Bubble Magus Pricing

[Aqua-Digital]

Hi Steve,

I have to correct one important point here

WE Aqua Digital DID NOT set the MAP price, lets be very clear on this.

Bubble Magus approached us as to what we thought the best MAP price would be, this was then taken to their company owner who then passed it onto all other distribtuors, as of yesterday ALL distributors and Bubble Magus agreed on the price.

I dont mind having muck thrown at me when it is deserved, but in this case, no we did not set the price and have no control over the MAP price.

Only last week we sent a revised price list with adjusted prices and here is the reply.

quote

Hi Michael ,
The retail price (shop price ) ,we still use previous price ,not the new price whcih you sent it to me some days ago .(please change your retail price at once ,thanks )
Regards
Jason


2010-05-20
________________________________________
Jason


In regards to claiming losses from shipping, our insurance bill would be mammoth if we claimed for every crushed skimmer we got, in fact our policy has a $5000 deductable, so yes this is quite valid as it is classed as uninsurable losses.

[StirCrazy]

Originally Posted by Aqua-Digital

Hi Steve,

I have to correct one important point here

WE Aqua Digital DID NOT set the MAP price, lets be very clear on this.

Bubble Magus approached us as to what we thought the best MAP price would be, this was then taken to their company owner who then passed it onto all other distribtuors, as of yesterday ALL distributors and Bubble Magus agreed on the price.

ah, but you did recomend the MAP and it was accepted which means you set the price. Basicly they were selling for xxx amount befor you.. you recomended xxx+xx amount for the N/A market and they said ok. then when you find out people can buy them cheeper overseas you send a e-mail complaining that local markets are undercutting you and selling in your area as per the agrement. the parent company either loses this market as they have signed some tearm with you as a minimum or they force the other retailers to increase prices..

I do have some experiance in distrubution as I am a distrubitor of a product in westren canada, but nothing to so with fish stuff.

Steve

[Aqua-Digital]

I am going to drop out of this now as it is important for you guys to talk amongst yourselves over this but I will pinpoint some important facts below

1. The MAP price is set by Bubble magus, ALL distributors put on the table what they feel is correct based on market conditions and BM set the MAP from there taking all costs and market influences into consideration. So if you are unhappy with it contact them, we simply put our costs and proposals down and BM thumped the numbers from there based on everyones input.

2. BM is a high grade range, but they made an early mistake in marketing by selling it to anyone at factory prices. This in the short term has created threads just like this as "everyones" expectations were set so price point low. This will take time to reverse but it will do.

3. The product is selling like crazy we cant keep it in stock, same as the other distributors, so does that mean we, BM, other distributors around the world got the price wrong?

4. For the product to have a legitimate right in this maket it needs correct pricing and fair pricing based on current market trends and client expectations. As the product has been well received at these prices BM will not change this, furthermore with these prices the product has become more widely available to more stores so more users have access to the product.

Whichever way, you can continue to blame AQD for the price but then you are ignoring the genuine facts as per the email I placed in the last thread which clearly shows BM controlling our price.

[DiverDude]

This is classic.

A company (Buble-Magus in this case) develops a product and make it available for sale. After a while, customers are finding this to be a good thing at a damn good price. Word spreads throughout the community. At this point, product is being sold direct, on eBay, whatever it takes. Reputation is still below the radar though and most companies won't stock it.

Pretty soon, demand rises to a point where Bubble Magus realizes that they are losing out because their distribution isn't effective.

Around now, businesses are being asked for the product by the public and realize they can move units. Bubble-Magus is suddenly the hot, loose chick at the dance !

Now the problem becomes how to get rid of all the channels they had before the distributors came online.

Nothing new here; we're just watching the beginnings of a new company entering the market and we're seeing a few of the ugly truths of a market economy along the way. Most of us would be disgusted to learn how little it costs to make many of the products we buy every day but there's manufacturing costs, employee costs, insurance, distribution, warehousing, marketing, blah, blah, blah.

Of course, the guy at the LFS has to make some money on it too -and you should be happy that he does because if he didn't there wouldn't BE a LFS for you to run to when you needed it.

As a consumer, I always look for the best deal I can but I don't feel it's fair to berate businesses for working the system and trying to make a buck. Shop around; competition is good and makes sure that prices aren't inflated. In the end, speak with your wallet. If you can find something somewhere else for less and you're willing to wait , ship, etc. then go for it.

[imisky]

I always find these types of threads funny

There has been some pretty good points brought out on both sides, both by Michael and Ron/hobbyists.

Having worked as an distributor for ADA i can say that importing duties/ taxes/shipping price DOES take a big bite out of the profit of a distributor if they buy small quantities but when the amount gets near $10,000+ range most manufacture are willing to work out a deal with the distributor to cover a portion of the shipping cost so what it comes down to is the duties which isnt all that much..maybe a few %.

I wont give out the actual total of the shipping cost but i can say my purchases with ADA was under $1000 shipped to get a large quantity of products in which weighs 100-200 times (40lb bags) more than that of any skimmer/acrylic product but that doesnt apply as much since BM products going to Michael are in containers.

There are usually a fair amount of restrictions giving to a distributor on how they can sell there a product, in the case of ADA they had restricted no selling in the home country of ADA, pricing has to be higher or equal to that of home country distributors but in the case of ADA distribution we did not have an MAP but a MSRP.

Now i have to say a few things about Michael's list of few things he left with us.

1. The MAP price is set by Bubble magus, ALL distributors put on the table what they feel is correct based on market conditions and BM set the MAP from there taking all costs and market influences into consideration. So if you are unhappy with it contact them, we simply put our costs and proposals down and BM thumped the numbers from there based on everyones input.

I have never seen a manufacture ask the distributors for a suggested MAP pricing, but this might be the case with BM as they are trying to break into mainstream supply . What doesnt make sense to me is why BM is willing to cut out home country supplies just so they can break into mainstream distribution with a enough distributors to count on both hands, and that leaves me with 1 question, what happens to all those units that was sold in China, how do they get warranties?

2. BM is a high grade range, but they made an early mistake in marketing by selling it to anyone at factory prices. This in the short term has created threads just like this as "everyones" expectations were set so price point low. This will take time to reverse but it will do.

I am not quite sure if that is a 100% true argument, i mean BM quality is definitely good, but i wouldn't put it in the category of high grade yet. But them stepping into Eheims and Aquabees is definitely a start to the change of quality of product. No one in this hobby expects cheap products anymore...we all expect the next skimmer to come out to have a hefty price tag. All that BM did was offer a product that we hobbyists thought was in the right price range, and for the first time...the product was not crap.

3. The product is selling like crazy we cant keep it in stock, same as the other distributors, so does that mean we, BM, other distributors around the world got the price wrong?

Same reason as stated above.

4. For the product to have a legitimate right in this maket it needs correct pricing and fair pricing based on current market trends and client expectations.

The biggest question is, how do you determine correct pricing, what manufacture set? or what hobbyists perceive as fair in terms of quality/service and etc.

[Ron99]

Originally Posted by Aqua-Digital

I am going to drop out of this now as it is important for you guys to talk amongst yourselves over this but I will pinpoint some important facts below

1. The MAP price is set by Bubble magus, ALL distributors put on the table what they feel is correct based on market conditions and BM set the MAP from there taking all costs and market influences into consideration. So if you are unhappy with it contact them, we simply put our costs and proposals down and BM thumped the numbers from there based on everyones input.

Yes, BM has final say on the MAP but you obviously had influence on that. Higher MAP means higher profits for you does it not? Enough said.

Originally Posted by Aqua-Digital

2. BM is a high grade range, but they made an early mistake in marketing by selling it to anyone at factory prices. This in the short term has created threads just like this as "everyones" expectations were set so price point low. This will take time to reverse but it will do.

As stated by others, BM is a decent mid range product, not high end. And I still don't buy this argument. They were not selling me a skimmer. They sold it to an overseas retailer who bought it from them just like they would get any other product directly from the manufacturer or through a distributor. I bought it from that retail store that happened to be overseas instead of down the street. So Bubble Magus had a wholesale price they sold at and the retailers added their markup and that's what I paid. Retail price in that market, not factory price. Stop trying to make this sound like Bubble Magus was selling directly to end users. They were not.

Originally Posted by Aqua-Digital

3. The product is selling like crazy we cant keep it in stock, same as the other distributors, so does that mean we, BM, other distributors around the world got the price wrong?

I guess in the end they (or you) charge what the market will bear. Good for you guys. Doesn't change the fact that they could have had larger market share by having a slightly lower price. Also doesn't change the fact that you and they have lost some additional sales due to the increased price. Eventually the initial spike in interest for BM will fill and they will become just another product competing with the Reef Octopus and Vertex and eShopps etc. I am far less likely to buy a BM again if there are other competing products in the same price range. I am not alone in that.

Originally Posted by Aqua-Digital

4. For the product to have a legitimate right in this maket it needs correct pricing and fair pricing based on current market trends and client expectations. As the product has been well received at these prices BM will not change this, furthermore with these prices the product has become more widely available to more stores so more users have access to the product.

That is bull$hit. Sorry but it is. This is a bunch of hand waving BS to try to justify a certain price point that has little basis in the economics of the actual product and more on the economics of how products in our hobby in general are marketed. Market trends and client expectations should be far less of a concern then what it costs to to make the product plus a reasonable profit for all levels in the distribution chain. And how exactly does higher pricing equate to greater availability? Really, can you come up with a logical argument? Lower pricing would mean higher sales driving more demand from retail stores wanting to carry the line due t even higher demand from the customers.

Originally Posted by Aqua-Digital

Whichever way, you can continue to blame AQD for the price but then you are ignoring the genuine facts as per the email I placed in the last thread which clearly shows BM controlling our price.

What facts? Them confirming a MAP that you yourself said you had input into it?

You still didn't answer my question. Who is profiting from the increased MAP? Bubble Magus or you? Did BM raise their wholesale price significantly along with the raised MAP? Or are the other levels in the supply chain the ones benefitting more from the higher MAP?

[OceanicCorals-Ian-]

Originally Posted by Ron99

You still didn't answer my question. Who is profiting from the increased MAP? Bubble Magus or you? Did BM raise their wholesale price significantly along with the raised MAP? Or are the other levels in the supply chain the ones benefitting more from the higher MAP?

Bubble Magus did not raise their wholesale pricing.

[Ron99]

Originally Posted by Aqua-Digital

2. BM is a high grade range, but they made an early mistake in marketing by selling it to anyone at factory prices. This in the short term has created threads just like this as "everyones" expectations were set so price point low. This will take time to reverse but it will do.

Just to add, you yourself set those expectations when you posted estimates of prices that went up dramatically by the time they actually reached the market. Now those original estimates must have been based on crunching the numbers such as the wholesale price from BM, the shipping costs, duty etc. which you should have been able to do easily since you have been in this business for a while.

You set some expectations and those then changed quite a bit. Not just a little but alot. A 180CS went from $349 to $499. That's a big jump. It's not unreasonable for us to now want an explanation as to why that went up so much. Who is the beneficiary of that big price jump? Goes back to my original question. Did BM raise the wholesale price dramatically? Did they raise it at all? Or are you benefitting from the big price jump?

[Sebae again]

I believe BM did not make a mistake early on. They new exactly what they were doing. They looked at the needs of market and made a skimmer that looks like certain ''other'' skimmers and priced it to sell to the masses.Their only mistake might of been their marketing or was it? Maybe originally it was only meant to be sold in Asia because the first time I saw these when they were sold online,the very first thing that came to mind was patent infringement.So now everything seems cool,they are selling like hot cakes,the original price is looked at by various people Hey,I can make more money or have a piece of the pie! Yes to a certain point but when you start putting Caddilac prices on Chevys , the crowds of Chevy customers start leaving. Not that there is any thing wrong with Chevs, it's just that you've lost your market share. Don't worry people.Before too long there will be another skimmer that looks like another certain skimmer which resembles another skimmer at a reasonable price. China never sleeps.

[titus]

Hello,

Guys, I haven't read through the whole thread and I won't bother. But I'm just shaking my head simply from reading the comments some individuals have been making.

Telling off a distributor that his comments on market trends and client expectations is BS sounds to me that this is more like a personal issue than anything. Different people are entitled to have different estimates.

Market participants have the right to set prices at whatever they want. If consumers don't like the price, they can do two things: 1) Buy another product and eventually demand will fall to the point that the price needs to be adjusted, or 2) Buy it direct yourself.

Now, three experiences I do want to add:
1) There can be duties with aquarium goods. I used to import products and had to pay duty. It depends on the material and country of fabrication or assembly.
2) There are breakages with shipments. Just because an end user didn't experience this due to luck on a one time purchase doesn't mean a distributor doesn't see this with consistent purchases. Filing claims on damages do take time and sometimes the process involved just ain't worth it.
3) Businesses do need to make a profit, and this profit comes after all the rent, salaries, bills, taxes are all paid for.

Just to provide a comparison, does anyone know how much does an average Coach bag costs in Asia compared to North America? It works out to about 30% more expensive in Asia.

So what? People are going to file a petition demanding explanations from the Asian distribution chain? I'm sure that will hit the press as the joke of the day.

Just because an Asian consumer can order direct from Coach.com and get it shipped across without having to pay taxes and duties doesn't mean the local retailers don't have to pay for rent, insurance on the storefront and employees, advertising, warehousing, bills, salaries, corporate taxes, shareholder dividends, interests, etc. After all these you still need to have profit left over or the equity owners doesn't have an incentive to invest and run the business.

If someone really have the time, go take a look at some companies' corporate filings rather than trying to argue to death about something like this, which really isn't constructive in adding to knowledge on how to run an aquarium. A huge portion of the annual revenue goes to stuff that doesn't apply to the average individual.

Titus