Pricing policy for Canada- Kapex120

[1freddy]

Can someone from Fesstool / ToolTechnic explain why this item sells for 26% more in Canada than in the US when the dollar is (and has been for some time) almost at par...?

I was told by one of your Canadian dealers that Fesstool sets the minimum price the saw can be sold for. This seems likely to be true as five dealers I checked in Ontario have the same advertised price to the penny; and when I called two of them to check for flexibility I was told there was none.

When I checked several US sites I observed the prices are all the same (just much lower than in Canada); so you may do the same there.

What justifies such a significant difference?

Thanks.

 

[dennylj]

I'm with Freddie.  I too would like to know why there is such a disparity in price given the relative value of the Cdn $ to the US$.  Seems to me that there would be a significant saving on a product like the Kapex if one were to order it from a US dealer and have it delivered to a US border town for pick up.  Duty of course would apply when bringing it into Canada, but the saving would still be on the order of $250 to $300 dollars on the Kapex.  Since most Canadians live about an inch above the US/Canada border, that option becomes increasingly attractive, certainly on pricey products.  I find it curious that Cdn dealers don't raise hell with Festool (or whoever it is who decides Cdn price levels) to ensure their price structure can remain competitive with their US counterparts.
Denny

 

[Administrator_JSVN]

We do not discuss or answer questions regarding pricing strategy. I hope everyone understands. Sorry I can't give an answer.

 

[Guy Ashley]

I am not an economist but I suspect that the pricing policy is not determined by Shane or any other countries representative, but by an extremely well resourced and knowledgeable marketing department in Germany.

The price differentials are not just between the US and Canada, but Europe also. Festools in Holland are more expensive than in the UK, yet the transport costs to get them here are obviously greater.

It is a case of well researched economic indicators and spending trends, in effect, what is the top dollar price our brand will ware and get a healthy return before people decide they cant afford to buy and go with the competition.

Like all of us Festool want to make as much money as possible.

 

 

[junk731]

Some of the costs related to the price difference, all product is distributed from the US, so shipping and crossing fees, 10% Canadian duty on German tools (found this out when I declared purchases at border) and the continual fluctuation in our currencies, also last but not least because they can. Prices seem to be set on a yearly basis, be thankful your buying now and not before when our dollar really sucked and it was close to 40%.

John

 

[tiralie]

What justifies such a significant difference?

1freddy:
This is not only restricted to Festool. Prices for many things are more expensive in Canada than in the US.
Pricing is a fairly complex issue for all consumer and industrial goods and imported goods increases the complexity. Even with in Canada inter provincial trade is fraught with a myriad of rules and regulations.

There is nothing stopping you from buying Festool products in the US and importing them to Canada. While many retailers will not sell to you over the internet, I am sure if you drive over the boarder and show up at any retailer ready to buy they will not stop you. Yes this is a pain but it will save you money.

I suspect that the higher costs for Festool are a direct result of several factors: the higher costs of serving an extremely small market spread over a large geographic area with two official languages, government regulations and corporate taxes.
While you could argue that the US government regulations and taxes are similar in the US (I don't know) the small market (size of California) adds some additional fixed costs to each tool price.

As a small business owner, I am only to aware that dealing and adhering with government regulations and constant changes adds costs (understand regulations, licensing etc.) to my business. While I understand the government is acting on behalf of the consumer that wants protection, it does increase costs to adhere to the rules. This could be one of the reasons the majority Canadians have traditionally been employed by large multinational companies, well except the >1/3 of the employed population that is employed by a local, provincial or federal government.

As a note: I have never worked for a tool manufacturer nor have I worked for a manufacturer who imports manufactured goods into Canada.

 

[tbellemare]

My brother-in-law is from Canada. I can remember when I first met his Dad back in the '70s, he was complaining about things in Canada being more expensive than here. So, he moved his pattern making business to Houston.

One of the things he pointed out was that a Chrysler made in Canada was cheaper in the U.S.. There must be something really nice there to put up with the cold and pricing.

Tom

 

[tiralie]

The women are way better looking...

 

[Pete Pedisich]

The women are way better looking...

And one of the last great undisturbed wilderness areas.

 

[tbellemare]

The women are way better looking...

How can you tell?

[attachimg=#1]

I have a buddy in New York who always talks about "stealth clothing"...

Tom

 

[tiralie]

The women are way better looking...

How can you tell?

I have a buddy in New York who always talks about "stealth clothing"...
Tom

...the ones in stealth clothing have undisturbed wilderness areas  [big grin]
Tim

 

[1freddy]

Always interesting to watch how threads morph...

As there will be no official response I'm forced to conclude the difference exists 'because they can'.

Other posters have made the point Canada is a small, geographically large market. I see it differently; its a market 10% of the size of US, 90% of which is located within 150km of the northern border. Believe we are in fact an ideal high margin market- little competition, geographically and (for this type of product) culturally similar.

I will purchase the tool in the US as I've done in the past; it is simple and low risk.

My preference is to buy in Canada, locally if possible but I'm not willing to pay a substantial premium. Maybe if enough of us take this path and make it obvious to our Canadian dealers they will force the hands of companies they represent.

 

[GhostFist]

Ya it's all funny especially since the Canadian dollar exceeded parity recently so with their increase, for what ever reason, they're now getting a larger return as the dollar continues to get stronger.

 

[mouppe]

Ya it's all funny especially since the Canadian dollar exceeded parity recently so with their increase, for what ever reason, they're now getting a larger return as the dollar continues to get stronger.

That's true if Festool were a US company, but being German, profits are repatriated into euros which makes the gain even greater because the euro has slid massively against the Canadian dollar recently.

The issue of Canadian pricing has been covered extensively on the FOG in recent months- to death. It makes no apparent sense to have such a large discrepancy to US prices and to those who can- such as myself- we buy Festool in the US. Just yesterday, I bought an ETS 125 for $170. Canadian price: $215.

Anyway, let's just take advantage of the strong currency while we can.

 

[upscale]

The issue of Canadian pricing has been covered extensively on the FOG in recent months- to death. It makes no apparent sense to have such a large discrepancy to US prices and to those who can- such as myself- we buy Festool in the US. Just yesterday, I bought an ETS 125 for $170. Canadian price: $215.

Unfortunately, you're forbidden to leave this discussion without clarifying a few things. It's just not as easy as the quote above suggests. To bring prices to reality, what did you pay for duty and/or additional taxes on your Festool when you came back across the border?

And, if you're going to toss in a good price on something you went over the border to buy, then in all honesty, you should be giving the total actual cost of the purchase. That includes a realistic estimate of the approximate cost of gas. For the time being, we'll let you dispense with the calculating cost of wear and tear on your car and the time you put into the trip.   [laughing]

 

[atomicmike]

One other thing to consider is that the cost of any Festool effectively includes the cost of the warranty. Since the only North American service center is in Indiana and Festool pays shipping one or both ways, the cost of offering that warranty in Canada is necessarily higher, especially for a larger item such as the Kapex. Granted, that still doesn't account for the entire discrepancy, but if you add that in with the import duty, and any other small costs they incur when selling the tools in Canada, it does start to add up. In the end, though, it's all just speculation, since only a few people know the real reasons.

 

[mouppe]

The issue of Canadian pricing has been covered extensively on the FOG in recent months- to death. It makes no apparent sense to have such a large discrepancy to US prices and to those who can- such as myself- we buy Festool in the US. Just yesterday, I bought an ETS 125 for $170. Canadian price: $215.

Unfortunately, you're forbidden to leave this discussion without clarifying a few things. It's just not as easy as the quote above suggests. To bring prices to reality, what did you pay for duty and/or additional taxes on your Festool when you came back across the border?

And, if you're going to toss in a good price on something you went over the border to buy, then in all honesty, you should be giving the total actual cost of the purchase. That includes a realistic estimate of the approximate cost of gas. For the time being, we'll let you dispense with the calculating cost of wear and tear on your car and the time you put into the trip.   [laughing]

Oh boy, you're giving me a hard time! 

I am on holiday for long enough to avoid duty, and both prices I quoted were before tax. Tax is higher in Quebec than anywhere else anyway.

I do buy my consumables locally, but I go across the border for the tools.

Now can I leave the discussion please?  [unsure]

 

[upscale]

I am on holiday for long enough to avoid duty, and both prices I quoted were before tax. Tax is higher in Quebec than anywhere else anyway.

In that case, the purchases would be better across the border. I'd say that your trip in this case was the exception. I'd suggest that most people looking to buy would go across the border for the specific purchase of their Festools and get stuck with both duty and taxes coming back home. There's still savings to be had by cross border shopping, but not as much as your relatively perfect scenario of holidaying and buying at the same time would suggest.

I do buy my consumables locally, but I go across the border for the tools.

I guess it depends on how close one lives to the border. I considered a trip to Buffalo from Toronto to buy my Festool products, but the cost of the trip, the five hours to Buffalo and back, not to mention duty and taxes, dissuaded me from making the trip. So, I bought locally.

Now can I leave the discussion please?  [unsure]

Ok, your detention is over. Don't cause anymore trouble.  

 

[Frank Pellow]

One other thing to consider is that the cost of any Festool effectively includes the cost of the warranty. Since the only North American service center is in Indiana and Festool pays shipping one or both ways, the cost of offering that warranty in Canada is necessarily higher, especially for a larger item such as the Kapex. Granted, that still doesn't account for the entire discrepancy, but if you add that in with the import duty, and any other small costs they incur when selling the tools in Canada, it does start to add up. In the end, though, it's all just speculation, since only a few people know the real reasons.

Not true.  There is an official Festool Canadian repair service near Ottawa run by Claude Ouellette.  A few months ago Claude di a fine job of fixing my old PS2 jig saw.

 

[Oldwood]

If Festool wants to support the Canadian dealers they need to remember (90 percent of the Canadian population is located within 160 kilometers (100 miles) of the U.S. border)
When the Canadian dollar is at par or close to it you can save $250.00 per thousand for a little trip south.
How much business do the Canadian dealers lose because of this? Lots I think!!

We have some great dealers and they would sell a lot more product if the prices were more inline with the US.

FWIW
Gerry