Originally Posted by
dneal
They stay in business because people don’t pay attention to pricing. They also aren’t making a living selling a bunch of M1000s (and that goes for the European dealers too).
Add the 21% VAT to Appelboom’s pricing, and you’ll see what Europeans pay for that pen. You aren’t paying VAT, and you’re usually getting through customs without paying import or sales tax. Most States require you to report and pay tax on online purchases, and most people don’t do it. So technically, your pricing isn’t accurate.
Why would I add 21% VAT? Im not paying it in North America. Im reporting net cost to me. Goods less than $800 are exempt from import duties. So my pricing is accurate. At best, sales tax is about 10%, so add $40 to CultPens $400 price and you arrive at $440 which is half that of American retailers.
How is it justified? What do you mean by “justified”? People can ask what they want to ask, and people can pay what they want to pay. Most pricing is based off of MSRP. A lot of brands protect their pricing, and drop dealers that advertise or sell at too big of a discount.
Everyone knows MSRP is a BS number that people attach to play the "sale price" game. I agree with you that some brands are protective, but there's easily ways around that, which are out of the scope of this discussion at this time.
An M1000 is a luxury item. People who can afford them usually have enough money that the pricing doesn’t matter that much. It costs what it costs. If that markup bothers you, stay away from jewelry. Although the market is much more competitive now, when I sold jewelry it was marked up 300% or more over cost. Ex: Lab created emerald or ruby ring set in 10k with two .005ct diamonds. Price on tag: $199. Sale price: $99. Cost: $15
This is a silly argument. I am sure people care if they pay double the cost of a luxury good than someone else. I actually wear luxury watches too (Omegas, Tudors, Rolex, IWC thus far) and I dont pay the stupid absurd prices being charged for a Rolex in the secondary market, but do pay the discounted rates at grey market dealers. The same principle applies. Why would someone pay $8000 for an Omega Seamaster Deep Ocean when they can get it at Jomashop for $5000? Also we are not comparing manufacturr price like the example you gave since the consumer doesn't have direct access to a manufacturer, but rather to a retailer.
Lastly is gross profit vs net profit. A lot of people fixate on gross profit, and think it’s exorbitant. Business have overhead. Rent, utilities, labor, taxes, etc... Net profit has to be, well, profitable; or it’s not worth the bother.
I agree that there are a lot of expenses to be paid, but this is where the european retailers also excel. Their shops are small and their inventories are warehoused so they dont have a lot of overhead in terms of rent, taxes, payroll, etc. Take a look again at Appelboom. His shop is TINY but he moves a lot of inventory and runs an operation with less than 5 people. I think its just him and one other person.
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