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Posted: Wed Feb 25, 2009 9:47 am
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Price increases are a fact of life with any product.

As a consumer you have the choice to pay it or not.

Simple

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Posted: Wed Feb 25, 2009 6:14 pm
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I still think if they would sell them at $500 they would make more profit in the end and more sales.I think its just the sales A-HOLES that cant bring them selfs to lower prices.Its FVCKING GREED PERIOD.


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Posted: Wed Feb 25, 2009 9:26 pm
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jack47804 wrote:

this is the first price jump I've seen on fender guitars but it's not as shocking as the epiphone & gibson price jumps, the epiphone standard went from $399 to $549. The MIM went from $399 to $449, so it's survivable.


Actually, right now..the price of the MIM is at 549 and up. The 449 price was there for a short period. There's a few stores that still have it at 449. Get them before they change the price.


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Posted: Wed Feb 25, 2009 11:51 pm
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jnastyNE wrote:
Quit your b*tching.
These are some of the finest precision instuments being produced in the world. Fender is a huge company with hundreds of millions in overhead and production costs. I doubt they are boosting prices so the CEO can buy his own Island in the Agean.
If you want a $500 strat, buy a MIM or get a time machine.
The made in USA strat is worth every penny and more.


AMEN!

Quality guitars aren't cheap. You can always find good "scratch and dent" deals at a lot of online stores. You'll save some money and still have a practically brand new guitar. Even the B-stock guitars can be good if you can live with it not being "100% pristine" from the factory. I got a good Highway One Strat for a little over $300 because of a dent on the bottom that you can't even see. Awesome guitar!


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Posted: Thu Feb 26, 2009 1:00 am
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BigJay wrote:
I posted this under one of the multitude of similarly themed threads....

Two main reasons likely....

First, Fenders component prices have likely risen. Commodity prices, while volatile, have generally risen over the last year. The cost of steel, wood, and other commodities have increased and Fender will pass along the cost. Also, the US $ has fallen vs. many other major currencies, especially the Japanes Yen. This has the affect of raising the cost of products we import from other countries like Japan.

Second, as many have noted, the sum of the cost of the parts of a Strat on Ebay, for example, is higher than the cost of a new guitar. This is technically called an "arbitrage" situation. Fender will certainly study these price dynamics and act accordingly by raising their prices of finished guitars.

Its also possible that Fender routinely raises prices every so often and we are simply due.

See I had thought it was the opposite with commoditys Here is just a piece of the Morningstars report.
They state that commodties are at a 22 month low and had droped for a five consecutive months. November to December Plastics are down 17%, Energy 11%, Metals 6%, Paper board & Wood pruducts 2% Both Morningstar and Merril Lynch are forcasting declines for 2009 that are shocking steel is forcast for as much as 30% decline this year.

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Last edited by cvilleira on Thu Feb 26, 2009 1:50 am, edited 1 time in total.

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Posted: Thu Feb 26, 2009 2:04 am
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So dull. So dull.

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Posted: Thu Feb 26, 2009 6:41 am
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I am in no way an economist, but it seems to me that it's not uncommon for companies to put their prices up in times like these... Apple comes to mind. When the exchange rate is particularly volatile, they charge as much as they feel the market will bear in the hope of generating enough of a buffer to see them through whatever tough times may be ahead. In a climate like this, everyone needs as much cash as they can get. Lowering prices would only make sense if there was some way that was going to make a whole lot of people who had never contemplated buying a guitar rush out and get one. Better to raise prices and put up with the fact that a certain percentage of your target market won't be buying a guitar from you this year, whether out of protest or just not having enough money to spare.


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Posted: Thu Feb 26, 2009 7:02 am
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As people have said, you have the choice to pay or not. I have a J-Bass I'm happy with (got it about a year ago), but after the price increase, I decided not to upgrade my Strat copy with the Highway One I'd been eyeing up. I'll replace the stock pickups with DiMarzios, and have a fantastic axe for a fraction of the price.

Despite what Fender and Gibson would have you think, electric guitars and basses are just wood, strings, pickups, and electronics. Anything you pay above about $350 for a good electric guitar is just for the name on the headstock.


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Posted: Thu Feb 26, 2009 7:04 am
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Whoa, prices went up?!?!?!?!
:shock:





Can we shut up about this now?

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Posted: Thu Feb 26, 2009 7:22 am
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But because of the last 6 months of last year with the commodity decline the surplus value for a unit produced is now greatly increased because of the increase in sale price and the cost of replacment material for futher units. And with all projections for 12 more months of decline :shock: Also if you go back 12 months to Jan 2008 lumber the one main commodity that Fender may use was at its 5 year low itself before creeping back up a little intill mid year then falling back of with the rest of the commodities market now. I think it is a matter that they just need cash on hand as I have said in the past. Hope they were not in the Bernie Mafdoff fiasco. The list of companys and banks and holdings firms that lost it all there were crazy. One holding firm lost almost 8 billion half there worth and others lost all.

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Last edited by cvilleira on Thu Feb 26, 2009 7:44 am, edited 1 time in total.

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Posted: Thu Feb 26, 2009 7:51 am
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BigJay wrote:
CV....I understand your logic here. In a purely "cash" business, your thought progression is perfectly reasonable and logical. It would be correct in a "cash business". However, there are few, if any "cash" businesses out there. I can almost guarantee you that Fender uses relatively strict "Generally Accepted Accounting Principles", or GAAP accounting.

Usually, under GAAP, inventory is valued at the lesser of cost or current market value. But they arent required to adjust their inventory valuations until its absolutely clear they may not be able to sell it. Thus, your thought of lower current inventory values generating excess profits is correct, except that they would have to declare an offsetting loss on the inventory they paid for last year at higher prices. Convesely, and more likely, they would pass the higher costs through to consumers as higher "Costs of goods sold". Typically, companies account for their inventory on a "first in-first out" basis. Meaning they use their inventory in the order they purchased it and account for that inventory price change in the cost of goods sold. Thus, as older and more expensive inventory is used in production, their profitability per guitar falls unless they raise their prices. Hense the current price increase to maintain profitability ratios. Further, once the average inventory cost falls again, for example as they restock inventory today at lower prices, their profitability per guitar would increase substantially (next year), assuming they dont then lower their prices to consumers.

Bigjay as I added above though the largest commodity that Fender would use is lumber which last Jan. 08 was at its 5 year low and and then went up slightly until midyear then droped of with the rest of the commodities market. Over the last couple years mills have stop log production several times because of the large surplus inventories. Mainly due to construction drop offs.

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