Indian and International Pricing

[Raghav]

Frankly, we are discussing 2 different items here.

1. Difference between Indian and UK/US Prices.
2. Different markups for brands of similar items.

1. For first item, I am actually quite satisfied with speaker prices of most brands including yours. When I first started scouting around I was expecting a larger difference of price and was pleasantly surprised to find VFM products priced at foreign prices (Q Acoustics, Wharfedale, Quad, Usher etc.). Though in terms of AVRs, BDPs, CDPs I feel the premium is on the higher side.

2. This I fail to understand any reason for and find it unacceptable. If a Quad 11L2 and B&W 685 have the same price in UK, why should one of them command a huge premium in India. Even if Govt. of India taxes are close to 50% it affects both of them. Why are they priced differently. If one distributor does not get a good deal from the manufacturer why should the customer care?

One query: Since you mention 13.5% VAT, can you save the same by selling the same under CST@2% to customers outside state directly? We do the same in our product taxed VAT@4%. By charging CST@2% half the tax is saved if good sold to final consumer.

Regards,
Raghav

Bro

I keep saying in my Post, about being personal..

I have been given a good weightage every time in this forum, and i have never been put under negative scanner...

I said in my last post as well, that wtever i am doing is just justifyin the actuals...
And yes, when we are getting container goods, we are well aware what we are paying... nd thts wt i post...

And i nvr tk tensions, or get aggressive, as i knw, thts hw the market is...But there are some realities, tht kicks our ass badly, and when you guyz put us into negative, tht time it feels bad...
And u need to agree tht, if we are talkin or fightin for something it is nt bcas we wnt to hide anything(as someone mentioned), if tht wud hv been the case i wudnt hv opened my accounts...and as we import, we knw wt problems we face...

Out here when people say tht they hv gt goods frm Overseas and still they have paid less, then y dont they count the following :
1). Freight, what they save bringing goods with them.
2). Rs.25K customs free allowance what they save. For eg : If someone brings goods worth 40K, they pay duty only on 15K...
3). Service and Warranty, in wtever case it is something imp.
4). VAT @ 13.5%
5). Stock Holding - No one have Crores of there own.
6). Running and Promotional Costs..

Bro, gettin one products, and getting a brand are both two completely different things...
I agree we get a special price, but y dont you even compare the Disounts consumer gets overseas and locally...
Then as said by a member tht the International VAT is claimed at Airport, but you dont pay VAT when u reach India...

Buddy, there is no hard feelings, for anyone, its just an effort to explain what we bear...thts it...

 

[odyssey]

Frankly, we are discussing 2 different items here.

1. Difference between Indian and UK/US Prices.
2. Different markups for brands of similar items.

1. For first item, I am actually quite satisfied with speaker prices of most brands including yours. When I first started scouting around I was expecting a larger difference of price and was pleasantly surprised to find VFM products priced at foreign prices (Q Acoustics, Wharfedale, Quad, Usher etc.). Though in terms of AVRs, BDPs, CDPs I feel the premium is on the higher side.

2. This I fail to understand any reason for and find it unacceptable. If a Quad 11L2 and B&W 685 have the same price in UK, why should one of them command a huge premium in India. Even if Govt. of India taxes are close to 50% it affects both of them. Why are they priced differently. If one distributor does not get a good deal from the manufacturer why should the customer care?

One query: Since you mention 13.5% VAT, can you save the same by selling the same under CST@2% to customers outside state directly? We do the same in our product taxed VAT@4%. By charging CST@2% half the tax is saved if good sold to final consumer.

Regards,
Raghav

Hi Raghav
I can help answer both your questions -
* why is there a difference between prices of different brands here vs UK prices. You are expecting that a USD 100 speaker A and a USD 100 speaker B need to have the same price in India right? Since duties/freight, etc will be the same, you are assuming that the final price is the same, fair enough. The base assumption is that both speakers are sold at the same price to the Indian distributor. This simply isnt true. Whether someone accepts it or not, its like saying that all products sold (if they belong to the same category) need to have the same margin. Every product can have a different margin, as I explained earlier, its up to the manufacturer and their business model. Some may give 30%, some may give 40%. Its really not about whether a distributor gets a good discount or not, it completely depends on what the manufacturer believes is the value of that product as opposed to similarly performing products and what they are priced at.

Sales can be made out of state at 2%, however that is only to a person owning a business and being able to provide a C-form. The buyer (a dealer) must then charge 13.5% VAT when the final sale is made to the customer.

cheers

 

[ajinkya]

"The base assumption is that both speakers are sold at the same price to the Indian distributor. This simply isnt true. Whether someone accepts it or not, its like saying that all products sold (if they belong to the same category) need to have the same margin. Every product can have a different margin, as I explained earlier, its up to the manufacturer and their business model."

Odyssey,
I think it is here that Indian consumers have a complaint. If all the dealers get together and tell the manufacturer that the Indian market (and mindset) simply is not amenable to such brand differentiation, the manufacturers may see reason. If you tell a brand this firmly, either they will not come to India, or maybe, they will listen to the market and come with standardised prices.

I can understand some amount of brand differentiation for esoteric/very high-end brands but having such discrimination at lower-level brands just means that all lose: manufacturers, dealers, and the customers; no one will buy at the volumes needed to drop/stabilise prices. Where is the business sense in that? Why cannot manufacturers accept (and dealers convince them) that the Indian market is very value-oriented and simply will not fall prey to their assumptions of what their brand should fetch? Don't these companies do a market study of their potential customers before they set up shop?

 

[odyssey]

Frankly, I have no experience with the mass brands you are probably referring to - likes of Marantz, Denon, Onkyo, etc I dont know their policies or import agreements. I do have experience with more of the niche/smaller brands and what I said holds for them.
As for distributors of mass brands, I suspect that the volume is simply not there for them to really negotiate terms in our favour, but I cant be really sure. The overall market (in terms of turnover) is extremely small when compared to the US - in fact a fraction of it.

cheers

 

[Thad E Ginathom]

As Ajinkaya says, it is up to the dealers to represent this. The customers do not get to talk to the distributors, let alone the manufacturers.

Unfortunately, the ultimate pressure the customer can bring to bear is not to buy --- but then the customer looses out and we probably loose the dealers to some other industry all together --- because dealers have to eat too.

So what is the answer? I don't know, but I do not believe that it is for the consumer to just shut up and put up with it!

 

[thevortex]

Honestly its a bit of a chicken-egg situation folks. We want something which is as rare as ivory right now. So we are having to pay up through our nose for it. The day that more people want it, the prices will have to reduce. If they still dont reduce then the distributors are at fault. The mass market home theatre systems like Sony, Samsung, Philips etc. go for less than Rs. 20,000 today. In that we perhaps have an example. Over time, justice is bound to be done.

One thing through - it is not that the US has chock-fulls of people who know better than Bose. It is just that the fraction which does get into audio deeper than Bose and other brands is larger than what we have in India. And we are probably fast getting there with our population and enthusiasm.

 

[kapvin]

This business and arguments I have so far seen are almost similar to some of those guys I had seen in some public sector companies I used to work in the past. They had a glorified retirement after 40+ years of service with medals, certificates, front page photos etc etc. Note, the retirement age used to be 55 and you don't have to be Sherlock Holmes to deduct that they presumably came out of their mothers' wombs waving SSLC papers.

Happy listening and bye.
murali

:clapping:
Hi murali,

Very OT: as a child, I remember my Dad (who was in the IPS) jocularly ribbing one of his batchmates, calling him a child prodigy.. because according to a birth certificate that guy had recently submitted, he had passed his senior Cambridge exam at the age of 10!

The Govt. invited this upon themselves... when they allowed people to resubmit age proofs.. this was ostensibly to help people who lost their age proofs during the partition... Many people put it to "good use"...

cheers..

 

[mridulgoel]

Hey Guyz

I should thank you guyz for responding so well...

You guyz realize or not, but someone or the other answers all the
questions...

1). Regarding the Quantities, obviously we will get a better price, if we will purchase a container, but its no use getting a container and keeping it for a year. We cant block 25-30Lakhs, because of that, instead we purchase one container mixed with all quantities every alternate months, so our prices are higher, and as it comes from UK, so the freight is more...So obviously once the sales will be good, we would love to get containers for individual products, and reduce the prices...
2). Regarding brands differences, same as Sridhar replied, that each brand has different distributor margins, that are based on Quanitities...So even of there international prices are same, its not necessary that there Indian Prices being same.
3). Regarding Duties, i said in my last post as well, that there is a lot of variation, in customs, compared to India and other countries. Countries like Pakistan and Bangladesh are expensive than India, where Europe is very less. Hongkong & Dubai are free shipping areas, Singapore & Malaysia are rock bottom...So, when we compare our prices from these countries obviously we are on a very high mark, so the same effects on MRPs...

And please dont give me the good old crap, that the customer is always right even if they are wrong...
Today customer is far educated compared to 10-20yrs back...and thats what making this discussion so intersting...so keeping that in mind, we cannot fool the customers...
But, yes even thats the truth, that if customer says no i want the X price, because i am customer, then i will rather not make sale, instead i will keep the same in stock, for a customer who knows the value of the product...And yes, there are customers who knows, what they are buying and what price...

Bro, simple concept, which i have been saying again and again,
if resellers have to do business they have to be competitive, but, they need to make sure, that they include all the costs and margins...but when they do it, for even the minimum for many brands, still there prices shoot up then the international prices...

I dont say that all the products are priced correctly as they should be, but even quantity matters...
The day we will have the same sales as what is there today for other High End imported equipments, are prices, will go down automatically...

Regarding the same Plasma price, the same thing i have seen in Hitachi as well... 42PD9000TA the best 42" Plasma sold by Hitachi... I have sold the same model @ Rs.1,45,000 and after a year the same model @ Rs.95,000... but i will make a note on it, that the import invoice what we use to get had a similar distance, and we use to do our MRP calculations from the same formula...

 

[Raghav]

WOW...Thats a huge saving of 11.5% provided the following conditions are fulfilled.

1. The buyer of the goods must be end-user not a reseller/dealer (Otherwise local VAT will come into picture when resale is made).
2. He should be situated in a different state.
3. Own a business and be able to provide C-form for the purchase.

Hi Raghav
I can help answer both your questions -

Sales can be made out of state at 2%, however that is only to a person owning a business and being able to provide a C-form. The buyer (a dealer) must then charge 13.5% VAT when the final sale is made to the customer.

cheers

 

[cmsajith]

Re: Clarification and Explanation

Another good point. Not sure how many HiFi manufacturers have multiple manufacturing locations. In any case, goods shipped from HK or China should be cheaper in India than in US shouldn't they?

Regards

Yes, it will be less. When I bought the Caiman DAC, the quoted price was lesser than the US price.

 

[magma]

WOW...Thats a huge saving of 11.5% provided the following conditions are fulfilled.

1. The buyer of the goods must be end-user not a reseller/dealer (Otherwise local VAT will come into picture when resale is made).
2. He should be situated in a different state.
3. Own a business and be able to provide C-form for the purchase.

i dont think thats possible for home uses like us even if we fulfill all the above conditions
odessey may confirm

to give odessey a c form i think my busineess must be related to odesseys
plus this c form can only be given by a reseller ( if im not mistaken )
basically someone who will buy from odessey and resell

odessey may clarify that

 

[odyssey]

Magma is right, the idea is basically that - you need to be a reseller along with the other assumptions !

 

[Sujit]

And please dont give me the good old crap, that the customer is always right even if they are wrong...
Today customer is far educated compared to 10-20yrs back...and thats what making this discussion so intersting...so keeping that in mind, we cannot fool the customers...
But, yes even thats the truth, that if customer says no i want the X price, because i am customer, then i will rather not make sale, instead i will keep the same in stock, for a customer who knows the value of the product...And yes, there are customers who knows, what they are buying and what price...

Donkey Poop!

Pardon my french.. But if you think the 'Customer is right' adage is all 'CRAP', I think your days in ANY business are numbered! .. And for the very same reason you gave - that your customers are educated!

Bro, simple concept, which i have been saying again and again,
if resellers have to do business they have to be competitive, but, they need to make sure, that they include all the costs and margins...but when they do it, for even the minimum for many brands, still there prices shoot up then the international prices...

.

Permit me to ask you this Mridul ( - and purely as a concept - it has nothing to do with how you do business) . Please try and answer TO THE POINT without getting angry. )

1. WHY should any customer be interested in any dealers livelihood? - He might be - if he is assured of getting 'service'! But if a customer will not get an on the spot replacement, and has to contact the manufacturer/ main importer directly for ANY after sales support - then it doesn't matter which dealer I pick things from... right??

2. Why should the customer NOT expect value As HE sees it - not as YOU /dealers see it!

3. If I can OFFICIALLY import ANY item directly - BY PAYING FULL DUTIES - and still be able to get it even ONE rupee cheaper, WHY should anyone pay more to any local dealer - who does not do a dang other than selling the goods (99% of them). Surely duties are the same, and economies of volume and scale can only be in your favour!

No one is questioning you and your mathematics. However if you are in a situation where any individual can import the same product directly for cheaper, then other than the so-called promise/threat of 'warranty' you may not have a survivable business model! That will again depend on what each person's perception of what the warranty is worth - remember in India the dealer who sold it to you gives little or no after-sales support - INCLUDING warranty!

 

[Raghav]

Then there is no way to save on tax. As the reseller will have to add VAT of his state before selling to the customer. We actually end up losing the 2% CST.

Is there no way to save on this by just paying the CST. How would you usually bill to a end-customer outside the state? CST + VAT?

Magma is right, the idea is basically that - you need to be a reseller along with the other assumptions !

 

[magma]

Is there no way to save on this by just paying the CST. How would you usually bill to a end-customer outside the state? CST + VAT?

hmm
actually i would like an answer to that too

 

[odyssey]

Its simple - if we sell directly out of state to a customer, we charge 13.5% VAT (1% more this year thanks to budget) and if we sell to a reseller, it is 2% CST to him on c-form. Beyond that, the reseller has to charge 12.5% VAT on the selling price.
hope this is clear. yes, there is no way to save on tax by selling out of state, imagine this obvious loophole, no Gov can prevent this. We can have a branch/another company outside the state just for shipment purposes, but a showroom within the state

Mridul, you might be more knowledgeable about this - ??

cheers

 

[odyssey]

I know that this is not the sole reason for high prices, but pls consider that about 50% goes into customs, duties and VAT !! If I can reduce by an equivalent amount, I may sell more, I can also buy in a larger qty since my landed cost is lower while at the same time get better prices from the manufacturer, which means I can use the economies of scale model to price my eqpt lower, and so on, it has a domino effect.
I know there are many other reasons incl greed of some distributors/dealers bad service, however the way I see it is, if we didnt have this type of charge/overhead I can reach a broader segment of the market.

cheers

 

[gobble]

I know that this is not the sole reason for high prices, but pls consider that about 50% goes into customs, duties and VAT !! If I can reduce by an equivalent amount, I may sell more, I can also buy in a larger qty since my landed cost is lower while at the same time get better prices from the manufacturer, which means I can use the economies of scale model to price my eqpt lower, and so on, it has a domino effect.
I know there are many other reasons incl greed of some distributors/dealers bad service, however the way I see it is, if we didnt have this type of charge/overhead I can reach a broader segment of the market.

cheers

Hi Odyssey
The specifics of all the calculations provided earlier are not important to a consumer. He doesn't care really. Nobody wants to dispute 40 to 50% shipping + taxes + duties. The whole issues is (and has been from the start of this thread) 50% on what? International MRP in USA or UK? It should be a manufacturer base price that is way below MRP. Add the 50% and arrive at a consistent price within 10 to 15% of international MRP, then watch the audiophile market boom !! People will simply stop purchasing on their trips abroad.

But it seems like what the dealer fraternity is constantly alluding to is that the Indian taxation system is so unfair no matter what, the burden of tax makes it an imperative to sell the goods at 50 to 100% over international price. In spite of comparatively high taxes in many other countries, India always ends up costing 50 to 100% more!! Nobody's going to buy that argument.

It does not look to me that disties and dealers are serious about market penetration - because this is almost always a "side business" for extra bucks.

I guess what we need is somebody to pioneer this in the A/V distribution industry - someone whose heart and sole and future lies in audio distribution solely. Only such a person will be motivated to really use his MBA degree to bring a pricing revolution and marketing strategy that beats the existing trend.

Nothing against you, just the way I feel ..

Edit: And PS: I do not imply the onus is entirely on you. I speak entirely in a general frame of mind.

Regards

 

[mridulgoel]

Donkey Poop!

Pardon my french.. But if you think the 'Customer is right' adage is all 'CRAP', I think your days in ANY business are numbered! .. And for the very same reason you gave - that your customers are educated!



Permit me to ask you this Mridul ( - and purely as a concept - it has nothing to do with how you do business) . Please try and answer TO THE POINT without getting angry. )

I may get over-excited sometimes, but dont worry, i will not be angry, because i face the trouble, from the clients, from the Customs, and from our parent company, so we are use to be questioned like these from all over, its not just you guyz...Bloody Customs guyz blame us, for the same issue, and so do our parent company, but as they are doing it all over, its easy to explain them, its just one time process out there...But, when more n more individuals are concern, the things needs to be explained differently...

1. WHY should any customer be interested in any dealers livelihood? - He might be - if he is assured of getting 'service'! But if a customer will not get an on the spot replacement, and has to contact the manufacturer/ main importer directly for ANY after sales support - then it doesn't matter which dealer I pick things from... right??

Yes very true, i have seen this earlier, when i was employed with Hitachi, they had a 3rd party service guy, who use to piss the customer, and customers use to blast at us...Thats y, we made sure in this company that we will provide the replacement of the material if the product is not serviced within 48hrs, and if not repairable, then we give permanent replacement. So yes, customer is not bound, and even if i am a customer, i will consider the same for my house...

2. Why should the customer NOT expect value As HE sees it - not as YOU /dealers see it!

Buddy take a example of my thread of Demo Stock, i am giving 25% off to customers, wherein even my dealers get 20% only...
Now if you say that you want a new product for that discount, tell me frankly is it possible...???
So, there are different circumstances which are not worked out, but the lucrative thing is always compared... For eg: If you take a product at MSRP in UK, and then import it by paying 100% duties your price will be more than or more or the same as ours, exclusive VAT... But, if a customer goes overseas and get a product for themselves, then 1st they will get some discount, then they will get VAT reclaimed at airport, then as a custom free rebate they are not charged customs on for Rs.25K, and over that amount only they are charged the duties, so they save, moreover they get goods themselves so they freight as well...calculating all these, there landed price goes very low, which they claim to be cheap.. Obviously, i go overseas and get sample products for future business, 90% times, i dont pay customs as they are under my free limits...so, shudnt tht been a part to be considered.?

3. If I can OFFICIALLY import ANY item directly - BY PAYING FULL DUTIES - and still be able to get it even ONE rupee cheaper, WHY should anyone pay more to any local dealer - who does not do a dang other than selling the goods (99% of them). Surely duties are the same, and economies of volume and scale can only be in your favour!

When you accept, that, and still if you want to, you can do it, but you know, very well, that in case something happens to the product in transit or during use of the original warranty, you will not get any free service, and in electronics, there are more chance compared to other products...So its all individual thought process, and resellers cannot control that...

[/QUOTE]
No one is questioning you and your mathematics. However if you are in a situation where any individual can import the same product directly for cheaper, then other than the so-called promise/threat of 'warranty' you may not have a survivable business model! That will again depend on what each person's perception of what the warranty is worth - remember in India the dealer who sold it to you gives little or no after-sales support - INCLUDING warranty![/QUOTE]

Members can very much question, they have the right..?? but if they want to argue, then its something pointless...

And yes there are few dealers who doesnt provide proper service, but tht doesnt mean tht the complete brand schematic is like tht...

See, i am not against or never mentioned tht people shud or shudnt import products of there own...The complete discussion all these dayz was / is related to the price issues...

I dont care what other brands do, but i presented here, what actually is the situation...that we face during the imports...

 

[mridulgoel]

Its simple - if we sell directly out of state to a customer, we charge 13.5% VAT (1% more this year thanks to budget) and if we sell to a reseller, it is 2% CST to him on c-form. Beyond that, the reseller has to charge 12.5% VAT on the selling price.
hope this is clear. yes, there is no way to save on tax by selling out of state, imagine this obvious loophole, no Gov can prevent this. We can have a branch/another company outside the state just for shipment purposes, but a showroom within the state

Mridul, you might be more knowledgeable about this - ??

cheers

Even if we supply to our dealers @ 2% they are liable to charge more 13.5% VAT only...

The only LoopHole is Grey Market, and that too is LoopHole, for Brands, as well as Customers...They take advantage from both the side.. Use the brand name, and in many cases provide a crap product, @ lucrative prices...