Tool Industry product mark-up

Been shopping around quite a number of sites and am a little dismayed on the mark-up on some items.

Now I don't particularly want to draw attention to any company or item (at least until I have what I want),however a product that can range from $379 to around $492 has me wondering whether this is because it may either be new stock bought at todays strong Oz $ or old stock that was purchased when the Oz $ was weaker.:(

Everyone knows that the tool market is readily upbeat in sales especially in the building industry.I reckon the smaller centres have the tradies at their mercy and you buy at the prices given or go elsewhere if you have the time and manner to.

I guess on a percentage basis I'd have to say that I investigate pretty close to 90% of purchase price on the net before either interacting with my local blokes for a deal or buying direck off of the net.

Wonder what other folks takes are on this.

Cheers:)

I guess it depends if your time is worth money! :shrug: Since I earn nothing I can spend some tiome finding a cheap thing and maybe even mucking around fixing it, but if you are costedc out at $50 an hour (Guessing here ) if its gonna take you more than an hour to save $50, and lose the earning time too then its economical to just walk in a buy something. :shrug: You've got to know your market though.

It's possible that the smaller outlets don't get the same wholesale price as the larger ones so they are not able to compete on price.
Jim

Same problem goes with Macs as with tools, although some old stock on tools may have been bought on a lower $.

The Mac I need to buy will cost me $12.5K, from the US it would cost me $6.5K. Now with the $AUD at 92¢ something is out of whack there, more so when all custom built Macs are shipped from Singapore where they deal in $US. :?

It's cheaper for me to fly over to the US and buy it there and upon return pay customs and GST on it.

That's really no different to the difference between US pricing and Australian pricing of, say, Incra and Wixey.

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Originally Posted by Waldo

Same problem goes with Macs as with tools, although some old stock on tools may have been bought on a lower $.

The Mac I need to buy will cost me $12.5K, from the US it would cost me $6.5K. Now with the at 92¢ something is out of whack there, more so when all custom built Macs are shipped from Singapore where they deal in . :?

It's cheaper for me to fly over to the US and buy it there and upon return pay customs and GST on it.

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Thats one heck of a difference in pricing and tho we have GST and importation duties to contend with I still fail to see how this all adds up unless local on sellers are really making more than a quid despite all their denials!:((

Cheers:)

Yeah, it has me angry too and if I had the money right now and a passport I would be on a plane for a quick visit to the US.

Welcome to the level playing field :D
Cheers,
Jim

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Originally Posted by John Saxton

Wonder what other folks takes are on this.

Cheers:)

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John, I agree that the cost of tools here compared to buying of the net from overseas is much too high but it isn't always the retailer/importer's fault.

We have a very small market compared to the US or Europe, so the quantities purchased from overseas is also rather small.

Also the retailer has to have a shop stocked with all the products, staffed by knowledgeable sales staff, despatch facilities etc. Often during the week they would have a limited amount of sales, yet be open in case. All of this cost money and must be factored into the sales price.

I think our beef must be with the overseas manufacturer or exporter who is screwing us.


Peter.

Peter I agree with most of those points you made however here in the local market I can't see why there are across the range fluctuations on product to the extent that was initially stated.

The particular item I was looking at, I would not call it a competitively priced item.
I can only assume that it may be stocked & sourced at current Oz dollar value.

Cheers:)

...I just figure that Australians aren't very price aware - the last few months I've been watching ebay auctions for a particular model of camera I'm after, and I keep seeing the second-hand ones selling for pretty much the same price you can buy them new for (in a few cases, for more!).

Or for a particular type of jacket - it worked out cheaper for me to ebay it from the UK and pay $30-odd postage than to buy it from an on-line retailer here.

Makes no sense to me!

Maybe we're just not good bargain hunters?????

Bit like when Carbatec could not justify the extra money for Triton Routers.

I know they are not as big as Bunnies but that difference was tremendous.


Funny thing. I've noticed that the small operators here in Brasil are more that competitive withe the bigger ones.for instance, bought some CA today - Loctite - local corner hardware was cheaper that Walmart.

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Originally Posted by Big Shed

That's really no different to the difference between US pricing and Australian pricing of, say, Incra and Wixey.

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Fred,

As noted on our sponsors forum; at the begining of the month we 'rolled back' our prices to at least the 2007 prices, in some cases more.

It's easy to do the simple maths and come up with the wrong answer, to be accurate you have to factor in all the other costs that volume importers face. Most importantly providing local warranty and technical support for all our products.

We also monitor US retail pricing and try to maintain a fair relationship, however a retailer in a marketplace of 300 million has a lot more clout, than we do with a 20 odd million population.

Please don't take this as us defending our pricing but as an explanation of the make-up of the final selling price.

Regards


Grahame

Grahame, if you read my comment in context, I was commenting on Waldo's post about having to pay more than double the OS price for an iMac in Oz.

Only used Wixey and Incra as an example in the tool area as I own both those brands, the Incra purchased from you, the Wixey from the US.

I applaud your move on pricing:2tsup:, only wish other importers would follow suit.

Was at Hare & Forbes yesterday and they have adjusted a lot of their pricing well below the current catalogue prices, so it is starting to happen.

Was also at C/tec, and no prices have moved there as yet.

In general, tool prices in Oz tend to be between 2 and 3 times those prevailing in the US and with the current strong dollar it is often very tempting to buy from the US, even with postage it usually much cheaper to buy OS.

It isn't all driven by the US dollar, I recently purchased an ER25 collet chuck from a UK retailer, even with international courier delivery (7 days to my door) the total cost was $A92. Same item at H&F, in excess of $A250. Item comes from China, goes to UK, courier delivered to OZ and then costs 1/3 the Oz price? Just a tad out of whack me thinks.

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Originally Posted by Waldo

Same problem goes with Macs as with tools, although some old stock on tools may have been bought on a lower $.

The Mac I need to buy will cost me $12.5K, from the US it would cost me $6.5K. Now with the at 92¢ something is out of whack there, more so when all custom built Macs are shipped from Singapore where they deal in . :?

It's cheaper for me to fly over to the US and buy it there and upon return pay customs and GST on it.

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Hi Waldo,
I have been a Mac user for 20 years. What sort of iMac costs $12500? Must be a beast! :o

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Originally Posted by Big Shed

It isn't all driven by the US dollar, I recently purchased an ER25 collet chuck from a UK retailer, even with international courier delivery (7 days to my door) the total cost was . Same item at H&F, in excess of . Item comes from China, goes to UK, courier delivered to OZ and then costs 1/3 the Oz price? Just a tad out of whack me thinks.

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Fair comment,It is hard when local retailers bleat about supporting the same product here and having us paying more for it here than importing it for less.
Whereas if I can I will support my locals, because they have often been more than fair to me but they only have a margin they can move to.

If negotiating a price it is now with the use of the internet that we can source prices far and wide to compare also with the market rates.
The retailers know this however getting stuck with old stock bought when the dollar was low does not help them.If only we're also not expected to carry that burden.

A lot of countries dont have the tax initiatives that are in place here which does not help matters so we struggle on mindlessly and in vain trying to make sense of it all.

Cheers:)

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Originally Posted by beer is good

Hi Waldo,
I have been a Mac user for 20 years. What sort of iMac costs $12500? Must be a beast! :o

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Not an IMac, but a Mac Pro - Two 2.93GHz Quad-Core Intel Xeon with other bits.

"We have a very small market compared to the US or Europe, so the quantities purchased from overseas is also rather small"

This is no better illustrated than with the deal we get from Northwood for the Great Bessey Buys. If it weren't for the volume we would be paying much higher prices per unit. This country needs to double it's population for the market to be really competitve.
And as an aside, I track down a retailer who gives good service and build a relationship with them. Over time, they see you as a valued customer and WILL do deals with you. :2tsup:

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Originally Posted by Shedhand

"We have a very small market compared to the US or Europe, so the quantities purchased from overseas is also rather small"

And as an aside, I track down a retailer who gives good service and build a relationship with them. Over time, they see you as a valued customer and WILL do deals with you. :2tsup:

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Shed, they still have a bottom line irrespective of the relationship you may have with them and whilst I have also garnered a respectable relationship with my locals they do understand my preference to source outside if the differing prices vary beyond their bottom line.

The relationship I have with them is on a good footing and no offense is considered if I'm open with them I believe.

Cheers:)

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Originally Posted by John Saxton

Shed, they still have a bottom line irrespective of the relationship you may have with them and whilst I have also garnered a respectable relationship with my locals they do understand my preference to source outside if the differing prices vary beyond their bottom line.

The relationship I have with them is on a good footing and no offense is considered if I'm open with them I believe.

Cheers:)

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G'day John, the experience you cite is probably very true in the larger population centres but Tassie is a very small market and competition for custom in the hardware trade is fierce. Often the one which provides a discount - no matter how small -AND great after sales service is the winner. Other than 4 or 5 of the online forum sponsors, I use 2 retailers here and they have always looked after me -(even with products I've bought elsewhere). :wink:

It's just as bad in the UK.

This has always been bad but I think a recent one was really astonishing. For years, I've found identical things from US suppliers that were USD10 would be UKP10, even though they were made in neither and even when the Pound was 2Dollars.

I was looking for a specific Italian made router bit last night from CMT. I could switch between suppliers in different countries from their website and so compare prices. What was selling in the UK for UKP46, from another EU country, so without any import duties, as the UK and Italy are both in the EU, was available from four US suppliers at 35USD and from Amazon at 26USD, including free shipping within the States.
26USD is around 16UKP! The UK price was around three times the American price despite the US having to pay import duties to import it from Italy! I've had one sent to an American client, who'll bring it with him the next time he comes.

Why do UK consumers tolerate these blatant rip-offs? In this day and age, when buying over the internet is feasible, the difficulties imposed by having to get across the Channel to check prices in the next country are not so insurmountable.

Cheers

Peter

Doing some surfing on a product not sold here in OZ I accessed it in Europe the cost was 34 Euros not a problem in itself, but was told it would cost me 160 Euros using UPS to post it to OZ.:((:((:((

It was'nt as if the item was heavy this I could understand, their answer was that they only use the one shipping option....LOSERS in my view if advertising on the net and restricting yourself is a no win gain.

Obviously a ludicrous example of how not to shop in Europe even using the net.:-

There are cases where you just have to do without some things.:(

Cheers:)

business is business and it has a bottom line and business owners will charge what they can, usually what the market will pay, the market being the end user.
the bottom line varies depending on the business structure.
think for a second though, these massive price differences in the examples given. those who are selling at the higher price obviously dont rely on turnover as much as profit. those selling at lower prices probably rely on turnover more, lower price will attract the consumer and increase turnover, giving good cashflow etc.
price they buy at is probably similiar across the board i would guess.
some of those selling on the net at low prices have little to no overheads, possibly some kind of warehousing but minimal staff.
thos who charge higher amount you may find are large well established operations with multiple store locations, 100's of staff, warehousing costs etc etc etc.
how many web sellers have a store front with actual people you can talk to, face to face over a counter?

just my two cents worth

Hi

The Amazon one apart, the companies offering were CMT agents who I'd accessed from CMT's website. That was why I was so surprised. I would have thought their agents would have roughly similar prices. The UK one doesn't even have to factor in import duty, as both supplier and agent are in the EU. The US ones would have had import duty to factor in, yet were still dramatically cheaper. UK mark ups are huge compared to other countries, for all sorts of things, cars particularly. It was traditionally harder for Brits (and Aussies) to compare prices because they couldn't readily visit neighbouring countries without a lot of hassle. The internet makes it so much easier.

Cheers

Peter

Want cheap - Hold off buying till the new year. the AU$ is tipped to be possibly as high as $1.10 to $1.20 against the greenback. Terrible news for U-Beaut Polishes but fantastic for anyone wanting to buy tools, etc, as it could be like getting as much as a 50% discount on their already cheaper prices and will also mean freight which is charged in US$'s will be cheaper as well. Win, win situation for Aussie buyers.

Absolutely devastating for Aussie exporters like us. :C

Cheers - Neil :U

For a while now I have been more than a bit peeved at the price charged by Australian distributors on quality tools and equipment. I've been buying on-line from the US and even with freight saving about 1/3 ... sometimes more.

I recently looked at the Incra LS table saw system. I can buy from the US at $379 US from Woodpecker.com ... but the Australian price is $1125 inc GST. Even with exchange rate, freight and whatever the mark up is hefty to say the least. And remember at $379, the US guy is still making his PROFIT!

I would prefer to buy from the Australian guy but at these mark ups it's not on and one wonders if and when the ACCC might want to look at this scenario. Sadly the practice of excessive mark up seems widespread in the industry and the only ones being hurt are the local agents/distributors who are losing business, custom and credability.

Any others as frustrated as me dealing direct with the US?

I agree with most of the folks above whose opinion is that Oz retailers overprice their goods.
Enough has been said on the subject and my buying preference on smaller items will be US sites.
Larger machinery and few larger hand tools will be sourced here.
Shipping is the contentious issue here for all us OS buyers.
I was recently told of a shipping agent... BONGO...check it out and let your impressions flow forth.
Cheers

Glenn

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Originally Posted by bobcarter

I would prefer to buy from the Australian guy but at these mark ups it's not on and one wonders if and when the ACCC might want to look at this scenario

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I think that some consideration must be given to shipping costs and that any distributor in Australia of US products must be able to markup to cover their costs plus make a profit. Brisbanefitter has raised from very good points.

C'mon Waldo - let's be reasonable and honest here! The US price equates to about $420 AUD so that gives the Australian distributor a margin of $705 to play with. And you also have to acknowledge that the Australian distributor would have to buy at less than the US retail price. As I said, I have no problem with people making a profit (I own and run my own business so know the finer points of profitability) - just looking for a sense of fairness.

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Originally Posted by bobcarter

I recently looked at the Incra LS table saw system. I can buy from the US at $379 US from Woodpecker.com ... but the Australian price is $1125 inc GST. Even with exchange rate, freight and whatever the mark up is hefty to say the least. And remember at $379, the US guy is still making his PROFIT!

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No, your wrong. It'll cost you about $500US to ship that system to australia. The rails are vastly oversize and USPS won't ship them, so you have to go with UPS/Fedex etc.

Get a quote from woodpeckers on that system delivered to Australia. Be sitting when your read it.

Also timbecon list it at $949AU plus shipping, pws lists at $1125.

Ultimately a seller can ask whatever price they want and a buyer gets to decide whom they choose to buy from. It's all good. You don't always make a purchasing decision on price alone.

Before you go wishing for a bigger population in Australia consider the wider consequences. We're already out of water, and the only reason living standards in aus are higher than NZ is our mining industry. The more people in this country the more competition and the thinnner it's meagre resources are spread. If you want to live in a densly populated slum and work your guts out just to eat you have plenty of options overseas. I'd like to see us back at 13 mill, less traffic, less pollution, less crime, easier living. Maybe young people could even afford to buy a home again.

2c

The oz distributor has to sink a deal of capital into inventory in order to serve a small market with a good range, and capital costs.

V. diff from Amazon who would have just been the shopfront for that router bit passing the order on to the actual supplier. And good luck getting tech advice from amazon; if it's defective they give you credit and you start over again.

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Originally Posted by bobcarter

C'mon Waldo - let's be reasonable and honest here!

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I am and do also run my own business. Damian has written all I would have so nothing more to add than to agree with his post.

Of course we all want to pay as little as we can, no argument there.

You also have to remember that the distributor here would not have brought the item at the same AUD$ to US$ as its market rate is currently.

I always get a little nervous when someone agrees with me :D

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Originally Posted by bobcarter

For a while now I have been more than a bit peeved at the price charged by Australian distributors on quality tools and equipment. I've been buying on-line from the US and even with freight saving about 1/3 ... sometimes more.

I recently looked at the Incra LS table saw system. I can buy from the US at $379 US from Woodpecker.com ... but the Australian price is $1125 inc GST. Even with exchange rate, freight and whatever the mark up is hefty to say the least. And remember at $379, the US guy is still making his PROFIT!

I would prefer to buy from the Australian guy but at these mark ups it's not on and one wonders if and when the ACCC might want to look at this scenario. Sadly the practice of excessive mark up seems widespread in the industry and the only ones being hurt are the local agents/distributors who are losing business, custom and credability.

Any others as frustrated as me dealing direct with the US?

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Bob

There are many issues in play, none more important than; are you getting what you need? In our market most table saws are wider than the US versions, hence we always order custom panels and fences. The other issue is after sales service, yes it's available from the US but not as convenient as a local number.

Also, remember that by buying direct in single items you aren't paying GST, customs and other import charges including bank fees and your goods aren't insured!!

We are remote here in Australia hence high shipping costs. We also have a small population and a lot less leverage on buying price.

We don't want to be seen as being defensive of our pricing, more that we want to explain the components that make up our selling price. BTW the Aussie dollar is still stuck at 92 cents, Neils prediction of >$1.00 seems a long way off.

Regards

Graham - I certainly hear what you have to say and have no argument whatever about the sentiment and the fact that you well entitled to make a profit. What we differ on is the quantum of profit. My argument is that you sell at the price you are comfortable with and at your current price I'm comfortable with buying offshore, albeit with the additional cost to me of freight and perceived risk to me of remote customer support. Indeed I've already done so with other Incra products without any problems at all but with considerable cost savings. I contend that if you were to be more realistic about your price, you would no doubt win more business - it's a simple application of the laws of supply and demand for a given price.

I have just bought a Wixey as the Beall is not available in the U.K. and shipping plus tax, etc. £22 for the Wixey. I have plenty of setups for it, I may even enjoy cutting bevels on my Eumenia RASaw now. I have just cancelled an order to MLCS in the U.S., as postage was $47 U.S., plus taxes on delivery

In a lot of cases it pays to buy offshore if you have the time and knowledge to do so . just dont expect much backup . fedx and ups are amazingly expensive to ship with , but quick ! the post is the way to go if it will fit . you get a premium product as thompson chisels ,cheaper than anything availble locally . it all depends on it meeting your needs . cheers Bob

I am so used to paying over-the-top prices for imported goods that, these days, I just automatically assume that I will import most specialised items.

My attention was drawn to the need for such an approach when I was aghast at the pricing of certain specialised fishing equipment such as downriggers.

A few years ago, I imported a downrigger during a period when the Aussie dollar was not traveling as well against the US dollar as it is now and the cost of the exact same item delivered to my doorstep was $192 versus $499 if bought from an Aussie tackle store. That is just too much of a price difference to start to feel sorry for the plight of any Aussie distributor. The imported product would be even cheaper with the current exchange rate yet I still see that same downrigger at a $499 price tag in all of the local tackle stores, big and small.

So, it has followed that I have subsequently imported things like cycling clothing at a fraction of the Aussie prices, LED lamps and other electronics, computer/TV cords etc at such small prices compared to what I could buy them for at DSE or similar stores, , a Wixley angle guage at about half the Aussie price and other bits and pieces from Rockler and the like. Indeed, last week, I have just repaired my 21 year old Rover mower's Briggs & Stratton motor with a scarce part that I imported from a parts liquidator in upstate New York found simply by Googling the parts number. (Pig Iron Parts)


So it happens that I am currently making a router table but just about fell over backwards at what I see being charged locally for router plates.


Like, give us a break, you retailers! There ain't much rocket science to be seen in the production of a flat piece of material with a few plug in concentric rings in it that we might call a router plate. So, if you cannot source a reasonably priced product overseas why don't you just contract a local engineering works to make a short production run of such things? Aren't you blokes capable of adding any value in the delivery chain other than unpacking big boxes from overseas and repackaging the contents into small boxes to mail to people here?


So after all of that background, how delighted was I to find that a Jessem phenolic router plate from Northwood Tools near Brisbane was so well priced that it was not worth my while to actually import the item. I am actually not sure that I could have got it any cheaper by doing so because I searched extensively for USA and Canadian stores that would deliver such to Oz and none of the delivered prices were good enough to make me want to buy from them versus buying the same item from Northwood.

So, this morning, I have just enjoyed a 100 km round trip to Burpengary near Brisbane over the magnificently newly upgraded Gateway Arterial Road out of Brisbane to Northwood's showroom to buy such item. I could have had it posted out but what the heck, I drive a cheap-to-run LPG car and it was a nice drive in non-peak-hour traffic.


I am delighted with the pricing and the bloke who served me was a friendly enough cove as well. So, "well done!" to Northwood for such a reasonable price.

I would willingly buy more tools etc from Aussie retailers if the price made it not worth the wait to get them from overseas.


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FWIW, my experience has been that when you're starting out you need purchasing advice and use support.

A good local retailer will give you that; you build a relationship, and you can ring them to sort out a prob and be going within minutes.

When you're more knowledgeable you can order gear more cheaply from o/s, but bear in mind the threat that poses to loss of local employment and support.