Dean E wrote:1. Not wanting to cannibalize their own sales in a finite market.
2. Not wanting to offer low-priced alternatives to their moderate-to-high end brands. Increasing supply lowers price.
3. Premium prices are commanded by deliberately under-producing products and keeping the supply down. Harley Davidsons and Corvettes are examples. I can charge a higher price for an instrument if customers are willing to be put on a wait list.
4. Cachet. Starbucks gets a higher price for a cup of coffee than White Gristle.
Cachet, schmachet. The local guitar store, here in the string-loving Appalachian piedmont, has banjos ranging from the Deering Good-Time to high-end banjos whose names I don't even know because I was scared to look. The price spread goes from about $300 to thousands upon thousands. At each price point, they have the best product available. When a customer comes in, they determine their price point, and then try to find out if they quality desires are in line with their price point. This usually requires talking them up a level or two. Then they have a product to offer them.
Ditto electric basses. They have $300 Chinese imports, and vastly more expensive boutique brands. I'm sure they are the same in their other string lines.
Humorously, this is the same music store that I was complaining about in my previous post. And guess what? The string section is always crowded with customers on Saturdays, while the band-instrument section is empty. Perhaps that's a local market condition, but then why are there better music stores 50 or 60 miles away that do fine?
So, I don't think your principles hold water (even if the Starbucks cup does). Anyone coming in to buy a banjo (my wife fools around with banjo so I keep up with that a little) will appreciate the value of a $1300 Gold Tone if there is a $300 Deering or a $600 Fender to compare it to. Otherwise, they'll shrink away in sticker shock. And if $300 really is their limit, they'll walk out with a serviceable instrument. You always sell high-end stuff by distinguishing it from low-end stuff. The stereo store always has the separate room for the high-end stuff, and the sales guy proudly leads you past the proles to get to it. That's cachet.
There have been cars as interesting as Corvettes that have failed in the market. The lack of supply is not what drives Corvette sales, but rather the image of it GM has been able, over long years, to establish through advertising.
You are only competing with yourself if the cheap instruments aren't distinguishable from the expensive instruments, and that's what I think the music stores are most afraid of: They might discover that if not now, soon, the Chinese imports are just as good as the traditional brands, especially for the typical sixth or seventh grader.
Rick "who thinks quality always sells
if it matters" Denney