# Tool pricing



## oh'mike (Sep 18, 2009)

The same reason a little store has to charge more for a box of Kleenex than Wal-mart.

Depot buys thousands of nail guns---the local lumber yard might order two or three--who do you think gets them at a lower cost?


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## jlmran (Feb 8, 2010)

It has been somewhat well established that Wally will lose money on various items simply to hit the lowest price category. Wonder if the same is true for home centers?


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## oh'mike (Sep 18, 2009)

They pay their stock holders a nice dividend each year---I doubt if they give much away.


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## jlmran (Feb 8, 2010)

So in theory, a purchase from a local supplier generates a larger margin for the manufacturer (Bostich).


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## oh'mike (Sep 18, 2009)

Sad but true----It's hell being a small retailer these days. Often the 'wholesale' price to a small shop is higher than the retail price at a giant store.

Been there and lost.---Mike---


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## Mr Chips (Mar 23, 2008)

i have sold products to big box stores, if you think they are taking a loss on anything you are seriously mistaken. Even when stuff was but on clearance, we had to give them "markdown money" to make up the difference


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## Mr Chips (Mar 23, 2008)

jlmran said:


> Bostich F28WW Nailer
> 
> $199 at big box store. $289 and $299 at two local suppliers. Which of the following could be true?
> 
> ...


you forgot option #4. Manufacturer charges Bix Box Store 30% less for the item to begin with


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## jlmran (Feb 8, 2010)

Mr Chips said:


> you forgot option #4. Manufacturer charges Bix Box Store 30% less for the item to begin with


Oh'Mike beat you on that point in post #2.


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## jlmran (Feb 8, 2010)

Mr Chips said:


> i have sold products to big box stores, if you think they are taking a loss on anything you are seriously mistaken. Even when stuff was but on clearance, we had to give them "markdown money" to make up the difference


Let's use the nailer as an example. If a box store were to realize a 5% loss on the nailer, but could realize a 50% gain on the nails needed to feed the nailer, then that's a pretty good scenario. Kind of like the Wal-Mart model.

Are you saying this could never happen at Lowes or Home Depot?


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## Mr Chips (Mar 23, 2008)

jlmran said:


> Oh'Mike beat you on that point in post #2.


I usually don't read a word that guy says, half of it is lies, and the other half is untrue. Me on the otherhand: I am almost perfect, most of the time :laughing:


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## oh'mike (Sep 18, 2009)

Mr Chips said:


> I usually don't read a word that guy says, half of it is lies, and the other half is untrue. Me on the otherhand: I am almost perfect, most of the time :laughing:



Never forget that I can secretly edit your posts:whistling2:


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## Leah Frances (Jan 13, 2008)

oh'mike said:



> Never forget that I can secretly edit your posts:whistling2:


You do not.... Argh ... I mean, Mike for President.


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## oh'mike (Sep 18, 2009)

Leah Frances said:


> You do not.... Argh ... I mean, Mike for President.



I do not want that job----:laughing:---Not now or ever.


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## Mr Chips (Mar 23, 2008)

jlmran said:


> Let's use the nailer as an example. If a box store were to realize a 5% loss on the nailer, but could realize a 50% gain on the nails needed to feed the nailer, then that's a pretty good scenario. Kind of like the Wal-Mart model.
> 
> Are you saying this could never happen at Lowes or Home Depot?


That's *EXACTLY* what I am saying.

HD or Lowes WILL be willing to make _LESS PROFIT_ on the tool with the understanding that they will make more on the consumables ( the nail in this example), but there is simply no reason for them to give up prime realestate to purposely take a loss on any item, especially when they can just pressure the manufacturer to lower their cost or be replaced by a competitor. They look at every item SKU by SKU. If an item doesn't have enough turns, and generate enough profit, they get rid of it. there are certain deparments where they will accept less profit ( power tools is one of them for sure).

The manufacturers and mom and pop stores might tell you that these guys take a loss on certain items, but I can tell you from first hand experiance that it simply doesn't happen. 

clearance is the only expection, and even then they will often get money back from the vendor, and most seasonal type items have "markdown money" written right into the sales contract


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## DangerMouse (Jul 17, 2008)

oh'mike said:


> I do not want that job----:laughing:---Not now or ever.


Why not? You certainly couldn't do any worse than the last 3 or 4 presidents we've had! :laughing:


DM


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## BigJim (Sep 2, 2008)

Just a thought, buy a brand name fishing reel from wally world then buy one from a sporting goods store and check out the gears in each of them. I can't say all of them are made different but some of them will have plastic gears. I have wondered if the same is true for the big boxes with their tools. I know some of their building materials is seconds and culls.

One more shot at wally world, they are doing like the dollar stores are doing now. As matter a fact my wife and I saw a dollar store truck unloading at wally world.


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## Maintenance 6 (Feb 26, 2008)

Major retailers will absolutely sell below cost to draw people into their establishments. It's how the term "Loss Leader" came to be. Wally was/is notorious for it. It is not even very ethical in most cases, but is done sometimes for long periods to drive out competitors particularly on popular items. Most big box stores have shown that a loss leader will return benefits by additional regular sales once the customer is in the door. How many people do you see walk into a big box and walk out with only the special item? Another tactic is the "store exclusive" model. Big Boxes will negotiate with manufacturers for a special model that can only be bought through their stores. They will hold the contract rights to that model so that, for example, a JD123 widget is available "exclusively at Slowes". You can't buy it at JD's own dealers or at Hum Depot. Maybe instead of ball bearings as on other JD products, this one has sleeve bearings to keep the price down, but joe Homeowner doesn't know the difference...... at least not until it breaks and he's trying to get parts. And it happens with a lot more products than most people realize, including power tools. It's the big Box's way of protecting themselves from being undercut by an aggresive independent distributor who might low ball a price to a local mom and pop establishment. Instead, Mom and Pop are forced to sell JD122 models which may be a better product, but at a substantially higher price. Just try to compare TV's and appliances from store to store by model number.


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## Mr Chips (Mar 23, 2008)

Maintenance 6 said:


> Major retailers will absolutely sell below cost to draw people into their establishments. It's how the term "Loss Leader" came to be. Wally was/is notorious for it.


there was a time when this was a common practice, but I don't believe its the case anymore, especially with the big retailers. They have so much leverage, and there is so much competition, that they can now basically demand the manufacturer to take the hit. Typically when they put an item "on sale" they make a deal with the manufacturer to get a discount for a limited time period, and sometimes it's for the exact amount that was sold. So imagine you supply one of these stores with an item that you sell to them for $70, and they sell it for $99. Your buyer calls you up and says he wants to put it on sale for $79 for fathers day. You guys agree that for the promo period you will reducr your price to $60. After the sale has ended, you will get a spreadsheet showing that 1000 units were sold during that period, and you will have your billing dept issue them a credit for $10,000

As to your point about the different model #'s, you are correct but it's even more involved. Sometimes there are subtle differances like a metal gear in one and a plastic gear in the other, but more often that you might believe, there is NO DIFFERANCE at all, except for the model #. sounds crazy, I know, but it often cost less for them to just slap a new model # and cut profits in exchange for more volume, then it does to source and test a few cost saving components. The big box gets his price point, and the manufacturer can keep selling the same tool at the higher price to the mom-and-pop stores


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## timmymcg (Mar 10, 2011)

> more often that you might believe, there is NO DIFFERANCE at all, except for the model #.


This also makes it easier for folks with price-matching, or price-match-plus 10% of the difference, not to honor their deals. If you JD123HD is on sale at Home Depot for $45, and JD123L is at Loews for $50, despite the fact that they're the same in every respect, Loews doesn't have to give you the thing for $40 plus whatever bonus they offer. 

Extremely common in electronics sales. (If you've wondered why digital cameras have model numbers 23 digits long...)


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## parts (May 6, 2009)

You must be careful some of the items big box stores sell may by all outward appearances be the same as the ones you see at supply houses but internally they are not.


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## Mr Chips (Mar 23, 2008)

parts said:


> You must be careful some of the items big box stores sell may by all outward appearances be the same as the ones you see at supply houses but internally they are not.


Good advice, but the opposite is true as well. sometimes supply houses will offer a lesser product to match a Big Box price point

it's not at all uncommon for manufacturers to offer different models of items in their lines, that might look the same on the outside but have different internals. This isn't necassarily done with the intent to confuse or deceive anyone, but might be done as a cost savings, for brand conformity, etc... 

If they have the same mfg model #, you can be confident that they are exactly the same regardless of where you buy. But even different model numbers and UPC codes could still be the exact same product, but in different packaging. If you are in doubt call the manufacturer, or compare a parts breakdown if it's available, don't simply take the word a sales person at the big box store OR at the local supply house. They may be telling you what they think or was told is true, but that doesn't mean it is actually accurate information


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## Mr Chips (Mar 23, 2008)

jlmran said:


> Bostich F28WW Nailer
> 
> $199 at big box store. $289 and $299 at two local suppliers. Which of the following could be true?
> 
> ...


for what it's worth: This tool is available on Amazon as well for $199. I highly doubt they would be willingly taking a loss to get nail business, since it cost a fortune to ship nails and most people will but locally. Tools Plus.com is even cheaper.....


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## michaelcherr (Nov 10, 2010)

Stores Generally have 50-100% markup.


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## Mr Chips (Mar 23, 2008)

michaelcherr said:


> Stores Generally have 50-100% markup.


Not on power tools and other price sensative items.


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