New tuba prices

[kingrob76]

The Euro isn't the only factor.

There was a conscious decision to move US tuba pricing policy closer to the European model. One company instituted a set of "minimum sell for" policies (as opposed to minimum advertised pricing where the dealer could sell for what ever they wanted, but could NOT advertise the low sell price).

I've wondering how long it was going to take before prices were discussed on TubeNet. I'm really surprised it took so long. Tubist must really be the laid back, patient bunch of our reputations.

I'm all for dealer profit. I just prefer a little freer market...

>>>If you are contemplating selling a tuba, will the new prices help you? Not necessarily. When the old prices are so fresh in the buyers' memories, they may not be willing to let a seller make a huge profit on a used (in some cases, very used) horn.<<<

>>>If you are contemplating selling a tuba, you better make really sure you don't want it anymore, because an identical replacement may cost you one heck of a lot more.<<<

S"Glad I'm not in the market for a new tuba anymore"T

Scoob hit a lot of good points. It would seem that manufacturers are hoping to sell less horns at a much higher margin, thus keeping demand in place for a longer period. This market influence is an attempt at producing a stable, sustainable business model over a prolonged period of time. Most corporations don't really care about their gross numbers as much as they do their net numbers, and margin is king in that area. When several corporations in the same market do this in unison in an effort to influence the market to their favor you have collusion, which gets into anti-trust, yada yada yada.

MW is clearly following this new model.

It could be hypothesized that this change COULD lead to higher quality products, the assumption being that since less are being produced more time can be devoted to quality control. In truth, a business is more like to simply downsize the production side, realize a costs savings which further drives the margin.

I would expect prices to come back down a bit if demand comes down (negatively influencing the margin) OR if someone put market pressure on a manufacturer to do so. For example, if I was able to sell a horn that was as good as a Thor for 1/3 the price AND in sufficient quantity, MW would eventually have to address their price point in order to stay in that market. But without one of those factors, these are the prices from now on.

As for the dollar, get used to a weak dollar for a very long time. There's way too much negative value, debt and risk in the U.S. economy for this to change anytime soon.

[KevinMadden]

I wonder what college kids are going to do for instruments if prices keep increasing on all brands like they have been.

Look for used Willson CCs!!

(but seriously, my first horn I bought new in HS, but since i've bought two used ones, I would never go back to shopping for new, unless money was really not an option)

[TubaRay]

RC
(who is worried for the future)

You and me both, brother...

That makes three of us......

Warning!!! The following may be interpreted as having political content. I am stepping over this line in an effort to allay your fears.

Since some are worried about the economic future of this country, let's be sure to elect a president who will raise our taxes(or allow present tax cuts to expire). I am quite sure this will put more dollars into each American taxpayers pocket.

There! Does everyone feel better, now?

[J.c. Sherman]

Unless I missed it, The price of fuel is definitely raising the expense of shipping for Tubas as well. The Stores have to pay much increased costs to get the things into their inventory...

J.c.S.

[randy westmoreland]

You have a beautiful baby, Jim. This will be the best thing ever to happen to you! But with that said, remember that you have to have outlets. This benefits not just you, but your whole family. If you can get by without selling the horn, I would do it. Remember, you are a "double threat!" Take care and I hope you are getting at least some sleep.

Randy

[tubatom91]

I believe I recived the "deal of a lifetime" when I bought my Miraphone 188 just a few weeks ago. I paid the old price ($7599 or so) with a scratch and dent sale tacked on. I got my latest tuba catalog in the mail a couple days ago and almost had a heart attack when I looked (for fun of course) at the tubas and noticed the 188 was up $1500 from what I paid! I can't even fathom buying anything but used tubas right now.

New Tuba + Case = a loan and/or selling a car!

[tofu]

[peter birch]

[quote="Scooby Tuba"]The Euro isn't the only factor.

In the states there had been a tradition of a smaller profit margins on tuba sales. In Europe, dealers have usually used a 100% mark up model (if the horn costed them 100 rupees, they charged 200 rupees to a customer). In the US the margins were much smaller, usually 10-25% (horn cost 100 rupees, they charged 125 rupees...). Some european folks had been coming to the states to buy horns (to a certain extent they still do...).

I hate to be the one to tell you this...but we don't use rupees in Europeland

[billeuph]

I hate to be the one to tell you this...but we don't use rupees in Europeland

It's a shame you don't. I visited four countries in Europe last year and used four different currencies. Maybe you should consider a common currency!
At least you Brits got rid of the old 20 shillings to a pound, 12 pence to a shilling nonsense (or was it the other way around).

The higher pricing philosophy and exchange rate seem to be a great opportunity for the Chinese to continue to improve their instrument quality and eventually dominate this market, too. Resistance is futile ...

Bill Anderson

[J.c. Sherman]

Okay, I'm out of the loop here - What the %$# is that clear tuba?!? Awesome!

J.c.S.

[Barney]

The higher pricing philosophy and exchange rate seem to be a great opportunity for the Chinese to continue to improve their instrument quality and eventually dominate this market, too. Resistance is futile ...

This is even a better opportunity for American manufacturers to get off their butts and design and build some really great instruments. With the dollar as low as it is, American products could suddenly be a bargain, worldwide. Of course, as long as American instrument manufacturers continue to raise their prices in line with the European makers they'll sabotage this opportunity. (Look at the price of a 56J at Baltimore Brass... Over $9000? Give me a break. Materials haven't gone up that much, and a 2341, utilizing many common parts, is still under $4000. The 56J should be a bargain in today's market, and should definitely not cost more than a Thor. [duh])

One other thing.... Chinese currency, held artificially low for many years, is now being forced upwards by these economic conditions. Soon, Chinese instruments, while still cheap, will not be the bargain they once were. At that point, quality WILL matter. It'll be interesting to see how everything plays out.

Bright side: I look forward to the price of cheap plastic toys from China going up, so I can continue to say to my son, "no, we don't have money for that", and actually mean it.

[bort]

Maybe a price hike is what was needed to get people to buy an "uncool" old Miraphone 186 or 188.

It seems like the For Sale board here is full of great horns and "I never though I'd have to do this" stories. None of us want to be in that situation -- hard to decide to sell, hard to be able to replace. And it's hard to hear that from people who clearly enjoy (and want to) keep playing.

[peter birch]

I hate to be the one to tell you this...but we don't use rupees in Europeland

It's a shame you don't. I visited four countries in Europe last year and used four different currencies. Maybe you should consider a common currency!
At least you Brits got rid of the old 20 shillings to a pound, 12 pence to a shilling nonsense (or was it the other way around).

Bill Anderson

.. that was almost 40 years ago!! I look forward to the day when the United States truly develops a global perspective

[Rick Denney]

We may be going back to the day when manufacturers tried to enforce a price model on retailers. But it never lasts when there is good competition in the market (as there is in the tuba market right now). They end up giving their business to their competitors.

It's not about the brass. I bet there's not more than a hundreds bucks or two in brass at wholesale prices in a tuba.

Manufacturers make a decision about which part of the market they will target with their pricing. If they are at their production capacity, they will sell to the richest few people who want that instrument. Doing less would be giving up profit, and could earn them (valid, and even actionable) complaints from their stockholders.

If the weak dollar means that their relative costs have gone too high to support their current production/price model, they will scale back production (or shift it to other products) and try to sell the reduced supply to those willing to pay the most. They will blame the weak dollar so that it doesn't look like they are being arbitrary, knowing that their customers don't care about how they serve their stockholders. Those who want the instruments will pay the price, but fewer will be able to do so.

Back in the 70's when GMC Truck made a motorhome in-house, the market for motorhomes took hits because of the oil embargo and rising gasoline prices. So, they increased the price (it doubled in five years) to try to sell upmarket and keep margins high. They added very few additional features, and most of those were designed to make the product look more expensive without actually costing them much more to make. It didn't work--the market would not support the higher prices, especially in the face of the second big rise in gasoline prices in 1978. The fatal blow was when Oldsmobile downsized to follow the market for more fuel-efficient vehicles, and killed the big-block drivetrain that the motorhome used. That's when they packed it in. Their reasoning at the time was that they could build a hundred very popular pickup tricks using the same factory resources as one motorhome, and make a lot more money. But the real reason was that ultimately, it's the market that sets the price, and the market would not support the prices for the motorhome (and its component parts) sufficient to overcome the costs with a reasonable profit margin.

As to the political commentary, I'm not that worried about the future. We've been through this before, but it was worse then. In the 70's, we went into an inflationary recession with poor monetary policy and such fiasco decisions (made by Republicans, alas) as wage and price controls. We have gone into this one with much more sound monetary policy and more faith in market mechanisms. If we survived the late 70's, we'll survive this one.

Rick "who has been through enough business cycles to expect them" Denney

[jeopardymaster]

Re tubashaman's Side Question to the TNFJ: "If the cost of the horns are rising, does that make the depreciation value of a used horn decrease? Like when the 1291s were 8000, and if you have one thats lets say 2 years old, and they jack up their prices to 10000 dollars, would your horn be worth based on the current price or the original sale price"


Oops, don't mix the terms "depreciation" and "value." Depreciation is an expense. Generally speaking, you depreciate what you PAID over the useful life of the asset. For equipment used in a trade or business, straight-line depreciation (say, 1/10 each year for 10 years) is generally accepted, and not as likely to be challenged on audit, as depreciation that has been accelerated (frontend-loaded).

Given the current pressure on market values, if you sell a deeply depreciated horn now you are more likely to realize a significant gain versus the adjusted basis (your acquisition cost less accumulated depreciation). That gain will be taxable. How you deal with it is up to you.

I'm not advocating anything or providing any advice - just information. E.g., whether you use a holding period of 3 years or 10, that is your call.

On the other hand, if you're asking what you could get for your horn now that the prices are all going up, well, what you get is what you get.

OK, I'll shut up now.

[Rick Denney]

Oops, don't mix the terms "depreciation" and "value."

Yes. Short answer to Tubashaman's question is: No, the price you paid has no influence on the current price you can get for an instrument. In addition to confusing depreciation and value, I see the confusion of price and cost. Price is set by the market (or by the buyer with whom you agree to make a sale), while cost is what you paid.

If the new price of an instrument inflates, the used price will probably inflate as well, assuming anybody actually wants the instrument. For example, I paid $3000 for a demo Yamaha 621 F tuba in about 1991. It's depreciated value (to reinforce the point above) is zero, and was never more than what I paid for it. It's market value is very likely more than what I paid for it, and mostly because the price of a new one is so much higher today, but also because people actually want them. Without demand, prices are low no matter what the new price.

Rick "who expensed the depreciation on that tuba in the first couple of years" Denney