Vendor Pricing

[Zef_66]

so you will spend an extra say day to save $5, then you end up spending more than that in your time, and gas. I will check around some, but I also will pay for convenience. I have also found buying some things online is cheaper than any local place (computer parts are half what I can buy local for instance) I also am one that will not buy from someone only on price, and will also support the independent guy first when possible (I have not been to a best buy in 9 years even for stuff I can't get myself)

I usually plan my purchases. For one, I need to budget them. So I do my homework, research prices, and plan where I am going to buy things. I make up a lot of excel spreadsheets. I need, this, this, this and this. And I may get those things at 4 different places. Most of the places I buy stuff can be found on my way home from work. If not, I will wait till I am going that direction for something else and buy it then. So an extra day or two doesn't make much difference.

If I need something tonight, right now to fix my car so it runs for work tomorrow, $5 doesn't matter to me. But then, I don't even consider internet in those cases anyhow. So no, time frame doesn't matter much to me.

As for doing the research. I usually get to work 20-30 minutes early which I use to do things like this. Also, I have to take an hour lunch. I spend 15 minutes eating, and the rest researching stuff and on forums. I also get on a couple times a day depending on my work load. So the time factor researching these items is null.

And while I agree that price is not my only factor on buying things, it is very dependent. There are places I just won't buy from and won't even consider. But there are very few of them.

Zef, I agree. Everyone has their own opinion and they are entitled to it. We value your input as well as everyone elses. I really think that vendors will charge what they think is reasonable (in their eyes). It may not be reasonable to us, however there are those that will blindly pay the price. The good thing is when the product does not go over as big as the vendor thinks it will, you can bet there will be a sale and possibly even selling it below cost just so there is not as much as a loss in profit. Product on the shelf is not making you money, its the product out the door.

You can bet that if I came up with a 20 dollar (my cost) item that converted water to gas, I would not sell it for 25 bucks. I think 250 would be fair since you will be saving that much in the first 6 months you use it.

I agree with you as well that vendors will charge what they want. Doesn't stop me from voicing my opinion on it though . But really, I do understand this. And there are many products that I feel are over priced because I know their true value of how much things cost to make them. I don't mind paying someone a profit. But I don't like paying for overpriced items either.

In regards to your water to gas converter. If you were the first one to come up with this, then yes, you can charge that much. And more times than not, it is because of the R&D involved. But when other people start producing similar items and selling at less price, you will eventually lower your price till you are near the $25 price window that it costs to make the part. Economics will show that if you are making a huge profit, there are a lot of people that are going to try and get onboard as well and make the same profits, but undercutting the competition a little each time. Thus driving prices down. Eventually it will all equal out.

On the other hand. If someone already makes a water to gas converter, and your works only slightly better, the price needs to be comparable to the benefits. You can't sell yours for $250 for the upgraded model, versus $25 for the standard competitors model.

And this entire discussion started about the SS brake lines. I started it by saying that I felt that when a vendor can discount a product $32 on a $100 part, then this product is overpriced (in my opinion). The way I see it, while some places will discount items to where they are making little to zero profit, most smaller vendors will not because they cannot afford it. ZZP may be doing this in this case, I don't know. But usually such offers are one time deals, like the woot deals. But being that these brake lines were offered up again at such a discount would lead me to believe that ZZP has inflated the price to almost, but not quite match that of goodyear lines. And they haven't been selling as well as they hoped, so they are trying to get more sales and get these moving. Might not be the case, but it is how I perceive things, and my opinions.

I personally think $100 brake lines are overpriced, since I know how little it takes to make them. So I haven't bought any. These prices ZZP is offering now are comparable and much more in line in my opinion and I will probably purchase a set in the near future.

[Rocket468]

I know you don't think its fair what people set there prices too. 20% markup across the board will not keep the doors open for an automotive business.

If you think someone price is too high then don't' buy it from them.

The labor is where most all shops get the revenue that keeps the doors open. A lot of these nickel and dime price chopper places do not inventory there parts and have a small w/d drop ship for them. So a lot of times they have never even touched the part you have bought. So when you email them they froward the email to the Oem and then reply back once they get the email back from the oem. Or they just point you to the Oem for support.

Oem pricing from production to end user of automotive parts is almost 400%
400 dollar retail carb from holley cost holley 100 dollars. Every personal along the way takes a cut. The retails are the ones that get the smallest cut.

[Zef_66]

Right, just look at Ebay.....

99 cents for a laptop and 799.00 for shipping and handling

(I know that exagerated, but you get the idea)

Shipping and handling is a real pain sometimes and you have to really be careful. It can turn a good deal into a real quick. That is one thing that I really look for when I am buying online, and just my thoughts are if you are charging reasonable shipping and handling, then I will buy (as long as the price and shipping/handling is cheaper than I can buy it locally). But if your shipping and handling are way out there, I view it as a shaddy tactic and wont buy the item, but that is just me.

webracin

FWIW, the ebay shipping is a scam to not pay so much ebay the company so much. The seller is charged by ebay for the actual price that the item sold for. If they sell a laptop for $.99, then they only pay a fee for a percentage of that $.99. They are not charged a fee on shipping. So it is in the sellers best interest to inflate shipping costs.

As for online stores that charge inflated shipping costs. They do this so people will just look for the lowest price and buy it, not always considering the shipping. Sometimes it works.

Then there is the other case of advertising free shipping, and charging a handling fee. Are you going to hold that against Summit Racing, or Jegs, or Pace?

As you said, I mostly consider the lowest total price for me to get my product. If that is online with $.99 price tag and $300 shipping, then so be it. If it is the little guy down the road, then I will go there. It's my hard earned money and I need to stretch it as far as I can. While there are places I won't take my money any more because of shady business practices or bad prior experiences, these places are far and few between. But in the end, price usually dominates.

[2Fast4U]

When we ship parts and our trannys out we don't rasie the price of shipping to make money. We charge you exactly what UPS charges us (we don't ship trannies UPS ). I have seen things for sale on some sites and when you look at the shipping it's like $25 for shipping on something that weighs 10 pounds, and I know that we don't pay that to ship UPS (just an example). You will never have to worry about shipping costs from us!!!

[David99GTP]

When we ship parts and our trannys out we don't rasie the price of shipping to make money. We charge you exactly what UPS charges us (we don't ship trannies UPS ). I have seen things for sale on some sites and when you look at the shipping it's like $25 for shipping on something that weighs 10 pounds, and I know that we don't pay that to ship UPS (just an example). You will never have to worry about shipping costs from us!!!

Thats a good honest thing to do. I ship with UPS and Fed Ex a lot with work so its easy to spot a markup. If its a crazy markup I take my business elsewhere.
Anyway glad to hear you ship honestly. Not many places do.

[webracin]

well you know I never thought about that when it came to ebay, so now you may have changed my mind on that. Everyone wants a quality product for a cheap price. In order to achieve this, you must do research and put some time into looking around for what your willing to pay. All in all, you and I look for the best price on the same product and include the TOTAL price with shipping and handling in order to determine if the item is a good deal. There are others that don't and they will buy on an impulse.

on the water to gas deal, you are right, however if I invented it, you can bet I would be getting royalties off other companies making my product...hehe And yes, as the competition lowers their price, I have to do the same (given they are the same quality) or my product will sit on the shelf making me zabo zippo nada.

webracin

[archemedes]

I add $4 to my UPS stuff usually as I don't have daily pickup and they charge me that for doing a scheduled pickup

[Trannyman95]

Yeah daily pickup is definately a better rate and I dont use that either. Some weeks I dont sell much, sometimes I ship things out every day but its not enough to justify them stopping by, and they also stop by around 3 PM which doesn not help me in the least. I am only about 2-3 minutes from the local UPS terminal and they are open until 8 PM so if I have an order at 7:30 PM it goes out the same day as long as parts are in stock, otherwise it goes out the following day but I like the convinience of dropping off my own parts and wait until late in the day to help people out in case I can ship something out after my daily pickup would have been here.

[archemedes]

takes me an hour to get to the drop off point (so about $5 in gas I guess)

[David99GTP]

takes me an hour to get to the drop off point (so about $5 in gas I guess)

Just wait a few months and it'll be 10 bucks in gas.

[archemedes]

don't remind me, that's why the $4 seems like a deal (and they don't get here until 5 at the earliest anyway)

[Zooomer]

On the Dex 6, you cannot compare Valvoline to GM. Even if it's the same product (which it's not) the cost is different. That's like saying Meijer price gouges on Cheerios because you can buy Spartan brand at another store for less. You have to compare apples to apples. $4.50/quart is .50 cents cheaper than ZZP is on Dex 6. I don't know if you're getting a deal at your dealer but I'm not sure most people do. At the time ZZP started carrying DEx 6, we were the first vendor to do so and most hadn't even heard of it.

In running a business we do charge as much as we can for products. This takes into account lost sales if the price is too high and what other vendors charge. It would be stupid to undercut competition by a huge margin just for the sake of being able to. That's a fast track to going out of business. Speaking of which, Thrasher, RAT, DHP, MDPP, Modbug and many others have gone out of business. I don't think this market is a gravy train so the notion that anyone is getting rich isn't justified. If there was money here to make 'price gouging' mark ups, there would be more people involved instead of companies like SLP dropping this platform.

A business such as ours cannot survive buying at $60 and selling at $72. We'd be out of business overnight doing this. It's very ignorant to assume it could be done. The cost of a building, insurance, charge backs, payroll, problems, etc could not be met with markups like this. To a guy sitting at home with a normal job thinking about a free $12, it sounds fine. But when you're actually running an operation you quickly find out it can't be done. I had a meeting with some business associates a couple months ago discussing successful business models. All of us concluded that the cost of the product cannot be the most expensive part of your business or you will fail. In fact with some of the businesses advertising was more costly than the product.

Sometimes politics and business strategy come into play. Take brake lines as an example. If a person comes into our market to sell a product, it's a threat. We may offer a product at a low price without cost consideration simply to maintain our status as the #1 vendor. Sometimes it's more important to be the only one selling stuff than to make a profit. This is especially true on a forum like this where only a few dozen people are exposed to the coupon code and it doesn't remove value from the product.

[GR8racingfool]

This may very state to state, but I know in Kansas, the R&D (research and development) that a business spends outright to expand the over all growth of the business and product line can be added as a business expense, and deducted off your yearly tax's.

Many here take advantage of this, and spend money on a known useless product, research in testing, fabrication or engineering only to write it off as a expense if they choose to or want to.

Vendors can charge what they want, because its their business and they can. They can keep the prices of retail with in the playing field of their competitors, and once and a while have sales, if they are offered a discount from their supplier.

Example, I used to work at a bicycle shop for 8 years, 3.5 of those years managing my own store before I left for a higher paying job with benefits. Bicycle inner tubes, these would cost us $0.15 to $0.50 each when we bought a box of 50 at a time. We would sell them for $3.99 each as the retail price. Still with other bike shops in the area according to price. Those 50 would last us a month maybe in the winter time. Come summer time, we would be buying around 1000 tubes a month, and still cutting it close between orders. Thats cost, vs. retail.

But in our market, 95% of the items on the vendors web sites are made in house, and not just merely ordered from a suppliers catalog for resell.

If you don't like the prices...either buy it yourself out right, or make it yourself. Thats what I do anyway. Just because it costs what it does, doesn't mean its worth it on many things.

~F~

[Zooomer]

True, any business expense (including R&D) is written off. You only pay tax on end of year profits.

Speaking of R&D and someones notion that R&D cost should only factor into a product that you're selling. What do you do when the product fails or never makes it to market? You certainly aren't paying for $10,000 of R&D with $12 markups on brake lines. We have dozens of failed or never released or unprofitable products. The money for these needs to come from somewhere. Usually it's made up with the outrageous markups (like tire inner tubes) we have on products where we purchased a vendors inventory when they went out of business or found a one time closeout on something no longer produced.
In the end it has to average out to a profit. During the months of November, Dec, and Jan, ZZP loses money. I have to borrow around 100k to keep the business going and make up for it during the profitable months. This is why you see woot sales and such on ours and other vendors web sites. At some point, we need capital to make payroll and keep bills paid. But this is also a risk. What happens if we come out with a differential that gernades and people stop buying from us? I'm left with 100k of personal debt I can't pay back. In that case, I would have been better off working for someone else w/o this type of risk. Taking that risk though means that I deserve the potential of reward someday. That is the only reason I take it.

[Reptile]

On the Dex 6, you cannot compare Valvoline to GM. Even if it's the same product (which it's not) the cost is different. That's like saying Meijer price gouges on Cheerios because you can buy Spartan brand at another store for less. You have to compare apples to apples. $4.50/quart is .50 cents cheaper than ZZP is on Dex 6. I don't know if you're getting a deal at your dealer but I'm not sure most people do. At the time ZZP started carrying DEx 6, we were the first vendor to do so and most hadn't even heard of it.

OK, allow me to correct you on something here. If it says Dextron 6, then it IS Dexron 6. That name is a registered trademark, and therefore they have to sell the same formula under that name so that they can say that it was approved by General Motors. And even then, the "knock off" formulations that other companies like AMSOIL, Chevron, and yes even Penzoil MUST meet or exceed the API requirements. Either way, you're not going to get a crappy product from any of the big petro companies.

Reference here

Currently, most ATF formulation and testing costs are borne by the additive manufacturers, who qualify a particular additive package in a specific base stock -- a so-called "original" formulation. Lube manufacturers then must buy those specific qualified ingredients to make their ATF, and must pay to test their "reblend" of this identical formulation. One lube company owner estimated that a reblend test regimen costs approximately $30,000, and an additive company representative indicated that the "original" test costs can be two to three times that.

This essentially states, that companies who wish to manufacture their version of Dex 6 must first buy the formula, and keep the formulation within + or - a certain requirement.

[Abrasive]

I hate to say this, but price is dependant on what a customer is willing to pay. Prices are, and always will be, consumer driven. I work in the glass industry, which is really two businesses in one. You've got flat glass and auto glass. The mark-up on flat glass would probably absolutely mortify most of you. It's huge. Auto glass on the other hand is low profit, but that is mainly due to insurance companies dictating their own pricing. Even with flat glass mark-up high, I am right in line with my competitors.

Prices are consumer driven, if people aren't buying, then prices drop. If they are, then they stay the same or even go higher if demand is higher. Considering what the mark-up is in my business is, I think that 50% or less mark-up on a set of stainless lines is still not that much. Of course I'm comapring glass to stainless lines which in no way is related, I'm just taking into consideration the average mark-up on things that are sold in my business.

[Zooomer]

I understand that the fluid may be the exact same but that's not the topic here. The topic was that ZZP is price gouging. If we sell a product branded GM, then it costs us more than if it's labeled Valvoline even if it's the same product. By your logic, we could sell at a loss and still be price gouging.

[Reptile]

I understand that the fluid may be the exact same but that's not the topic here. The topic was that ZZP is price gouging. If we sell a product branded GM, then it costs us more than if it's labeled Valvoline even if it's the same product. By your logic, we could sell at a loss and still be price gouging.

Hey, I'm just responding to what you said about the formulations not being the same. I never once concerned myself with what you price your ATF at, but when SyntheticShield states that you can get a different brand cheaper, and you respond basically by saying it's not as good....then it's false. And people can get the same product locally and not pay shipping on it, I don't think it's fair to assume they get a deal on that. But in the same turn to be fair, GM prices the certain things that they purchase from other companies to make huge profits.

For example: they could buy your stainless lines for say....$80, and turn around to sell them at $140. And oddly enough, people buy them.

I continually buy ZZP products, so don't think I'm hating. I love the (cheaper priced ) pulley system, I have the snout turn-down tool, Your Stainless lines etc. You do good work, but I'm also on the lookout for the next best deal....just like everyone else is. I'm still a consumer, and I go where my money is best spent.

I guess now I'll bow out, since I appear to be off topic.

[Zooomer]

Hey, I'm just responding to what you said about the formulations not being the same. I never once concerned myself with what you price your ATF at, but when SyntheticShield states that you can get a different brand cheaper, and you respond basically by saying it's not as good....then it's false. And people can get the same product locally and not pay shipping on it, I don't think it's fair to assume they get a deal on that. But in the same turn to be fair, GM prices the certain things that they purchase from other companies to make huge profits.

Well, on the topic of fluid... is it the same? It's my understanding that Dex 6 is not synthetic. If valvoline is, then they would have to be different, right?

[Rocket468]

The consumer just has no idea what it takes to have an automotive business that profitable. "keep the doors open" The cheaper items tend to have more mark-up. I learn a lot standing there talking to you zoomer and jim at the san antion meet 2 years ago. Its not easy to operate an automotive company. The big chain W/D put a dent for the small guys.

You don't make any money on a 10.00 order no mater what your mark-up is just because it takes x time for someone to package and print the invoice. Some 25 cent cost items can easily sell for 4-5$ range retail and still not making any money on them in the long run for a company. Just like car auto the marktup on head units is slim but the accessory are profitable.