Music Man MSRPs

[DaveB]

Hey Beej,

I said I'd buy you dinner but you went for the corporate schmoozing option instead

When is the next shipment coming in then "Mule-Boy"?

DaveB

 

[Tim O'Sullivan]

I always have my treasure shipped to my friend in Virginia, and then she ships it to me in the UK. Allows for some 'creative invoicing' !

 

[beej]

When is the next shipment coming in then "Mule-Boy"?DaveB

Hmmm ... think I need to be back over there in November ... need to buy another EBMM?

 

[Big Poppa]

Heres how it works...

We start with a block of wood that costs....oh you know that part
we make the guitar add our gross profit that we need to keep everyone happy and healthy and me in old shiny cars. In exchange for that gross profit we have designed built warehoused, maintained a sales staff, customer service, artist relations, assumed credit risk,purchasing department, accountants, lawyers, safety staff, engineering warranty dept (JON),marketing dept IT dept..shipping department.After all of this we hope to make a net profit that makes it worthwhile doing. For all of the risk and trouble you dont want to end up making cd rates. Nothing wild but a fair net return

We sell to dealers in USA and distributors in the rest of the world.

the dealer makes his profit by...........oh yeah...stocking the stuff paying rent salaries maintaining inventory, customer support after the sale......He has a gross profit that is immediately adjusted by "street price" usually in the usa between 2o to 40 %.

The export customer:

Imports the merchandise
assumes currency fluctuation
advertises the product
pays salesmen
lawyers
accountants
carries inventory
assumes artist relations responsibility
assumes customer service and warranty issues
selects the right outlets for our stuff
evaluates credit and assumes credit risk (Music Dealers generally aren't harvard MBA's) They are generally higher credit risks that other retail businesses.

The export customer sells to retailers who hopefully do what they are supposed to do.

If you are involved in margins at your job its pretty easy to figure out what the gross margins are if you do simple math. When two entities handle the product and make their gross margin the price is XXX (USA ) when three entities handle is it is signifigantly higher even though that third person added a similar gross margin percentage but when you keep compounding the percentage it ends up about double.

Some USA companies have gone direct using fulfillment centers and trying to deal with the different European markets from the USA or a central office. This model is not perfect though.

We look for distributors that understand who we are and what we do and have the ability to translate our message and product to thier market.

We think that this is still the best way.

 

[Big Poppa]

While Im giving a low grade econ class keep in mind that the fewer units sold require higher gross margin to achieve your desired net profit...the more sales velocity a product has enables you to use a lower gross profit percentage to achieve your desired net return.


Did I hear the class bell?

 

[SteveB]

BP,

That's all very nice, but how can that fella get a catalog?

 

[kbaim]

Post #24 is my favorite business post so far!

 

[DaveB]

While Im giving a low grade econ class keep in mind that the fewer units sold require higher gross margin to achieve your desired net profit...the more sales velocity a product has enables you to use a lower gross profit percentage to achieve your desired net return.


Did I hear the class bell?

Thanks for the insight BP

I guess the point I was trying to make (and badly I admit) is that sometimes you need to give that "sales velocity" a kick to get things started. If for example the Silo came in at around £900 in the UK it would be in the same ballpark as a standard US F*nder Strat, if people compared the two (from a playability rather than brand perspective) then this surely would result in increased sales volumes. As it is EBMMs seem to be more of a specialty item and seem to end up being custom ordered.

BTW - BP I'm not having a go - I've had a good few helpful phonecalls with one of the guys from Strings & Things - I'm just interested to see how the process works and how the profile could be raised over here. Everybody you speak to in the industry says great things about the product - then not seeing it in shops must be incredibly frustrating for you guys.

I guess from punters point of view over here all that (totally understandable) cost added by the distributor doesnt translate into a quantifiable benefit and as such people use eBay (and Open House trips ) to get better value.

Dave

 

[Jonny Dubai]

At one point, due to the strength of the pound, it was cheeper to buy from the USA, get it delivered to the UK and pay the duty(about 17% or something).

However we would not be supporting our own music stores and increasing sales in the UK.


Rip off Britain strikes again!

Now i live in Dubai = tax free, BUT NO BALLS!!!!!!

 

[beej]

Sounds like capitalism all right; the market ultimately determines the sale price.

Seems like there's a good opportunity here for a small UK based EBMM dealer to be competitive. Like a British Pete DuBaldo

 

[g_man]

I guess from punters point of view over here all that (totally understandable) cost added by the distributor doesnt translate into a quantifiable benefit and as such people use eBay (and Open House trips ) to get better value.
Dave

And people using eBay, etc. destroys the distributor, which then gives EBMM less presence in Europe, short term at least.

That is why some companies adopt a global pricing strategy, through what ever means, in order to make shopping in another country actually add to the cost for the end user.

And as stated before, I seriously want to support my local store, but not at 1000 USD a guitar.

 

[DaveB]

Beej,

I'd love to do something like that.....

but unless you "grey import" guitars then I guess the UK distributor and EBMM would have that kind of thing tied up.

........and I respect BP and the rest of the crew too much to risk upsetting/alienating them.

Dave

 

[Big Poppa]

Dave
if a guy wants a strat he buys a strat. we could burn marketing dollars and margin trying to sell a product with no margin and then we try to raise it to where it should be for everyone to make out and it goes cold again. What would happen if our sales doubled?
Can we still keep our standards? WE have the ability to maybe and i mean maybe make about 50% more instruments. But to do that is going to be really hard. I cant be a "custom shop killer" and a high volume factory at the same time....something has to give.

Im really happy knowing that we can make and sell about 1200-1400 instruments a month and maintain the standards that we have set.

Beej makes a great point. That guy who stirred up all of the mess on the birdseye issue caused so much havoc that I called the dealer and talked to him. We wont talk about that guy, but I told him that there are now about 4 dealers who are part of this community and are selling instruments they wouldnt normally sell. I encouraged him to get involved and be the pete or dude or bassplayr of Canada.

THe fact that we are below the retail radar does in fact create and opportunity for focused passionate dealers.

 

[beej]

Beej makes a great point.

(Reels in shock!)

Seriously- that's awesome! A few well placed guys through word of mouth sales could to a ton of good out there! ("BP's Army")

 

[Funky Chicken]

Looks to me like there's already a small scale groundswell of interest by dealers in growing the brand, at least in the states. Guys like Pete can only help. A forum like this one can only help, too. Another forum I visit from time to time is already buzzing due to the Rosewood Neck models-no less than 3 members there have already purchased RW Axi. A few more dealers are probably already out there that could be converted to passionate EBMM dealers, but it's up to US to bend their ears and BUY the guitars. Sales beget sales...

 

[beej]

How about a great write-up of the EBMM open house in Guitar Player or one of the mags ... let the kids drool thinking about all the forumites hanging with Morse, Petrucci, Luke, Vinny, Tony, Dave (and of course Sterling) ... that should help sales too

 

[PeteDuBaldo]

Sounds like capitalism all right; the market ultimately determines the sale price.

Seems like there's a good opportunity here for a small UK based EBMM dealer to be competitive. Like a British Pete DuBaldo

Oh man.... I'm not a redhead, and I don't have an accent, or an overly funny (chick-pea) nose. Therefore.... NOT HAPPENING!

 

[DaveB]

Oh man.... I'm not a redhead, and I don't have an accent, or an overly funny (chick-pea) nose. Therefore.... NOT HAPPENING!

Redhead - Check

Accent - Check

Overly Funny (chick-pea) nose - WTF?

I dont think I've ever had my nose name checked before. Thats fighting talk where I'm from DuBaldo!!!!!




Dave

 

[DaveB]

BP,

Its good if your sales are at a level where you can maintain quality and obviously anyone who went to SLO knows how much time and effort you put into each guitar to ensure that standards are kept. I imagine thats why this neck thing has stirred so many people because it is attacking a belief and ideal at the very heart of the company. I guess I was thinking more about the sales over here. Are you shifting guitars (rather than basses - I see loads of them in shops, not too many Bongos, loads of Stingrays and a few Sterlings) in decent quantities?

I think the Open House write up is a great idea. A good friend of mine is Adrian Clark who is the music editor for Guitarist Magazine (a fine publication). If its OK with you I'll talk to him about the possibility of publishing an article in the magazine. I may need to get some more pictures - esp. of the concert as my camera wasnt up to stage lighting conditions.

Once again thanks for the input and insight.

Dave

 

[skabassist13]

So how bout that catalog?