Resale Price Maintenance

Peter123

Peter123

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Yes
This was outlawed in the UK in 1964.

But, isn't it strange that many photographic products are sold at exactly the same price by a multitude of retailers?

e.g. Looking at a Fuji 23mm F2. 12 of the 13 dealers on Camera Price Buster are selling this at £419. The 13th is selling it at £418.

This means that all of them have the same proportion of fixed and variable costs to sales, and all require the same profit percentage to make their businesses viable. What a coincidence!

I have picked out the 23mm because that was the one I happened to look at, but the same applies to no end of products.
I know grey market, used etc are alternatives but surely the equipment suppliers can't be dictating the price?
 
Peter123 said:
This was outlawed in the UK in 1964.

But, isn't it strange that many photographic products are sold at exactly the same price by a multitude of retailers?

e.g. Looking at a Fuji 23mm F2. 12 of the 13 dealers on Camera Price Buster are selling this at £419. The 13th is selling it at £418.

This means that all of them have the same proportion of fixed and variable costs to sales, and all require the same profit percentage to make their businesses viable. What a coincidence!

I have picked out the 23mm because that was the one I happened to look at, but the same applies to no end of products.
I know grey market, used etc are alternatives but surely the equipment suppliers can't be dictating the price?
Click to expand...

No it isn't strange at all we don't live in the 60's any more, we live in a digital age which means that suppliers are aware of their competitors prices within seconds of them being amended and adjust their own prices accordingly to compete. Camera hardware for re-sellers is a low profit margin, high volume type of business, with profit mainly coming from value added services, consumables and accessories.
 
Peter123 said:
This was outlawed in the UK in 1964.
Click to expand...
The use of RRP was prohibited in 1998 for electrical goods and then this was overturned in 2012. Most retailers will sit at the RRP whenever they can - ie. between manufacturer backed promotions, the retailer margins on these type of goods are very tight.

..but you happened to pick Fuji, a brand that only the desperate would ever buy new at the list price when there's a constant cycle of lens and body promotions ;)
 
f/2.8 said:
No it isn't strange at all we don't live in the 60's any more, we live in a digital age which means that suppliers are aware of their competitors prices within seconds of them being amended and adjust their own prices accordingly to compete. Camera hardware for re-sellers is a low profit margin, high volume type of business, with profit mainly coming from value added services, consumables and accessories.
Click to expand...
& as Thom Hogan noted this week it is the retailers that are being squeezed out of business faster than the manufacturers. http://www.dslrbodies.com/newsviews/what-goes-away-isnt-camera.html
 
Many products in the mainstream supermarkets and department stores are the same or near equal price.

Mystery shoppers are employed to check on prices so the shops can stay competitive
 
If any retailer is trying to sell at a higher price, they will sell far fewer items than a price cutter. At one point, a well known retailer (who have gone bust and resurfaced) were selling kit at a retail price lower than the manufacturer would supply small independents. As Scott's link says, smaller retailers simply can't afford to compete so we now have a situation where we're lucky to see a salesman with in depth knowledge when in the past, the chances were that a smaller shop would be staffed by enthusiasts rather than box shifters. (And that's before we open the can of worms that is "showrooming", where a potential purchaser sees a price on-line but wants to handle the kit before he/she orders it so visits a small shop with knowledgeable staff, picks their brains, devalues their stock then buys at the cheapest possible price.)
 
When I had my own business selling high end hifi, if we sold product for less than the manufacturer or supplier wanted us to sell it at, we were threatened with having our account closed.
All verbally of course. ;)
 
Bobsyeruncle said:
When I had my own business selling high end hifi, if we sold product for less than the manufacturer or supplier wanted us to sell it at, we were threatened with having our account closed.
All verbally of course. ;)
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There's swings and roundabouts with that. It's bad for the consumer because it reduces the bargains. But it's better for the consumer because dealers can invest in stock, facilities, etc. knowing that they aren't going to be undercut.
 
Hmm, quite a bit of love for retailers.
I remain cynical.
 
Peter123 said:
Hmm, quite a bit of love for retailers.
I remain cynical.
Click to expand...
Maybe because several of us have direct experience of working in retail, although in camera terms mine goes back to the Sony Mavica when a 3.5" disk was considered removable media!
 
Peter123 said:
Hmm, quite a bit of love for retailers.
I remain cynical.
Click to expand...


How much profit do you think there is in a basic camera body retailing at £300? By the time assorted middle men have had their cuts, the retailer will be lucky to get £30 profit from it. Once he/she's paid the rent, business rates, 'leccy etc. there's very little left in it and the salesperson needs his/her wages as well. There's a bit more in accessories like memory cards, filters etc. but most people will be buying them online as cheaply as possible. Of course, the big retailers who sell a lot will be bulk buying and that will get them bigger discounts. They'll also get preferential treatment and will get stocks of new products before the minnows see any.
 
Peter123 said:
Hmm, quite a bit of love for retailers.
I remain cynical.
Click to expand...
If you want all camera shops to close so your only option is ebay and Amazon with no ability to handle and try before you buy... remain cynical.
 
I never said I wanted any shops to close.
What I am questioning is why the price is exactly (to the penny) the same at all 12 retailers.
 
The first lesson in setting a retail price us that the right price is the one the customer wants to pay. Offering for sale at a higher price means no one buys - offering for sale at a lower price means you make less profit for no good reason. Retail prices are not based on costs or overheads - those things determine the profit available, not the retail price.

The various shops are selling to the same population of customers so the right price for each shop is the same.
 
You've also picked a relatively new lens that still has the fresh on the market premium smell attached.

Pricing of the 23/1.4 is more varied, as you'd expect for a lens that's been on the market a while. Eek, prices of that one are rising fast..
 
Peter123 said:
I never said I wanted any shops to close.
What I am questioning is why the price is exactly (to the penny) the same at all 12 retailers.
Click to expand...

The first reply covers that though. If they were different people would either go elsewhere, or be asking them to price match constantly anyway.

f/2.8 said:
No it isn't strange at all we don't live in the 60's any more, we live in a digital age which means that suppliers are aware of their competitors prices within seconds of them being amended and adjust their own prices accordingly to compete.
Click to expand...
 
Peter123 said:
I never said I wanted any shops to close.
What I am questioning is why the price is exactly (to the penny) the same at all 12 retailers.
Click to expand...

Because selling for a higher prices means you won't sell any and selling for a lower price just triggers a race to the bottom where nobody makes any money. If nobody makes any money, everybody goes out of business except ebay and Amazon who have no shortage of mugs selling at zero profit.
 
Nod said:
How much profit do you think there is in a basic camera body retailing at £300? By the time assorted middle men have had their cuts, the retailer will be lucky to get £30 profit from it. Once he/she's paid the rent, business rates, 'leccy etc. there's very little left in it and the salesperson needs his/her wages as well. There's a bit more in accessories like memory cards, filters etc. but most people will be buying them online as cheaply as possible. Of course, the big retailers who sell a lot will be bulk buying and that will get them bigger discounts. They'll also get preferential treatment and will get stocks of new products before the minnows see any.
Click to expand...

On camera hardware the average profit margin for a U.K dealer is between 6-8% depending on brand. Fuji and Sony are around the 8% level, Canon and Nikon around the 6%. Every now and again the manufacturers will throw the retailers a bone by offering a funded discount which moves the margin % up by a couple of points but this is usually for a limited amount of time. That's why you see so many cash back offers offered by manufacturers rather than actual discounts by the retailers. That's mainly for camera bodies though entry level bodies and lenses average around 12% They do make decent margin on a lot of the point and shoot type cameras up to 20% in some cases.
 
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ecoleman said:
Because selling for a higher prices means you won't sell any and selling for a lower price just triggers a race to the bottom where nobody makes any money. If nobody makes any money, everybody goes out of business except ebay and Amazon who have no shortage of mugs selling at zero profit.
Click to expand...

I worked for one of the oil majors (the one that rhymes with Mexico) in the 1990's when Esso launched their price watch campaign on fuel. We were making such a loss on fuel chasing their prices down that all employees were encouraged to buy our fuel at an Esso to minimise our losses and maximise theirs. Great for consumers, bad for businesses. Although the UK losses could be absorbed by the bigger organisations it caused a fundamental change in the structure of the industry and drove many smaller operators to the wall.
 
DoctorJ said:
I worked for one of the oil majors (the one that rhymes with Mexico) in the 1990's when Esso launched their price watch campaign on fuel. We were making such a loss on fuel chasing their prices down that all employees were encouraged to buy our fuel at an Esso to minimise our losses and maximise theirs. Great for consumers, bad for businesses. Although the UK losses could be absorbed by the bigger organisations it caused a fundamental change in the structure of the industry and drove many smaller operators to the wall.
Click to expand...
And the net result was that most small garages closed and now the major place to get your fuel is the supermarkets...
 
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