If they are actually selling at MAP you're right. We're getting robbed. I don't know if they are or not, but can tell you that in my industry the big guys do not sell at that level. They "advertise" those prices but actually sell for less.

Joe your point is valid to an extent. As gr8tfulEd pointed out the larger retailer does get a better discount due to their economy of scale (they move more units) but they also have higher overhead and operating costs. If GC's business model is anything like the company I work for their margins may not be as good as you think.
In my line of work (construction) I find that smaller firms can beat my pricing because their overhead is lower than mine on the residential end. Conversly they can't touch me on commercial work because they're simply not big enough to handle it.
The natural progression of any capitalist economy is for the big fish to eat the little fish... until the big fish gets too big to swim... then the big fish breaks up into smaller fish and it starts all over again...Maybe MAP doesn't level the playing field as much as it delays the inevitable.
Just my thoughts...

Hey tdanb2003,
I'm only speaking from my experience in the performance aftermarket industry for cars. I actually worked for one of the large companies before I joined a team at a local shop. I saw first hand the difference. Our gross profit goal at the big company was 43% and we rarely, if ever, missed that goal. At the local shop we're lucky to hit 30% and on some lines we sell if we make 10% were doing good. As far as expenses and overhead go we get clobbered compared to the big guys. Lease and utilities are about the same but we pay much more percentage wise for insurance and taxes than they do.
MAP pricing was a Godsend for shops like ours. Several of the manufacturers we deal with paid for an independent study of our specific market and the effects of pricing strategies. What they found out was that in a five to ten year period there would be no more mom and pop speed shops like ours in business if they didn't do something. One of our largest competitors, Summit Racing, even agreed. Losing the small shops in towns around the country was going to be bad not just for us, but also for the large companies and the manufactureres alike due to lack of exposure and the loss of qualified people to help the customer.
In the end, they agreed to MAP policies and it has had a positive impact all the way around for our market. They still get a better deal based on volume then we do, but at least now we don't have to cut our own throats to make a sale and we're still in business and turning a profit. We we're barely treading water before that.

I guess any company who charges big bucks for a hand crafted instrument is gouging? PRS too? D'Aquisto? Martin? Taylor? Gibson bashing is ridiculous.
They're expensive because they're hand crafted and made in the USA.

As much as I love Fender, the prices they charge for a bolt together cnc machined guitar is just funny. When I was in Mexico last year, the locals told me that $40 per day was a good wage. And that was for skilled labor. Made me wonder.

If you don't like Gibbys, don't buy them.

Charging a grand for a reissued Champ amp is gouging. The parts will run you under $300. If you know what you're doing, you can build one in a couple hours.

Isn't 40 a day good?

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The blues ain't nothin but a good man feelin bad.

Joe,

I think I see your point (although, to be fair, I'm still a little fuzzy on MAP), but correct me if I'm wrong: for MAP pricing to work, the MAP has to be set squarely (and hopefully fairly) by the Manufacturer, not the Manufacturer and their biggest customer. By tailoring it to the demands or needs of the biggest customer, instead of the market as a whole, you're pretty much kicking the other players in the game are you not? In your example, what if the manufactures in question had gone to their biggest customer, who because of economy of scale, gets such a discount that the final MAP they agreed on was your COST. Then how could you compete? How could customers shop around to find a good deal?

I think a case in point would be Fender's recent price increase. What if, instead of having a MAP, individual retailers could decide how much of the increase to pass on to consumers. True, it would directly and immediately affect their margins, but sometimes you're willing to give a little to get a little. The day after the price increase, the prices were up essentially the same from Sam Ash, MF, Sweetwater, GC, and my local mom and pop.

I understand the idea of MAP is to level the playing field so that a brick and mortar like my local mom and pop can compete with the GCs and webbased shops of the world that get big volume discounts and/or have lower overhead. But when the GCs and MFs set the price?

I guess I don't understand why Fender, or any company for that matter, just doesn't make a guitar and say to the stores buying them: "Okay, this strat to you is $500 (or whatever). Charge what you will." Competition would then level the playing field. Personally, I'd pay a few dollars more to buy local and get the service from my local store.

Some days I get less...

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Hey, Boy Blue is back!

I'm talking skilled labor. Plumber, construction worker, factory worker etc. They don't just work 8 hours a day.

If they do that here, imagine what they get away with in Mexico and China.
Sometimes the fines are cheaper than disposing of Hazmats legally.

Hey Joe thanks for the explanation. Your example has cleared up some of the doubt I had about the way it worked. I enjoy these conversations I always learn something.

As far as setting the MAP price goes, the manufacturer sets it and the vender either agrees to the level and can sell the products, or disagrees and is not allowed to sell said products. They are very strict about enforcement of the guidlines and I do know of one vender that lost the right to sell for violations. The key thing to remember is that MAP is just the advertised price. Anyone in a MAP agreement can sell for less, they just cannot advertise that lower price.

It would be great if everyone had the same cost from manufacturers but things just don't work that way. Higher volume brings lower costs. A fact that is levereged by the big guys everyday. I know at the corporation I worked for there were several instances of manufacturers being blackballed from our stores over price increases. All of thier products would be pulled from the shelves and purchase orders cancelled. A very powerfull way to get what you want, and it works.

You don't see GC as a monopoly? Read the article again...

"Further to this, Giambusso’s lawyers make much of the sheer size of Guitar Center (295 stores in all states, combined with the industry’s largest mail order amounting to sales of some $2 billion) in comparison to the US’ second largest MI chain, Sam Ash (45 stores in 12 states), raising interest for a possible monopoly inquest."


295 stores...not including Musician's Friend...sounds like some serious monopoly leverage to me there friend.

And personally...I buy my strings where ever I can get them the cheapest.




I see...and you got your law degree from where exactly? Well I'm no lawyer myself but regardless, the fact that Fender was named in this law suit reflects very poorly on Fender's practices and that something is possibly amiss here which we'll address further down in regards to your next comments.



And where precisely would you draw the line between "profit" and "greed"? Dude...whether you realize it or not, "large corporations" are often greedy...quite greedy. What exactly was it that practically ruined Fender in the 70's and early 80's? CBS's tendency to be "cheap"....cheap and greedy are two sides of the same coin. I have no problem with a company making a "reasonable profit" but when corporate execs are making outrageous sums of money, is that really "reasonable profit"? Like the OP, I too am a small business owner...I understand and am fully ware of "working for profit" but when it comes to large corporations, the line between the two that you suggest can and does become very blurred, very quickly.

I'm sorry dude but I happen to think that Gr8tefulEd's comments have some validity...I was thinking similar thoughts myself about Fender long before either of the issues mentioned came to light. I won't speak for others but the couple of times I've tried to contact Fender's customer service in regards to certain issues, -if- they respond at all, they have typically been short and quite rude. They want to sell lots of guitars but they only seem to care about people who spend a lot of money...screw the little guy with limited funds. In this sense I think Gr8teful's comment "Come on guys, straighten-up and fly right. You use to be about the musician, not the greed"...I think this is perfectly valid.

Personally I've long suspected Fender of price fixing...I've probably even mentioned it on these forums at one point. I won't go in to all of the details but very simply this law suit doesn't surprise me. To come to the point however, as it pertains to the MAP issue, if GC is in part or in whole responsible for how these prices are established and if they are in fact found guilty of price fixing, at the very least that makes Fender a "willing accomplice" which is considerably more than a "just in case" as you suggest...but that's to be decided by the courts and not people on an internet forum.

In addition...and I have to be perfectly blunt here...if you're "tired of lectures" then why would you hang out at a public forum in the first place? Is it that everyone's allowed to have an opinion....as long as that opinion only agrees with yours?

And BTW...people new to the forum have just as much right to an opinion as yours. Maybe this is just me but I think people new to the forums should be encouraged rather than slammed for posting thoughts that you disagree with. -ALL OF US- who have been here for any period of time had at one point only 14 posts. If you really want your own private little "Yea Fender" club, perhaps you should simply start your own forum.





Well, at least you show some signs of common sense so I guess there's hope. Oddly enough, the EPA issue didn't strike me as that big a deal. I've worked in a manufacturing environment and the truth is that sometimes containers get left open and sometimes people who work there aren't always aware of the hazards of those chemicals. Sure the company is supposed to provide MSDS (Material Safety Data Sheets) material but how many typical workers really sit down and read them let alone understand them as well as they should? Storing hazardous waste without a permit...that one is kind of dicey too. That's one of those issues that people in manufacturing don't tend to think about too much...until there's a problem. I'm not saying this is "right" by any means as much as just the reality of the situation. I seem to remember something about Fender having similar problems in the early years with some of the volatile chemicals they used with their finishes...and the factory getting shut down because of it. You'd think a company that's been thru that before would know better but how often do people really learn anything from history? In the course of day to day affairs in a manufacturing environment, things like that do tend to get "over looked". In this case, as gomania16 said, "they violated a law and payed a fine" and according to the article, have taken actions to correct the violations.

My only question here is will Fender's customers end up paying that fine for them with another price hike at some point?




While some of the OP's comments are certainly "subjective", I would point out that MANY of the comments posted on these forums are! WELL DUH!!! Look at virtually any post that starts with "such and such vs such and such..." and you'll get OPINIONS out the wazzoo!!! That's what a public forum is for...a place for people to offer differing views on subjects that may be of interest to the people who choose to participate. In this case, the OP at least provided some reasonably substantial information to back up his opinions. Again here I would risk being completely blunt and ask, if you don't like the subjectivity of a public forum and since you clearly don't care for anyone's opinions who differ from your own, why would you hang out here in the first place?

I think the OP did a great job of defending himself...I agree with some of his points, disagree with others. That said there slapchop...I don't care if you have 715 more posts on this forum than I do, your post was rude and at least as subjective as the OP's comments. You could have easily said "I disagree with you" and then provided your own opinions...instead you were deliberately a bit nasty about it (or at least -really- came off sounding that way).

My apologies to the others reading this thread but Chop's slop really got under my skin there.

Peace,
Jim

First, in the case of "monopoly," I only have to read it once because I know what the word means. You don't have to buy Fender products or ANY products from GC. You can get them online from Sweetwater or in person from a local dealer. GC is big, but they are not a monopoly. Price fixing happens when all three major dairies in a region, for example, get together and agree illegally that they will not sell milk to any school system for less than price X-per-pint. Hell, man you said it yourself... you buy your strings somewhere else! That's how it works. Now, if GC and NAMM could prevent you (through some kind of colllusion) from buying ANYBODY'S strings at a lower price, then that would be "price fixing."

Second, nobody needs a law degree to know this basic fact about a class action suit... I am a business owner, and they cover this topic in Business Law 101 at Indiana University, which is where I learned it.

Sorry to get under your skin... I know facts irritate people who suppose that whatever they imagine or wish to be true actually is true. GC is not a monopoly, you have to name every possible defendant in your initial filing of a class-action suit because you can't go back to the well if you find out you've named the wrong parties, and the fact that Fender is not referenced anywhere in the filing documents (except on the first page as a defendant) indicates that there is no evidence against them.

I'm with BigJay....