Why are Alembics so expensive?

[smcd]

“What the market will bear” isn’t a business concept?

No, it isn't. That's not what's happening with Alembic's pricing. That's what people who don't understand manufacturing costs THINK is happening. And they're wrong. Do you actually think there are hordes of trendy people lining up in a sales queue waving money around trying to buy an Alembic because it's the hot thing an every hep person just HAS to have one?

 

[peledog]

Why is Lipitor so expensive?

 

[smcd]

THIS is the correct answer.
Prices on anything is based on supply and demand. Nothing more and nothing less. If Alembics weren't selling at the prices they are currently offering, they would find a way to cost cut to lower the prices, create a new inexpensive line made overseas or they would go out of business.

Absolutely and incredibly incorrect. Where on earth did you ever get the idea that this is how goods are priced?? Prices are determined by well proven industrial economic formulas. NO legitimate manufacturer decides to charge "what the market will bear". Retailers may do this, but the manufacturers DO NOT.

If Alembic sales dropped, they'd make cutbacks in staff and expenses. They would NEVER initiate manufacturing shortcuts or drop quality, as this would destroy their hard won image as a quality product. What makes you think they'd go overseas? As if this is some kind of unavoidable option? Many manufacturers opt out of overseas manufacturing. Besides Alembic, Rickenbacker does not manufature offshore. Ditto Carvin.

 

[smcd]

Yeah that's how I came up with that number, because what you said makes no sense otherwise. It would take much longer than a month to receive a custom built Alembic. So where did you get this 4 week number?

And do you really think I am stupid enough to think you were talking about a 24/7 work schedule? When you say it takes 4 weeks of hand labor, I assume you means 4 weeks of combined time, as it obviously takes much longer than 4 weeks to receive an Alembic after placing an order.

A week is 40 hours. I shouldn't have had to point that out.

 

[yodedude2]

cost-dependent pricing is efficient and effective but is not a requirement. costs must be covered for long-term survival of course, but there are variations. check out what e. l. cord did with auburn and cord pricing in the late 20s and early 30s. some interesting marketing and pricing stuff there.

 

[Seb_VitusFreak]

Well, Hyundai's use similar components to Mercedes too.

I would still rather have the Mercedes-Benz over the Hyundai.

 

[smcd]

Corvette Stingray or a Porsche 911? Which one performs better? The Corvette.

Did Corvette come out with an improved model in the last few hours? Because if not, that is absolutely false.

 

[ster]

Absolutely and incredibly incorrect. Where on earth did you ever get the idea that this is how goods are priced?? Prices are determined by well proven industrial economic formulas. NO legitimate manufacturer decides to charge "what the market will bear". Retailers may do this, but the manufacturers DO NOT.

If Alembic sales dropped, they'd make cutbacks in staff and expenses. They would NEVER initiate manufacturing shortcuts or drop quality, as this would destroy their hard won image as a quality product. What makes you think they'd go overseas? As if this is some kind of unavoidable option? Many manufacturers opt out of overseas manufacturing. Besides Alembic, Rickenbacker does not manufature offshore. Ditto Carvin.

I am speaking hypothetically if their sales were to dramatically drop. What would they do? Sure cutting staff is an option, but not a solution. So is cutting costs. I mentioned creating a NEW line overseas. Doesn't Fender, Ernie Ball, Sadowsky and Lakland have lines overseas? Ernie Ball HAD to start doing this after many years trying to work around it.

I understand that Alembic is a boutique company with an incredible image and they probably don't want to sacrifice that. But why is it ludicrous to think that if people aren't buying a product it might force a company to explore other options?
Sure the supply costs is a major part of the price. But if the market doesn't find the product desirable, it won't sell.

 

[Lee Moses]

I haven't gone through this entire thread, but I imagine the answers are pretty much the same:

http://www.talkbass.com/forum/f8/why-foderas-so-expensive-324174/

You could pretty much insert any high-end "boutique" company in the question, "Why are _______________ so expensive?", and you'll get pretty much the same answers:

1. Quality materials.
2. More painstaking craftsmanship/handmade vs. mass-produced. Paying skilled artisans vs. factory workers.
3. Made where costs of business are low (e.g., China) vs. where costs of business are high (U.S., Western Europe).
4. Demand.

Of course, #1 and #2 contribute to #4, as does #3 to a lesser extent.

 

[walldaja]

The more unpronounceable a name the more you can charge...

 

[smcd]

I am speaking hypothetically if their sales were to dramatically drop. What would they do? Sure cutting staff is an option, but not a solution. So is cutting costs. I mentioned creating a NEW line overseas. Doesn't Fender, Ernie Ball, Sadowsky and Lakland have lines overseas? Ernie Ball HAD to start doing this after many years trying to work around it.

I understand that Alembic is a boutique company with an incredible image and they probably don't want to sacrifice that. But why is it ludicrous to think that if people aren't buying a product it might force a company to explore other options?
Sure the supply costs is a major part of the price. But if the market doesn't find the product desirable, it won't sell.

Why did EBMM have to manufacture an overseas line? What was the financial math behind that? If EBMM "had" to start up an overseas line, their company must be very poorly run.

 

[GBassNorth]

Did Corvette come out with an improved model in the last few hours? Because if not, that is absolutely false.

As a previous Corvette owner and current Porsche owner I didn't want to side track the Alembic discussion but I think the person that posted that comment is referencing a recent write up by Edmonds where they pitted a brand new 2014 top of the line Corvette with the Z51 performance upgrades to a 2 year old base 911. The Corvette did marginally better than that particular Porsche. Of course they didn't bother to run the Corvette against a stock off the shelf 911 turbo S. That would have been an entirely different outcome.

An even more interesting performance comparison would have been the new Porsche Cayman S vs a Corvette Z51, they are nearer in cost with the HP advantage to the Vette but the Weight advantage to the Cayman. Would be an interest race on a road circuit like Laguna Seca.

And for the record I've never owned or used Lipitor nor do I know how much it costs but I'm sure there are at least two camps on it - one that claims big pharma is out to screw us all and is charging the most that people will pay; and one that claims Pharmaceutical R&D and FDA compliance has become to costly that it takes an average of 15 years of market time to recoupe their costs before they lose the patent to generics which can simply copy the drug with no significant R&D cost.

Who's right, who cares! I drive a Porsche because I like it more than my last Corvette, I play an Alembic because I like it more than my last Schecter and if I end up on Lipitor it will be because I like it better than other options. Why people have to assume the worst about every company and every product and every pricing strategy completely floors me.

 

[ster]

I haven't gone through this entire thread, but I imagine the answers are pretty much the same:

http://www.talkbass.com/forum/f8/why-foderas-so-expensive-324174/

You could pretty much insert any high-end "boutique" company in the question, "Why are _______________ so expensive?", and you'll get pretty much the same answers:

1. Quality materials.
2. More painstaking craftsmanship/handmade vs. mass-produced. Paying skilled artisans vs. factory workers.
3. Made where costs of business are low (e.g., China) vs. where costs of business are high (U.S., Western Europe).
4. Demand.

Of course, #1 and #2 contribute to #4, as does #3 to a lesser extent.

Bingo. Supply AND demand. But I think slick advertising can contribute more to #4 than #1. and #2. Demand isn't always based on quality, look at all the ****** foods are that sold off the shelves.

 

[NecroticImbecil]

I've seen a picture of one, and it looke dlike it sounded nd played terrible. It also looked different from what I like, therefore they are overpriced junk.

 

[bassbenj]

I haven't gone through this entire thread, but I imagine the answers are pretty much the same:

http://www.talkbass.com/forum/f8/why-foderas-so-expensive-324174/

You could pretty much insert any high-end "boutique" company in the question, "Why are _______________ so expensive?", and you'll get pretty much the same answers:

1. Quality materials.
2. More painstaking craftsmanship/handmade vs. mass-produced. Paying skilled artisans vs. factory workers.
3. Made where costs of business are low (e.g., China) vs. where costs of business are high (U.S., Western Europe).
4. Demand.

Of course, #1 and #2 contribute to #4, as does #3 to a lesser extent.

Exactly correct. The boutique market is not the same as the factory standard market. Boutique/art market is clearly a "what traffic will bear" situation. The standard factory cost and profit rules don't apply anymore than they do to the price of paintings. Why do some paintings go for a million dollars? Same thing. If people want them, then they will drive the price up by demand.

Which leads us to the recent large Alembic price increase. Presumably this was the result of a big surge in demand. If you get too many orders in a boutique business you raise the price until you have only the orders you can handle.

But this then answers the question of why are the used prices so low? I'd suggest that they are NOT low. Typically used prices drop up to maybe half of the original price. You look out there at Epics like mine and they are seen going for a grand while I paid over two grand to get mine new. So that really isn't out of line. But when you compare to the CURRENT pricing it seems a HUGE drop. But you can be sure that prices will catch up as mine becomes "vintage" and the ones people bought at the higher prices come on the used market. Hence the smart money says if you GAS for an Alembic NOW is the time to buy a used one!

 

[Lee Moses]

Bingo. Supply AND demand. But I think slick advertising can contribute more to #4 than #1. and #2. Demand isn't always based on quality, look at all the ****** foods are that sold off the shelves.

True. But this really doesn't play in very much, if at all, when considering Alembic. I don't see too much "slick advertising" for Alembic. Throughout their history, they have refused to pay for endorsing artists, or even to give name artists free instruments, to keep from having to charge customers higher prices. There was an exception when Alembic gave Stanley Clarke an instrument a few years ago as a token of their decades-long partnership, but it was an exception.

Obviously, reputation plays a major part, and sometimes a company can coast on past achievements.

 

[bucephylus]

Is that true? I was under the impression that the Series I electronics are essentially unchanged (functionally at least...perhaps you meant component selection?) since the mid-1970s.

You are quite correct that the basic circuit topology is pretty set. However, they have an older Series I sent them for some maintenance issues. Ron keeps tweaking with component matching, pup matching etc. He is on a mission to make the noise level 0. Never satisfied with good enough.

 

[smcd]

Which leads us to the recent large Alembic price increase. Presumably this was the result of a big surge in demand. If you get too many orders in a boutique business you raise the price until you have only the orders you can handle.

WHAT!!!!???

Look...nobody, and I mean NOBODY who has a successful business runs it that way! Raising prices to control increases in demand??!! You can't operate a business that way! Think about it....you raise your prices in 2005 when orders are up, and when orders are down in 2008, you lower your prices. You further lower your prices in 2009, but with an uptick in business you raise your prices again in 2010. No one does this. That kind of strategy is insane, especially in a highly competitive market like electric bass guitars.

When demand goes up, you work overtime. When you can't keep up with overtime, you hire more employees. When times are tough, you cut hours, then lay off staff. This is the way it works.

 

[bucephylus]

They have increased operating costs to cover. Among other things, they are struggling with the documentation associated pedigree of all the woods that are used. Sounds simple, but there are some fairly hefty legal hoops developing in this area.

Always something. As Mose Allison said, "I don't worry bout a thing cause I know nothin's going to be all right."

 

[armybass]

because they only sell four basses a year....