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Author Topic: Canadian pricing  (Read 17946 times)

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Offline EcoFurniture

  • Posts: 608
    • Eco Furniture
Canadian pricing
« on: March 16, 2010, 03:33 PM »
Dear Festool:

Please have a look at the current exchange rate (US-Can) and please adjust your pricing for us Canadians.
I know that there are custom fees and such involved but for bigger shipments that really should make that much of a difference.

Thank you.

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Offline Inner10

  • Posts: 191
Re: Canadian pricing
« Reply #1 on: March 16, 2010, 05:46 PM »
Please, this IS hurting your Canadian retailers.

While your at it you may also want to have a quick look at section 45 of the Competition Act (C-34).

Offline JohnDistai

  • Posts: 216
Re: Canadian pricing
« Reply #2 on: March 16, 2010, 06:17 PM »
Inner - why do we waste our time on this?  Any discussion of price is urinating in the wind.

Offline WarnerConstCo.

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    • Warner Mill Works
Re: Canadian pricing
« Reply #3 on: March 16, 2010, 06:20 PM »
I have the same feeling when my customers try to get me to change my prices.
I have the same amount of overhead every week, the price is the price.

They are talking pure exchange rate differences.


Offline JohnDistai

  • Posts: 216
Re: Canadian pricing
« Reply #4 on: March 16, 2010, 06:29 PM »
It would be naive to think that Festool is not aware of the exchange rates on a monthly, if not daily basis. I'm sure they employee a team of Financial Analysts that do plenty of analyses to take advantage of, or hedge against rate fluctuations.  The only difference between accounting for an exchange rate and a change in price is the magnitude of profit.  I think the original requests are asking for the magnitude of the profit to be returned to the same magnitude of profit as when the price was originally set.  The price has to be adjusted to reflect this change in rates.

I can understand why this request would fall on deaf ears.  The company I work for has claimed an increase in revenue each year for the last 34 years.  This last year was a tough year due to the economy.  However, they did a lot of business outside of the U.S., and those exchange rate differences offset any sales deficiencies in the U.S.  I think they said something to the effect that every Euro of revenue represented a $1.50 or so in revenue when returned to the U.S.  International companies keep a close eye on this, and I surely wouldn't count on any reductions in price due to rate fluctuations.

Offline JohnDistai

  • Posts: 216
Re: Canadian pricing
« Reply #5 on: March 16, 2010, 06:40 PM »
Oh, and Warner, you seem to not be phased at the prices.  I think one thing that is overlooked here is the difference between business and hobby use.  As a business, each dollar you spend on a tool purchase doesn't equal a dollar.  You get the opportunity to  deduct and depreciate that cost over time.  So each $1 may only cost you $.75 or less when the final accounting is done.  Hobbyists have to pay the full dollar.  So in essence, your $500 TS 55 may only cost you $375, where it costs the rest of us the $500, plus whatever amount we have to pay in income tax to get our $500 of purchasing power.

Offline RL

  • Posts: 3038
Re: Canadian pricing
« Reply #6 on: March 16, 2010, 06:41 PM »
I have mentioned the Canadian pricing issue several times in the forum. Two years ago when the dollar was at similar levels, everybody I know went to the US to buy their cars, and presumably Festools! A year later, the Canadian dealers slashed their car prices. Now we are back again at dollar parity. 90% of Canadians live within 100 miles of the US border- it takes me less time to enter the US than to leave Manhattan through the Holland Tunnel at rush hour!

As I said elsewhere, I really want to support my local dealer, but recently I was able to buy an OF1400 for $470 in the US versus $594 in Canada. This is just wrong and it is the Canadian dealers who suffer. If Festool are serious about building a business here, they need to support the dealers by helping them on pricing.


Offline mastercabman

  • Posts: 1854
  • NORFOLK,VA
Re: Canadian pricing
« Reply #7 on: March 16, 2010, 07:29 PM »
Oh, and Warner, you seem to not be phased at the prices.  I think one thing that is overlooked here is the difference between business and hobby use.  As a business, each dollar you spend on a tool purchase doesn't equal a dollar.  You get the opportunity to  deduct and depreciate that cost over time.  So each $1 may only cost you $.75 or less when the final accounting is done.  Hobbyists have to pay the full dollar.  So in essence, your $500 TS 55 may only cost you $375, where it costs the rest of us the $500, plus whatever amount we have to pay in income tax to get our $500 of purchasing power.
I wouldn't go that far. Keep in mind that as a subcontractor we use the tools everyday,all day. More wear,witch mean that we need to replace/repair more often.
We maybe able to right it off but we are paying more taxes.
We also need to carry insurance(work comp./liability) and we have other over head to deal with.I know that's what happen when you're in business.
But that $.75 ends up been more like $.90-$.95!
I don't understand!?! I keep cutting it,and it's still too short!

Online Peter Halle

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Re: Canadian pricing
« Reply #8 on: March 16, 2010, 07:30 PM »
John,

I don't think that the hobbyists versus professional comparison really has merit when the discussion is about Canadian prices versus US prices.  There are professionals and hobbyists in both countries I suspect.

Contractors still have to fork out the initial outlay just like anyone else.  That is still money spent.  We could certainly warp the thread further and talk about depreciation strategies, section 179 deductions, the paybacks due to the government if you don't show a profit in three out of five years.......

I have a solution for those in the US.  If you are a hobbyist and you want to get tax advantages for purchasing tools, then create something and sell it.  Hobbyists are allowed to deduct expenses up to the limit of their sales just like contractors are, but they are never allowed to show a loss - it is a hobby after all.

If you interested in this idea - please consult your tax adviser.

Peter
« Last Edit: March 16, 2010, 07:32 PM by Peter Halle »

Offline JohnDistai

  • Posts: 216
Re: Canadian pricing
« Reply #9 on: March 16, 2010, 07:39 PM »
Peter,

I appreciate your addition and clarification.  My mention of the tax subsidy was a retort to one particular member who seems unaffected by prices and comments about our complaints regarding it.  I just wanted to point out that based on our usage, his dollar of purchasing power may only cost him $0.75, where my dollar of purchasing power actually costs me $1.30.  If my effective cost were nearly half I wouldn't be complaining about the price, either.

Offline EcoFurniture

  • Posts: 608
    • Eco Furniture
Re: Canadian pricing
« Reply #10 on: March 16, 2010, 07:58 PM »
So far I was able to claim part of my tool expenses too.
But my point was:
Why, when the Canadian Dollar (for quite some time now), is very close to the US $ our pricing doesn't adjust? For some online retailers that may be quite a pain in the butt to always update the website. But that's how it is when you are in business! For me as a customer it really bugs me when I see that both dollars have almost the same value but we have to pay over $300 more for a Kapex  (I'm not in the market for one, already got one...) But there are other items like the CT33, the cordless drills...
Again, I understand that these tools have to go through customs and shipping isn't cheap either.
Anyhow, there is a solution to that! Why not bring them directly to Canada, without going through Festool headquarters? There is already a warehouse in Ontario, right?

Festool: Please don't take this as a bashing. I highly respect you guys. But this is something I can't grasp, other then seeing it as a money grab.

Online Peter Halle

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Re: Canadian pricing
« Reply #11 on: March 16, 2010, 08:05 PM »
John,

The way life is going for contractors many of us will be hobbyists before it is all over.  That being said, when I buy a tool for my business - just like any other contractor who is in it for the long haul - I have to evaluate cost of the tool, opportunity costs, odds that the tool will survive past the depreciation schedule that I choose ( that is where you make money as a contractor), etc.

This discussion is like a graph, we can depict it anyway we want.  As an example - hobbyists should be rejoicing because the contractors had to pay the same price for their tools as the hobbyist.  None of the contractor discounts like you can get in some supply houses.  The hobbyists will ultimately have the upper hand because everyone will have opened their wallets and pulled out the same amount of bills.  The hobbyist's tools in five years may or may not have had the same usage as the contractor and thus when they sell the tool they gain more money - not taxable.  The contractor sells the tool and then he may have to deal with taxable income from the sale as well as lower value at sale time because of condition.

It all works out in the end equally based on time.  You just have to go thru the layers.

Peter

Offline WarnerConstCo.

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    • Warner Mill Works
Re: Canadian pricing
« Reply #12 on: March 16, 2010, 08:29 PM »
I was just trying to make the point that maybe they can't lower the price.

I know I would rather sit at home and play candy land with my daughter, then go work for less then what I need/want.
It's proven over and over it is cheaper that way.


Offline Inner10

  • Posts: 191
Re: Canadian pricing
« Reply #13 on: March 16, 2010, 09:14 PM »
Quote
Inner - why do we waste our time on this?  Any discussion of price is urinating in the wind.

I realize that we may sound like broken records sometimes and many requests fall on deaf ears but eventually the word will make its way around.  Like the old advertising adage goes the messages sinks in the ten thousandth time.

Quote
This discussion is like a graph, we can depict it anyway we want.  As an example - hobbyists should be rejoicing because the contractors had to pay the same price for their tools as the hobbyist.  None of the contractor discounts like you can get in some supply houses.  The hobbyists will ultimately have the upper hand because everyone will have opened their wallets and pulled out the same amount of bills.  The hobbyist's tools in five years may or may not have had the same usage as the contractor and thus when they sell the tool they gain more money - not taxable.  The contractor sells the tool and then he may have to deal with taxable income from the sale as well as lower value at sale time because of condition.

It all works out in the end equally based on time.  You just have to go thru the layers.

Peter that was very very well said.  Thank you.

Besides I need to make more money to be able to write off my tool expense.  [big grin]

Quote
I was just trying to make the point that maybe they can't lower the price.

I know I would rather sit at home and play candy land with my daughter, then go work for less then what I need/want.
It's proven over and over it is cheaper that way.

I agree, but in your business you can at least compete on price and quality.  This is a comparisons of commodities which in many instances have no value-added by the dealer.

I'm trying to say is your are comparing apples and oranges.  Lets say hypothetically there is a magical group or trolls that steals 20% of all products that crosses the boarder and that is why they can't sell good at the same as US retail; fair enough, in that case let the retailers compete on price instead.

Lowering the price in Canada to that of the US would help increase sales in Canada, but lower sales in the US.  Net change on Festool's end could be negligible, but what it would help with is increasing and establish its popularity in Canada in the long-term.


Offline WarnerConstCo.

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Re: Canadian pricing
« Reply #14 on: March 16, 2010, 09:26 PM »
I think I saw a show about those Trolls, it was monster quest or something!! [big grin]

Offline wnagle

  • Posts: 502
Re: Canadian pricing
« Reply #15 on: March 16, 2010, 09:41 PM »
I was just trying to make the point that maybe they can't lower the price.

I know I would rather sit at home and play candy land with my daughter, then go work for less then what I need/want.
It's proven over and over it is cheaper that way.



Darcy,  I always liked chutes and ladders...
Wayne

 

TS 55, CT 33 x2, ROTEX 150, RO 90, DOMINO 500Q SET, TRION PS 300, OF 1400, MFT/3, ETS 150/3, KAPEX KS 120, DOMINO XL.

Offline JohnDistai

  • Posts: 216
Re: Canadian pricing
« Reply #16 on: March 16, 2010, 09:46 PM »
Have they ever found one of those monsters on Monster Quest?

On a pricing-related note, I was thinking about this whole dealer network, fixed pricing, and inventories.  So if I decide to become a dealer, how do I manage my inventory?  I guess that I would need to estimate what my stock levels are, arrange floor plan financing, and buy my inventory.  But how do I provide my customers with variety, service and selection?  I would have to purchase a lot of items, and tie up a lot of money in product and retail/storage space.

But what happens if sales are slow in a particular product category?  If I owned any other type of business, I would have a "promotion", and mark down the stale inventory to move it so I could recoup my capital and apply it more effectively.  But if I sold Festool products, I wouldn't be allowed to do that.  My stale inventory and floor plan financing would slowly hemorrhage my business of money.  But Festool will have upheld their strict discounting policy.  To offset this, I may choose to carry a small inventory and field customer's requests with the "I don't have that, but I can order it.  It will be here within a week" response.  The customer would of course go somewhere else.  I'll lose the sale.  But Festool will have upheld their pricing policy.  The brand value will remain strong, even though sales channels suffer and the number of purchases may be kept low due to this.  Its the policy that counts.

Online Peter Halle

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Re: Canadian pricing
« Reply #17 on: March 16, 2010, 10:10 PM »
We will never know the Festool Sales policy - and rightly so.  None of our darned business.  This complimentary place to come and ask questions
and then the attitudes at times becomes we deserve to know.  Nope.  Notta.  What company in the world would discuss their strategies on a searchable place in the internet?

Perhaps the business model that has existed in more parts of the world for longer than we have been alive works and it is just us - notice the plural form - who don't understand.  Just because it isn't understood by some but understood by others doesn't make it wrong.  It just is.

Offline WarnerConstCo.

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    • Warner Mill Works
Re: Canadian pricing
« Reply #18 on: March 16, 2010, 10:14 PM »
I was just trying to make the point that maybe they can't lower the price.

I know I would rather sit at home and play candy land with my daughter, then go work for less then what I need/want.
It's proven over and over it is cheaper that way.



Darcy,  I always liked chutes and ladders...

It is like 50/50 between chutes and ladders and candy land.

I tell you one thing, got to watch that girl, 4 year olds know how to cheat!! [big grin]

Offline RL

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Re: Canadian pricing
« Reply #19 on: March 16, 2010, 10:21 PM »
A simple alternative would be to allow US dealers to ship to Canada. This would eliminate the pricing disadvantage and presumably increase sales because prices would be lower. Canadian dealers would have every right to complain but really their first complaint should be to Festool for establishing a situation which encourages consumers to buy their Festools in the US.

I know this is just a forum, we are just venting our opinions and they will probably fall on deaf ears but it is clearly a sentiment shared by many of us.

As an aside, although I am a "hobbyist" I expense all my tools through my company and then sell the finished goods to my family, my office etc. So there are ways to get around the tax folks.

Richard.
« Last Edit: March 16, 2010, 10:23 PM by RichardLeon »

Offline tDot

  • Posts: 87
Re: Canadian pricing
« Reply #20 on: March 16, 2010, 10:47 PM »
I agree that it would be nice if Festool would lower their price points in Canada, to make them more comparable to the US.  I'm a contractor, and after my initial purchase of tools, which happened in the US before I was aware of our local dealer. I have only purchased a few new tools.  I'm not about to drop money on tools here in Canada when I am very aware of the prices down in the US, however I dont want to buy from the US, as I would like to support my local dealer.

The net result of this is that I only buy new Festools when I truly need them, I also don't buy any of the accessories or consumables as a result.  I have also found myself buying other brands again.  I dont want to, but it's even harder to justify the Festools when comparing the price difference to other brands.  Most other brands are virtually on-par with the US to Canadian pricing.

The pricing structure in Canada is also a considerable barrier to entry, all of the guys who work for me, and some of the builders whom I've worked for have been extremely interested in the Festool products.  However, their interest quickly dies when they hear the prices... of the few times I've asked, they would usually be more interested if the prices were on par with the US.


Offline Daviddubya

  • Posts: 704
  • Arizona, USA
Re: Canadian pricing
« Reply #21 on: March 17, 2010, 01:39 AM »
While we're at it why don't we get Festool to change the USA pricing when the US dollar fluctuates in relation to German currency.  That makes about as much sense as adjusting Canadian prices to reflect fluctuations in the US dollar.  Maybe I just don't get it.  Hmmm.
David W. Falkenstein
in Cave Creek, AZ, USA

Offline PaulMarcel

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Re: Canadian pricing
« Reply #22 on: March 17, 2010, 01:47 AM »
So presumably the idea is to fix prices everywhere so people get dealer service.  But as John pointed out, retail stores with a Festool display need to stock a lot of expensive inventory to meet the immediate demands of the walk-in client.  So they don't.  They go to the "we'll order it for you at the end of the week; thereafter it will be 10 days; then on Tuesday we'll call you at 5 to close to tell you it is here so you come in on Wednesday to get it" ( <-- this is EXACTLY what happens at my local Woodcraft on -every- order; he only stocks 150mm abrasives).  So much for promoting the dealer quality issue.

I order all my Festool tools and consumables online.  Yes, yes, I avoid the use-tax (but when I get a paycheck again, I'll be sure to pop that right in an envelope and send it to Sheriff Joe Arpiao).  But the -real- reason I order online is because: 1) online vendors have such an enormous customer-base that isn't geographically limited, they can stock oddball items and ship them immediately, 2) much like Festool's goal of having you go to dealers that give good service, I go online because my local Woodcraft store is a joke in this regard.

As an aside, when I find myself on the other side of town, I usually go by Rockler.  He stocks a very nice Festool display with most anything I want ('cept MFK700 bits...).  Last trip there, I dropped $300 in accessories and consumables though I could have saved a bit online... I want to support his well-stocked display.
Visit my blog for Festool adventures
(okay! now the link works!)
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Offline Frank Pellow

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Re: Canadian pricing
« Reply #23 on: March 17, 2010, 05:49 AM »
While we're at it why don't we get Festool to change the USA pricing when the US dollar fluctuates in relation to German currency.  That makes about as much sense as adjusting Canadian prices to reflect fluctuations in the US dollar.  Maybe I just don't get it.  Hmmm.
It's a different situation.

That is because it is easy for many Canadians to nip across the USA-Canada border and pick up some tools.

It is not easy for most Americans to nip over to Germany to pick up some tools.
Cheers,   
               Frank (Festool connoisseur)

Offline justinmcf

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Re: Canadian pricing
« Reply #24 on: March 17, 2010, 06:47 AM »
if you check out festool.de and then do the currency converter thing.
you will realise america gets the festool toys cheaper than germany!
bizarre but true!

regards, justin.

Offline jonny round boy

  • Posts: 3224
Re: Canadian pricing
« Reply #25 on: March 17, 2010, 07:57 AM »
if you check out festool.de and then do the currency converter thing.
you will realise america gets the festool toys cheaper than germany!
bizarre but true!

regards, justin.

Justin, whilst that may still be true on certain items, please bear in mind that the prices in Euro on the German website include VAT, which in Germany is currently at 19%.

MAJOR EDIT:

I decided to do a quick comparison to find out. I picked 4 tools which are representative of the whole range - the Kapex, Rotex, TS55 and OF1010. I then compared the prices from Festool UK, Festool Germany, and Festool USA (note - the Festool USA site does not have pricing information, so I chose Bob Marino's website for the pricing). I then converted all the prices excluding any sales taxes into Euro (since this is the originating currency) using the converter on Yahoo's UK Finance pages.

Here's what I found:



These are relative prices at today's exchange rates ('bank rate') at 0.7254 for USD, 1.1131 for GBP.

As you can see, the US prices are as much as 25% lower than the German price. What surprised me is that the UK prices are also cheaper, but to a lesser extent.

If these differences were 100% due to exchange rates, then the percentage difference would be equal across all products (give or take 1 or 2% for rounding). The fact that they aren't equal indicates some different price point setting, depending on the market.

I'm not making any judgements, just presenting the figures as I found them.
« Last Edit: March 17, 2010, 08:05 AM by jonny round boy »
Festoolian since February 2006

TS55R EBQ saw - CTL26 - CTL Mini - OF1400EBQ router - KS120 Kapex SCMS - ETS150/3 sander - RO90 sander - DF500 Domino - PDC18/4 drill - PSC420 jigsaw - OFK500 trimmer

Wish list (in no particular order!): Anything not listed above....

Offline AdamM

  • Posts: 137
Re: Canadian pricing
« Reply #26 on: March 17, 2010, 08:00 AM »
if you check out festool.de and then do the currency converter thing.
you will realise america gets the festool toys cheaper than germany!
bizarre but true!

regards, justin.

Yeah, but that price includes the 19% VAT...still more than in the US but brings it somewhat closer.
Kapex, Domino, TS55, CT22, MFK700, MFT 1080

Offline jonny round boy

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Re: Canadian pricing
« Reply #27 on: March 17, 2010, 08:02 AM »
While we're at it why don't we get Festool to change the USA pricing when the US dollar fluctuates in relation to German currency.  That makes about as much sense as adjusting Canadian prices to reflect fluctuations in the US dollar.  Maybe I just don't get it.  Hmmm.

David, that's over simplified.

What Festool charges in Canada versus the US is dependent entirely on the exchange rate (excluding any sales taxes). This is a linear relationship.

What Festool charges in the US versus Germany/Europe is dependent not only on the exchange rate but also the fixed costs of running the Festool USA division, e.g. if the exchange rate drops 10%, then the product they buy in drops in price by 10%, however the cost of running the US operation (excluding purchasing) does not change. This makes it a non-linear relationship, and it's then not so simple.
« Last Edit: March 17, 2010, 08:05 AM by jonny round boy »
Festoolian since February 2006

TS55R EBQ saw - CTL26 - CTL Mini - OF1400EBQ router - KS120 Kapex SCMS - ETS150/3 sander - RO90 sander - DF500 Domino - PDC18/4 drill - PSC420 jigsaw - OFK500 trimmer

Wish list (in no particular order!): Anything not listed above....

Offline JohnDistai

  • Posts: 216
Re: Canadian pricing
« Reply #28 on: March 17, 2010, 10:03 AM »
I don't have to tell you things are bad. Everybody knows things are bad. It's a depression. Everybody's out of work or scared of losing their job. The dollar buys a nickel's work, banks are going bust, shopkeepers keep a gun under the counter. Punks are running wild in the street and there's nobody anywhere who seems to know what to do, and there's no end to it. We know the air is unfit to breathe and our food is unfit to eat, and we sit watching our TV's while some local newscaster tells us that today we had fifteen homicides and sixty-three violent crimes, as if that's the way it's supposed to be. We know things are bad - worse than bad. They're crazy. It's like everything everywhere is going crazy, so we don't go out anymore. We sit in the house, and slowly the world we are living in is getting smaller, and all we say is, 'Please, at least leave us alone in our living rooms. Let me have my toaster and my TV and my steel-belted radials and I won't say anything. Just leave us alone.'

Well, I'm not gonna leave you alone. I want you to get mad! I don't want you to protest. I don't want you to riot - I don't want you to write to your congressman because I wouldn't know what to tell you to write. I don't know what to do about the depression and the inflation and the Russians and the crime in the street. All I know is that first you've got to get mad.  You've got to say, 'I'm a HUMAN BEING! My life has VALUE!' So I want you to get up now. I want all of you to get up out of your chairs. I want you to get up right now and go to the window. Open it, and stick your head out, and yell, 'I'M AS MAD AS heck, AND I'M NOT GOING TO TAKE THIS ANYMORE!'

Things have got to change. But first, you've gotta get mad!... You've got to say, 'I'm as mad as heck, and I'm not going to take this anymore!' Then we'll figure out what to do about the depression and the inflation and the oil crisis. But first get up out of your chairs, open the window, stick your head out, and yell, and say it: "I'M AS MAD AS heck, AND I'M NOT GOING TO TAKE THIS ANYMORE!"

Howard Beale - Network (1976)

Offline RL

  • Posts: 3038
Re: Canadian pricing
« Reply #29 on: March 17, 2010, 10:14 AM »
This thread could go off on a million tangents about economics, currencies, Germany, manufacturing costs etc. but the original issue was a straightforward and simple one: the cost of Festools in Canada relative to the US. There is no justifiable reason for the massive discrepancy in prices between the two countries, and since many of us seem to able to cross the border easily to shop, the main suffering seems to be borne by the dealers.

There are two simple solutions. 1) Quote all prices in US dollars like Lee Valley. 2) Allow US dealers and Canadian dealers to ship outside their country, thereby allowing the consumer to buy where it makes most sense.

Richard.