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[John Roberts {JR}]

While I'm not a lawyer, I have observed that it apparently is possible to insist on a final sales price.  My beloved Festool power tools are this way, my Canon cameras and lenses are this way, and I suspect other things.  I've heard from dealers of these brands that if they sell for less than the designated price, they will almost certainly lose their dealership agreement.

Sounds like a good argument to convince customers to pay full MAP.

I see some brands (typically not audio) that seem pretty effective at managing their street price. The race to the bottom (for price and therefore profit) is one thing that discourages me from using distribution, I don't have the muscle or attention span to keep all the puppies in the pen. Dealers can be pretty self destructive about margins, while eroding the street price of some random SKU does not typically threaten their entire business and can buy them customers in the short term.

JR

 

[Randall Hyde]

While I'm not a lawyer, I have observed that it apparently is possible to insist on a final sales price.  My beloved Festool power tools are this way, my Canon cameras and lenses are this way, and I suspect other things.  I've heard from dealers of these brands that if they sell for less than the designated price, they will almost certainly lose their dealership agreement.

Dealers can sell for any price they want (even lose money if they like, look at Amazon with ebook pricing as an example). The manufacturer cannot prevent them from self-destructing. Many manufacturers have tried and have wound up getting sued by the (US) Government for doing this. However, the manufacturers do own the rights to their name and image; so they can insist that if you advertise their products, you can only use their names if you agree to a MAP (minimum advertised price). This has been upheld. It's why you oft-times see "Call for Best Price" or "Too low to advertise" in ads.

Manufacturers have tried things like delayed shipping and pulling dealerships from people who don't fall into line. Such tactics have often turned out to be an expensive mistake on the manufacturer's part once the lawsuits were all settled.

That said, I still can't imagine anyone heavily discounting boutique brands like Danley. There isn't enough volume to justify taking at hit on the profit margin. While I'm sure you can talk a dealer who is a friend of your's down a few bucks, at the end of the day that dealer either needs to ship a lot of product at a small margin or a small amount of product at a large margin to stay in business. I'd prefer my dealer stay in business so I have place to take the speakers when they wind up with blown drivers...
Cheers,
Randy Hyde

[John Roberts {JR}]

Dealers can sell for any price they want (even lose money if they like, look at Amazon with ebook pricing as an example). The manufacturer cannot prevent them from self-destructing. Many manufacturers have tried and have wound up getting sued by the (US) Government for doing this. However, the manufacturers do own the rights to their name and image; so they can insist that if you advertise their products, you can only use their names if you agree to a MAP (minimum advertised price). This has been upheld. It's why you oft-times see "Call for Best Price" or "Too low to advertise" in ads.

Manufacturers have tried things like delayed shipping and pulling dealerships from people who don't fall into line. Such tactics have often turned out to be an expensive mistake on the manufacturer's part once the lawsuits were all settled.

That said, I still can't imagine anyone heavily discounting boutique brands like Danley. There isn't enough volume to justify taking at hit on the profit margin. While I'm sure you can talk a dealer who is a friend of your's down a few bucks, at the end of the day that dealer either needs to ship a lot of product at a small margin or a small amount of product at a large margin to stay in business. I'd prefer my dealer stay in business so I have place to take the speakers when they wind up with blown drivers...
Cheers,
Randy Hyde

During my stint at Peavey I experienced a lot of hard to understand behavior from dealers. However it is the nature of competition and free markets to squeeze inefficiency out of distribution channels (goodbye small dealers). The use of the internet to communicate up to minute changing prices eroded prices even faster.

The next trend is situational per customer pricing where web sellers use information they can glean about the buyer to offer good enough but still profitable pricing. It is a slippery slope I avoid for now, and don't miss.

JR

[Bob L. Wilson]

While I'm not a lawyer, I have observed that it apparently is possible to insist on a final sales price.  My beloved Festool power tools are this way, my Canon cameras and lenses are this way, and I suspect other things.  I've heard from dealers of these brands that if they sell for less than the designated price, they will almost certainly lose their dealership agreement.

Vertical price restraints are no longer by definition illegal but instead subject to the rule of reason since 2007. See the controlling precedent here. http://en.wikipedia.org/wiki/Leegin_Creative_Leather_Products,_Inc._v._PSKS,_Inc. Lots of case law since 2007 indicates the courts are perfectly willing to allow vertical price restraint even absolute restraint in many situatiuons.

[Chip Dryden]

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