Arc MAP pricing

I have gone thru every site listed as a seller on the Arc home page and many now do not carry the Arc AAA and as far as I can tell, those who do all have the same price of $24.95, just as it is on the Arc home page. TTS has always been my favorite distributor and had carried the Arc AAA for $20 or slightly under for a long time, much longer then before Country Comm (whom I see do not even carry the product anymore) pricing and subsequential comments and threads. Upon emailing TTS, was informed that they had not sold a single Arc LE since going to MAP pricing so doubtful would carry the regular version anymore which also is no longer listed on the site.

I have mixed feelings about this. If it is necessary for Arc's survival then I suppose it is worth it but the free enterprise side of me that looks for the best price vs. service feels burned. Also I wonder how a seller would feel towards Arc regarding future business having now being forced to lose business on an existing Arc product.

I have not investigated whether this pricing structure is true for the LS as well.

Is ARC going to use MAP (Minimum ADVERTISIED price) pricing or are they going to a UMRP (Unilateral Minimum Retial Pricing)?

If it's a MAP pricing system then all that does is controls what the dealer can advertise it for.

UMRP actually sets the minimum price that the dealer may sell if for. This is enforcable in court if the dealer does not comply. ARC reserves the right to terminate them as a dealer if they wish.

UMRP protects mainly the dealers from being undercut but it's also good for customers as well. If a dealer knows he cannot go below a certain price on a flashlight he may be forced to do other things to win the customers business (i.e. Free Shipping)

I belive BOSE was the first ones to come up with this. Apple also does it along with a few other electronics companys.

It is similiar to that. It is called Unilateral Suggested Retail Price. And if you forget everything, dealers can sell the product for whatever price they choose. We do reserve the right to stop selling to any dealer however.

Since Arc is a high-end product, I would love to see dealers compete to provide the best service instead of unloading it like a bag of soybeans.

Granted, this won't fit into every dealers business model but there are dealers who would love to add the latest Arc to your order of flashlights.

If this works, everyone should equally win.

Peter

I am pretty sure that dealers can sell it at any price they want, but they just can't advertise below the MAP.

Peter's comment on Arc's right to stop selling to any dealer pretty much indicates they are forced to sell at MAP. It will be interesting to see how this affects sales. Many people have posted they would buy or buy more at a $20 price point versus $25. I know myself, I will be much more selective. I used to make sure I had a few around to give out as last minute gifts. Now I'll buy on a strictly as needed basis. Perhaps two or three a year instead of six or eight. I think the product has become quite mature. I would never say ho-hum but considering all the other advances other manufacturers have made in the past couple of years, I would say not really revolutionary anymore and it's tough to pay more, not less.

Peter I'm not sure what you meant about the dealers competing on service unless you mean throwing in extra goodies. You yourself said that a dealer's ability to deliver the product in a consistant and timely manner was over stated. If the product fails, it's coming back to you, not them anyway.

Perhaps Peter hopes to hook up with some of the better known higher end gadget dealers that put out some of those glossy catalogues. If so, it would make sense to help protect the pricing (and profit) structure. Certainly the LS series needs better exposure if it is to be economically viable. Sure hope that with all the distractions the LS4 is getting closer to being a reality.

There are always tricks to sell for a lower price, if a dealer wants. E.g. "Free shipping on your entire order if you buy X" is around $5 off on X (if you buy one).

Many years ago, a stereo store quoted me a price on a system that was much less than the sum of the minimum retail prices of the parts; they said they could do that because they'd tell each manufacturer they were discounting the other guys' stuff.

In general, "minimum pricing" is unenforceable by law. The trick usually used (by large companies) is "minimum co-op advertised price" that is, if the store advertises the item at or above that price, the manufacturer will share the cost of the ad. When it's a situation where stores always advertise (unlike the web, since web sites are cheap), that effectively tells stores that they pay a higher price if they sell for too low a price.

Also, as Peter said, a manufacturer can always just stop selling to a store, for any reason or none.

It would be nice to see him hook up with places like Sharper Image or Needless Markup, to get his lights out to sell a lot more (and at higher prices than we pay /ubbthreads/images/graemlins/smile.gif )

Anyone who thinks a US manufacturer can simply stop selling for any reason or none at all is in for a very expensive and painful education program. It doesn't work that way, and hasn't for a very long time.

You have to good reasons to cease selling (contract violations, failure to meet quota, failure to pay bills on time etc), otherwise you may be found to be engaging in what is called a secondary boycott, or other illegal restraint of trade. (In general it is illegal for the supplier to dictate who their customer can and cannot do business with, and is referred to as a secondary boycott, and in general, they are just plain illegal in the USA.

It is illegal, and the attorney fees and damages can make your head spin in very short order.

If you want to refuse to sell because the seller cannot meet your credit terms, that is OK, but if he sends you a cashiers check for the MSRP and you refuse to deliver, look out.

If don't want to sell to him because he is a competitor, LOOK OUT, because that one is slam dunk, and you are the one who is going to get slammed.

You can usually restrict the advertised price, but you cannot restrict the actual selling price in general. That is called restraint of trade. It can also cause you unending trouble with something called Robinson-Patman if you happen to do business with US Government. As the previous poster pointed out, minimum selling price is somewhere between uneforceable, and just plain illegal (in some states it really is illegal, it is a form of price fixing).

Having spent upwards of $500,000 on legal fees in Anti-Trust matters, I may not be an attorney, but I've seen most of this stuff.

And yes, I have had to sell eqipment to people I would rather not have sold to, but the advice I received from one of the best known anti-trust attorneys in California, was that if they were prepared to pay the advertised price on a cash with order basis, I better sell. I could impose ugly payment terms (CWO), but that was about all I could do.

For example if Compaq wants to buy an IBM computer, if Compaq is willing to sign the standard licence agreement, and pay the published price, IBM can either sell, or get crucified. It is a lesson most manufacturers learn very early on.

I support whatever fixed pricing Peter can legally arrange, and I think it can be worked out, based on the success that fixed pricing has had for Lie-Nielsen Toolworks. They make high end hand planes and sell them for about 10x the current Stanley equivalents. Difference is the Lie-Nielsens actually work. Some retailers mark them 5 cents off (249.95 instead of 250.00), but that's about all the discount you'll see. These fixed prices have resulted in the retailers working very hard to present and sell LN products. Over the last 20 years LN has flourished - growing into IMO the most respected name in hand tools. They employ maybe 3 dozen people in Maine and probably don't care to get larger. They refuse to make any compromises in the design and construction of their planes. LN products look great, and work even better, but as a matter of design and engineering, not because they are "designy" or embellished in any way. Sound anything like the Arc business plan?

Lie-Nielsen? Sorry...never heard of them. I do have a Stanley screwdriver though...works great!

Sorry, but I have to disagree with you. A UMRP policy IS enforcible in the courts. When a dealer signs up they sign a contract stating that they WILL adhere to the minimum price set by the manufacture or they can be terminated. Also allot of dealer contracts DO have a clause that the manufacturer can revoke to franchise whenever they want to.

Of course this does not mean that the dealer still cant sell the products, Just means that the dealer cannot buy them directly from the manufacture and be listed as an "authorized" dealer.

How do I know this? I've done it before. My company reps over 11 diffrent high end home theater/audio lines and I have personaly cut-off delaers for selling below the UMRP price. I have also terminated dealers for trans-shipping products to other dealers.

If a product is sold through a distrubuter then its a whole diffrent story. However, if you only sell to dealers "factroy direct", then there are many things ARC can do to protect the line and his loyal dealers.

As long as Arc sticks to their guns, this is a good plan. There can't be any more "sales" only offered by Arc. While it's good for consumers, Dealers really get the stiffy with those. Soon, I'll have a physical store and this will hopefully take care of internet slumps. SOmething else I must add out of fairness to the dealers is that the DEALER COST has been raised as well as the prices you will be seeing them go for. Chris Reeve Knives has a similar system. They are different in that they make FAR LESS numbers of units per alloted ammount of time. COnsumers know what the item costs across the board. Now they just have to search through the dealers to find who has what they want. I've seen it work with my own buying and selling eyes. It DOES work, IT JUST HAS TO BE STABLE!!! One difference is that Chris Reeve Knives is less geared to take personal consumer orders. Even months away, EVERY ITEM on the drawing board is already sold to Delaers. A consumer would have to wait a few months to get a knife. They still have the best Customer Service in the Biz. And I mean THE BEST!!! Arc is nothing short of this. It can be done. The coming of the L4 will be a great boost for them, and if we all play our cards right, someday we will enjoy the tiny and unbelievably bright LS-1000! WHO-HOO!

Yea, Stanley does OK with screwdrivers. Lie-Nielsen leaves that market to them.

Stanley used to make pretty good hand planes. The story of their downfall is one that Arc wants to avoid. Similar to Maglite, Stanley's business model was to sell as much product as possible. They started out with a superior product. As the product matured, Stanley decided to start cutting corners on design and construction to lower the price and keep volume high despite the market shift to power tools (AKA "The Rise of the Machines"). After a few decades the planes were so poorly made that they didn't work right out of the box. It took an experienced hand tool woodworker a couple hours to tune a new Stanley plane to work acceptably. Even then, it takes an aftermarket blade to make them work in many hardwoods. Stanley still sells tens of thousands of hand planes every year. The vast majority of them are bought by woodworker wannabes at the Borg (Home Depot and Lowe's) and gather dust on the shelf after they fail to take even one satisfactory shaving.

I see Maglite of the "Stanley" of the flashlight world, and hope that Arc will become the Lie-Nielsen.