List vs. Street Price

This is a question which applies to other industries as well, but is of the essence with the sale of musical instruments. Why, now that virtually every customer knows that the list price is not real and that most even know the standard calculated discount from list price, do we persist in the dance? It once was valuable when instruments were sold by mom and pop storefronts with their own overhead and relationship with cost vs. price, but now with the transparency of the current times, it would seem anachronistic. Not to mention all the rules with which the companies control their dealers as to MAP and required inventory.

When I was searching Amazon for high-quality, over-the-ear headphones yesterday, they listed the MSRP and the "on sale" price. One headphone might say MSRP $199, sale price $159; another might say MSRP $279, sale price $169.

I have to admit that, all things being equal, when buying over the internet for a product that I cannot test in person, the one with the (1) best reviews and (2) the best "sale price"--admittedly, sale price from an arbitrary pie-in-the-sky fictional price that is about as accurate as the bounty on Sasquatch--is the one I will likely buy.

Not everyone buys online for street prices. When you go to retail stores, many items are still sold at MSRP.

Typically, MSRP is set by the manufacturer, who overinflates the value of their product. Product is then sold or consigned to dealers at a set percentage of MSRP, often 50% with musical instruments. It is then up to the dealer to determine what they will sell for. Almost all dealers sell for some amount between the wholesale and MSRP, with very few attempting to sell at MSRP. I will agree that before the internet, it was difficult to price-compare, since there usually weren't a lot of shops in your town selling the same product. Now it's very easy to see what a given instrument typically sells for. That has tended to drive all prices down, which may or may not be a good thing.

Minimum Advertised Price (MAP) is supposedly a way that manufacturers protect their smaller dealers, by preventing big box retailers from advertising rock-bottom prices that mom-and-pops couldn't hope to match. In reality, I doubt MAP does anybody any good, since all it takes is a phone call (or sometimes just a click) to reveal that ultra-discount price.

One one hand, you could argue that there is now price transparency, and it's easy to see what the lowest possible price is for any given instrument. On the other hand, you could argue that smaller shops are being driven out of business, as many people stop in to give an instrument a test drive and then buy it from an online retailer. While I won't necessarily argue for higher prices, it's sad to see the Guitar Center/Sam Ash landscape in many areas now, where everybody but the big box guys are pretty much gone.

fretted said:

Not to mention all the rules with which the companies control their dealers as to MAP and required inventory.

Click to expand...

I've actually had a lot of dealers WANTING a mandatory MAP price so some online store doesn't undercut them by $10.

Yes, but why have a list price and an MAP in this Day and Age? Even in the old days I knew the real price, even from mom and pop's was 40% off list . . . at least where I lived. Those days are over but one can still negotiate down from MAP which is usually, but not always around 25% off list. I have to say, it's always better to be able to play the actual instrument one is purchasing. The problem with ukes are that there are few dealers which have a selection to try, even the big box stores.

I imagine dealers like this pricing structure, because it allows them advertise big discounts, or suggest to a buyer that they're giving them an excellent deal by knocking 30% off the manufacturer's price. And don't assume all buyers are as savvy as you are. I'm always a little surprised when I'm at a bricks-and-mortar store how many customer come in, try an instrument, and purchase it for whatever's on the price tag.