Korg Forums Forum Index Korg Forums
A forum for Korg product users and musicians around the world.
Moderated Independently.
Owned by Irish Acts Recording Studio & hosted by KORG USA
 
 FAQFAQ   SearchSearch   MemberlistMemberlist   UsergroupsUsergroups   RegisterRegister 
 ProfileProfile   Log in to check your private messagesLog in to check your private messages   Log inLog in 

Competition & Markets Authority Investigation
Goto page Previous  1, 2
 
Post new topic   Reply to topic    Korg Forums Forum Index -> Latest News
View previous topic :: View next topic  
Author Message
dfahrner
Platinum Member


Joined: 21 Jun 2008
Posts: 523
Location: Terrebonne, OR

PostPosted: Thu May 31, 2018 4:18 pm    Post subject: Reply with quote

...and where did that Indonesian site get their information about Yamaha's parts cost for the Genos? And aside from that, a quick internet search suggests that for low-volume consumer electronic products, the final retail price is many times the parts cost (at least 5x, and often 10x or more)...RE any specific product, there are too many unknowns here (company size and reputation, labor costs, overhead costs for manufacturing, engineering development and support, regulatory approvals, etc.) to make an estimate of a manufacturer's profit from parts cost (or retail price, either)...online estimates of net profit on consumer electronic products is maybe 10% of final sales price, plus or minus a lot...

Since all of this is just our uninformed opinions and guesstimates anyway, or unsubstantiated Internet rumors, if anyone has any real data, please chime in...I doubt that there is anything fishy about the Genos retail price (or Kronos and Montage prices, either)...high-end, good-sounding keyboard equipment has always been relatively expensive...

df
Back to top
View user's profile Send private message
GregC
Platinum Member


Joined: 15 May 2002
Posts: 6951
Location: Discovery Bay (San Francisco Bay Area)

PostPosted: Thu May 31, 2018 9:45 pm    Post subject: Reply with quote

dfahrner wrote:
...and where did that Indonesian site get their information about Yamaha's parts cost for the Genos? And aside from that, a quick internet search suggests that for low-volume consumer electronic products, the final retail price is many times the parts cost (at least 5x, and often 10x or more)...RE any specific product, there are too many unknowns here (company size and reputation, labor costs, overhead costs for manufacturing, engineering development and support, regulatory approvals, etc.) to make an estimate of a manufacturer's profit from parts cost (or retail price, either)...online estimates of net profit on consumer electronic products is maybe 10% of final sales price, plus or minus a lot...

Since all of this is just our uninformed opinions and guesstimates anyway, or unsubstantiated Internet rumors, if anyone has any real data, please chime in...I doubt that there is anything fishy about the Genos retail price (or Kronos and Montage prices, either)...high-end, good-sounding keyboard equipment has always been relatively expensive...

df


Bigger picture at play here.

I see the inference. Keyboards like Genos or even Kronos are over priced at retail.

this is where one needs to get the FY financial statements, understand them and play with some #'s.

And cos do not run financials by a product or even a product line. There is a budget associated with an expensive product or a product line.

The following is hypothetical. Not actual.

Korg or a Yamaha roughly average a 20-30% gross profit margin on
the sale of a Genos or Kronos. To run thru it, a Kronos sells for $3000.
Retailer enjoys his 15%. Retailer pays Korg the invoice cost or $2550

Korgs fixed cost{Kronos parts] and a portion of overhead/G&A is $1950

Korg earns $600 on each K sale before tax. Korg also has to establish reserves for ' what if ' problems looking forward 10 years. Reserves are tricky business.
They shield income. But its proper accounting for the future..

Now we could argue that Kronos is overpriced today at $3000. A drop in MSRP
would reduce the profit $ of the retailer and of Korg.

That sounds like a bad idea but sometimes its warranted to prevent a larger problem- of very low sales due to 'what if ' factors in the marketplace.

FYI, I have worked for electronics mfg.'s in the past. I am certain that most
design and profit plan in advance. A product mistake can cause serious problems.
_________________
Kronos 88. nanoPAD2. Roland FA-07, MBP, UR44
Achieve your musical dreams Smile
https://soundcloud.com/user-898236994
Back to top
View user's profile Send private message Send e-mail
Devnor
Full Member


Joined: 30 Jan 2011
Posts: 158

PostPosted: Fri Jun 01, 2018 1:33 pm    Post subject: Reply with quote

It's foolish to take the lemonade stand approach to the actual cost of a product. There are so many costs built into these things that have nothing to do with the parts & pieces. Taxes, added costs due to increased regulations, unique electrical approvals, support, documentation, warranty costs, loss of product, distribution, warehousing, insurance, staff.

The policy is there to protect the market. If retailers raced to the bottom, there would be nothing in stock, no return policy, no demos for you try out. You can't stay in retail business very long making 10%.
Back to top
View user's profile Send private message
GregC
Platinum Member


Joined: 15 May 2002
Posts: 6951
Location: Discovery Bay (San Francisco Bay Area)

PostPosted: Fri Jun 01, 2018 1:48 pm    Post subject: Reply with quote

Devnor wrote:
It's foolish to take the lemonade stand approach to the actual cost of a product. There are so many costs built into these things that have nothing to do with the parts & pieces. Taxes, added costs due to increased regulations, unique electrical approvals, support, documentation, warranty costs, loss of product, distribution, warehousing, insurance, staff.



thats a good list. Most of that falls into G & A, general and administrative
_________________
Kronos 88. nanoPAD2. Roland FA-07, MBP, UR44
Achieve your musical dreams Smile
https://soundcloud.com/user-898236994
Back to top
View user's profile Send private message Send e-mail
burningbusch
Approved Merchant
Approved Merchant


Joined: 30 Jan 2005
Posts: 1056
Location: Seattle

PostPosted: Fri Jun 01, 2018 4:31 pm    Post subject: Reply with quote

GregC wrote:



The following is hypothetical. Not actual.

Korg or a Yamaha roughly average a 20-30% gross profit margin on
the sale of a Genos or Kronos. To run thru it, a Kronos sells for $3000.
Retailer enjoys his 15%. Retailer pays Korg the invoice cost or $2550

Korgs fixed cost{Kronos parts] and a portion of overhead/G&A is $1950

Korg earns $600 on each K sale before tax. Korg also has to establish reserves for ' what if ' problems looking forward 10 years. Reserves are tricky business.
They shield income. But its proper accounting for the future..

Now we could argue that Kronos is overpriced today at $3000. A drop in MSRP
would reduce the profit $ of the retailer and of Korg.

That sounds like a bad idea but sometimes its warranted to prevent a larger problem- of very low sales due to 'what if ' factors in the marketplace.

FYI, I have worked for electronics mfg.'s in the past. I am certain that most
design and profit plan in advance. A product mistake can cause serious problems.


I know this is hypothetical, but I think you're way underestimating the retailer percentage. More like 40-45%. Remember, even with online software retailing/distribution (think Apple, etc.) it's 30%/70% and that model has far less costs for the retailer.

Busch.
_________________
Kronos 73, Minilogue, VL-1, V-Synth, B3 w/122, (3) Rhodes, Clavinet D6, 200a, AvantGrand, Minimoog Model D, Studio Electronics Omega 8, Hammond SK-1, Protools HD, Mac Pro, VSL, LASS, Sample Modeling, East West, Ivory, Komplete 8, Spectrasonics, etc.
http://www.purgatorycreek.com
Back to top
View user's profile Send private message
nitecrawler
Platinum Member


Joined: 22 Mar 2007
Posts: 743
Location: from a mile high to the the AZ desert

PostPosted: Fri Jun 01, 2018 5:59 pm    Post subject: Reply with quote

burningbusch wrote:
GregC wrote:



The following is hypothetical. Not actual.

Korg or a Yamaha roughly average a 20-30% gross profit margin on
the sale of a Genos or Kronos. To run thru it, a Kronos sells for $3000.
Retailer enjoys his 15%. Retailer pays Korg the invoice cost or $2550

Korgs fixed cost{Kronos parts] and a portion of overhead/G&A is $1950

Korg earns $600 on each K sale before tax. Korg also has to establish reserves for ' what if ' problems looking forward 10 years. Reserves are tricky business.
They shield income. But its proper accounting for the future..

Now we could argue that Kronos is overpriced today at $3000. A drop in MSRP
would reduce the profit $ of the retailer and of Korg.

That sounds like a bad idea but sometimes its warranted to prevent a larger problem- of very low sales due to 'what if ' factors in the marketplace.

FYI, I have worked for electronics mfg.'s in the past. I am certain that most
design and profit plan in advance. A product mistake can cause serious problems.


I know this is hypothetical, but I think you're way underestimating the retailer percentage. More like 40-45%. Remember, even with online software retailing/distribution (think Apple, etc.) it's 30%/70% and that model has far less costs for the retailer.

Busch.


+1
_________________
http://www.soundclick.com/bands/default.cfm?bandID=807494

PA3Xle, Oasys 76, Trinity, Wavestation EX, Karma, O1W/FD(given away), Mini-Moog, Roland A90ex, EMU Audity 2000, Oberheim Drummer, Strummer and Cyclone, Motion Sound KBR 3D amp, Presonus and Reaper DAW W/Tannoy Reveal 501A powered monitors
Back to top
View user's profile Send private message
GregC
Platinum Member


Joined: 15 May 2002
Posts: 6951
Location: Discovery Bay (San Francisco Bay Area)

PostPosted: Fri Jun 01, 2018 6:39 pm    Post subject: Reply with quote

burningbusch wrote:
GregC wrote:



The following is hypothetical. Not actual.

Korg or a Yamaha roughly average a 20-30% gross profit margin on
the sale of a Genos or Kronos. To run thru it, a Kronos sells for $3000.
Retailer enjoys his 15%. Retailer pays Korg the invoice cost or $2550

Korgs fixed cost{Kronos parts] and a portion of overhead/G&A is $1950

Korg earns $600 on each K sale before tax. Korg also has to establish reserves for ' what if ' problems looking forward 10 years. Reserves are tricky business.
They shield income. But its proper accounting for the future..

Now we could argue that Kronos is overpriced today at $3000. A drop in MSRP
would reduce the profit $ of the retailer and of Korg.

That sounds like a bad idea but sometimes its warranted to prevent a larger problem- of very low sales due to 'what if ' factors in the marketplace.

FYI, I have worked for electronics mfg.'s in the past. I am certain that most
design and profit plan in advance. A product mistake can cause serious problems.


I know this is hypothetical, but I think you're way underestimating the retailer percentage. More like 40-45%. Remember, even with online software retailing/distribution (think Apple, etc.) it's 30%/70% and that model has far less costs for the retailer.

Busch.


My context is a retailer of electronic instruments, guitars, amps, keys, and so on

When I bought my Kronos + 7 years ago from a small independent dealer in the Midwest, I paid dealer cost + 15%.

The dealer cost per the invoice he showed me was $2600.

I paid $2990. Dealer also paid for freight/shipping.

This was some time ago(2011), so I am not current on the #'s.
if I bought a K2 today.

I would imagine a Sweetwater has higher gross profit margins on a Kronos. Higher than 15% but I don't have the data to make a fair estimate.
_________________
Kronos 88. nanoPAD2. Roland FA-07, MBP, UR44
Achieve your musical dreams Smile
https://soundcloud.com/user-898236994
Back to top
View user's profile Send private message Send e-mail
dfahrner
Platinum Member


Joined: 21 Jun 2008
Posts: 523
Location: Terrebonne, OR

PostPosted: Fri Jun 01, 2018 7:14 pm    Post subject: Reply with quote

...a lot of hypotheticals and speculation here, hmmm...but as far as Yamaha is concerned, the Genos is overpriced if they can't sell enough of them to get at least the minimum return-on-investment that they need (however that is determined)...if they're not getting that ROI, Yamaha will at some point either discontinue the product, lower the price to sell more of them, or use the technology in a more affordable product (as Korg did with Oasys)...to us potential customers, the Genos is overpriced if it's too expensive to justify what it can do for us, and that's for each of us to decide...at this point, it's overpriced to me, and that's why I haven't bought one...I'll stop talking now...

df
Back to top
View user's profile Send private message
burningbusch
Approved Merchant
Approved Merchant


Joined: 30 Jan 2005
Posts: 1056
Location: Seattle

PostPosted: Fri Jun 01, 2018 9:32 pm    Post subject: Reply with quote

GregC wrote:
burningbusch wrote:
GregC wrote:



The following is hypothetical. Not actual.

Korg or a Yamaha roughly average a 20-30% gross profit margin on
the sale of a Genos or Kronos. To run thru it, a Kronos sells for $3000.
Retailer enjoys his 15%. Retailer pays Korg the invoice cost or $2550

Korgs fixed cost{Kronos parts] and a portion of overhead/G&A is $1950

Korg earns $600 on each K sale before tax. Korg also has to establish reserves for ' what if ' problems looking forward 10 years. Reserves are tricky business.
They shield income. But its proper accounting for the future..

Now we could argue that Kronos is overpriced today at $3000. A drop in MSRP
would reduce the profit $ of the retailer and of Korg.

That sounds like a bad idea but sometimes its warranted to prevent a larger problem- of very low sales due to 'what if ' factors in the marketplace.

FYI, I have worked for electronics mfg.'s in the past. I am certain that most
design and profit plan in advance. A product mistake can cause serious problems.


I know this is hypothetical, but I think you're way underestimating the retailer percentage. More like 40-45%. Remember, even with online software retailing/distribution (think Apple, etc.) it's 30%/70% and that model has far less costs for the retailer.

Busch.


My context is a retailer of electronic instruments, guitars, amps, keys, and so on

When I bought my Kronos + 7 years ago from a small independent dealer in the Midwest, I paid dealer cost + 15%.

The dealer cost per the invoice he showed me was $2600.

I paid $2990. Dealer also paid for freight/shipping.

This was some time ago(2011), so I am not current on the #'s.
if I bought a K2 today.

I would imagine a Sweetwater has higher gross profit margins on a Kronos. Higher than 15% but I don't have the data to make a fair estimate.


Well, back in the day I ran a small music store. I've been on a cost+ basis for many of my purchases over the years, but recently I just haven't bought that much so I don't push it.

I think the difference is this:
Kronos 88
MSRP: $4650 less 45% gets you to $2557
MAP: $3699 less 30% gets you to $2589

Roughly the same. MAP didn't exist when I was in the business. In your case, you got roughly a 20% discount. Most people don't get 20% discounts off MAP. When GC runs 15% off sales, they're still making money, as you would expect, not giving things away at cost. Many purchases are at or near MAP.

Busch.
_________________
Kronos 73, Minilogue, VL-1, V-Synth, B3 w/122, (3) Rhodes, Clavinet D6, 200a, AvantGrand, Minimoog Model D, Studio Electronics Omega 8, Hammond SK-1, Protools HD, Mac Pro, VSL, LASS, Sample Modeling, East West, Ivory, Komplete 8, Spectrasonics, etc.
http://www.purgatorycreek.com
Back to top
View user's profile Send private message
Kevin Nolan
Approved Merchant
Approved Merchant


Joined: 04 Dec 2005
Posts: 2400
Location: Dublin, Ireland

PostPosted: Mon Jun 04, 2018 12:01 am    Post subject: Reply with quote

Bachus wrote:
if this article is about price fixing..

Then Yamaha is the big evil..
I know two local dealers who lost their dealerships
For selling to cheap..

Yamaha is definately fixing pricing, and forcing their dealers to keep them up..


I don't think Korg really influences sales prices of Korg products, atleast there dealers seem to have much more freedom.

Anyway, a good example is the Yamaha Genos... production costs < €200.
Sales prices €4000, that definately sounds fishy to me...


Over the years Yamaha in Ireland:

Sold me Ex demo (in perfect condition) CS40M for £250
Sold me an Ex U2 (pop album) perfect condition VL1 for £850 (when it was selling for £3999 sterling)!
Sold me three CS01 IIs and a CS01 - all for - £50
Gave me 20 CS range IG chips - for nothings

....

and - gave an articulated lorry full of instruments of all kinds to a kids club in a disadvantaged area in Dublin.

Like wise - I found their support from the UK to be simply stunning - as in - when they were running low, finally, on CS80 VCO chips - THEY rang me - knowing I owned a CS80 - to tell me that if I want spares, to get them then!


And then there was the episode where they bought out Korg to save it and enable the release of the M1; and then essentially gave Korg back to "Korg" a few years later.

Likewise - they essentially just returned the "Sequential Circuits" name back to Dave Smith quite recently.


so I think you're thinking of the wrong company when throwing a word like "evil" about!
Back to top
View user's profile Send private message Visit poster's website
Bachus
Platinum Member


Joined: 23 Apr 2006
Posts: 2489

PostPosted: Mon Jun 04, 2018 5:00 am    Post subject: Reply with quote

Kevin Nolan wrote:
Bachus wrote:
if this article is about price fixing..

Then Yamaha is the big evil..
I know two local dealers who lost their dealerships
For selling to cheap..

Yamaha is definately fixing pricing, and forcing their dealers to keep them up..


I don't think Korg really influences sales prices of Korg products, atleast there dealers seem to have much more freedom.

Anyway, a good example is the Yamaha Genos... production costs < €200.
Sales prices €4000, that definately sounds fishy to me...


Over the years Yamaha in Ireland:

Sold me Ex demo (in perfect condition) CS40M for £250
Sold me an Ex U2 (pop album) perfect condition VL1 for £850 (when it was selling for £3999 sterling)!
Sold me three CS01 IIs and a CS01 - all for - £50
Gave me 20 CS range IG chips - for nothings

....

and - gave an articulated lorry full of instruments of all kinds to a kids club in a disadvantaged area in Dublin.

Like wise - I found their support from the UK to be simply stunning - as in - when they were running low, finally, on CS80 VCO chips - THEY rang me - knowing I owned a CS80 - to tell me that if I want spares, to get them then!


And then there was the episode where they bought out Korg to save it and enable the release of the M1; and then essentially gave Korg back to "Korg" a few years later.

Likewise - they essentially just returned the "Sequential Circuits" name back to Dave Smith quite recently.


so I think you're thinking of the wrong company when throwing a word like "evil" about!


Its good to see you have a different experience with Yamaha..

Maybe evile isn’t the right word
But here in Holland, its definately more about making money then about making music.
_________________
Korg Kronos 2/88 , Korg PA4x, Mainstage3 +VSTsu, Kurzweil PC3X
www.keyszone.boards.net
Back to top
View user's profile Send private message
Kevin Nolan
Approved Merchant
Approved Merchant


Joined: 04 Dec 2005
Posts: 2400
Location: Dublin, Ireland

PostPosted: Mon Jun 04, 2018 11:36 am    Post subject: Reply with quote

..and in that - my examples are all about 10 or more years old. Yamaha was amazing back then - I think it showed in their design philosophy too - so perhaps they're a different company now.

If there is price fixing going on; I hope it's exposed and sorted.

My own personal "beef" with synth companies regarding pricing, as a European, is that they announce the price in dollars or sterling - but when you convert that to euro it never works out because apparently there's extra VAT in Europe - which I can never understand as there's VAT everywhere - so it always seems that synths are disproportionately more expensive in Europe compared to the US or UK - even for European synth companies such as Arturia, Clavia and so on! I wish they'd sort that one out Smile
Back to top
View user's profile Send private message Visit poster's website
GregC
Platinum Member


Joined: 15 May 2002
Posts: 6951
Location: Discovery Bay (San Francisco Bay Area)

PostPosted: Mon Jun 04, 2018 1:41 pm    Post subject: Reply with quote

Kevin Nolan wrote:
..

My own personal "beef" with synth companies regarding pricing, as a European, is that they announce the price in dollars or sterling - but when you convert that to euro it never works out because apparently there's extra VAT in Europe - which I can never understand as there's VAT everywhere - so it always seems that synths are disproportionately more expensive in Europe compared to the US or UK - even for European synth companies such as Arturia, Clavia and so on! I wish they'd sort that one out Smile


vague recollection why we don't have ' 1 price for all ( cheapest of course) '
or a true global price for a product.

Mfgr's will say a particular country or region has more requirements for service, safety, bureaucracy etc thus there is an extra cost element. Which they decide to pass along to the buyer vs absorbing it.

I also think scale or volume is a factor. US is a good example. Large market, more competition, and a mfgr' has to be price realistic due to various competitors.

Back in the days of covered wagons, brand loyalty and co or product uniqueness was the ally to keeping prices high. Maybe Nord is an example- prices here in the US seem silly high. But they seem to have a cult like following and musicians
find a way to justify buying a Nord keyboard ( don't shoot me here, Nordites. Start another topic Smile )
_________________
Kronos 88. nanoPAD2. Roland FA-07, MBP, UR44
Achieve your musical dreams Smile
https://soundcloud.com/user-898236994
Back to top
View user's profile Send private message Send e-mail
Kevin Nolan
Approved Merchant
Approved Merchant


Joined: 04 Dec 2005
Posts: 2400
Location: Dublin, Ireland

PostPosted: Mon Jun 04, 2018 9:11 pm    Post subject: Reply with quote

I for one was hugely critical of Nord's early Stage and Electro keyboards - I tried them out on many occasions and in the early days and their sampled acoustic piano was on a par with an M1 or any typical workstation from that era; while their onboard CP80 sound was poorer than the CP80 on the JV80 Piano card. No kidding.

But - these days they are gorgeous - have to concede that if I were forking out 3000+ Euro on another 88 note keyboard it would probably for the Nord Stage 3 rather than even a Kronos. The immediacy of the control panel cannot be ignored, while the sound quality and access to huge online libraries from Nord themselves as part of the package all seem very attractive.

I can assure you - they are outrageously expensive in Europe too!


Isn't it interesting how poorly the GEM Pro-omega 3 sold when it came out (I think it's stunning too) given how similar in concept it is to the Nord Stage 3; with that being, as you point out, so popular. How times change.
Back to top
View user's profile Send private message Visit poster's website
Biggles
Full Member


Joined: 31 Aug 2017
Posts: 236

PostPosted: Tue Jun 05, 2018 1:15 pm    Post subject: Reply with quote

In the UK:-

A Yamaha Genos is £3439 or $4600

A Korg PA4X is £2500 or $3340

A Korg Kronos 88 is £2800 or $3740

Nord Stage 3 88 is £3000 or $4000

Inc Tax in all above and conversion to USD at todays rate.

The Genos is stupid money for what it is in comparison.
_________________
Biggles
PA700, Kross 2
Lancashire, UK.
Back to top
View user's profile Send private message
Display posts from previous:   
Post new topic   Reply to topic    Korg Forums Forum Index -> Latest News All times are GMT
Goto page Previous  1, 2
Page 2 of 2

 
Jump to:  
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum


Powered by phpBB © 2001, 2005 phpBB Group