Pricing in the New Year

[adam]

Hi folks,

It's been a while since we've had an open discussion about our pricing here at PBG, but, with the dramatic fall of the Aussie dollar (against the US), I think it might be time to hear what you all think.

Firstly, some facts: We buy our kits in US Dollars. When we started PBG in August 2012, the Aussie dollar (AUD) was on parity (or better) with the US Dollar (USD). From memory our first order was paid for with one AUD = 1.05 USD.

The other day I paid for our Jan/Feb shipment and was fortunate to get $0.8125. That represents a 20% increase in the factory cost (FOB) of our kits.

The other mitigating factor is that pricing on guitar kits was originally set by Guitarworx, the Australian guitar kit company that eventually went down the toilet, and the prices have stayed pretty much at the same level since they were around. In my opinion, they have always been too cheap. Sure, you can buy a Chinese Strat copy for $99 if you shop around on eBay, but have you ever played one of those? They are awful.

We also have two Aussie "DIY" sites that stock a limited range of kits and are keeping their prices just below ours. In fact, the business model of one of them seems to be "copy everything PBG do (down to creating a Forum with a My Build Diary thread) and undercut them by $10".

I guess what I'm getting at is this: we can change our business model and reduce our selection of kits to around a dozen (like our competition does) and compete on price and service. Or, we can continue offering the biggest selection of kits (in stock, ready to ship) in the world, but put our prices up to keep the business viable.

I am very interested to hear peoples thoughts. What do you think of the current prices? Are we too cheap or too expensive?

[ultpanzi]

Hi Adam. Im a student on minimum wage and I think the prices are reasonable. PBG has something the other companies cant possibly have. Theres a great forum here ready to help, great quality kits thanks to your strict checking and to top it all off, the best customer service of any online company I've ever interacted with. If you need to increase the prices to keep the show running, Ive got absolutely no complaints. The wide range of kits you stock keeps a lot of us interested due to the wide variety of musical genres that we come from. For instance, I mostly play metal so a superstrat or a lp is great for me, but a strat just isnt my thing. Someone who plays blues might love the strat. Etc. Keep up the great work.

[Scott J.]

I don't think anyone would ever complain about something being too cheap! but I also don't think any of us would say that Pit Bull's kits are too expensive!

... but if it gets to the point of having to choose between upping the prices or running the risk of a great Aussie company like Pit Bull going bust - then I'd much prefer to see you up your prices.

... maybe we could find an easy way to sabotage the US dollar and bring things back our way (I'm really liking that idea on a number of different levels! )

[ultpanzi]

Sabotaging the US dollar sounds like something Im ready to be in on...

[michael]

As the resident (?) Yank here, my perspective is different, but I will say I'm only here because PBG's stock was so vast; this was the only reputable site in the world I could find a bass kit that wasn't a four-string J- or P- bass copy. I originally was looking for a five-string (non P- or J-) and found the IB-5 via Google. Looking further in your stock of basses, I found, and purchased, the IB-6S.

With the favorable US/AUD exchange rate, the IB-6S kit, with AU$60 shipping, was still a reasonable cost for me. If it was $50 more, I probably would have still bought it, however. I also know that my build thread on TalkBass has generated a lot of interest from non-Australians, so having a wider range of basses in stock could be good for PBG (and my next planned build is a RC-4, which I can only get from PBG).

I'd rather pay a few extra dollars to order something unique from halfway around the world, rather than not have that opportunity.

[ihasmario]

A store in Perth called Headphonic had similar issues at some point, both with the Aussie dollar falling and a rival company effectively undercutting them on their most popular models - which they could do as the rivals didn't have a brick and mortar store.

Variety and customer service kept me a loyal Headphonic shopper. Plus the cool benefit that they support RTR FM .

Regarding Pricing;
1) I'd be happy to see the price on some models increase, less happy on others. I would still buy a Tele/SG/Strat/LP if it went up in price. I'd be less inclined to buy an ES-335 type guitar, if the price went up.
2) I think you could decrease the effective cost to ambitious builders by including the option to buy the kit without hardware, without the need to email you in advance. In my TL-1A build, I spent a lot on extra electronics, and I didn't use any of the stock items.

Regarding Variety;
1) I think you could increase revenue from non-kit related purchases by offering simple lutherie, such as widening the pickup route to suit humbuckers when purchasing, rather than through email.
2) If you are dealing with flamed/quilted/spalted caps, I think it would be good to list them individually and price them based on how the caps look. If you get a really good cap, I think you could squeeze some extra dollars from it, which would mean you don't have to push up the price of kits as far. In fact, I'd be more inclined to shell out for a spalted top if I knew I was going to get an absolute cracker than I am just kind of gambling.


Another option, which you've said you didn't want to do, is that you could create revenue through ads on the site.


If I had to choose between a price rise or a drop in variety... I'd choose variety. If you get rid of the variety, I'm basically stuck buying from the states if I want to build something that isn't a tele.

[Scott J.]

@ Michael ... hope I didn't offend with the "sabotage" comment mate (certainly wasn't intended)

@ ihasmario ... great suggestion about the option for a "blank kit" (i.e. the no hardware option) ... I think a lot of us take the same route with upgrades (p/ups, pots, etc) once we've built a couple ... and interesting idea about the "grading" the caps

[wokkaboy]

Ads I have no problem with a price rise to keep the large range, its been a while since the last price rise so don't change the excellent range, I think the prices represent very good value

[WeirdBits]

Adam, the fact that you're actually asking your customers for input says it all. If maintaining the range and quality means bumping the prices a bit to compensate for the declining dollar, so be it. Looks like we're headed for .75 US, so it's only wise to start thinking about that now. If we want to risk bargin bin kits and worse service we can take our chances elsewhere.

I like the idea of trying to minimise any increase on the lowest and on some of the upper priced kits, if possible. That way the low priced starter kit can still tempt the first time builder into taking a chance and having a go, and the upper priced kits remain within reach of those who could never otherwise afford their 'dream guitar'. But, the mid-range best sellers will only be able to absorb so much, so do what you need to do. I certainly don't plan on going anywhere else.

[Fretworn]

Adam, none of us want to see you going bankrupt. Prices will clearly have to rise due to the movement in the exchange rate, but I can see the wisdom of also switching some models over to "custom order only" status if that can help keep costs down.