Open Your Wallets Wider, Golf Gear is Too Damn Cheap

[The Dansome]

FROM THE BLOG

Open Your Wallets Wider, Golf Gear is Too Damn Cheap

 

http://www.mygolfspy.com/golf-equipment-is-too-damn-cheap/

 

 

Written By: Tony Covey

 

As I've heard it from hundreds of you; one of the prime suspects in the crime that is the decline of golf is the cost of the gear itself.

 

Golf equipment has gotten too damn expensive. These golf companies have a lot of nerve thinking they can charge $400 for a driver.

 

Nobody can afford to spend $400 in this economy.

 

The prevailing perception is that the manufacturers are gouging the consumer. They've steadily raised prices and haven't given you a damn thing more for your money.

 

Those sonsofbitches.

 

Golf equipment is overpriced, right? They're screwing us.

 

Probably not.

 

Seriously though, at this pont are you/we the public willing to spend more on equipment with today's additional costs to play etc?

 

[Mr_Theoo]

I think if prices go up we are going to want more quality for our money. No more of the "made for shafts" like we see in the taylormade drivers.

[markb]

We will pay for what we perceive to be true advantages. SuperStroke has no problem getting $25 a grip. But it becomes much harder for a manufacturer to get $400 for a driver if that driver doesn't offer anything new or advantageous.
 

Three cases in point. I think that Ping will do okay with its new G30 at $349 because those turbulators are rightly or wrongly perceived to offer actual advantage. Likewise, Titleist's 915 will sell in satisfactory numbers because no one will argue with the quality and forgiveness of a Titleist big dog with the Rocketballz slot in its mouth.   On the other hand, Callaway's Big Bertha V Series will tank big time at $399 because it offers nothing but a retro cosmetic re-badging. Big discounts by fall, and it doesn't launch till August 22nd.

 

I will buy none of them at MSRP.  I'll wait a month after launch and pick up someone else's reject on Ebay for half price. My latest purchase was a nice 2014 Jetspeed 3 wood for $37. The mannies can slap whatever fake list price they want on these clubs. It doesn't impact what they actually trade for in the trenches.

[Alex1975]

With the speed of relieces they cant charge more or we will stick with what we have. If they want us to keep buying new, and lets face it we dont need to, a driver last longer then a year or two, they they will have to price right.

[t5timesb]

I think I sold you the 3 wood at $37.  Ha.

 

We will pay for what we perceive to be true advantages. SuperStroke has no problem getting $25 a grip. But it becomes much harder for a manufacturer to get $400 for a driver if that driver doesn't offer anything new or advantageous.
 

Three cases in point. I think that Ping will do okay with its new G30 at $349 because those turbulators are rightly or wrongly perceived to offer actual advantage. Likewise, Titleist's 915 will sell in satisfactory numbers because no one will argue with the quality and forgiveness of a Titleist big dog with the Rocketballz slot in its mouth.   On the other hand, Callaway's Big Bertha V Series will tank big time at $399 because it offers nothing but a retro cosmetic re-badging. Big discounts by fall, and it doesn't launch till August 22nd.

 

I will buy none of them at MSRP.  I'll wait a month after launch and pick up someone else's reject on Ebay for half price. My latest purchase was a nice 2014 Jetspeed 3 wood for $37. The mannies can slap whatever fake list price they want on these clubs. It doesn't impact what they actually trade for in the trenches.

[HardcoreLooper]

Maybe I'm just behind the curve, but I don't see how a gain of just a few yards is going to benefit my game significantly.  I could invest that $400 in so many other parts of my game and get a better return.  Lessons, tournament entry fees, rounds on better courses, lots of practice, etc.  When I don't hit my driver well, it's not the club's fault.

[mbrodeur86]

It's extremely hard to justify charging more with the economy as it is. People are really struggling and if people have to cut out luxuries to stay afloat - they will just hold on to what they have longer.

 

Seriously, I consider myself a lower middle class person. Both my wife and I work. I actually fix pc's as a side job so really I have 2 jobs and 2 kids (1 being Autistic) We only have 1 vehicle and I cannot afford to buy anything new. I would love to go to a Golftown or a place that could fit me for new clubs and spend $2000 on a new set but I can barely afford to live. I buy stuff on ebay and sell what I'm replacing to cover the cost. It's sad but it's reality at Home. Playing golf is the only thing I do. It's taking over my life really. I could not live without it. It comes down to either buying a $500 driver or paying $500 to play golf for the year....I'd rather play. 

 

So as much as I would like to help - I just can't! 

[markb]

Gotta hand it to Tony.   Since his article came out I have noticed price creep in the top tier woods and irons.    Titleist and TMag are jacking their prices up just a bit, (like $50) probably in a effort to offset expected lower sales.   I think they've learned that the small set of core early adopters will pay anything for the latest and greatest.

 

Me, I'm still picking up my bargains.  Got a new Jetspeed 5 wood for 26 bucks.

[GolfSpy Barbajo]

Pricing is a balance - it's based on a variety of factors: Cost of good sold (direct, hard costs - materials & labor), Overhead costs (R&D costs, operating costs, shipping/delivery, marketing.advertising, salaries, commissions, rebates, etc) and desired profit margin.  Sales forecasts play into it -- but if you forecast that sales volume will go down in the future, reducing your selling price isn't going to help you achieve your profit goals.  One of the fundamentals of business is that it's virtually impossible to lower your price and make it up in volume.  Sounds good, but if you operate on a 20% profit margin and cut your price by 10%, you'd have to double - DOUBLE - your sales volume just to get back to where you were.

 

And you'd have to double your volume without increasing overhead at all - and that's not really possible.

 

So in an era of dwindling sales volume and narrow margins, a bunch of things will usually happen: overhead belts get tightened and selling prices will go up. 

 

You'll also see things like we saw at Nike - the have 3 drivers at 3 price points:  The Vapor Speed at $299, Vapor Pro at $399 and Vapor Flex at $499.  

 

Nike did say their plan is to hold price...can only go by what they say at this point.

 

That said, the used/discount/eBay business is going to boom, I'll bet - but that would have an upward impact on pricing, as well.  And HIreko, Pinemeadow, MDC and others are always options - decent equipment at much lower prices.

[markb]

I agree with the above, except that I'd stress the odd price inelasticity at work with new premium clubs just after their release.   They are not exactly Giffen Goods (like the Aldila Rogue has been), where sales go up when price rises, but they are quite price inelastic for the early-adopters (golf ho's) of new clubs for a little while.

 

I don't think any manufacturer can hold price in the long or medium terms, but they probably can pick up that other $50 they've been leaving on the table with the golf ho's.

[GolfSpy Barbajo]

 

I don't think any manufacturer can hold price in the long or medium terms, but they probably can pick up that other $50 they've been leaving on the table with the golf ho's.

 

Yeah, and $50 a club at 100,000 clubs sold is $5,000,000 worth of gross income.  That can't hurt...

[mbrodeur86]

Here's my thinking (and do correct me if I'm wrong). Let's use Microsoft as an example. Here is a company making billions of dollars selling products (a worthless DVD and a sticker) for $150-$200 a pop. The lower income people simply cannot afford it so they go after these people who "pirate" software. I'm thinking, if the price of (EX: Microsoft Windows 7 Home Premium) was $50 instead of $150, don't you think more people would buy it? Don't you think PC sales would rise? Why would I risk being sued or brought to court when I can simply buy it for $50. I would think that A - you would sell a whole lot more and B  - profit would be the same since by lowering the cost,  you would sell more product

 

I firmly believe that the world needs a "cap" system like sports have. How much is too much? How many houses to these company CEO's need?  I mean, seriously, it's ok to be rich and it's ok to make money but logically wouldn't you move more product if the price was within reason in this economy? I predict that the further the price gap between regular people like myself and the companies gets, we will see less and less people take up the sport and ultimately - they will have to cave. No choice here. We need more golfers. Only so many people can buy stuff at that price. They've already lost me (I could never afford a new driver at $400-$500 ,hell not even $300! 

[markb]

The objective of any seller is not to sell his goods at a "fair" price or a "reasonable" price or at a price that is some multiple of his cost.  The objective of an informed seller is to sell his product for AS MUCH MONEY AS HE CAN GET.   To a large degree, this is done with smoke and mirrors and "be like Mike" campaigns.

 

Goods have no inherent value, they are only worth what someone else will pay for them.   Microsoft has a largely captive market or a market they share with only one other competitor who charges essentially the same price they do for an OS etc.   Anyone using a PC is forced to pay what they demand.   Software is really price inelastic.   If you need it, you need it, and will pay to use it.   The first Big Bertha was the most price inelastic club I've ever seen.   We would pay ANYTHING to lay our hands on one back in the 90's   Every manufacturer is looking for that same magic again.

 

And I'm like you.  I buy nothing new.   But this out-of-control market is great for us cheapskates.  Here are my last set of Ebay purchases:   Bought Callaway V series $185, sold for $260.   Bought Ping G30 for $270, sold for $265.   Bought Jetspeed 3HL for $37, still have.  Bought Jetspeed 5HL for $26, still have.   Bought 3 Scor wedges for $99, sold off 3 ATV's for for $135 at break even.  Bought Hireko juggernaut NEW for $70, great fun club still have it.  Broke my Sun Mountain Microcart, bought new Ogio x4 for $110, 1/3 of MSRP.

 

With chaos on the Savanna, out come the jackals and it's a feast for the scavengers!   I'm happy to be a scavenger.

[mbrodeur86]

I understand what you mean BUT if anyone thinks that by driving up the prices of equipment in a declining economy and a declining golf market makes any sense, than I must be sleeping on the wrong side of the fence! I Totally understand that they need to make money - we all do - but when making money means selling things to people who have no extra money to spend on a sport most people play recreational 6 months out of the year....it just doesn't compute to me. If I was someone who wanted to start playing golf, looked at the drivers and saw $449 for just the driver it would completely discourage me from playing.  The smart companies will go with the market flow. I like that Nike and Wilson/ Staff have drivers at the $299 price point. Can u imagine if the high end drivers were $299!! And than it went to $199 and the 3rd tier at $99.....I would be able to buy new almost every year!! WE ALL COULD!! lol

 

But call me selfish. I would love to year in and year out be able to buy new. Reality says no. I could also understand if they came out with a limited production (like only 100 made) and then sold them for $599. OK. 

[GolfSpy Barbajo]

I understand what you mean BUT if anyone thinks that by driving up the prices of equipment in a declining economy and a declining golf market makes any sense, than I must be sleeping on the wrong side of the fence! I Totally understand that they need to make money - we all do - but when making money means selling things to people who have no extra money to spend on a sport most people play recreational 6 months out of the year....it just doesn't compute to me. If I was someone who wanted to start playing golf, looked at the drivers and saw $449 for just the driver it would completely discourage me from playing.  The smart companies will go with the market flow. I like that Nike and Wilson/ Staff have drivers at the $299 price point. Can u imagine if the high end drivers were $299!! And than it went to $199 and the 3rd tier at $99.....I would be able to buy new almost every year!! WE ALL COULD!! lol

 

But call me selfish. I would love to year in and year out be able to buy new. Reality says no. I could also understand if they came out with a limited production (like only 100 made) and then sold them for $599. OK.  

I hear you - but manufacturing of anything really doesn't work that way.  You can't cut your price and make it up in volume, because you still have to MAKE all that extra stuff, then warehouse it, ship it, sell it, process the payments, pay the salespeople, factory workers, HR staff, maintenance staff, R&D teams and everyone else.  And much of that staff is likely to have to increase to handle the extra sales volume that would be needed to get right back to where you were.  It's a sure-fire way to go out of business in a hurry - not because you ran out of customers, but because you ran out of cash.  When you cut price and Cost of Goods Sold, Direct and Indirect overhead go up as a percentage of sales - your business is in trouble.

 

 

 

I feel your pain - but I guess another way to look at it is that if you find something you like, stick with it and buy whatever new stuff you want at the end of the year or used on eBay.  And there are all sorts of offerings available at different price points.  It's like cars -- I'd love an Escalade, but it ain't happening.  I have an 11 year old Mazda mini-van.  It ain't sexy, but it gets me where I need to go.  There are always going to be people who'll buy high end stuff - that's why they sell high end stuff.  And there are always going to be people  that are on the value end, too. 

[mbrodeur86]

 

I hear you - but manufacturing of anything really doesn't work that way.  You can't cut your price and make it up in volume, because you still have to MAKE all that extra stuff, then warehouse it, ship it, sell it, process the payments, pay the salespeople, factory workers, HR staff, maintenance staff, R&D teams and everyone else.  And much of that staff is likely to have to increase to handle the extra sales volume that would be needed to get right back to where you were.  It's a sure-fire way to go out of business in a hurry - not because you ran out of customers, but because you ran out of cash.  When you cut price and Cost of Goods Sold, Direct and Indirect overhead go up as a percentage of sales - your business is in trouble.

 

 

 

I feel your pain - but I guess another way to look at it is that if you find something you like, stick with it and buy whatever new stuff you want at the end of the year or used on eBay.  And there are all sorts of offerings available at different price points.  It's like cars -- I'd love an Escalade, but it ain't happening.  I have an 11 year old Mazda mini-van.  It ain't sexy, but it gets me where I need to go.  There are always going to be people who'll buy high end stuff - that's why they sell high end stuff.  And there are always going to be people  that are on the value end, too. 

 

 

 

I understand what you are saying but....that doesn't make much sense either. You aren't selling the amount of clubs you want to sell so you jack up the price in hopes that the few people buying them still will? You are pretty much doing what I'm doing which is "assuming". If what you are saying is the case, why do people buy when things are on "sale"? Most People can't afford to pay "full price". Some people can and do and God bless them if they can but they say there are much more poor people in the world than there are rich people and I think that if poor (or less fortunate) people are moving away from the game because of the high cost of playing + high cost of equipment, why would it make sense to bring up the prices and further alienate people?  

[markb]

There are small segments of the buying public (like we knuckleheads who obsess over golf equipment in internet forums) who will buy the latest and greatest no matter what.   Think of them as Season Ticket holders to Knicks games.  These die-hards don't fill Madison Square Garden, but they are still very important to the Knicks organization, they have deep pockets and they keep coming back.   If you can fleece them for a few more sheckels up front, it's gravy.   It doesn't really impact how you will discount later on.   This raise in price is aimed at the "season ticket holder".

 

On the other end of the spectrum, the least important ticket buyer for the Knicks is me -- the ebay scalper buyer.   I'm picking up the overstock for pennies and none of it goes in the Knicks pockets.  But I benefit most by the high prices and losing record that creates empty arenas.

[mbrodeur86]

Yes we are definitely in the same boat. I, like you, ebay my life but to be honest - I don't like it. I'd rather be able to support all these small businesses who, without a doubt, give the best service. They deserve my money but I just plain can't afford anything new. I hate that it affects them the most. If money was not an issue, that's where I'd be. 

[markb]

I'd still be cheap, no matter what. 

 

I look at it this way.   If you have a PGA Superstore and Golfsmith in town right across the street from each other, would you feel bad if you buy a club from the first because it had a  $10 off sale that the second didn't offer?  No, you wouldn't and you'd buy the cheaper club.   If Golfsmith wants your business, it can match the price.   That's just capitalism, the most American of philosophies.   If it wants loyalty, it can buy a dog.

 

One store isn't morally good while the other bad.   Don't feel bad for any of them.  When buying online you are creating jobs at Globalgolf while you may be reducing them at Edwin Watts. 

 

And if you want to support American small business, who is smaller and more American than Joe Ebayer boxing used clubs himself in his own garage?   He's certainly more American than buying new sticks from the heirs of the Dassler brothers, founders of both Adidas and Puma, and  members of the Nazi Party.   Or the new Korean overlords of Titleist, or the Japanese makers Mizuno, Bridgestone, Miura et. al.,

[Johan Rens]

You guys mention the price of clubs - what about apparel like a polo shirt for $80 and more. I was in this business for a long time.  I'll be surprised if they pay more than $20 for that shirt, including shipping.  

 

And then there is one company charging hole-in-one achievers more than $100 for a framed certificate?