Understanding the SureFire price increase

Thanks Mr. Ted.

You make excellent points, and it is nice to hear some reasoning behind the madness. Doesn't make me any happier, you understand... but it is nice to hear an explanation.

I concur with Mr Ted Bear. I work for a company that is a central distributor for Kohler engines. If you saw the difference between cost & list on some of the products, you wouldn't believe it. But since we are a central distributor, we have to sell to our distributors for a price that allows them to sell to the dealers so they can still make a profit. If we sell to someone off the street, which we discourage, we sell at list price. That puts us makeing a lot of money on the surface, but not in reality. It's to time consumeing for our operation to sell on an indivudial basis. We would rather sell 100 of an item at a discount to a distributor. But we don't cut prices, because then we would be competing with or own dealers. So much for Marketing 101. TX

I've been vocal about this price increase, no doubt about it. Mr. Bear, I thank you for the info you've provided - it makes sense. I still DO NOT like the price increase, and would have felt much better if this msg would have come from Surefire, which it has yet to do.

Perhaps part of the predicament with this "message" from SF is that it may upset distributors even more than they already are since they've been reined in. As many have said, I can not fault SF for a fair price increase, I even expected at least a 10% boost this yr. It does makes sense that the predicament lies amidst the middle of the chain of distribution, where there is more flexibility in pricing and 2 markets to work with (dealers and retail customers).

Hope you're enjoying SHOT - man am I envious!

Despite knowledgeable points, does it still validate a 30 percent price increase? Something much less might have been more acceptable.

I'm curious as to what percentage of Surefire sales are from Brick and Mortar stores as opposed to dealerships. They (brick and mortar) are damn scarce in my area and I live in the greater metropolitan Boston area.

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by geepondy:
Despite knowledgeable points, does it still validate a 30 percent price increase? Something much less might have been more acceptable.

I'm curious as to what percentage of Surefire sales are from Brick and Mortar stores as opposed to dealerships. They (brick and mortar) are damn scarce in my area and I live in the greater metropolitan Boston area.<HR></BLOCKQUOTE>

In one word, NO, and I agree with you about brick and mortar, but unfortunately, that's life. There other thing is this, what about the internet retailers that don't have the traditional kinds of overhead like Joes Fishing?

Lacking from my explanation is the "high" volume dealers that move lots of product, and naturally buy at a lower cost. Both the e-tailer and volume guys can, and do, sell for less. This then begs the question, what is a fair price? How does a manufacture address this problem? A high volume dealer should be able to sell at a lower price; they don't need to get $80-85; they can get by at 75-80 and if they are "high volume, and an e-tailer as well, they might be at 70-75.... now what's wrong with this scenario?

Bottom line is this, there was a real price increase. I would guess 10-12%. List prices are meaning less becuase the manufacture can change the discount. Be thankful that the folks at SF have the foresight to recongnize a problem, and to have taken steps to correct it now, before it puts them out of business 5 years from now

Thanks Ted Bear: I feel a lot better now.

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But how can anyone question the wisdom and benevolence of SureFire - they allow us to buy their lights, do they not ?

And the R+D expenditure costs aplenty, which has to be recouped Somehow.
What is mere money when the most bestest lights in the world are available at prices that are in fact like give-aways, compared to the joy that they bring to one's life ?

It was whispered around SHOT that PK actually pays Surefire for the privilege of working there. And that everyone else is paid in SF123's, and not too many of those either.

Why, Dr. Matthews, the President and Owner of SureFire, travels by mountain bike, not by chauffered stretch EV limousine.

I think I understand the price increase. I'm not especially enamoured of the fact, nonetheless. But if the muse has to be inspired by dollars, so be it.

Sorrowing silently, in a manly kinda way,

lightlover

A couple of thoughts.

One expects to pay a bit more at a brick and mortar establishment -- it's instant gratification after all.

It's unclear to me that people doing low volume be kept on the same footing as those doing high volume.

It might be a bit more prudent to not change the policies at the *same* time as you are raising the prices (if that was the case).

It seems like it would be a good idea for them to respond to the outcry with the reasoning, unless of course the reason is simply because they can.

From a more positive perspective, there is also a simple supply and demand issue. Perhaps current events have caused demand to outstrip their ability to produce, and they want to try to slow demand.

-john

What follows is a summary of a conversation I had with a Distributor for Sure Fire products at the Shot Show 2002 in Las Vegas regarding Sure Fires most recent price increase.

"Yes, they have a real mess on their hands with so many distributors selling direct to the public. And if I were a dealer, I would be mad as hell"

What this distributor was referring to is quite a common problems for all manufactures, and speaks to the relationship that the distributor has with their dealers. Ideally, the distributor buys in larger quantities at a lower price. In turn, they resell and support the needs of the independent dealer, who otherwise would not be able to work with the manufacture directly (too small of a fish)

Here is how the numbers work out. ……

The distributor may receive a discount of something like 50 less 10. The flashlight that has a list price of $100, costs the distributor $50 less an additional 10%, for a net cost of $45.

If the distributor resells the light to the dealer for 20% mark-up, , he would need to sell the light for $54.. 20% of $45 is $9 dollars. The distributor earns his 20% by servicing the dealer (ABC gun store, Joes Hunting and Fishing, or XYZ Hardware). The distributor can "get by" with 20% because they are a warehouse operation versus retail.

The dealer has paid $54 for that $100 "list price" light. But, because the dealer has a brick and mortar operation with employees and rent etc, , the dealer needs to sell the light for $80 - $85 to pay the overhead, and make a little profit. Notice how the "dealer" is only discounting the light 15-20% off "list".

The problem for Surefire (or any other manufacturer) is that some of the distributors now sell direct to the public (cutting out the middle man, as they say). Instead of selling to the dealer for $54, and making $9, why not sell direct to the public for $65/$70 and increase the profit to $21/$26 ??. Hey, at $70 dollars, that's 30% off list, and at $65, that's 35% off "list., which of course is much less that the $80/$85 dollars at Joes Hunting and Fishing.

The problem with this scenario is that Surefire has to have dealers for visibility. They have to have their product in l the sporting goods stores, the gun shops, the tactical supplies stores, "cop shops" etc.

Surefire has had to "tighten the reins" with their distributors… not allowing them to sell below a fair market price that the dealers need to survive. Remember, the dealer is the manufactures meal ticket, not the distributors.

And to make matters worse, how about a legit 10% price increase? So now, instead of pay $65/70 dollars( a couple of weeks ago) we are now paying $85/90 or what seems to be a 25 to 30% price increase.

One last thing… I didn't write all to this to defend the good folks at Surefire. I, like everyone else, would much rather pay $65 and not $90 for a flashlight that is already twice the price of the competition

I appreciate the explanation given by Ted Bear and others, but I wonder about two additional points:

No one has mentioned the possible connection between the price increases and the significant amount of R&D and retooling Surefire has had to finance in order to come up with all the new goodies that we are collectively salivating over.

In many other industries that cost is not passed along to the consumer in such a blatant and inconsiderate manner, if at all. A quick look at the audio/video component industry for example, will show a consistant increase in quality and innovative features concurrent with falling prices. This applies to both online and "bricks and mortar" sales.

Also, IMO Surefire has made a serious customer relations error by suddenly imposing
the entire increase at one time, rather than through smaller increments over two or three years, along with explanatory announcements.

It may not be their intention to show contempt for their online customers, but that is surely how it appears.

Brightnorm

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Brightnorm. I agree with your analogy to A/V. Companys are always coming out with the latest and greatest new products but always put the cost on the newest not across the board. Why should the cost of, say, the 6P increase so much? Same old tooling. Does this mean that the cost to produce the Beast and the other goodies are so costly that they have to recoup from other lines. If so, than the market is not yet ready for that product.
Of course your opinion may differ from mine. Just my $0.02.

I believe the culprit is SureFire's unchallenged position at the top of incandescent flashlight industry.

Until competition come out with a product comparable if not better than SureFire's at a lesser price.. SureFire can put a price to their product anyway they like it and looks like they're just doing that to make the most profit while they're on top.

- verge -

This is the typical price structuring of manufacturers to distributors to retailer to end users. This is the same in all industries. Not all manufactures use this distributor system (which in flashlights was developed by Mag - and in the case of the arms business is the standard) but rather sell direct to retailers cutting out most distributors and allowing price lower prices. All those in Europe can attest to this - this why their pricing is higher for US products - they are accounting for duties, taxes, distributor expenses etc. The reality is that a Suggested Retail price is listed to maintain a price standard - this MSRP is based on the complete structure as listed above or necessary. The problem for the SureFire market is that it is dominated by distributors. Having been in a family retail business, I can tell you this.

The fact is that Mag dominates the incandescent market, and Tony Maglica IS driving in the Limo and more.