Bubble Magus Pricing

[Ron99]

In respect to a sponsor's request to keep this discussion out of his thread I would like to continue the discussion here. I would like to explore the reasons for the often large disparity in pricing of products in Canada vs. overseas pricing and specifically the Bubble Magus line.

Now I will first start by saying I think that the Bubble Magus line are a great bunch of products that are well made and work well. Their most attractive feature, however, was their price. The Bubblke Magus skimmers are as well built and perform as well or better than many other brands that are (or were) priced higher than Bubble Magus. I think that is what made Bubble Magus so attractive was the price point vs. the competition. They were bringing a quality product to the market at a very attractive price.

Now that some exclusive distributors have taken over the line the prices in Canada are much higher compared to overseas and the reasoning given does not seem sound to me.

So first let’s do some price comparisons:

Product China Price Canada Price Difference

BM-NAC6 skimmer $130 $195 $65 (+50%)
BM-NAC7 skimmer $170 $240 $70 (+41%)
BM 150Pro skimmer $236 $379 $143 (+60%)
BMQQ nano skimmer $68 $139 $71 (+104%)
BM 180CS skimmer $305 $500 $185 (+64%)
BM 220CS skimmer $500 $800 $300 (+60%)

BMT-01 Dosing Pump $276 $320 $44 (+15%)
BMT-02 Dosing Pump addon $130 $260 $130 (+100%)
BM 2.5L liquid storage bucket $20 $60 $40 (+200%)
BM 5.0L liquid storage bucket $25 $75 $50 (+200%)


The distributor attributes the higher costs to shipping costs, duties and providing warranty support. He also stated that they are paying the same to Bubble Magus as the Chinese retailers charge us or something to that effect (perhaps he would clarify that as the original post is not there anymore). Let me state my take on it:

1. Shipping costs. I was quoted $70 to ship a BM180CS skimmer from China by EMS. The distributor is having them shipped in a container by sea so the cost per unit to ship will be far less than $70. So that still leaves room for markups etc. and I would say the prices of the NAC line of skimmers are reasonable in Canada vs. the cost to get one from China. However, the prices of the Aquabee equipped 150Pro and CS cone skimmers is a bit inflated vs. the Chinese prices at close to $200 and $300 more than the overseas prices. There does not seem to be some set percentage or per item markup to cover shipping. It is somewhat variable.

2. Duties. I was not able to find specific information on this but it looks like there may be no duty on aquarium equipment. So the importer would pay GST and possibly some brokerage fees if using a customs broker instead of doing the paperwork themselves. I may be wrong about the duties but I could not find aquarium equipment in the tariff listings and haven’t taken time to try to contact Canada Customs to find out. If somebody knows about duties on aquarium equipment please chime in.

3. I would be curious to know what the cost of providing customer and warranty support is as a percentage of their sales. Shouldn’t be a huge percentage unless you are selling a bunch of low quality product which Bubble Magus does not appear to be. And from what I have heard from others this particular vendor isn’t the most responsive or helpful when it comes to warranty support.

4. Finally, it was implied that the wholesale price Bubble Magus is charging the distributor is the same as what the Chinese retailers are charging. I find this doubtful. Bubble Magus should set their wholesale price and the retailers then add a markup for their profit. I would find it had to believe that the wholesale price charged to Chinese retailers would be that much lower than what is charged to overseas customers. Sorry I don’t buy it.

So basically, I would like to understand the economics of the price differences. It doesn’t make sense to me and the reasoning presented in the other thread just did not seem believable.

There was some implication that Bubble Magus were not seen as a quality product because the prices were low. That is just an excuse to try to price gouge. Sorry. The attraction of the Bubble Magus line was the value proposition. Good quality products at lower prices. At these prices Bubble Magus is just another option in a sea of competitors and will not sell as well as they could at better prices. Those dosing solution containers are especially overpriced at 3 times the price for the same product in China.

I would love to hear some other opinions or additional input on this.

[mark]

The attraction for BM when they came out was the cost for the product, now with the huge markup as part of the exclusive distributorship, I'm sure lots are staying with the other mainstream lines.

I agree, would think the cost of shipping a whole container rather than shipping individually would bring the total overall cost down, can't understand what happened there.

As for increased cost due warranty and custom service, balanced against that I've be running my ASM G3 skimmer for about 5 years, with no problems and really a skimmer is a simple device, I'd like to keep the cash.

[gobytron]

Guys...
this is just the thing...lol

When the bubble magus frst came out retailers and high tech hobbyist alike were purporting the age old aquarium addage of "you get what you pay for" and dismissing them as cheap, made in china crap.

Then some brave (and cheap...lol) souls actually tried this line and reviewed them and suddenly the proof was out there.
A quality product for a fair price was on the market.

How long did you think it would take before retailers realized that significantly higher mark ups would equate to significantly higher profits?


You can't escape from this cycle, it's just free market capitalism at its finest.

I wish I'd thought of ordering them in bulk or inking a contract with the manufacturer or distributor in china and marking them up to sell to all of you.

[Ron99]

Originally Posted by gobytron

Guys...
this is just the thing...lol

When the bubble magus frst came out retailers and high tech hobbyist alike were purporting the age old aquarium addage of "you get what you pay for" and dismissing them as cheap, made in china crap.

Then some brave (and cheap...lol) souls actually tried this line and reviewed them and suddenly the proof was out there.
A quality product for a fair price was on the market.

How long did you think it would take before retailers realized that significantly higher mark ups would equate to significantly higher profits?


You can't escape from this cycle, it's just free market capitalism at its finest.

I wish I'd thought of ordering them in bulk or inking a contract with the manufacturer or distributor in china and marking them up to sell to all of you.

Gobytron, that's the attitude that causes the problem. Why should we just accept it as a product of capitalism? It's up to us as consumers to vote with our wallets. We can also use this new fangled interwebs thing to spread and discuss this information with large numbers of hobbyists. If enough people complain about the pricing and buy other products then perhaps things change. Do nothing and just accept it and nothing changes.

I for one do not like to be overcharged for things and am always seeking ways to find a deal or get the best price. Ordering from China was not difficult. It arrived quickly. They provided good support for a small problem. Oh and the bonus was that the package was not charged any taxes etc (sometimes you get lucky and Canada Post doesn't charge the tax) so I saved a bunch there too.

Buying here I would have overpaid and also paid PST and GST on top of it. So I figured I saved nearly 20% on my Bubble Magus skimmer and dosing pump. If I had bought a higher end skimmer my savings would have been much larger. I would have spent about 30% ($185) less on a 180CS. $185 is a good chunk of change.

So vote with your wallets and voice your opinions. When you buy that Reef Octopus skimmer instead of the Bubble Magus (or better yet, skip a purchase altogether) tell the retailer that you were interested in the Bubble Magus and would have bought it if the price was better. The message will get across if enough people deliver it.

[dankent]

The markup is there . .... but i do agree with shipping and cost to support might be the difference if the importer is actually the one supporting the product .... In most cases i doubt it.

They even have a decent website .... so i wouldnt doubt they handle there own support / replacement parts .

Currently looking at one myself .... or an ASM skimmer ... ASM i have experience with. So undecided so far, and trying to find a reliable review .. not just " Pulls out gunk " would help hehe.

[gobytron]

supply and demand Ron.

Unfortunately makes the world go 'round.

[Aqua-Digital]

Ron,

This is quite simple if you wish to understand how distribution works and why manunfacturers wish to use distributors

yes i agree 100% getting a distributor involved increases the product price, But by doing so you give a genuinely good product a market available to the many not just the few that wish to shoot their luck with sending some $$ over to China and hope they get something back in a useable state.

Ok onto prices.

Originally BM were selling to anyone at their factory price, no hiding this fact, but also this created the issue they have now moving into main stream marketing. basically you could (minus duties taxes and shipping) prior to February this year get a BM for cost price, wahoo BUT their market was restricted to only those willing to buy oversees, they had zero marketing and no country based product support.

So for the company to establish itself it needed to create a distribution base, this means distribution margins and retailer margins, and this brings me onto two points

Why have a distributor - this is wholly down to two reasons 1. Very few small stores wish to purchase in the numbers that a factory demand so by not having a distributor again the product becomes market restrictive to the masses. and 2. support, a client wants to know they can get fast easy access to resolutions when things do not go overly well.

So pricing. Well you know roughly what the product costs us shipping for a $10,000 order cost approx by sea freight $1500 so here immediatly is 15% across the product range. This is how all distributors work out shipping costs.

You then have taxes duties and disbusements, this can range from 0% to 6% depending on how customs view the shipment when it lands, basically this depends on how many entery lines they wish to charge us for.

So what is my margin - about 20%! shock horror wow, ok now sit back a slurp that beer and think, thats Gross margin, many dealers want free shipping then there is packing costs, advertising, cost of spare parts for warranty, no the factories do not offer these for free, then there is shipping losses, always happens with sea freight especially, no factory replaces those losses, so taking all that into account we may be lucky and see EEK 10-12%

Dealer margin - dealers have huge expenses to offer you a funky store front to go a browse on saturday afternoon they also have to offer from time to time things like free shipping to stay competitive just because mr cheap skate wants to shop for a deal and drag the poor dealers margin down further, did he not realise the guy behind the counter does not live on bread and water?

Dealer margins for any product run gross between 25% to 40% did you know other skimmers have margins of 50% plus!!

Yes i am sure you will rip this apart somehow but lets just sit back and look at reality. yes we all like the concept of Walmart pricing, but for a manufacturer to have any chance of mainstream supply they have to have retailers and distributors making sure the product is out there for all not just for the few willing to use their paypal account and send some dosh across to China.

Look at the big picture for the company making the unit not just your own need for cheap as possible irrelevant of effects. And yes prices went all over the place for sometime while real costs were worked out. Now they are set and set to stay.

[Ron99]

Aqua Digital,

I do understand some things about importing and retail and distributor markups as I ran a business importing and selling model race cars from around the world. But some of your reasoning still does not make sense.

Firstly, most of us are buying from Chinese retailers such as fish-street or reefshops. They are not Bubble Magus selling direct but retailers in China. So the wholesale price that Bubble Magus charges for their product is less than the retail price at fish-street etc. We were not buying at factory direct prices, we were buying at chinese retail prices. If Bubble Magus is charging you the chinese retail price for large wholesale purchases you better be renegotiating with them. Now, if they want to expand into the newer markets they should be working with you to offer the best wholesale price possible in order to build their new market. You make up the small loss in per unit profit by significantly increasing sales volumes and make more money overall. That is standard and prudent business.

So let's run a hypothetical scenario. The BM180CS is $305 retail in China. Let's assume a 30% wholesale discount (although the usual discount is 40%) which gives a wholesale price of $213.50. Add your 15% for shipping brings the cost up to $245.52. Let's now add another 6% for brokerage fees and duties etc. as you indicated. We're now at $260.25. Your distributor margin is 20% bringing the canadian wholesale price the dealers pay to $312.30. Add 40% to that for retail markup and we have about $438, not $500 and also a significant increase over the overseas prices. So why is MAP at $499? I think most of us would be willing to pay a $50 premium to buy a skimmer locally rather than overseas. But a premium of $120 or more seems a bit high for most of us.

And how do you explain the prices of the dosing buckets? They are $20 and $25 in China and $60 and $75 here. That is a pretty significant increase. That's not a 50% increase but a 200% increase.

Now your comment about spare parts makes no sense. Do they not offer a manufacturer's warranty? If not then perhaps it's not a product worth carrying but as far as I know any decent manufacturer offers some sort of warranty. So I don't see how you are out of pocket for replacement parts which should be covered under the warranty.

Nobody is trying to stop you or the retailers from making money. My problem comes from the apparent extra money making at some stage here. The excitement over Bubble Magus was the expectation that we could have a quality product at a lower price then the competition. But now it is priced in line with the competition and some of us are disappointed and unhappy with that.

Walmart has nothing to do with it. The pricing of the product as available overseas sets expectations here. Yes, we expect to pay a reasonable premium over that once its available here. Some of us think the current premium is not reasonable. As I said above, if you want to expand sales do it by offering better value then the competition and you will expand sales and everybody makes more money; the manufacturer, the distributor and the retail stores.

But don't keep changing your tune and blaming shipping costs, or duties and taxes, or warranty support or some notion that price affects perceived notions of quality.

And you will have to deal with the new world economy. The internet and Paypal and international sellers are here now and it is easy and, for the most part, safe to deal with sellers all over the world. Buying things from all over the world on the internet is increasing all the time. You need to recognize that and adjust to it too. It's not about throwing dosh to China and hoping for the best. That is nothing more than a scare tactic to justify higher prices here. More and more people are doing this as they don't want to pay excessive premiums for things. I found dealing with the Chinese retailer to be a good experience. They were eager to help, shipped our order quickly and gave support afterwards. So why wouldn't I and others do the same to save large amounts of money? Where's your value proposition to the consumer? Really, why should I buy it locally vs. overseas? You have yet to provide a compelling reason to justify the much higher prices on much of the Bubble Magus line.

[Aqua-Digital]

Just an FYI Ron, BM shut down supply of Fish street to stop them under selling their product line into the North American market.

You will find it very hard now to source BM from within China directly unless it is old stock, BM have shut everything down to protect their product brand from devaluation.

I have provided a very compelling reason wy BM is now more expensive. BM wants it accessable to all, not the few. If they want to set a price they feel the product is worth irrelevant whether you feel it is justified based on a very blinkered view and not looking at long term growth of a company, then this is up to them.

Lets put it another way, we imported nearly $20K of bubble magus in April, we sold all of it, and so did dealers, I think that is enough proof the price is set fairly at a price people think the product is worth, if not, simply put, we would be stuck with a whole lot of kit.

So the product sells well at this price, clients love the product, build quality and support, so I fail to see the problem other than the select few as always looking for a rock bottom bargain with no care what so ever of long term effects this sort of thing has on the survivability of our hobbies dealers

Go get a BM bucket shipped direct from china "if you could even source one" and then let me know what they would charge you in shipping. OOPs I have the answer here $48 direct to your door just for the shipping!

Not exactly $25 bucket anymore eh!

As i said above, the product sells at these very reasonable prices and if you had not sen what they were being sold for direct before, then we would not be having this discussion, and in 6 months from now when the masses have access to the product and many new lines have been introduced, providing the client is happy, which seems they are, whjy should a factory bend to the few that just want "that deal"

Lets all bow down to Walmart and Ebay and look at what they have done to the global economy, wahoo mega cheap prices, suppliers struggling to stay in business to keep up with consumer greed for far reduced MAP prices way below product worth, and where will we all be in 10 years? Sourcing out of China direct to appease the few that dont see past their own view point and dont care who suffers down the supply chain.

Sad world we live in it really is.

Accept a product price or dont buy it, move on. Debating it here is changing nothing and certianly does not change any market strategy when we are stretched already to meet consumer demand.

[Ron99]

Originally Posted by Aqua-Digital

Just an FYI Ron, BM shut down supply of Fish street to stop them under selling their product line into the North American market.

So why did they do that? Was there some outside influence Some posts on Reef Central suggest that somebody influenced BM to raise the MAP in North America. They seemed happy selling at the previous price before you came on the scene.

Originally Posted by Aqua-Digital

You will find it very hard now to source BM from within China directly unless it is old stock, BM have shut everything down to protect their product brand from devaluation.

Honestly, what the heck does that even mean? Protect the brand from devaluation? Whatever. They make it. It costs them a certain amount to make it. They add a reasonable margin on their production costs and that sets the wholesale price which in turn sets the retail price. That's the way it works before the greed of middle men etc get in the way. They were obviously happy selling at the price they were before "exclusive" distributors stepped in. Did it devalue the brand when fish-street was selling at price X? How exactly? They made sales to North America, Bubble Magus increased their sales because product was now going out of China and word started to spread that Bubble Magus was decent stuff at an attractive price. I doubt they were losing money or sitting there wishing that they had priced them higher? They made a product and sold it at what they thought was a reasonable price. End of story at that point.

Now you step in as the exclusive distributor for Canada and low and behold, they are underpriced which devalues the brand and the prices need to jump up drastically? Give us a break. Do you think we're stupid?

Originally Posted by Aqua-Digital

I have provided a very compelling reason wy BM is now more expensive. BM wants it accessable to all, not the few. If they want to set a price they feel the product is worth irrelevant whether you feel it is justified based on a very blinkered view and not looking at long term growth of a company, then this is up to them.

No you haven't. How does greater accessibility mean higher prices? You make these statements that have no basis in logic and do not make business sense. As I stated above, they have a manufacturing costs and then they set a mark up based on that cost. So what you are saying is they raised their wholesale prices? They are now charging much more for their product then they used to? That doesn't make sense unless the production costs have gone up drastically or they are spending a ton of money on R&D for new products. If anything, producing in higher volumes to meet the demand in new markets should drive per unit production costs down. Or did somebody tell them they could price them higher in North America so let's go for it?

Originally Posted by Aqua-Digital

Lets put it another way, we imported nearly $20K of bubble magus in April, we sold all of it, and so did dealers, I think that is enough proof the price is set fairly at a price people think the product is worth, if not, simply put, we would be stuck with a whole lot of kit.

Well bully for you. I guess you found lots of people who don't know any better or are sheep and don't want to question things. I feel sorry for this hobby because to many product are overpriced. You can argue otherwise but that's the truth. Slap "For Aquarium Use" on a product and the price goes way up compared to the same thing for another use.

Originally Posted by Aqua-Digital

So the product sells well at this price, clients love the product, build quality and support, so I fail to see the problem other than the select few as always looking for a rock bottom bargain with no care what so ever of long term effects this sort of thing has on the survivability of our hobbies dealers

It's not about a rock bottom price. It's about a reasonable price given the actual manufacturing and wholesale costs of the item in question. As I said, I am more then happy to pay reasonable premiums on things. Our argument thus becomes "what is reasonable?" So our hobby will only survive if we allow greedy people to overcharge us for products without question? Traditionally Canadians are passive and just accept that we pay more for things. But not all of us want to accept that and more and more people are starting to look beyond our fine Canadian tradition of screwing the consumer. That's why both my wife's car and my car were purchased south of the border saving thousands of dollars. More and more people are shopping on the internet outside of Canada because we want value for our dollar. It will catch up with you eventually.

Originally Posted by Aqua-Digital

Go get a BM bucket shipped direct from china "if you could even source one" and then let me know what they would charge you in shipping. OOPs I have the answer here $48 direct to your door just for the shipping!

Not exactly $25 bucket anymore eh!

Well by your numbers in a previous post that $25 bucket should cost no more than $51 here. And that is assuming you are paying Bubble Magus $25 for it wholesale which I doubt. So where does the extra 50% markup come from? You throw out all sorts of catch phrases and rhetoric but no numbers or facts to back it up.

So, did Bubble Magus drastically raise their wholesale prices thus causing the big increase in prices here from your first "estimates" and compared to overseas prices? Yes or No? Your original estimated price for a BM180CS was $349. Now it is $499. That's a big difference of 43% higher then your estimates which were only going to change based on small currency fluctuations and shipping costs. So you must have come up with those original estimates based on what Bubble Magus said they were going to charge you for their product? So I ask again, did Bubble Magus drastically raise the wholesale price? Yes or No?

Originally Posted by Aqua-Digital

As i said above, the product sells at these very reasonable prices and if you had not sen what they were being sold for direct before, then we would not be having this discussion, and in 6 months from now when the masses have access to the product and many new lines have been introduced, providing the client is happy, which seems they are, whjy should a factory bend to the few that just want "that deal"

Again, did Bubble Magus raise their wholesale prices? If so why? Who influenced them to do so? Is your factory cost on a dosing bucket $25? Is your factory cost on a BM-180CS skimmer $305? Those are the retail prices in China so are Bubble Magus selling at a lower cost to Chinese dealers then to their North American distributors? If so then you could do the market a huge favour by negotiating lower prices. As I stated several times this would make Bubble Magus more competitive, sales go up quite a bit and profits increase due to higher volumes. Everybody wins. I am still not convinced that your costs are that much higher.

Originally Posted by Aqua-Digital

Lets all bow down to Walmart and Ebay and look at what they have done to the global economy, wahoo mega cheap prices, suppliers struggling to stay in business to keep up with consumer greed for far reduced MAP prices way below product worth, and where will we all be in 10 years? Sourcing out of China direct to appease the few that dont see past their own view point and dont care who suffers down the supply chain.

Sad world we live in it really is.

Accept a product price or dont buy it, move on. Debating it here is changing nothing and certianly does not change any market strategy when we are stretched already to meet consumer demand.

Yes, we should bow down to Walmart and eBay for offering us alternatives to overpriced products when we live in a country were we are overtaxed and many products are overpriced. We frequently go shopping for groceries across the border because the prices are so much lower. For example, dairy products are half the price a mere 15 to 20 minute drive south. We are overcharged for to much in this country and it makes me sad and makes us less able to compete on a global scale.

The state of the global economy has nothing to do with Walmart and eBay and everything to do with greedy banks and stock traders etc. And really, almost everything we buy is now made in China or has alot of Chinese made parts in it. That's the reality because if we had to manufacture alot of products at North American or European labour rates few of us would be able to afford them. if you don't like Chinese sourced product why are you selling Bubble Magus? Why is a Chinese made skimmer priced the same as non Chinese skimmers if that is the way to save money? I'm glad you are struggling to meet consumer demand and are happy ripping people off because you have given me no reason to believe that is not what you are doing.

Oh, and you're pi$$ing match with Ian just makes you look petty. Look out Ian, Aqua Digital is going to tell on you