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Kite Prices Inflated and Fixed (End of Story...)

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  • wickedkiter
    I like the discussion of kiting prices and your estimates and miscalculations of kite costs. Until last year, I worked in Florida for a large kite retailer
    Message 1 of 2 , Nov 4 8:55 PM
      I like the discussion of kiting prices and your estimates and
      miscalculations of kite costs. Until last year, I worked in Florida
      for a large kite retailer (don't ask for the name, I'm not saying).
      I loved placing orders, etc. During every discussion, we (as
      retailers) were told by wholesalers to keep our markup as close as
      possible to MSRP, but to NEVER go below a 25-30% markup above our
      cost. If we did go below 25%, we would lose our account.
      Interesting talk in a free trade economy, don't you think?

      Why was this? Simply put--It's price fixing. This made me wonder,
      how much wholesalers actually make. The following example may shed
      some light on this. At the end of last year's season, Cabrinha (or
      their main distributor--also out of Florida) sent out a flyer for
      closeouts on blacktips and directional starter combo sets. The price
      you ask? Our wholesale cost was $399.00 for both the board and the
      kite/bar/bag/pump--Any size. This was rather a shock considering we
      had been purchasing kites sets at the full wholesale cost for the
      entire season for $575-$725 depending on size.

      The store I worked for sold a lot of kites, including stunt kites,
      and the typical retail markup on stuntkites is 50% to 100% (Also,
      there's no threats of account deletion for retail sales). In
      contrast, the typical retail markup on a kiteboarding kite is 25%.
      Thus, if you paid $575 for a kite and managed to get 25% you're
      making a whopping $143.75. Not very lucrative... I mean think about
      it. If we sold 10 kites in a month, we've made $1400.00. The
      monthly rent on our store was $1,100.

      I believe the premise behind this strategy is to establish a price
      standard; however, what the industry doesn't understand is it's
      shooting itself in the foot. Wouldn't more people come to kiting if
      costs were low? Thus, improving volume, increasing distribution and
      profit.

      But who is getting rich here? Surprise, many of the same companies
      which made a killing on windsurfing. Thus, since there pricing is
      established, it's established--It is not going to change in 2006.
      Because you as the consumer view your 2002 kite as being some mutant
      worthless piece of junk, thus you MUST HAVE your 2004 or the guys at
      the beach will laugh at you.

      Solution: Fly it till it dies. Don't get a new kite. Or, instead
      get sponsored by one of the Top Industries. What is Lou's Wainman's
      salary anyway? I heard $40,000. In contrast, what is Robby Naish's
      salary?
    • swengelska
      Interesting viewpoint that fits well with other retail industries. Other things to think about: 1. a lot of kiters are moving from windsurfing and thereby
      Message 2 of 2 , Nov 6 11:41 AM
        Interesting viewpoint that fits well with other retail industries.

        Other things to think about:
        1. a lot of kiters are moving from windsurfing and thereby
        cannibalising the windsurfing sales.....
        2. Kitesurfing has a very steep learning curve. Both in terms of
        equipment complexity, safety and image. It may not grow to be huge
        sport...

        Tom

        --- In kitesurf@yahoogroups.com, wickedkiter <no_reply@y...> wrote:
        > I like the discussion of kiting prices and your estimates and
        > miscalculations of kite costs. Until last year, I worked in
        Florida
        > for a large kite retailer (don't ask for the name, I'm not
        saying).
        > I loved placing orders, etc. During every discussion, we (as
        > retailers) were told by wholesalers to keep our markup as close as
        > possible to MSRP, but to NEVER go below a 25-30% markup above our
        > cost. If we did go below 25%, we would lose our account.
        > Interesting talk in a free trade economy, don't you think?
        >
        > Why was this? Simply put--It's price fixing. This made me
        wonder,
        > how much wholesalers actually make. The following example may
        shed
        > some light on this. At the end of last year's season, Cabrinha
        (or
        > their main distributor--also out of Florida) sent out a flyer for
        > closeouts on blacktips and directional starter combo sets. The
        price
        > you ask? Our wholesale cost was $399.00 for both the board and
        the
        > kite/bar/bag/pump--Any size. This was rather a shock considering
        we
        > had been purchasing kites sets at the full wholesale cost for the
        > entire season for $575-$725 depending on size.
        >
        > The store I worked for sold a lot of kites, including stunt kites,
        > and the typical retail markup on stuntkites is 50% to 100% (Also,
        > there's no threats of account deletion for retail sales). In
        > contrast, the typical retail markup on a kiteboarding kite is
        25%.
        > Thus, if you paid $575 for a kite and managed to get 25% you're
        > making a whopping $143.75. Not very lucrative... I mean think
        about
        > it. If we sold 10 kites in a month, we've made $1400.00. The
        > monthly rent on our store was $1,100.
        >
        > I believe the premise behind this strategy is to establish a price
        > standard; however, what the industry doesn't understand is it's
        > shooting itself in the foot. Wouldn't more people come to kiting
        if
        > costs were low? Thus, improving volume, increasing distribution
        and
        > profit.
        >
        > But who is getting rich here? Surprise, many of the same
        companies
        > which made a killing on windsurfing. Thus, since there pricing is
        > established, it's established--It is not going to change in 2006.
        > Because you as the consumer view your 2002 kite as being some
        mutant
        > worthless piece of junk, thus you MUST HAVE your 2004 or the guys
        at
        > the beach will laugh at you.
        >
        > Solution: Fly it till it dies. Don't get a new kite. Or, instead
        > get sponsored by one of the Top Industries. What is Lou's
        Wainman's
        > salary anyway? I heard $40,000. In contrast, what is Robby
        Naish's
        > salary?
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