Festool pricing discussion

[Crazyraceguy]

[member=8955]Coen[/member] it's nice to hear that it is applicable to you over there too. Pricing of some things is just funny on some items.
The LR-32 holey guide rail comes to mind. In the US, it is the same price as the regular one.

 

[Coen]

[member=8955]Coen[/member] it's nice to hear that it is applicable to you over there too. Pricing of some things is just funny on some items.
The LR-32 holey guide rail comes to mind. In the US, it is the same price as the regular one.

Yeah, adding holes is often free, as the off-cut metal offsets the tooling. But in Europe the LR-32 rail is more expensive and you don't get it as an option with a saw either  [sad]

 

[Crazyraceguy]

[member=8955]Coen[/member] it's nice to hear that it is applicable to you over there too. Pricing of some things is just funny on some items.
The LR-32 holey guide rail comes to mind. In the US, it is the same price as the regular one.

Yeah, adding holes is often free, as the off-cut metal offsets the tooling. But in Europe the LR-32 rail is more expensive and you don't get it as an option with a saw either  [sad]

I think I actually learned that from you in the first place, after I assumed that it would be the same everywhere. Just like the fixed price system that we have here, I thought that happened everywhere too.
The only benefit I can see to it from the customer side is in the customer service area. The only difference between dealers would be the way they treat the customer.

It has to cost them something to punch those holes, so why?
In fact, why bother to offer both? Just include the LR32 version with the set version of the saw. At that point the simplicity of adding the rest of the LR32 system is far greater. That's exactly how I got mine. My dealer offered it to me with the TS55, with that exact advice. I didn't have the need at the time, but it worked out later.
So, now there are 3 versions of the FS1400? The plain one, the LR32, and the new one with the sticky pads and carry-handle hole. I get that two of them are at odd with each other, but the plain one? why keep it in the line-up?

 

[Coen]

[member=8955]Coen[/member] it's nice to hear that it is applicable to you over there too. Pricing of some things is just funny on some items.
The LR-32 holey guide rail comes to mind. In the US, it is the same price as the regular one.

Yeah, adding holes is often free, as the off-cut metal offsets the tooling. But in Europe the LR-32 rail is more expensive and you don't get it as an option with a saw either  [sad]

I think I actually learned that from you in the first place, after I assumed that it would be the same everywhere. Just like the fixed price system that we have here, I thought that happened everywhere too.
The only benefit I can see to it from the customer side is in the customer service area. The only difference between dealers would be the way they treat the customer.

It has to cost them something to punch those holes, so why?
In fact, why bother to offer both? Just include the LR32 version with the set version of the saw. At that point the simplicity of adding the rest of the LR32 system is far greater. That's exactly how I got mine. My dealer offered it to me with the TS55, with that exact advice. I didn't have the need at the time, but it worked out later.
So, now there are 3 versions of the FS1400? The plain one, the LR32, and the new one with the sticky pads and carry-handle hole. I get that two of them are at odd with each other, but the plain one? why keep it in the line-up?

Festool's parent company got fined because their fixed pricing supposedly violated some EU rule and ever since it's a free for all. Result is less dealers with any knowledge and more box-movers with zero product knowledge.

With more expensive materials like aluminum, adding holes is often free. Punching holes costs money yes, but the material they cut out is recycled (+$!). Perhaps in the case of LR 32 pattern not completely, but in case of larger holes with less tolerances it's often completely free in total production costs to add holes. In lots of designs you actually want holes, rebates and cut-outs to save weight.

The plain is just there to keep set prices down I guess. My guess is that the profit margin in Europe on the LR 32 rail is higher too.

 

[mino]

Festool's parent company got fined because their fixed pricing supposedly violated some EU rule and ever since it's a free for all. Result is less dealers with any knowledge and more box-movers with zero product knowledge.

With more expensive materials like aluminum, adding holes is often free. Punching holes costs money yes, but the material they cut out is recycled (+$!). Perhaps in the case of LR 32 pattern not completely, but in case of larger holes with less tolerances it's often completely free in total production costs to add holes. In lots of designs you actually want holes, rebates and cut-outs to save weight.

The plain is just there to keep set prices down I guess. My guess is that the profit margin in Europe on the LR 32 rail is higher too.

In this case it adds a manufacturing step - the "plain" rails are not put on a CNC while the LR22 (and the KP series) need to be. The material recovery is probably minimal given how small the holes are.

Ref the pricing, yeah, CRG probably does not mind as he is a commercial shop fella where dealers will come to them. But right now it is impossible to get almost any Festool stock in person - unless you live in a very big urban area or a business where the dealer will come to you.

My city is like 500k, 1 mil with the area in question, and there is like 1 (one!) dealer with any Festool stock on display here. And even that is just historical as they did lots of business with Narex/Protool in the past.

I spoke with the folks lately and they do not move almost any tools to retail customers. Most sales are immediate consumables and some accessories. The sales moved to etail or commercial where custom deals are made. They only have a display because they use it as a presentation area for business customers. Once they give up, my "nearest" shop will be a big etailer where a fan employee made displays for business customers ... in the middle of nowhere some 100 miles way. Yupi!

Does not affect ME much, but it DOES hurt Festool a lot in the hobby market.

In the past it was one of their main differentiators while now their retail presence is pretty much non-existent. Makita, Millwaukeee and the others still maintain de-facto price caps but they do it dirty so manage to fly under the radar while Festool got screwed by the (in my view legally wrong) ruling.

Act straight, the gov will screw you. Act a crook and the government will rid you of any straight competition..

 

[Lincoln]

[member=8955]Coen[/member] it's nice to hear that it is applicable to you over there too. Pricing of some things is just funny on some items.
The LR-32 holey guide rail comes to mind. In the US, it is the same price as the regular one.

Yeah, adding holes is often free, as the off-cut metal offsets the tooling. But in Europe the LR-32 rail is more expensive and you don't get it as an option with a saw either  [sad]

Same down here in Australia.

 

[Lincoln]

Festool's parent company got fined because their fixed pricing supposedly violated some EU rule and ever since it's a free for all. Result is less dealers with any knowledge and more box-movers with zero product knowledge.

With more expensive materials like aluminum, adding holes is often free. Punching holes costs money yes, but the material they cut out is recycled (+$!). Perhaps in the case of LR 32 pattern not completely, but in case of larger holes with less tolerances it's often completely free in total production costs to add holes. In lots of designs you actually want holes, rebates and cut-outs to save weight.

The plain is just there to keep set prices down I guess. My guess is that the profit margin in Europe on the LR 32 rail is higher too.

In this case it adds a manufacturing step - the "plain" rails are not put on a CNC while the LR22 (and the KP series) need to be. The material recovery is probably minimal given how small the holes are.

Ref the pricing, yeah, CRG probably does not mind as he is a commercial shop fella where dealers will come to them. But right now it is impossible to get almost any Festool stock in person - unless you live in a very big urban area or a business where the dealer will come to you.

My city is like 500k, 1 mil with the area in question, and there is like 1 (one!) dealer with any Festool stock on display here. And even that is just historical as they did lots of business with Narex/Protool in the past.

I spoke with the folks lately and they do not move almost any tools to retail customers. Most sales are immediate consumables and some accessories. The sales moved to etail or commercial where custom deals are made. They only have a display because they use it as a presentation area for business customers. Once they give up, my "nearest" shop will be a big etailer where a fan employee made displays for business customers ... in the middle of nowhere some 100 miles way. Yupi!

Does not affect ME much, but it DOES hurt Festool a lot in the hobby market.

In the past it was one of their main differentiators while now their retail presence is pretty much non-existent. Makita, Millwaukeee and the others still maintain de-facto price caps but they do it dirty so manage to fly under the radar while Festool got screwed by the (in my view legally wrong) ruling.

Act straight, the gov will screw you. Act a crook and the government will rid you of any straight competition..

I'm lucky then, I have five retailers within a 10 - 20 minute drive, all carry the majority of items available down here. Prices are fixed hard though - to the point where retailers can't even discount other branded tools bought in the same transaction, or they risk losing Festool altogether.
Ordering online from Festool is easy and usually arrives next day, but nothing beats getting hands on with a tool you're interested in.

 

[Coen]

[member=61254]mino[/member] Yeah I think it (the rule) is wrong too. Vertical price fixing is something completely different than horizontal. And as you already noted; there is still plenty of vertical price fixing around...

 

[Crazyraceguy]

There are advantages to living in a large metro area as far as this goes. I have a Woodcraft store and another more commercially oriented woodworking store that I can walk into on any given day. That second store even has a dedicated Rockler room. Thre was an independent Rockler store years ago, but it was combined into this one. That one also has a big selection (and stock) of Festool equipment and supplies. I probably have more myself than the Woodcraft store does, except for abrasives.
The real advantage to being employed in this field is the dealers who are unknown to retail customers.
The big suppliers are Festool dealers too, but only to shops. They will actually deliver the products with the next order of whatever else is coming in. This also includes Keim Lumber, a big retailer that is 60-70 miles away. They also sell hardwood to commercial customers, delivering anything from their retial catalog along with it.
Hartville Hardware is also less than 100 miles away, too far to just stop by, but close enough, if I had too. Plus they are one of the biggest in the country for parts.

Prices are fixed hard though - to the point where retailers can't even discount other branded tools bought in the same transaction, or they risk losing Festool altogether.

This part I just don't understand. How on Earth can they dictate what a company can do with the other products they sell? I mean, I get it, you signed a contract, but who would even demand such a thing? especially when it's so easy to work around it by separating the transactions onto two different orders/receipts. I see it as unreasonable flexing for a net-zero result.

 

[mino]

Prices are fixed hard though - to the point where retailers can't even discount other branded tools bought in the same transaction, or they risk losing Festool altogether.

This part I just don't understand. How on Earth can they dictate what a company can do with the other products they sell? I mean, I get it, you signed a contract, but who would even demand such a thing? especially when it's so easy to work around it by separating the transactions onto two different orders/receipts. I see it as unreasonable flexing for a net-zero result.

That would be a clear "anti-circumvention" measure. While, on itself, un-enforceable the way Lincoln described it. I am pretty sure that should Festool do some test-shopping and be offered this as a way to bypass the fixed prices, with such a rule in place Festool would be in their right to (legally) terminate the contract with the dealer for a breach. Which is the point of such "rules" in the first place.

The goal being that dealers cannot bypass the "no discounts" rule by /officially/ offering other brand products for free etc. Sure, they will still do it for "known" customers, but they cannot use it as a public sales tactic to undercut that other dealer.

I am pretty sure the anecdote came not from a dealer spontaneously complaining but more like the customer fishing with "But can you not you give me some discount for that Makita instead?" And the delaer saying: "Nope, discounts for other products related to the purchase of Festool fall into the same category of being prohibited.".

If, on the other hand, a customer (or a Festool rep incognito) came and solicited a discount for that Makita *without* any relation to Festool and *then* added some Festool items to the purchase, I am sure the discount would be granted as it would "not be related" to the Festool purchase. In a way, this is a clever way to keep the ducks in line, employing some proper psychology and legal concepts.

 

[woodbutcherbower]

The mandatory retail price fix was outlawed in Europe a while ago. If I go shopping for a Festool product online and I find half a dozen stockists, I’ll also see half a dozen different prices. Same goes for every other tool manufacturer. The cheapest doesn’t always get the order, but at least we’re given the choice.

 

[Coen]

The mandatory retail price fix was outlawed in Europe a while ago. [...]

But only selectively enforced...

Oh, so you want a Nikon D850?

[attachimg=1]

Perhaps a telephoto lens with that?

[attachimg=2]

[huh]

So how the minimum and average are for years on end exactly the same? Haha

 

[jacklewis]

What I did was cut down my old 1400mm rail that came with my saw, so I can have an 800mm rail, and the remaining 600mm can be attached to my LR32 1400mm rail so that I can crosscut 4' pieces.

 

[Mini Me]

I'm lucky then, I have five retailers within a 10 - 20 minute drive, all carry the majority of items available down here. Prices are fixed hard though - to the point where retailers can't even discount other branded tools bought in the same transaction, or they risk losing Festool altogether.
Ordering online from Festool is easy and usually arrives next day, but nothing beats getting hands on with a tool you're interested in.

In Oz Festool had to go to court and make a legal argument to ensure they could have a fixes price policy and that procedure has to be repeated as each application is not open ended. People complain about the pricing policy but for dealers it is a good thing as they know the score and are not cutting each others throats to get business. In Oz the main business for Festool is for trades such as the automotive panel repairers but it is very evident that they are losing ground in some sectors such as the building trades though they most probably did not have a strong presence there any way.

Retail customers here complain about the prices of the product and the pricing policy but they fail to see that Festool most probably see them as cream on the cake and it is the commercial sector they are more interested in and that market is not so sensitive to price. My attitude is if you don't like it shop elsewhere as there is plenty of choice to buy other quality brands. It would not surprise me to find that Festool do make deals to the commercial sector in fact it would be nearly impossible for them not to given the choice of losing a sale of many thousands of dollars if they didn't.

 

[mino]

...
Retail customers here complain about the prices of the product and the pricing policy but they fail to see that Festool most probably see them as cream on the cake and it is the commercial sector they are more interested in and that market is not so sensitive to price. My attitude is if you don't like it shop elsewhere as there is plenty of choice to buy other quality brands. It would not surprise me to find that Festool do make deals to the commercial sector in fact it would be nearly impossible for them not to given the choice of losing a sale of many thousands of dollars if they didn't.

Correct. Any "fixed price" policy is always retail-only.

With business deals it works the way that the dealer "registers" the customer/deal with Festool and will get the discount as applicable approved/agreed etc. This prevents any "race to the bottom" at the source so there is no need for "fixed" (actually "flat" would be the better word) prices there.

As for cream of the crop ... that is actually the opposite for the most part. Retail customers are way more "expensive" than business ones as you need to spend for retail space and the mantime to talk to, generally, non-professional customers. That costs way more at the point of sale (dealer cost) as well as at support to Festool. Flat prices are to ensure *the dealers* gets an adequate piece of the cake to have the motivation giving time/care to the retail customer. The idea is that the dealers compete on service quality, not on price. I.e. the objective is to sustain a healthy dealers ecosystem, making more money through more sales even at a higher prices thanks to good services. Not to "sell for more" as many presume. Not for the manufacturer that is.

"Sell for more" is the "horizontal price fixing" part which Coen mentioned that is very much a bad thing and has nothing to do with a vendor not allowing a "free market" on price among dealers and making one only on "service". Completely different concepts.

For a start ... Festool may as well have only company stores and sell only through them ... and that would be absolutely OK anywhere ... in effect the EU *removing* the option of a "price set by maker, service defined by middle-man/dealer" from the varioous possible arrangements a market can have.

Add:
EU situation is now like:
a) price set by maker, service set/provided by maker => OK
b) price set by maker, service set/provided by reseller/dealer => BAD!
c) price set by dealer, service set by dealer => OK
d) price set by dealer, service set/provided by maker => OK (though makes no sense/logic)

Looking at the these scenarios it stops making sense to call it "price fixing" pretty fast. That term is associated with a completely different meaning i.e. a situation where independent companies manipulate a market. Here there is no market to "fix/manipulate" as the complain was the - per se - non-allowance of a "pricing market".