"MAP" pricing....How long will it last????

[jimenezphoto]

So every so often Canon decides to enforce their "Minimum Advertised Price" policy sending prices for their cameras and lenses back to "MSRP" levels. Seems like price fixing to me but apparently it's legal. I was ready to purchase a Canon 6D With 24-105mm lens but went from being priced at $1999 to $2,499 overnight. I did not buy the 6D and I am glad because I decided not to compromise and buy the 5D Mk II. Having said that I will not pay MSRP. I am in no hurry and will wait for a sale. My question is how long do retailers go along with Canon before before they begin offering discounts on cameras and lenses. I don't see how raising prices across the board helps Canon sales, but I am no business expert. I am sure they know something I don't, but they will not get one dollar from me unless the gear is discounted. Any thoughts out there????

 

[lilmsmaggie]

I was just going to post a question related to Canon enforcing it's MAP which went into effect at the beginning of this month. I read that Best Buy recently tried to reduce its prices but then reverted back to the MAP in less than 24 hrs.

I too was looking at buying a new DSLR but not now. I just sold a 40D and T3i in anticipation of snagging a 6D or 5DMK III.

As they say in legal parlance; this latest enforcement move serves as a "Chilling effect" with respect to Canon DSLR sales. At least for me anyway. I'm sure there are consumers out there that will purchase anyway. So much for competition between dealers.

As for me, I'm taking a wait and see approach.

 

[unfocused]

I think I understand why they try to enforce MAP pricing. They are trying to protect their dealer network; not necessarily the large retailers, but the smaller shops that can't compete on volume and can't stay in business on the small margins that internet dealers accept.

Intellectually, I am sympathetic because I see the downside to massive internet retailers like Amazon, that have little to no investment in the community. They don't pay the taxes that support schools, roads, police, etc. etc.

On the other hand, like most consumers, I am interested in maximizing my purchasing power.

So, I am conflicted.

Two points though to keep in mind.

First, MAP pricing does not affect the manufacturer's price to the retailer. When Canon or Nikon or Sony enforce MAP pricing, they aren't earning any additional profit, the higher margin goes to the retailer. They continue to sell the product to the retailer at the price they've always sold it.

Second, MAP enforcement never works. Ultimately, the market sets the price regardless of MAP.

 

[Loswr]

...I see the downside to massive internet retailers like Amazon, that have little to no investment in the community. They don't pay the taxes that support schools, roads, police, etc. etc.

On the other hand, like most consumers, I am interested in maximizing my purchasing power.

To the extent that sales taxes support community services, Amazon is now collecting them on behalf of many states (mine included). Even without that, consumers in most states are obligated to pay use tax on items purchased from another state and intended for use in the home state. I'm sure all law-abiding citizens declare such purchases on their state tax returns... :

 

[edwyun]

I too was looking at buying a new DSLR but not now. I just sold a 40D and T3i in anticipation of snagging a 6D or 5DMK III.

Have you looked into Canon USA's refurbed units with 1 year factory warranty and 20% off MAP? 6Ds are available last time I checked.

 

[privatebydesign]

I think I understand why they try to enforce MAP pricing. They are trying to protect their dealer network; not necessarily the large retailers, but the smaller shops that can't compete on volume and can't stay in business on the small margins that internet dealers accept.

Intellectually, I am sympathetic because I see the downside to massive internet retailers like Amazon, that have little to no investment in the community. They don't pay the taxes that support schools, roads, police, etc. etc.

On the other hand, like most consumers, I am interested in maximizing my purchasing power.

So, I am conflicted.

Two points though to keep in mind.

First, MAP pricing does not affect the manufacturer's price to the retailer. When Canon or Nikon or Sony enforce MAP pricing, they aren't earning any additional profit, the higher margin goes to the retailer. They continue to sell the product to the retailer at the price they've always sold it.

Second, MAP enforcement never works. Ultimately, the market sets the price regardless of MAP.

You are being generous.

Canon are only after protecting themselves, how does MAP do that? Well B&H, Amazon and Adorama pay less for the product than your local camera shop because of the bulk they buy it in, so the big boys can sell it all cheaper (even before we factor in the sales tax equation) which puts the small local camera retailers and outlets at a big disadvantage. This means the purchasing power migrates up the system, the small retailers can't compete so they buy even less, the big boys buy even more and demand bigger discounts, Canon sells the same amount of product but gets less money for it as it is all going to big retailers for the biggest discounts.

If Canon can maintain a viable network of retailers then the big three (or so) won't be able to become a retail cartel and start dictating prices to them.

 

[mrzero]

My biggest complaint with the MAP game is that Canon is treating it as completely arbitrary. One week, MAP is strictly enforced and the price on gear is ridiculously high. Then they run rebates and everything is moderately priced. Then they let people run double-dips on a few items and there are great deals. Next, back to MSRP. Didn't get in the door fast enough on that great deal? Too bad, maybe next time. Forget to mail in your rebate? Tough.

As noted above, MAP is not designed to save the "mom and pop" camera stores. Those are closing anyway. Even if Canon and Nikon banded together on this, there is too much profit on showrooming and accessory sales being lost to the internet. The last time I popped into a Ritz camera here, before they closed, they had an entirely random assortment of crop zoom lenses and bodies, and that was it. They were pushing cell phones, cases, bags, frames, anything but cameras and lenses. If they don't want to give the big retailers larger bulk discounts, then don't. But quit playing games with the pricing to the consumer.

 

[lilmsmaggie]

I too was looking at buying a new DSLR but not now. I just sold a 40D and T3i in anticipation of snagging a 6D or 5DMK III.

Have you looked into Canon USA's refurbed units with 1 year factory warranty and 20% off MAP? 6Ds are available last time I checked.

Yes -- a couple of days ago. The 5D3 was out of stock. On the fence with the 6D. Looking to do BIF.

6D AF may not be up to the task.

 

[lilmsmaggie]

...I see the downside to massive internet retailers like Amazon, that have little to no investment in the community. They don't pay the taxes that support schools, roads, police, etc. etc.

On the other hand, like most consumers, I am interested in maximizing my purchasing power.

To the extent that sales taxes support community services, Amazon is now collecting them on behalf of many states (mine included). Even without that, consumers in most states are obligated to pay use tax on items purchased from another state and intended for use in the home state. I'm sure all law-abiding citizens declare such purchases on their state tax returns... :

Amazon started collecting California sales tax last year. I would think that states where Amazon has distribution centers are paying state and local taxes as well.

 

[edwyun]

Yes -- a couple of days ago. The 5D3 was out of stock. On the fence with the 6D. Looking to do BIF. 6D AF may not be up to the task.

I would agree. For BIF, the 5D3 is the way to go.

 

[Mt Spokane Photography]

I haven't seen Canon changing its policy on the Minimum Advertised Price. The Policy allows authorized Sales, so we can see a temporary price reduction when Canon announces a sale.

Canon has stated that a dealer can sell for whatever price he wants, he just can't advertise below MAP. A person can call a dealer and negotiate a price lower than MAP without breaking Canon's rules.

Sony has had a MAP for at least 50 years, and have enforced it very strictly, they do not allow for privately negotiated prices and come down hard on violators.

B&H, Adorama, and some others have found ways to get around MAP. They only show the actual selling price during checkout. Then, photography blogs pick up the deal and post it online. I'm sure that the dealers let them know.

You will see some ebay sellers selling below MAP, but they are usually not authorized dealers, they don't buy from Canon, so Canon has no leverage over them. They negotiate purchases from Dealers who are overstocked, but need to keep sales volume up. No violation of MAP there.

Back in the 1960's, Canon, Nikon, Pentax, etc had very tight price controls, and the US Government helped them by seizing any gray market imports as they came thru customs. Once again, clever people found a way to avoid this. There were two common methods used by Hong Kong sellers. If a logo could be easily removed, it was pried off and the camera and logo were sent separately. If it was not a removable logo, it was painted out with a color to match the camera. This allowed people to import for half the price of a US model. Eventually, the government got out of the gray market seizure game, and competition drove prices down.

 

[unfocused]

...I see the downside to massive internet retailers like Amazon, that have little to no investment in the community. They don't pay the taxes that support schools, roads, police, etc. etc.

On the other hand, like most consumers, I am interested in maximizing my purchasing power.

To the extent that sales taxes support community services, Amazon is now collecting them on behalf of many states (mine included). Even without that, consumers in most states are obligated to pay use tax on items purchased from another state and intended for use in the home state. I'm sure all law-abiding citizens declare such purchases on their state tax returns... :

Amazon started collecting California sales tax last year. I would think that states where Amazon has distribution centers are paying state and local taxes as well.

Actually, I wasn't referring to sales taxes, but to the whole investment in the community that brick and mortar stores have.

Even national retailers like Best Buy or Barnes and Noble contribute far more to local economies than Amazon. Through their network of local stores, they hire local workers, pay salaries, payroll taxes, workers' compensation, unemployment insurance, etc., Their stores pay local property taxes, which support local schools.

The local payroll circulates through the local economy, helping other local businesses, including photographers, stay in business.

Sales taxes are paid by the consumer and are only collected by the stores. The individual still owes the taxes, regardless of whether or not the retailer collected the, so those taxes aren't really relevant.

As I said, I'm conflicted because, like most consumers, I'm short-sighted enough to go for the best price whenever possible. But, that doesn't make me blind to the downsides of an internet-based economy.

 

[Loswr]

Actually, I wasn't referring to sales taxes, but to the whole investment in the community that brick and mortar stores have.

Even national retailers like Best Buy or Barnes and Noble contribute far more to local economies than Amazon. Through their network of local stores, they hire local workers, pay salaries, payroll taxes, workers' compensation, unemployment insurance, etc., Their stores pay local property taxes, which support local schools.

The local payroll circulates through the local economy, helping other local businesses, including photographers, stay in business.

Sales taxes are paid by the consumer and are only collected by the stores. The individual still owes the taxes, regardless of whether or not the retailer collected the, so those taxes aren't really relevant.

As I said, I'm conflicted because, like most consumers, I'm short-sighted enough to go for the best price whenever possible. But, that doesn't make me blind to the downsides of an internet-based economy.

Makes sense. I suppose there's some state revenue gained from Amazon's distribution centers, but nothing like a retail presence. Beyond just revenues, Best Buy recycles old CRT displays to keep them out of landfills (although they get a tax break for doing so), etc.

It's also not just about getting the best price. Many products available from online retailers simply aren't available in local stores.

 

[jdramirez]

Minimum advertised pricing is just that... advertised. Give a retailer a call, ask to speak to a salesman and give a valid explanation as to why you would like a lower price.

Heck bluff and say X store is willing to offer you the lens you want at $800... but their store is $1000, but you have a long standing relationship with this store and you would prefer to buy from them since you believe in loyalty to a retailer... but $200 is too much... are they willing to match.

With stores, it isn't always about the bottom line in regards to profit, though no store likes to willingly to sell for less than cost (lord knows I don't), but if you are close to the cost, and you have been a good customer or even if you haven't bought from them before but they want to earn your business on this purchase and possibly 20 more purchases down the line... or maybe you buy the lens for $800 but you also need a filter at a price that is the same across the internet... an umbrella too... and while we are at it... throw in some lens cleaner... ok... they are selling the lens at cost, but they are making a small profit on the extras and they are earning a customer.

Be bold. Don't pay sticker price at a car dealer... and don't just bow down to MAP.

 

[jdramirez]

And not that it is related to much of anything, but I bought about $10,000 in gear from Amazon last year... and I'll probably do the same this year too... so having a retailer (even a GIANT one where they don't know you by name), but they do know you by your buying habits... it helps.

 

[jdramirez]

I too was looking at buying a new DSLR but not now. I just sold a 40D and T3i in anticipation of snagging a 6D or 5DMK III.

Have you looked into Canon USA's refurbed units with 1 year factory warranty and 20% off MAP? 6Ds are available last time I checked.

Call Canon and ask about they loyalty program. You send in an old film canon camera that you bought off craigslist for $10 (or I'll sell you one for $10), and they give you 20% off the refurb price. Not all bodies are available... but I think the mkiii and the 6d are now... but I havne't really checked in a while because I have my body and I hopefully won't be upgrading for many years now.

 

[jdramirez]

Didn't get in the door fast enough on that great deal? Too bad, maybe next time. Forget to mail in your rebate? Tough.

They were pushing cell phones, cases, bags, frames, anything but cameras and lenses. If they don't want to give the big retailers larger bulk discounts, then don't. But quit playing games with the pricing to the consumer.

If you see a deal... and you don't buy... then that is kinda your fault. I worked in a retail setting and the buyers would negotiate prices with the manufacturers for sales... and during that time frame, the cost to the retailer would be lowered (or at least that is the crap management fed us). So if the price was $1000 last week during the July 4th sale... and it is $1500 this week without a sale... the cost went from $900 to $1300... so the absolute best the retailer could do without taking a bath is sell it for $1300...

As for Cell phones... the retailer I worked for got $200 in profit for one new line. So if you consider that the profit margin for some items is 10%... then that means that the retailer has to sell a $2000 item to a customer to equal the profit, which is a tougher pill to swallow than paying $70 per month for 24 months... and is about $1700.

 

[JonAustin]

It's also not just about getting the best price. Many products available from online retailers simply aren't available in local stores.

Exactly. Which came first, the trend among brick and mortar camera stores to stock a narrower range of merchandise, or their dwindling numbers? It's probably one of those "chicken and egg" things, but the reality is that in most areas, your only resources for higher end or less mainstream gear are the online retailers.

 

[Mt Spokane Photography]

Our local dealer says his Markup for Canon runs 7%. There may be a rebate for meeting sales targets, but a small dealer can't sell millions of dollars worth a month.

The salesmen are all photographers and give good advice. I buy from them frequently, and from Adorama / B&H for something they can't easily get due to manufacturers requiring large purchases.

I've found that they can get cameras and lenses from Canon even when the big stores are out, so Canon does take care of small dealers.

 

[Loswr]

I think I understand why they try to enforce MAP pricing. They are trying to protect their dealer network; not necessarily the large retailers, but the smaller shops that can't compete on volume and can't stay in business on the small margins that internet dealers accept.


...MAP pricing does not affect the manufacturer's price to the retailer. When Canon or Nikon or Sony enforce MAP pricing, they aren't earning any additional profit, the higher margin goes to the retailer. They continue to sell the product to the retailer at the price they've always sold it.

I don't think Canon really cares about a 'dealer network' including smaller shops. According to the owner of a local store (not a chain) I was talking to a bit over a year ago, in addition to Canon's MAP policy, they also cut margins (i.e., raised wholesale prices), adding back via 'discounts' for volume and for pre-payment, both of which are hard for an independent shop to meet, but benefit large online retailers.

He said that was pretty much the last straw for him. In fact, that was what brought me in. He was liquidating much of his photo gear and shutting down his print lab, leaving just the broadcast side of his business - essentially B2B with no effort on the consumer end. He said he'd still sell Canon video-oriented dSLR gear (5DIII and up, fast lenses), and he's not expecting a significant profit from those sales.