End of another day .......

[SquareCircle]

This one has probably been done to the death on this website, but still leaves me breathless every time I come across it. Today’s mailshot from Woodcraft.com promotes that they now stock Festool kit for the USA market. Sucker that I am couldn’t resist having a wee peek at their web-site. Have always fancied a Festool router, just haven't found a rich aunt to pass away yet.
Festool Plunge Router, OF 1010 EQ-PLUS. Woodcraft.com (obviously USA power specification) - $295.
:x Hey folks, guess what. The same piece of kit at APTC £295.04.
How do these people do it :evil:

 

[Guest]

I think we have all wondered how we can change money at about 1.80 Dollars to the pound but goods are roughly par.Nobody has ever explained it to me satisfactorily even allowing for tax differences.

 

[Anonymous]

I think we have all wondered how we can change money at about 1.80 Dollars to the pound but goods are roughly par.Nobody has ever explained it to me satisfactorily even allowing for tax differences.

I think its partly to do with economy of scale, ie they have a bigger market, therefore they sell more therefore can have a smaller profit margin on each item.

Also they probably are more efficient and there is more competition

 

[mhannah]

Bilzee, the things that you mention are indeed part of the reason for this price mis-alignment. There is another major factor however, that we're ignoring...good old fashioned British snobbery.

It has been quoted many times on this board that you cannot buy a decent table saw for under £300. So, if a manufacturer comes along with a good table saw which they could quite feasibly sell for under £300 quid, what are they going to do? Sell it for a reasonable price and have it branded "cheap crap" by those supposedly in the know?

Or charge top whack and market it as a "superior" product with excellent build quality, reliability and all the other marketing terms?

For this exact reason, the UK has long been referred to as "the gold coast" by manufacturers of consumer products. They can make higher profits by shifting fewer units than anywhere else in the world.

Mark.

 

[Pete W]

Economy of scale is part of it - the US has more than 250 million people, in Britain we have about 60 million, so the average market for products is four times bigger in the US.

But there are plenty of other reasons. For example, average annual earnings in the US are less than £20,000 compared with around £25,000 in the UK. Anyone care to take a 20 percent pay cut in exchange for US prices?

When you factor in the cost to employers of national insurance contributions, what we pay the government in petrol tax and a ton of other costs, it's just a hell of a lot more expensive to do business in the UK than in the US.

 

[mhannah]

For this exact reason, the UK has long been referred to as "the gold coast" by manufacturers of consumer products. They can make higher profits by shifting fewer units than anywhere else in the world.

Mark.

..and whilst I'm ranting, this is also the reason why new products appear in the US/japan etc. years ahead of the UK...the manufacturers like to give them a thorough test in the marketplace before bringing them to the UK to skim the cream from the top of the market.

Mark.

 

[Guest]

The reasons above may explain a small difference but how do you explain British goods sold cheaper there than here(C.D's for example)I think manufacturers know that we in this country will pay what they ask.We have very little manufacturing actually carried out here and what there is works out dearer to produce than foreign stuff. Can't blame anyone for charging the max the market will bear.

 

[Anonymous]

Pete

But there are plenty of other reasons. For example, average annual earnings in the US are less than £20,000 compared with around £25,000 in the UK. Anyone care to take a 20 percent pay cut in exchange for US prices?
Umm me maths maybe a little rusty but a current exchange of around $1.8 to the £1 yes i would gladly give up 20% of my wages for prices to be that low almost 40% cheaper :shock:

 

[chiba]

> this is also the reason why new products appear in the US/japan etc.
> years ahead of the UK

To be honest, you wouldn't want to buy most of the new products that appear first in Japan. We're a captive test market - the UK usually only gets the stuff that sells well here and doesn't break in a month. The UK also gets stuff that's designed and built just for UK tastes. We get most of the new toys first, sure, but we also get to be guinea pigs for some really amusing cr@p! :roll:

 

[Steve]

Pete - the market isn't considered in terms of territories - 250M and 60M is 310M. The market is global. The massive price differentials are simply profit maximisation. Manufacturers and dealers will sell at the price they consider the market will bear - the other complications are relatively minor and certainly don't equate to +80 or +100% differentials.
Mark was bang on the nail - it is difficult to sell 'specialised' consumer goods in the UK (and some other European countries) if you get the price point wrong. The market's attitudes have far more bearing than the import taxes, costs of sale etc.
The US are worrying about European attitudes crossing the pond - already in some parts of the US 'reversed cost awareness' (price snobbery) has a strong foothold.
Consider ladies' perfume. The costs of manufacture are stunningly low - indeed most 'up-market' perfumes spend far more on packaging than product. Specially moulded glass, metallic inks, high-grade card, velveltine liners etc. However - if you tried to sell such a product at £4.99, you'd bomb. £49.99 - you're away. It's all about perceived value and consumer psychology.
De Walt, for example, are good tools, but they aren't the absolute be and end all. Some of the range isn't up to much at all, as you'll read in other threads. Yet the prices would suggest they are. That's their marketing strategy, and it works. They even picked the most distinctive colour scheme possible in order that the eventual buyer can 'be seen' with a product of the correct perceived value.
Before anyone leaps at the huge difference between perfume and power tools, let me tell you that perfume was picked for a purpose. The people who design the marketing strategy for one are the same people who do it for the other.
The adage that 'we get what we pay for' is only partly true. We Brits are the definitive 'brand animal'. Two identical houses in London, 75 yards apart. One falls in SE13, one in SE3. The one in SE3 will command £25,000 more.
It's fundamentally to do with zoology, believe it or not!
Go figure!

Steve

 

[Jaco]

You think you are being ripped off! Buy tools in the Southern most tip of darkest Africa.
i am sure that all tools are sent from whereever to the UK, 50% added on and then sent south via 20 agents with charges, then comes import duties, local mark ups etc.

 

[kityuser]

I suppose the bottom line here really is " because they can get away with it"

if everyone stopped buying them because of the price difference, then the manufactures would listen. But that ain`t going to happen we're british!

just look at the yanks, years ago they tried to put a few cents onto a litre of petrol, there was uproar and the gov backpedalled........ whats just happened in our budget?

we are FAR to much of a push over!, elected dictatorship? maybe, but joe public has to be the root of the problem. Market snobbery is a well known british trend, but after all ..... everyone likes having (what other people deem) the best?????? and if you are lucky enough to be the manufacturer that makes "the best" your quids in!

The perfume post is an excellent and very well known example.