if it were still being built they way your grandfathers house was (using the same tools and materials available then)!!
TomF wrote:With the euro falling, when are we going to see prices go down? Ever?
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tmac
Euro and Fair Pricing
A dear friend of mine once said that if you can't afford your hobby, maybe a change of hobby is in order. I too, lust after a shinny LP10 but haven't figured out how to embezzle the wife's grocery money. The trusty IZH-46M is still capable of shooting 1" tighter groups than the goofball holding it. BUT, if and when I make the decision, I will pay exactly what Rhonda Pilkington says it takes to put one into my hands.
If the Pilkingtons and Potters had a dollar for every hour they have plowed into our obscure hobby, they would each own a chain of twelve McDonald's and be sitting on a beach somewhere. Instead, for a fair exchange in trade, they support our hobby 24/7. Quality has a price, and integrity is priceless. If you don't need either, buy a chinese piece of %$#& and and know you beat the exchange rates fair and square.
If the Pilkingtons and Potters had a dollar for every hour they have plowed into our obscure hobby, they would each own a chain of twelve McDonald's and be sitting on a beach somewhere. Instead, for a fair exchange in trade, they support our hobby 24/7. Quality has a price, and integrity is priceless. If you don't need either, buy a chinese piece of %$#& and and know you beat the exchange rates fair and square.
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Mark Briggs
- Posts: 583
- Joined: Mon Mar 01, 2004 8:35 am
- Location: The Frigid North - Ottawa, Canada
Whew! TMAC sure hit the nail on the head!
One thing I'll comment on in addition to his very well-worded response... Nobody likes to think they're getting a bad deal. I'm very fortunate to have an excellent dealer located nearby. He will quote me a price to order goods based on the current exchange rate, and then tell me the price may change a bit based on fluctuating currency rates. He has NEVER upped his price between the time I ordered and received the goods. In fact, in several instances, if it took a long time for the goods to arrive, he would actually knock a few bucks off the price because I had been patient.
I don't want to make it seem like I'm a saint, but one thing I don't do is try to negotiate him down on his price. We have, over the years, developed a relationship based on trust. If he tells me a price, I know it's his best price. by the same token, he also knows that I refer business to him as often as I can, so our relationship is based on mutual benefit.
Any customer who walks in the door of a low-volume specialty equipment dealer (and lets face it, that's the market we're talking about in high-end competition pistols), then takes up hours of the dealer's time asking questions, and then goes and buys from a mail-order dealer because they saved 25 bucks, has just screwed themselves out of ever getting a good deal from the dealer they first visited. The old addage always applies. Penny wise, pound foolish!
So, in short, patronize your dealer as best you can. Deal with him honestly, and expect honest treatment in return. The integrity that I've encountered in dealing with these business people (and our host is certainly no exception) is second to none.
One thing I'll comment on in addition to his very well-worded response... Nobody likes to think they're getting a bad deal. I'm very fortunate to have an excellent dealer located nearby. He will quote me a price to order goods based on the current exchange rate, and then tell me the price may change a bit based on fluctuating currency rates. He has NEVER upped his price between the time I ordered and received the goods. In fact, in several instances, if it took a long time for the goods to arrive, he would actually knock a few bucks off the price because I had been patient.
I don't want to make it seem like I'm a saint, but one thing I don't do is try to negotiate him down on his price. We have, over the years, developed a relationship based on trust. If he tells me a price, I know it's his best price. by the same token, he also knows that I refer business to him as often as I can, so our relationship is based on mutual benefit.
Any customer who walks in the door of a low-volume specialty equipment dealer (and lets face it, that's the market we're talking about in high-end competition pistols), then takes up hours of the dealer's time asking questions, and then goes and buys from a mail-order dealer because they saved 25 bucks, has just screwed themselves out of ever getting a good deal from the dealer they first visited. The old addage always applies. Penny wise, pound foolish!
So, in short, patronize your dealer as best you can. Deal with him honestly, and expect honest treatment in return. The integrity that I've encountered in dealing with these business people (and our host is certainly no exception) is second to none.