Paul Buff
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 p.5 #15 · Answers and info from Buff and others | |
Let me clear . . . we are not developing global lights because "we want to take over the global market". We are doing so because our email is filling up with requests for us to send equipment to all parts of the globe, plus we have a lot of domestic customers who travel the globe. Up until now we have filled all such requests, not because we want more business, but because people have asked us to.
Economics 101: Look at our structure: We are able to offer great value and service in the USA because we sell factory-direct on the simplest of terms. If a light costs us $150 to make and we have another $100 in costs (warranty service, buildings, heat and lights and phones, tech help, advertising, administration, R, wages, health insurance and the all important customer service, etc, we end up with $50 profit.
Now look at what happens when we direct-ship to a far away country: First, the operating cost go up dramatically. Our typical international sale literally takes ten times the time and effort in all administrative and customer service departments to fill and ship an order. We used to add 10% to cover these costs and we were bombarded with angry people who accused us of "hating the rest of the world and ripping them off", even though our profits were far less on these sales than on domestic sales. So we dropped the 10% surcharge and settled for almost zero profit.
Now we put ourselves in your shoes: When we ship to you we both get bombarded with regulations, paperwork, money transfer problems and huge shipping charges. (We already pass on our substantial UPS shipper discounts to you and make nothing on any of the above.) We can't help it if your governments charge you VAT and duties and all that - hey, you voted them in, not me. We're busy enough trying to keep our own government fro doing the same and destroying us in the process.
Now let me introduce the "standard business model" where the manufacture sells through distributors and dealers and reps and all that. We sell the same product to the middlemen for the $285 because this reduces our direct-sales costs a little bit, and we still make $50. But the middlemen, in the standard business model expects to buy at 40% less than what the product retails for so they can all make a profit. Based on this, our $300 product will cost you $475 in the USA. (You have to understand discount VS markup to understand this relationship.)
At this price we would sell many times fewer units so, if we still want to make the same bottom line we would have to raise the price to compensate for the lower number of sales. So distribution chain now pays us $360 and the USA customer pays $600 - a similar price to what they pay for similar equipment from other manufacturers. But it's a vicious downward spiral - our sales fall even further, our customer service is cut and our customers are no longer happy campers.
Now, apply this to International sales, which we must then have pursue aggressively in order to survive. We sell to our distribution chain for $360. After paying for the ocean shipping, import duties paperwork, then add their markup, the Euro MSRP price comes out maybe $700. On top of this you pay VAT - another what . . . 20%? Now your price has risen to $840 and we still make our $50 IF YOU BUY AT THIS PRICE. But you're not going to pay this price, so here come the discounters. They give up a large portion of their profit and sell it to you for $699. In the process, they can't afford customer service so you get a light in a box and little more.
I hope this is sufficiently clear as a demonstration of why our business model is such as it is and why we are not about to change it. Why should we ask our USA customers to pay $600 for the same product they now pay $300 for just so the rest of the world could "get a similar price"? Uhhh duh, I'm sure glad I don't have an MBA where they teach the Standard Business Model so I could sell half as much, all across the globe, and make 10% of the bottom line I now enjoy, and lose all the good customer will I have worked so hard to earn.
That said, we are currently exploring and negotiating distribution that bypasses as many middlemen as possible and which results in good service centers and customer service in two key geographic areas: Australia and Germany. (My last attempt at this in Switzerland resulted in me being robbed of $100,000 by Gotham Audio, We sent them inventory on good faith, they didn't pay us a dime and are now posing as our representative and selling unauthorized CyberSyncs they never paid for on eBay.)
But don't expect this to be utopia . . . you still have your governments and their VATs and duties to deal with, as well as the profit of the distributor and his costs of maintaining repair centers, advertising and many of the costs mentioned above.
Quite simply, you're not going to buy our product at the USA price any more than we're going to buy an Elinchrom at the Pakistan price. The world just doesn't work that way and I can't alienate my USA customers by attempting the standard business model.
I welcome any real world solutions as to how I can better accomplish this. But remember, I'm not a politician who can promise utopia based on empty words and promises.
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