A Festool dealer told me that he can’t discount any Festool, because the company mandates what he must sell it for.Is that a violation of the law?what happened to competition, i don’t think FESTOOL is the only one. I guess we are taking this on the chin. Two peanuts were walking down the street one was a salted.
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Here's the law:
"While the United States also prohibits resell price maintenance, its law in this regard has been modified judicially by the so-called U.S. Colgate Doctrine,28 which provides that a company may:
(i) do business with whom it pleases and may unilaterally discontinue doing business with any person;
(ii) state the terms and conditions on which it will deal; and
(iii) announce in advance that it will refuse or cease to deal with or terminate distributors who do not comply, provided it does not use coercion to force acceptance of these restraints or extract a commitment to abide by them.
In essence, therefore, the Colgate Doctrine states that resale price maintenance does not occur where a resale price condition is a term of trade imposed unilaterally by the supplier without any attempt to enforce the condition apart from ceasing to supply non-compliant customers."
SUMMARY: As long as Festool does not bargain with its distributors to enforce the price, but instead just unilaterally makes it a condition of doing business, it is perfectly legal. As for competition, there is still plenty of competition from other manufacturers of similar tools who are pricing against Festool.
Edited 1/15/2007 3:50 pm ET by Samson
Samson,
I had wondered about the US position on this, thanks for the clear explanation.
Dave
It is an interesting problem. Consumers obviously don't like "fair-trade" pricing, as it discourages competition.On the flip side, the predatory "big box" pricing strategy (e.g. Walmart squeezing its suppliers to sell at little or no margin) has had the effect of corrupting brands and driving down quality. I think Festool- and some other brands that refuse to be sold at deep discount suppliers- are trying to break out of this trap. If they succeed, then consumers will have something more than B&D-type quality to choose from. If they set their prices too high, other competitors may move into the space between, say Festool and Delta, offering better than big box quality/warranty at less than a Festool price. That may actually be the sweet spot of the market... and could result in more consunmer choice (different levels of quality at different prices),Glaucon
If you don't think too good, then don't think too much...
Yep,
I dont see the problem with what they are doing or their price. Consumers always have the right not to buy, particularloy in this market where there are many alternaives. The price of festool cf their compoetitors seems to me about the same ration as that of LN vs recrd for planes, and, as you point out, there are others moving into the gap (and beyound). its all about making a market niche.
In Australia we have an ideological drive for some concept called competition policy. federal government money to the states was tied to how hard they implemented this. Many of us had our eyes opend to this idiocy when it destryoed a significant part of our dairy industry. lower prices at the farm gate, many fewer farms, and higher prices to consumers from the new oligopoly. This is the same model as your HD and our Bunnings.
Fortuneately we now have a 'social impact test' that allows some consideration of wider issues. dairy industry is still dead and those Kiwis are killing us in the export markets.
Doesn't festool have a cheaper cousin? Certainly there is the felder / hammer relationship that allws customers some choice of price point.
Dave
Thanks for the information,they do make a quality product. I guess it just rubbbbbbbbs me the wrong way, i do like to haggle, its the American way .
See if they'll accept more than they're asking for woodenhead. That would allow you fun of haggling still, just in reverse.
If that fails, you could try secret, underhand bribery and corruption of the salesperson for an extra frisson of excitement.
Hey, it works for the arms industry selling to corrupt, nepotistic foreign governments. It could work for you too, ha, ha--- ha, ha, ha. Slainte..Richard Jones Furniture
Any bribery i do is right up front, its a very very shiney red apply. It worked great in Miss. Finneys class.When you money runs out you can rent some of mine.
I own only 2 festool products, a dust collector and a detail sander that i bought for the specifi purpose of sanding inside the house.
They seemed to have a bit of wiggle room to negotiate the amount of sand paper they gave with the product and a couple of other extra accessories. Not worth much but better than nothing.
Dave
What rubbs me the wrong way is when people say things like haggling " it's the American way" . Having run my own business, and was fair in all my pricing. I hated when people tried to haggle me down. I have to earn a living just like you and everyone else. Why should I take a cut on what I earn to please someone else. When we buy a product or a service, we are paying for someone elses knowledge, idea, hard work and especially skill. We have to pay for skills that we don't have. And those things cost alot of money to obtain, so they shouldn't come cheaply.Just my two cents, I hope I don't ruffle any feathers.Kaleo
http://www.kalafinefurniture.blogspot.com
I own a business, are you telling me that when you purchase a car you pay sticker price. I give local merchants the opportunity to match the lowest price that i find.If they can i buy if not i move on when it comes to money my family comes first. That is my way of haggling i also kick the tires.
There is a difference between shopping around for the best price and haggling someone down. As for cars, I never buy new.You have to remember that the guy your haggling is also trying to do what is best for his family. If the price is fair and your not being takken advantage of, then that should be enough. We are all trying to make a living and take care of ourselves and are families.Kaleo
http://www.kalafinefurniture.blogspot.com
<<Why should I take a cut on what I earn to please someone else. When we buy a product or a service, we are paying for someone elses knowledge, idea, hard work and especially skill. We have to pay for skills that we don't have.>>Exactly! Do customers think you decide on a price for your product, and then add 20% just so you can really stick it to them? My approach to pricing anything is to set it at what you need to make the profit you require, and let the customer take it or leave it. If I find I'm not selling anything, then I need to rethink either my pricing, what I'm selling or the quality of my work.Many people need to feel they've gotten a "deal". It's natural, but it's funny what people will haggle over. Have you ever heard someone say to a waiter, "That's a good looking steak, but it's not worth $34.00. I'll give you $19.95 for it"?Mike
Lots of companies have this policy.
Example: You'll never find a Rolex "on sale"or "discounted" by an authorized Rolex seller.
Borscheim's Jewlry, her in Omah (owned by some local guy, Warren Buffet) lost it's right to sell Rolex's because they wanted to discount them.
You can't even take advantage of a sale or discount coupons, etc. on festool products at places like Woodcraft. They routinely have sales and promotions with small print that reads: "Excluding all festool products"
Lee
Your post reminds me of the Stihl chainsaw ads. "You can't buy this tool at Home Depot." Stihl, and I suspect Festool, want to uphold the quality of service for thier products.
Frosty
Once the tool is purchased by the dealer how does what he sells it for affect the quality and or service of Festool. I think it will change when an other tool company enters the market with the quality of a Festool.
Once the tool is purchased by the dealer how does what he sells it for affect the quality and or service of Festool?
First, it affects the image of Festool in the marketplace. Further, to the extent Festool relies on dealers to support the product in various ways - advertising, demonstrations, making the tools available in brick-and-mortar stores, etc., Festool may be concerned about so-called "free-riding." Free riding is when one distributor spends resources promoting a product, but the customer then makes the purchase from a discounter who does not provide such promotional efforts - like going to the store and taking half hour of the clerk's time teaching you about the product and then going home and buying from an internet only dealer who has no overhead and cut 15% off the price.
Moreover, the dealer can sell a particular tool for whatever he likes, he just won't get any more stock from Festool.
Edited 1/16/2007 9:54 am ET by Samson
Personally I am in favor of Mfg's mandating a set retale price and there should also be a set wholesale price to venders. That sure would make shopping a lot less complicated. It would give the small businesses a chance for survival. Ever notice how much better the service is at a small family run business ? The Big Box stores might have to buck up and provide some service too.
Work Safe, Count to 10 when your done for the day !!
Bruce S.
Welcome to capitalism.
At this time i don't see any competition to Festool, when that happens their policy might be amended.
Not sure what FWW policy is for mentioning another magazine and its web site on their site. But Wood Magazine has a story on one of their editors that visited Germany and the Festool and Fein factories. What he found is that these tools are built to last almost forever, have tolerances that rival a Swiss watch, and are made with materials with very exacting standards. These are the tools that Euro pros use every day in their businesses, and they are fanatical about quality.
This is the reason tools like Festool cost what they do. I only have one (the guided circular saw system) but there are cheaper alternatives. And that is what you get when cost is the main focus of your buying decisions-cheap. Like a lot of us amateur woodbutchers, we have gone through our share of poor quality tools, only to later find out that there better quality alternatives.
Not trying to pushing you into a Festool; I always consider both sides of an argument.
I think the comparison to Swiss watch precision is rhetorical -- it would be very difficult to substantiate a claim like that. It is a very effective comparison for an audience that admires and respects Swiss watchmaking efficiency, but I think that it is the product of Americans finally getting a glimpse into Teutonic work environments more than anything else!However, what is true is that Festools are built by a German workforce that is very highly trained and paid compared to the outsourced workforces used by many power tool manufacturers. Having lived in Austria I've experienced what its like to use lots of products made in Austria, Germany, Switzerland, by workers who have training and skill and a lifelong commitment to the company they work for, and I can say, very subjectively, that it makes a difference. Whether any of these things were built to Swiss watch tolerances, I cannot objectively say, but I think that that comparison was probably the expression of an American's astonishment with the high quality produced by such a well-paid, skilled, trained, and content workforce. Not to mention the engineering/design/research aspects of the process --- all of which are very much nurtured in the German educational system. Another thing: Germans are accustomed to paying more for products but consuming less. You won't find many stores resembling "Big Boxes" in Germany, and you won't find a basement full of junk in most Germans' homes, either. (Although this is unfortunately changing -- I guess some will welcome the change, others will dread it.)As for Fein, I own a Fein vac, and it is wonderful, but I thought it wasn't made in Germany --- I'll have to check the label.I love my VW, too, but note that it was made in Mexico! (Remember the Adobecar commercial on Saturday Night Live: "German engineering and Mexican Know-How combined [...]"!)
-Andy
Edited 1/17/2007 10:41 am ET by VTAndy
I love my Fein vacs too, I think they are of Italian origin.------------------------------------
The ultimate result of shielding men from the effects of folly is to fill the world with fools. -- Herbert Spencer (1891)
German engineering and Italian know-how! I guess the company is in Germany but perhaps they have a factory in Italy? According to the Wood Mag article, Fein is located in Stuttgart.I love how quiet they are. I have mine hooked up to a LV cyclone lid to pick up the big chunks and only send the dust to the vac. The filter bags are very expensive -- found any alternatives???I'm also wondering if any adapters are need to hook a Fein up to a Festool saw? Anyone know?
-Andy
Edited 1/17/2007 11:08 am ET by VTAndy
Are you using the cloth bag or the paper ones? I use the cloth bags and they seem to last forever, I back blow it with air out in the alley when I empty the vacs.
I don't know if it fits the Festool or not. It fit's my Metabos like a glove. They do offer a rubber adapter.------------------------------------
The ultimate result of shielding men from the effects of folly is to fill the world with fools. -- Herbert Spencer (1891)
Well I think at least part of the reason for so few big box stores is they have less space for them. In a city that has 400 year old buildings it is hard to convince them to bulldoze a block or two so you can build a new Ikea. Where I am at they just bulldozed a building that was less then 10 years old (I think it was around 5) to put in Ikea (a Europe based store)
As for not having much stuff stashed in the house. The house My great aunt lived in with her Daughter, Her son in law and their two Kids was so small their was no space to put anything. The shed/barn out back had things in it that looked to have been put their in the 1800's however. So I think it is a matter of space. 5 people in a two story house that may have been 1800 sq ft (but I doubt it was that big) with no basement of any size is harder to stuff things into then 3 people in 2400 sq ft, and when you add in a full size basement and 2 garages 24'x25' it gives you a lot of room to put things.
Doug Meyer
PS if you want to see something funny on the big box idea, go do JibJab.com and look in the site for the video on BigBoxMart. It is a funny take on Americans and Wallmart.
Edited 1/17/2007 11:41 am ET by DougMeyer
To All,
Enjoy wood,
Paul
Doug,
I understand what you're saying but I think the larger (and increasing) size of American dwellings is a result of our consumption patterns, not the other way around. But perhaps it is chicken/egg.As for whether space is the primary reason for the relatively low number of big boxes in Germany, it is certainly one factor among many. Other factors include Germans' different attitude toward using credit cards, as well as reluctance to drive for 20 minutes to "go shopping" (varous reasons for that as well -- such as, saving a few Euros at a discount store hardly makes up for using very costly fuel to get there). Large-scale corporate building also has costs associated with it (in some provinces and municipalities, requirements to build a park or public sculpture). And then there are differences in labor relations with retail employees, who tend to be trained and unionized, which would be an unattractive proposition to many big boxes. There are some very restrictive (but increasingly loosening) limits on operating hours (in many if not most places, no Sunday business at all, for instance).
It is also really obvious to anyone who has lived in German and in the U.S. that "consumption" plays a different role in people's daily life. And its really obvious that American companies treat their laborers very differently, with some exceptions of course. There are some really astonishingly different attitudes about taxes/money/credit/saving/investing that have been studied -- no room to go into detail here but suffice it to say that many Americans would be shocked at the amount of money Germans keep in savings accounts as opposed to investing, and comparing the amount of personal debt people carry is also surprising. I bet that there would be some really radical differences in the demographics of typical Festool customers in the U.S. and Germany, most notably in who used a credit card to buy the product vs. a direct debit from a bank account. All this is to say: when you buy a Festool, there is more to the high price than just extra money for the company. Clearly, their labor costs more than the out-sourced labor used by many other power tool producers. It still doesn't make their product as precise as a Swiss watch, though there might be some similarities! I'm just thankful that when I buy a German product in the U.S., I don't pay their value-added-tax.
-Andy
...the price I usually charge is $450.00; for you it is $500.00, so that you can enjoy haggling the American way, and I can still make the money that I need to make in order to keep producing the product; or we can just say it is $450.00 for everyone and no one has to play any games. This is one way to look at it. Another way follows, based on my past experience: I produced lovely chess boards for a crafts club I used to belong to. I priced them at a very fair, low price, and sold very few. The following year I raised the price significantly and sold many. The perception was that the lower priced article was of lesser quality and the higher priced article was worth every penny spent. Human nature. JL
Sony does the same, I believe.
So what you do is you get the guy to throw in stuff as part of the bargaining. Sony sales guys do that all that time, especially since their products are not as competitive as they once were.
Perhaps I can add a little different perspective to this discussion. I have worked as a manufacturers representative for more years than I would like to say and can explain the viewpoint of the manufacturer in wanting to control the retail prices of their products.
Store A buys a Festool drill for $50.00 and sells it for $100.00. They make an investment in the product by buying 50 drills and putting them into their inventory. They are good, loyal customers who provide Festool with alot of business. Store B wants to buy and resell Festool; they only buy 2 drills at a time but want to sell them for $75.00. Now Store A goes ballistic because they can no longer make the profit they deserve and need because they stock the product, service it, etc. And then they tell Festool to go scr. because they can no longer make a profit on the product. So in a nutshell that is why a quality manufacturer wants to control the retail price by controlling who they will sell to. PMM
Hmm. But thats what makes the market go round. If Store B figures he can sell a lot more tools at $75 than at $100, the NEXT time he orders, he asks for 60 drills, which he promptly sells and then he orders 75 drills.
Meanwhile, Store A starts losing business because they prefer a high class of customer, or at least one that needs handholding and service. He may 'deserve' a particular profit in his mind, but, in fact, the manufacturer is selling many more drills at $50 on account of Store Bs entrepreneurship in finding the point at which the market clears. Ity is the retailer who knows that price point, not a beancounter in Germany.
Eventually, Store B asks for a $45 price due to a volume break so he can sell them at $65. The manfuacturer does some math and figures out that he can make even more money selling more drills at $45. Who wins? The consumer, the manfuacturer and Store B. Who loses? Store A which 'deserves' a profit.
Price maintenance of this sort is a typically European concept because it is fair for everybody, except the store, consumers, and manufacturers.
In France (I'm pretty sure - I travel a lot and it kind of blurs) retailers are only allowed to have 'sales' once a year during a particular time, and thats for the same reason as price maintenance. Ask yourself a question - whose economy performs better?
Price maintenance is only viable for monopolies or very strong brands. Festool makes good gear, but they won't grow much if they continue charging $300 for a multitool like the one I bought last week. I can afford it, most people can't. If Festool sells a lot, the design will be knocked off and you'll be able to buy the knock offs for $60 at Home Depot.
Imagine the horror of Williams & Hussey. They make a fantastic planer moulder. Same design, more or less, for 30 years. For about a year you can buy a Shop Fox clone for for about 1/3 the delivered cost of their unit. But, W&H are holding price.
Is that fair? Since when is capitalism about fairness? Its about optimization of resources.
And on the other end of this mess from Fesstool you have Wallmart. They demand a lower price even if this means shipping the work someplace with cheaper labor or if you have to make the item with cheaper parts or lower quality control. They don't care they just want it cheep.
And if making it cheep means that your items becomes junk and no one will buy it anymore well what does Wallmart care? They may have to sell some for no profit but they don't own the company and they did not invest in the plant and tool so when you go out of business because no one will buy your great tool that is now a piece of junk to meat wallmarts price point. Well that is your problem. Wallmart will just bring in the next company and milk them until they go under.
That is capitalism. At least until someone decides that Wallmart is to big and the government goes after them or until they implode like KMart did. Remember in the 70's a lot of people thought Kmart was going to put every retailer out of business and look were it got them.
I can't fault a company for keeping it's items at the price it wants so it can control and keep it's quality at a level it wants
Doug Meyer
Fair enough, though the Walmart phenomenon is also one reason why a lot of lower income people have stuff they otherwise wouldn't have. If people want quality, they can buy else where.
I'm not saying Festool shouldn't have a right to do what it wants with pricing. I'm sure all retailers would like no price competition because that way they could provide the level of service and pricing of, say, Italy, where you go to an underwear store to ask if you can buy a particular style of underwear at a hugely inflated price and they more or less decide whether or not they want to sell it to you.
Good for the retailer, not so much for the consumer. I'm not convinced its good for the manufacturer, though, referring to my W&H comment.
If the gov't were to break up Walmrt, there'd be blood in the streets: a lot of people couldn't live without Walmart pricing. Its a shame, but that's the way it is. Jobs aren't moving to China, etc., because of Walmart alone. How many woodworking machines are made in the US (or Canada) these days? Could most folk on this site afford their own planer if they had to buy General, ., etc?
Same story here (The Netherlands), however my local tools supplier has an annual discount day on all product. For the Festool he puts on the bill; full list price - gift vouchers (that don't exist) = discount. An other option for the seller would be to give you extra's for free, e.g. the needed accessories that Festool doesn't supply as standard.
The response posted by the first reply is right on. Interestingly though here in Texas (plano or Louisville) there is a high end boutique that sell expensive purses ($1,000). They were selling them and other designer label stuff at reduced prices. The manufacturer has tried to drop them as a seller. They have taken the case to court and are fighting those provisions that get around the fair pricing laws. That was about 5 months ago and I don't know were it is today.
Pardon my spelling,
Mike
Make sure that your next project is beyond your skill and requires tools you don't have. You won't regret it.
I would be interested to see how that turns out. I know that GM caused an uproar with Saturn when it first came out as it had a no haggle list price that everyone had to sell the car for. The other dealers were up in arms. So it will be interesting to see if they can or can not force a price. I would say that after I sell you something you are free to do with it what you like even to the point of giving it away. That being that I also think that if you do not sell it for what I think it should sell for I should not have to sell you anything either. I mean we can pick and choose who we do business with, but then again this may be to logical to be the law.
Doug Meyer
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