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Prices - MSRP, MAP

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I was just reading through the forum and finding out about different pricing strategies for new guitars. If I'm not mistaken, MSRP is typically the highest price. MAP is minimum advertised price (which is less than MSRP). And it also seems that you can often get 40% off MSRP if you can haggle. So my question - I'm looking at the new Hummingbird Vintage that's coming out in 2018. I see it on a re-seller website for $4949. They also say the MSRP is $6383 (yikes!). But when I got to Gibson.com, it shows it at $4949. Where are these folks getting this MSRP number from? Isn't the Gibson site MSRP??

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I was just reading through the forum and finding out about different pricing strategies for new guitars. If I'm not mistaken, MSRP is typically the highest price. MAP is minimum advertised price (which is less than MSRP). And it also seems that you can often get 40% off MSRP if you can haggle. So my question - I'm looking at the new Hummingbird Vintage that's coming out in 2018. I see it on a re-seller website for $4949. They also say the MSRP is $6383 (yikes!). But when I got to Gibson.com, it shows it at $4949. Where are these folks getting this MSRP number from? Isn't the Gibson site MSRP??

 

Most guitar stores think people are stupid and will fall for their game. I was in the Las Vegas Sam Ash last year and commented that Guitar Center was advertising guitars at the MAP versus the MSRP and the sales clerk told me it was illegal. Who knew guitar prices could be criminal... Suffice it to say, I bought nothing from that Sam Ash but I did have a good laugh.

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I don't believe there are any actual laws about what prices you can advertise. The local prosecutor isn't going to come in and arrest a store owner for advertising too low of a price.

 

However the manufacturers have some pretty strict rules about how low you advertise their products, and even how low you sell them for. If you break their rules and they find out about it, they can suspend your privileges and ability to purchase from them. 10 or 15 years ago there was a Sam Ash in my neighborhood, and I went in one day and they only had used Gibsons. I asked why they didn't have any new ones and they told me they had lost their "authorized dealer" status and Gibson wouldn't sell to them (because they had been undercutting everyone else's price). Eventually they got their status back.

 

MSRP and MAP really don't mean anything. If a guitar is in high demand and there aren't a lot of them available it may sell above MSRP. But generally you can negotiate a price in a retail outlet, or even an internet sale talking on the phone. They have a pretty large profit margin and usually will cut the price some to make the sale.

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I don't believe there are any actual laws about what prices you can advertise. ...manufacturers have some pretty strict rules about how low you advertise their products, and even how low you sell them for. ...

 

+1

 

In 2005 Elderly ran afoul of Gibson's advertising rules over a banjo and still hasn't renegotiated their dealer contract Gibson. . Ouch. . :(

 

 

.

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So my question - I'm looking at the new Hummingbird Vintage that's coming out in 2018. I see it on a re-seller website for $4949. They also say the MSRP is $6383 (yikes!). But when I got to Gibson.com, it shows it at $4949. Where are these folks getting this MSRP number from? Isn't the Gibson site MSRP??

 

So nobody has an answer? Any re-sellers on here want to chime in??

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.

My guess: Gibson knows dealers are working from the MAP and buyers are haggling it down. So it looks like Gibson is abandoning the MSRP listings on their website and listing just the MAP. Checking a few web dealers I see a few are still listing the MSRP (which is about 20-23% higher than the MAP) while listing the MAP as their "sale" price - for example Sweetwater lists MSRP at $6,383.35 and Sweetwater will save you $1,434.35 and sell it at $4949. And some are simply listing the MAP - for example Wildwood lists: Your price: $4949.

 

At this time, you are caught in the transition.

 

 

.

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.

My guess: Gibson knows dealers are working from the MAP and buyers are haggling it down. So it looks like Gibson is abandoning the MSRP listings on their website and listing just the MAP. Checking a few web dealers I see a few are still listing the MSRP (which is about 20-23% higher than the MAP) while listing the MAP as their "sale" price - for example Sweetwater lists MSRP at $6,383.35 and Sweetwater will save you $1,434.35 and sell it at $4949. And some are simply listing the MAP - for example Wildwood lists: Your price: $4949.

 

At this time, you are caught in the transition.

 

 

.

That sounds like a reasonable explanation. I'm not familiar with historical prices - do you think this new price is closer to the traditional MSRP or the MAP?

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+1

Stan's stubborn. He's a really nice person, but doesn't take crap - nor should he have to.

In 2005 Elderly ran afoul of Gibson's advertising rules over a banjo and still hasn't renegotiated their dealer contract Gibson. . Ouch. . :(

 

 

.

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That sounds like a reasonable explanation. I'm not familiar with historical prices - do you think this new price is closer to the traditional MSRP or the MAP?

 

Well, you're looking at the "Vintage" model and the last coupla years these models included a "thermally aged" top. When Gibson first came out with "thermally aged" tops they really jacked the prices on top of the already pricey "Vintage" specs and VOS finishes. Even with the J-45 the difference between the regular production model and the Vintage can be $2K or more.

 

Anyway, the 2017 Hummingbird Vintage MAP was $4249 and the 2018 MAP is $4949. I'm not sure why the price jumped so much - I don't think there's been any changes in the specs.

 

Regarding whether the new price is closer to the traditional MSRP or the MAP - seems like the $700 jump puts it closer the the traditional MSRP.

 

 

.

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That sounds like a reasonable explanation. I'm not familiar with historical prices - do you think this new price is closer to the traditional MSRP or the MAP?

That doesn’t make sense!

 

Gibson couldn’t advertise the minimum prices lest it alienate the smaller stores that because of lower volume need a bigger margin to exist. It doesn’t make sense to “punish” dealers that are discounting and then advertise those same prices on their website. Unless they are intending to only supply big box stores?

 

Incidentally, cutting off dealers who don’t comply with their policy on pricing would be illegal here and a restrictive trade practice.

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Guest Farnsbarns

The 2 things (MSRP and MAP) aren't directly related. The MAP is the lowest price a dealer is allowed to advertise. They can sell for less but they cannot advertise for less. The MSRP is just an RRP (perhaps an British thing, it's recommended retail price). And as in most cases these days it's BS. No one expects to ever sell anything for that price, it's a marketing tool.

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That doesn’t make sense!

 

Gibson couldn’t advertise the minimum prices lest it alienate the smaller stores that because of lower volume need a bigger margin to exist. It doesn’t make sense to “punish” dealers that are discounting and then advertise those same prices on their website. Unless they are intending to only supply big box stores?

 

Incidentally, cutting off dealers who don’t comply with their policy on pricing would be illegal here and a restrictive trade practice.

Not sure that small stores could meet the demands of the (middleman) distributors for excessive annual purchases required to be an authorised dealer. I suspect if we see a new Gibson or two in a small store they might have just purchased it at mates rates from a big store who are in turn trying to hit their own turnover quota.

 

So your point re big box stores is pretty much true by default - though more at the hands of the distributors then the manufacturer - not sure how it works in USA, maybe Gibson sells direct to stores?

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I used to work at a couple music stores back in the 80's. Pretty much no one uses the the MSRP these days. Most will use the MAP. They can, and often do, sell lower than the MAP. If you walk in with cash and make an offer, they'll haggle with you some. I was allowed to sell for up to 20% off of Retail if they paid cash. 30% on some higher marked items.

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I am referring to another industry completely as I write this. However, the similarities are apparent, as they are common pricing strategies.

 

MSRP is usually Manufacturer's Suggested Retail Price (aka, List Price). It is a published price, quite high, that is rarely the actual final price that a user pays. It is usually published together with the MSRP's of all the products in a category. Historically, this would be on a sheet or in a booklet published periodically - perhaps once per year. From that MSRP a the manufacturer can discount a sale to a distributor, depending on the dollar volume of the purchase order. The larger the order, the deeper the discount, up to a point. A large order qualifies for free freight and the deepest discount. An order for one unit would be entitled to the smallest discount and the buyer pays freight. There may be multiple levels of discounts for orders of varying sizes. The price sheets are broadly distributed. The discount structure is a whispered secret. Further, there are probably periodic volume incentive rebates, as in quarterly or annually, where the manufacturer sends a check to the distributor the amount of which depends on the amount purchased. THIS secret is known only the the manufacturer and the owner of the business. This is how a retailer can sell something AT INVOICE, but still make money.

 

hypothetical example: a stock order of $22,500 MSRP may receive a discount of MSRP less 25%/25%/10% and is shipped Full Freight Allowed. Calculated as MSRP x .75 x.75 x.90 or MSRP x .50625.

25/25/10 is a DISCOUNT CHAIN - not a store chain. .50625 is a MULTIPLIER the effective discount in this example is a 43.75% discount

Note that 25+25+10 is not equal to 50.625

An order of $5,000 MSRP may be billed as MSRP less 25% , Freight Collect.

 

 

I know MAP as Market Area Pricing. This is the manufactures ATTEMPT to dictate the final retail sale price of an item. It can vary regionally (Southeast, Northwest, tri-state area, etc.) This is as close as they can get without actually dictating the price, as that would be illegal under the Sherman Antitrust Act.

 

Bottom line: published prices (MSRP, MAP, etc.) are only a tool the make price discussions easier among manufacturers and distributors, and to trick consumers.

The price of any object is what a buyer is willing to pay.

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Not sure that small stores could meet the demands of the (middleman) distributors for excessive annual purchases required to be an authorised dealer. I suspect if we see a new Gibson or two in a small store they might have just purchased it at mates rates from a big store who are in turn trying to hit their own turnover quota.

 

So your point re big box stores is pretty much true by default - though more at the hands of the distributors then the manufacturer - not sure how it works in USA, maybe Gibson sells direct to stores?

 

 

I think they do.

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In my industry, MAP is between the brand and the dealer as part of their dealer contract/agreement. NO laws against it, only the chance of losing your franchise.

 

In my opinion, MAP came about because you had dealers who were trying to make a fair profit who sold items at or near MSRP, but most retail franchises require that you purchase/sell a certain quantity of products to be a qualified dealer. What happens then, is if you have a dealer who struggle to meet their required numbers, they start selling at crazy discounts just to move the numbers even if it means a lower profit. In my industry(snowmobiles) they finally went to having a MAP policy so those dealers could not advertise and draw customers away from dealers charging higher prices. You ARE allowed to charge what ever you want in your store......they can't FORCE you to make a profit(as stupid as that sounds, it happens).......you just can't advertise it.

 

MSRP is exaxtly what is says.....Manufacturers suggested retail price. That doesn't mean much either.....lol.

 

For example, for YEARS, Harley Davidson motorcycles sold WAY above MSRP......how? why? Because there were waiting lists of people who were willing to pay for one.

 

 

For me personally when it comes to guitars, I use what I've learned in my career. I would rather pay a little extra from a good local reputable dealership than to buy the cheapest one possible from anywhere. That extra money is worth it to me to be able to walk into a store and speak to a human and resolve any issues or needs that may come up. My local shop has saved me more in time and stress by helping me with little things that I could NEVER get from say an online dealer or anything, that the slight difference in pricing is well worth it to me.

 

NHTom

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The internet was a large factor in the move to MAP pricing. In the old days, brick and mortar stores would advertise "we will beat anyone's advertised price". A coustome would then come to the store with the ad for thier widget (in stock, same model) at a sale price and get the same price at their local store. With the increase in internet sales and on line only stores, everyone could have a sale at anytime on the same model. Manufactures started holding retailers to MAP to prevent high volume retailers from undercutting every one else. They can still sell at any price, but they can't advertise below MAP.

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So, if Gibson has done away with MSRP and only has MAP, what should I expect to pay for this Himmingbird Vintage listed at $4949??

 

Sweetwater is selling it for 49hunnert something, with a list of 63hunnert something. So knock...25 off of 63 hunnert and try for that from a decent sized Gibson seller, 6383 - 1595 = 4788. In person, in a decent store, you might get it to 30 off the list, 6383 - 1915 = 4468. If you are really lucky and they want to move one bad you might get 40 off, but with Gibson that can be a stretch sometimes. If I wanted one I'd probably be happy 30 - 35 off 6383.

 

rct

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