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Why Is Fender Raising Their Prices AGAIN!!!!

#22
I don't have an economics degree. So feel free to correct me if i'm wrong, but It seems logical that if the economy is weak and people are spending less on luxury items, (and I think some basses can fall into that category for a lot of us)
wouldn't it make more sense to sell more product at a slightly lower profit margin rather than less product at a higher margin? That way they keep their customers while still maintaing a profit. It might not be as huge a profit, but should companies really expect to keep the same profit margins even when the economy takes a dive? People just won't buy their product at all and companies will lose more money in the long run.

The basic idea is...lower prices will make more money from sales volume. Higher prices will result in less sales and lost customers overall. :confused:
 
#23
B.C. said:
Right, but that is the beauty of the market. When the demand drops, so will prices. Its just the fluctuations of the market.
Click to expand...

I can't imagine that prices would go down by any appreciable amount, unless there was so little demand for Fenders that the company had to sell the basses for less or go bankrupt. In other words, while the prices of may things are sensitive to market fluctuations, Fender basses (and other products) are much less so, and very likely not at all by any discernable amount. I'm not saying the laws of economics don't apply to Fenders, but that doesn't mean they have to ride the supply/demand curve like airline tickets do for my observation to make sense.

Has anyone seen the whole lineup of Fender instruments drop in price, ever? While I have not made it a priority to closely monitor Fender prices over the long term, I've never been pleasantly surprised by seeing a Fender bass for less money than that last time I saw it in the store.

Anyone else?
 
#24
bassguppy said:
Yeah, but some people are not going to pay $999.00 for a new MIJ Geddy Lee because many of us remember when it was $629.00, $679.00, $749.00, $849.00, and now $999.00 in a span of a few years.

Buying a bass for the most part is discretional spending and I think the pool of discretional money is running dry for most people.
Click to expand...

A new MIA Jazz Deluxe 5 was around $800 (less IIRC) in 1997. Guess what they go for now (I mean that same 1997 bass)?

Stuff goes up. People say they won't spend the extra money but eventually they do.
:cool:

I remember people saying they'd never pay $3 for a gallon of gas. Now they're tickled it's not $4. Those fuel prices affect manufacturing too.
 
#25
BassXgirl said:
I don't have an economics degree. So feel free to correct me if i'm wrong, but It seems logical that if the economy is weak and people are spending less on luxury items, (and I think some basses can fall into that category for a lot of us)
wouldn't it make more sense to sell more product at a slightly lower profit margin rather than less product at a higher margin? That way they keep their customers while still maintaing a profit. It might not be as huge a profit, but should companies really expect to keep the same profit margins even when the economy takes a dive? People just won't buy their product at all and companies will lose more money in the long run.

The basic idea is...lower prices will make more money from sales volume. Higher prices will result in less sales and lost customers overall. :confused:
Click to expand...

Tell that to Rickenbacker. :smug::hiding: lol
 
#26
Thunderthumbs73 said:
I can't imagine that prices would go down by any appreciable amount, unless there was so little demand for Fenders that the company had to sell the basses for less or go bankrupt. In other words, while the prices of may things are sensitive to market fluctuations, Fender basses (and other products) are much less so, and very likely not at all by any discernable amount. I'm not saying the laws of economics don't apply to Fenders, but that doesn't mean they have to ride the supply/demand curve like airline tickets do for my observation to make sense.

Has anyone seen the whole lineup of Fender instruments drop in price, ever? While I have not made it a priority to closely monitor Fender prices over the long term, I've never been pleasantly surprised by seeing a Fender bass for less money than that last time I saw it in the store.

Anyone else?
Click to expand...

Right, I agree. What I am trying to say is that the market, whenever there is a shortage or surplus, will tend to equilibrium. Fender will raise prices, and slowly lower them, as wages slowly increase. I know around my part of the country the min. wage is increasing close to every year. So, with inflation, it will eventually even out, and if wages don't increase, price will drop back to equilibrium, not to say that equilibrium will be back at 650, but they will stay stable at a point. IMHO and IME :)
 
#27
GregC said:
At least the MIA stuff didn't move. And there's a scratch'n'dent '57 RI for $1216, not bad.
http://bass-guitars.musiciansfriend.com/product?sku=510073X
Click to expand...

That's something people seem to miss... sometimes the prices stay the same. Bastids.

Another thing not being considered is that lower priced, higher quality products also become available. Might not be a signature model. Think about it... how many sub-$400 pro quality basses were available 5 years ago? Heck, look at the current Squier models.
 
#28
I noticed the "Marcus" at GC for over $1100. I had been wanting one but decided to look in the used market. The next week I found one at a local shop still ticketed at the old price and promptly put it on layaway to lock it in. I'm seriously considering a P bass as well if I come across some older priced inventory. If I'm doing it there must be others. It would seem a price increase in some strange way could stimulate some short term sales!
 
#31
BassXgirl said:
I don't have an economics degree. So feel free to correct me if i'm wrong, but It seems logical that if the economy is weak and people are spending less on luxury items, (and I think some basses can fall into that category for a lot of us)
wouldn't it make more sense to sell more product at a slightly lower profit margin rather than less product at a higher margin? That way they keep their customers while still maintaing a profit. It might not be as huge a profit, but should companies really expect to keep the same profit margins even when the economy takes a dive? People just won't buy their product at all and companies will lose more money in the long run.

The basic idea is...lower prices will make more money from sales volume. Higher prices will result in less sales and lost customers overall. :confused:
Click to expand...

Unfortunately, there is no such generalization on this subject. In other words; either can be true depending on the product, market, supply/demand relations, retailer goodwill, price, etc. People do complex calculations, iterations, optimizations and derivations/integrals to estimate the relationship between supply and demand.

A lot of time passed since I last think about these and I haven't been doing the job that I initially trained for, but I will try. Think of an curve (which looks like an extremely warped neck, you are looking at it from the side while the headstock is looking up and the body of the bass is lying on the bed. Now, that's wicked:)) where total sale is calculated by simply multiplying the value of the x and y of a specific point on that curve; x being price and y being quantity.

The bottom side of the curve (body till it reaches to the point where the neck begins to warp): Regardless of the price, relatively same quantity will be sold, because the market is limited by the total demand; i.e same number of MIA basses will be sold if CBS prices them as 10 dollars or 20 dollars. So the company can increase the price until it reaches to the neck warp, which only means increase in profits.

The neck is begining to make the curve upwards to the point where the headstock is horizantal while the body is vertical: Around this area, depending on the angle of the curve, it could go either way. For example the quantity sold can be 200 when the price is 1000, giving CBS the total sales of 200 grand. When you move up the price to 2000, CBS manages to sell let's say 130 basses, making the total revenue 260 grand. The increase the price to 3000, where the neck makes a sharp warp, they only will sell 50 basses; hence the number is 150 grand.

For those who are not interested to read all of these, here is the conclusion: There is no way to say estimate the profit margin for us, just by looking at the price; we have to know the relationship between the price and the quantity sold, which is determined by every imaginable condition and variable.

Boy, was I bored enough to write this message..
 
#33
B.C. said:
Right, I agree. What I am trying to say is that the market, whenever there is a shortage or surplus, will tend to equilibrium. Fender will raise prices, and slowly lower them, as wages slowly increase. I know around my part of the country the min. wage is increasing close to every year. So, with inflation, it will eventually even out, and if wages don't increase, price will drop back to equilibrium, not to say that equilibrium will be back at 650, but they will stay stable at a point. IMHO and IME :)
Click to expand...

I hear ya.

:)
 
#35
Ohhh the Economy, how you do torture me so, atleast its an interesting time to be studying it...

Theres no way I'd spend 1000 for a Geddy esp. if it has the blocks painted on! I too remember way back when it was 699, and I think the MM used to be 749...Everythings going up except my wages! :crying:
 
#39
I thought the Geddy was a good deal in the $600- $700 range. You can upgrade it nicely for another hundred or two.

But $1k? Not such a deal. There's a million used ones for sale, there would be no point in buying new.
 

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