BC manufacturers must be Raking it in...

[MBH]

Would someone please make Tobin get off of ScubaBoard just long enough for him to Go out to his warehouse and ship me the Torus 57 that I just ordered.

 

[cool_hardware52]

Yes, it is a competetive arena. But my impression is that the competition is not focused on retail price. Most seem to compete with brand names, features (mostly bells and whistles) and the resulting prices remain artificially high. High enough that smart entrepreneurs can jump in and be successful by offering a quality product in spite of low volume sales and high start-up investments.

And it is not just BCDs. Look at regulators. Why is a Mk25/S600 so much more expensive than a Mk2/R190? IMHO, the difference has little to do with production costs and is mostly about what the consummer can be sold on.

To bad this industry does not put as much effort into satifying divers as it does into fooling them.

Tobin - If your gear had an "H" on it, what do you think the prices would look like?

Awap,

Consumers routinely buy "more" than they really need. Titanium bicycles, carbon fiber tennis rackets, etc.

Such decisions are usually made because emotions and not well informed, analytical, logical reviews were made.

Today the tools to make informed decisions are within easy reach, the internet, specifically sites like this, provide information to the prospective buyer unthinkable just a few years ago. No longer is the prospective buyer more or less limited to the information that their local retailer makes available.

Information is power, and there is a power shift to the consumer, if they are willing to educate themselves.

Tobin

 

[Barracuda2]

As an "old" scuba diver, I really have enjoyed reading this thread and have learned much about manufacturing, marketing, feelings, thoughts and opinions. It has even caused me to make a decision as to my next "BC" purchase. Thank you all for the input; however, I sort of chuckled reading all of this because I never even wore a BC until about 1968. (it was really today's a snorkeler's vest) I must say I got pretty good at estimating my weight belt based on the planned depth. but there were times I had to carry a rock around. That was the norm, and nobody thought anything about it. You guys all have a Merry Christmas.

 

[DennisS]

So you're new to scuba, yet you know that a BC hasn't changed in 30 years? Exactly how would you know that? You watched some old TV shows?

Take it from somebody who actually did dive 30 years ago. BC's have changed.

Yep, my horse collar is on my back instead of my front.

 

[PhilEllis]

You are correct that I'm not running a hobby. Beyond that how can you claim to know what my margins are?

I never claimed to specifically know your margins. However, I can guess pretty closely. I do understand business. I was, however, making a specific point. Several people on this thread have offered "disgust" that local scuba stores makes a "keystone" or 50% gross profit on a $600 bc. They seem to think that is highway robbery. I honestly don't know where that comes from. That is a perfectly reasonable margin on that type of item in a store that depends on speciality trade instead of volume. That is the local scuba store. It is the way it is. Some internet operations, like myself, operate on a 30% profit. It requires some measure of volume and purchasing power to do that.

The reference to your margin came from a specific post where the poster said he bought from you "after seeing the mark-up at his local scuba store". My point stands. You are a manufacturer who solicits business from dealers, and you also sell direct to the public. I assume you do so at your "suggested retail price".
If you do, you MUST have a mark-up at least equal to that of the local scuba store. After all, you have cut the middle man (the dealer) on all of those sales. To contend otherwise would make absolutely no sense. If you don't have such a markup, then were is there room for your dealers to resale your stuff? Tobin, you are a very smart guy and make maybe the best wings and plates on the market. However, you can't change math. It is what it is.

The point I was trying to make is it should NEVER matter to the consumer what the mark-up is. It only matters that the product being purchased represents a good value for the price.

Side Note: It is very possible that Tobin's business model may well be the one of the future. No dealers. Only direct to the consumer retailing.

Phil Ellis

 

[cool_hardware52]

The point I was trying to make is it should NEVER matter to the consumer what the mark-up is. It only matters that the product being purchased represents a good value for the price.
Phil Ellis

I agree. That's exactly why any speculation, about my margins, or anyone else's margins is a pointless undertaking.

Tobin

 

[PhilEllis]

I think you are wrong here Phil. When I bought my first sets of gear, I thought I was getting a pretty good deal at 10% off MSRP. I didn't resent my LDS until I learned that I could have bought the same gear from Leisurepro for HALF the price I payed and all I would have had to give up was a rather unimportant mfgr warranty and the good graces of a shop that was not going to last long anyway. I like to see the LDS doing well. I just don't like to see them doing well because they charge much higher prices than other scuba retailer.

There is no question about it.....Leisurepro is able to operate on extremely small margins on scuba gear. ( I will explain how in a moment) As a result, those of us that are attempting to play in some of that market have to match prices. I think there are about 15 of us actively attempting to gain a share of the market, that for years, belongs to Leisure Pro alone. We are doing so on pretty small margins. But this cannot continue for long.

Do not fool yourself, Leisure Pro is NOT a "scuba retailer" in the sense that most would imagine. Leisure Pro is only one facet of an operation that is involved reselling a variety of products on a massive level. Their sales volume at all of their operations is in the dozens and dozens of millions of dollars. That cannot today, and likely will not ever, be created by anyone else in scuba alone. Their approach to scuba margins comes, I think, from their primary exposure in electronics. Again, I repeat, these types of margins CANNOT lead to ultimate success in the scuba business, especially with wholesale product distribution working as it currently does.

Earlier you said the "good graces of a shop that wasn't going to last long". Sadly, that is the description of many shops. On their extremely small volumes, they cannot succeed with the price pressure from online operations. I know. I was one of them. In the past, if one shop closed down in a town, some new guy would open another one. I fear those days are coming to an end. There was a time when you could open a scuba store for $10,000. Now that number is more like $200,000. Now, potential new owners are looking at an area that have seen,2,3,4,5 shops fail. They are starting to ask the smart question...."Should I invent MY money in that?"

As I have said in many posts.....this is a very tough time for scuba stores. An industry change is necessary. Distribution must change. Resale rules must change. Instruction must change. If not, cover you head. Your local scuba stores lowering margains will not do it.

Phil Ellis

 

[Otter]

Yes, it is a competetive arena. But my impression is that the competition is not focused on retail price. Most seem to compete with brand names, features (mostly bells and whistles) and the resulting prices remain artificially high. High enough that smart entrepreneurs can jump in and be successful by offering a quality product in spite of low volume sales and high start-up investments.

One of my B-School Marketing Profs said "Competing on price is the last hope for a poor Product Manager". Marketing's responsibility include developing products and services that potential buyers want and are willing to pay for at the highest possible price (given price elasticity...i.e. demand vs. price). That the nature of a capitalist enterprise. What is artificial about that? One strives to price it high enough to maximize profits, yet low enough that the margins are not attractive enough to entice new competitors to the market. I can think of only two 'new' entrants to the BCD market this decade [that have made any kind of impact].

And it is not just BCDs. Look at regulators. Why is a Mk25/S600 so much more expensive than a Mk2/R190? IMHO, the difference has little to do with production costs and is mostly about what the consummer can be sold on.

Price should NEVER be based upon COST; its based upon VALUE. Its NOT the BUYER's responsibility to make sure the SELLER makes a profit. Conversely, to be successful the SELLER should price their product/service commensurate with the VALUE delivered to the BUYER. If its too high, the product/service doesn't sell and the SELLER goes out of business. I have this conversation all of the time, to which I ask "If you found a $20, bill would you sell it to me for $10...after all it cost you nothing?"

To bad this industry does not put as much effort into satifying divers as it does into fooling them.

What is satisfaction? Are there lots of divers that are dissatisfied or have unmet wants and needs? BUYERS want the BEST VALUE (their needs/wants met at the lowest possible price. SELLERS want to MAXIMIZE the value of their business (typically though maximizing profits). These are all relative and therefore satisfaction exists somewhere in that continuum.


What is fooling them? I personally agree that many of the bells and whistles on BCDs have no value to ME. Then again I see little value in a car that can go 100 mph, bottled water, or $400 MP3 player that can 20 gazillion songs [to name a few].

Tobin - If your gear had an "H" on it, what do you think the prices would look like?

The question is not what is the price but what would people to be willing to pay. Some believe that an H has more value (quality, cache) others do not. The same can be said about Lexus, Rolex,etc...

 

[PhilEllis]

I agree. That's exactly why any speculation, about my margins, or anyone else's margins is a pointless undertaking.

Tobin

On that, I agree completely. It isn't about margins. I was simply making that point to the poster to whom I responded.

Phil Ellis

 

[The Chairman]

Hey Tobin...

don't forget to send your Lear Jet over to pick me up today!