Headsets: "Minimum Advertised Price"

Just about all of the major (USA) pilot shops on the web use a "minimum
advertised price" for headsets. The actual price for a popular headset,
such as Lightspeed or David Clark are not readily available on the
website. Instead you only find out the real price after actually
ordering or requesting and waiting for an email. The shops claim the
manufacturers require this, and they can't advertise a price below the
"minimum adv. price" which is usually somewhat lower than the MSRP or
list price.

So why is this? Manufacturers *cannot* set actual selling prices, per
federal law (Sherman Act and related) so it is strange that they try to
impose this barrier. .

At any rate it is just a hassle for the consumer becaues it
intentionally makes it difficult to find the best price. You would think
the manufacturer wouldn't mind the end seller selling for the best
possible price to get more sales. UNLESS of course the manufacturer
secretly sells to different dealers at different prices.....

I've done a lot of business on the web, and it is both weird and
annoying that aviation .headsets operate differently than everything
else.

This practice is common with lots of mail order products, especially
electronics. Look though any computer magazine and you will see "$CALL"
listed as prices for various electronic equipment.

--
Richard Kaplan, CFII

www.flyimc.com

Will Thompson wrote:

Just about all of the major (USA) pilot shops on the web use a "minimum
advertised price" for headsets. ...
So why is this? Manufacturers *cannot* set actual selling prices, per
federal law (Sherman Act and related) so it is strange that they try to
impose this barrier. .

At any rate it is just a hassle for the consumer becaues it
intentionally makes it difficult to find the best price. You would think
the manufacturer wouldn't mind the end seller selling for the best
possible price to get more sales. UNLESS of course the manufacturer
secretly sells to different dealers at different prices.....

I've done a lot of business on the web, and it is both weird and
annoying that aviation .headsets operate differently than everything
else.

It's certainly not restricted to aviation headsets. For one example this
is very common for GPS receivers. Look at the prices at www.tvnav.com -
for many of the Garmin receivers it says to click to send email for
price. Clicking actually opens your email with the price already listed.

As to the rationale, I believe it is to help the small volume retailers
who cannot compete on price with many of the mail and internet ordering
sites or even with the bigger brick-and-mortar retailers. If the prices
were widely advertised it would become even more apparent how much more
the small stores are frequently charging. But the small stores are often
the ones where customers get a chance to see and play with the products.
And probably many of the customers who try on a headset or check out a
GPS at a small retailer end up buying from one of the cheaper mailorder
or internet shops.
If Garmin (or Lightspeed, etc.) didn't help out the smaller dealers
with a MAP policy, many would stop carrying these products and it would
hurt the overall sales of the products since they wouldn't be as accessible
to potential customers who want to 'try before they buy'.

So why is this? Manufacturers *cannot* set actual selling prices, per
federal law (Sherman Act and related) so it is strange that they try to
impose this barrier.

That's exactly why they have the concept! (It wasn't the Sherman act.
Minimum retail price fixing was stilll very much around when I was in
high school, and I post-date the Sherman act Basically they're
saying: I can't stop you from selling cheaper, but I damn well can
stop you from boasting about it.

Think of all the merchants who promise to meet any competitor's
"advertised price". You're supposed to bring in a clipping to show
them, and they'll rebate you the difference. Presumably they wouldn't
honor an email, since that was a private offer just to you.

all the best -- Dan Ford
email: (put Cubdriver in subject line)

The Warbird's Forum www.warbirdforum.com
The Piper Cub Forum www.pipercubforum.com
Viva Bush! blog www.vivabush.org

"Peter" wrote in message
newszKbc.181002$po.990627@attbi_s52...

It's certainly not restricted to aviation headsets. For one example this
is very common for GPS receivers. Look at the prices at www.tvnav.com -
for many of the Garmin receivers it says to click to send email for
price. Clicking actually opens your email with the price already listed.


Actually, Garmin sent a threatening letter to all their retailers saying
that they would cut off shipments of the new GPSMAP 296 for six months to
any retailer that they determined had sold (not just advertised) one of
these units for less than $1,695. The letter also said that it was necessary
to protect the reputation of Garmin. Apparently tvnav.com has retaliated by
refusing to stock the 296. I wouldn't be surprised if some of the other mass
marketers did the same. I suppose the smaller retailers would appreciate the
price protection if Garmin actually shipped them some units that they could
sell.

Richard Kaplan wrote:

This practice is common with lots of mail order products, especially
electronics. Look though any computer magazine and you will see "$CALL"
listed as prices for various electronic equipment.

It's also common with photography gear.

George Patterson
This marriage is off to a shaky start. The groom just asked the band to
play "Your cheatin' heart", and the bride just requested "Don't come home
a'drinkin' with lovin' on your mind".

You are half right.
Manufacturers can set _minimum_ sale prices:

http://www.ftc.gov/bc/compguide/question.htm


"Will Thompson" wrote in message
...

So why is this? Manufacturers *cannot* set actual selling prices, per
federal law (Sherman Act and related) so it is strange that they try to
impose this barrier. .

"Richard Kaplan" wrote in message
s.com...
This practice is common with lots of mail order products, especially
electronics. Look though any computer magazine and you will see "$CALL"
listed as prices for various electronic equipment.

The use of MAP was much more relevant when magazine and T-A-P ads were the
primary source of customers for the mail order houses. With published ads,
they have to be set two months or more ahead of the actual publish date. If
the "other guy" set his price $10 below yours, he got more sales. So price
setting was kind of like a game of chicken. Set it a few bucks too high and
you lose sales, set it too low and you lose profit. The end result was that
most dealers actually wanted the manufacturers to set a MAP. That way all
the ads were the same -- either the MAP or "Call". They could then adjust
their price as needed when the customers actually called.

It's not so important today with almost everyone having a web site. I guess
not having the price on the site does avoid having a quick Froogle(TM)
search point everyone to the one "cheapest" dealer. If a dealer lowers his
prices, it may not be reflected in the web searches for a week or longer, if
at all. With customers having to send an email or load a shopping cart,
they get that customer interaction and can adjust prices dynamically to make
the sale.

As I mentioned, the dealers point to the manufacturers and say it's their
MAP policy; but when I worked for one of those manufacturers, it was the
dealers that asked for the MAP policy. It was a tool that let them avoid
really steep discounting which hurt their margins.

Gerry

MichaelR wrote:

You are half right.
Manufacturers can set _minimum_ sale prices:

http://www.ftc.gov/bc/compguide/question.htm

The above website does not support your assertion. It states:
"If the manufacturer and a dealer entered into an agreement on a resale
price or minimum price, that would be a price-fixing violation. The
agreement could be formal, through a contract, or informal, when the
dealer’s compliance is coerced. However, if the manufacturer has
established a policy that its dealers should not sell below a minimum price
level, and the dealers have independently decided to follow that policy,
there is no violation."

So a manufacturer coercing a dealer to abide by a minimum sales price
is a violation of price-fixing legislation. But the manufacturer can
suggest a minimum sales price and hope that the dealers abide by it.

If Garmin is telling dealers that they must abide by the minimum price
for the 296 or have their supplies cut off that would constitute
coersion and I expect they would lose in court if Darrel (tvnav) or
other affected dealers decide to fight the policy.

"Will Thompson" wrote in message
...


So why is this? Manufacturers *cannot* set actual selling prices, per
federal law (Sherman Act and related) so it is strange that they try to
impose this barrier.

"Peter" wrote in message
news:yL%bc.182419$_w.1842540@attbi_s53...
MichaelR wrote:

You are half right.
Manufacturers can set _minimum_ sale prices:

http://www.ftc.gov/bc/compguide/question.htm

The above website does not support your assertion. It states:
"If the manufacturer and a dealer entered into an agreement on a resale
price or minimum price, that would be a price-fixing violation. The
agreement could be formal, through a contract, or informal, when the
dealer’s compliance is coerced. However, if the manufacturer has
established a policy that its dealers should not sell below a minimum
price
level, and the dealers have independently decided to follow that policy,
there is no violation."

So a manufacturer coercing a dealer to abide by a minimum sales price
is a violation of price-fixing legislation. But the manufacturer can
suggest a minimum sales price and hope that the dealers abide by it.

If Garmin is telling dealers that they must abide by the minimum price
for the 296 or have their supplies cut off that would constitute
coersion and I expect they would lose in court if Darrel (tvnav) or
other affected dealers decide to fight the policy.

Refusing to deal with a reseller is not considered coercion. The FTC web
site at http://www.ftc.gov/bc/compguide/illegal.htm says:

Resale price maintenance agreements. Vertical price-fixing -- an agreement
between a supplier and a dealer that fixes the minimum resale price of a
product -- is a clear-cut antitrust violation. It also is illegal for a
manufacturer and retailer to agree on a minimum resale price.

The antitrust laws, however, give a manufacturer latitude to adopt a policy
regarding a desired level of resale prices and to deal only with retailers
who independently decide to follow that policy. A manufacturer also is
permitted to stop dealing with a retailer who breaches the manufacturer’s
resale price maintenance policy. That is, the manufacturer can adopt the
policy on a "take it or leave it" basis.