Are OEM's beginning to shoot themselves in the foot with MSRPs?

[caeye0710 19]

First time MGS poster here after spending years at another forum site, also a "Certified Club Junkie"

I was just going some research on the MG3 being released early next month. IMO, what a sharp looking wedge! I've admittedly been a Vokey guy my entire life, so doubt I'll be making a move considering my SM8's are waiting for their first round (just swapped new ones in after a year with my first set of SM8). 

While looking at the MSRP for the new MG3 ($179 for stock options), it got me thinking: Are OEM's going completely off the rails with prices on new equipment?

I don't remember which model it was, but I remember that I could walk in to a shop and get three new wedges for $327 plus tax ($109 MSRP). It's gotten to the point where buying three new TM wedges would be $578 after tax here in NC (NEARLY $600!).

Let me add to that by saying: I understand. Over time, costs related to materials and shipping increase. One can argue that even production costs increase, although as a Process Improvement Consultant in the Manufacturing industry for close to a decade, I don't know if that rings true as much as we think it does due to the automation process nowadays (although I'll admit there has to be some merit to it). Doesn't mean I'm an expert in the Behind-The-Scenes production of golf equipment, but a lot of my clients have remained stagnant in their production process over the years due to robotics and automation processes, so I would think it would ring somewhat true to golf equipment OEMs.

Back to the topic: Are we getting to a point where it's going to eventually be too expensive to get the latest and greatest equipment? In 2004, Drivers hit a $500 MSRP for the first time (TM R7, Titleist 905 Series, etc.). The R7 was the first driver to be listed at $500 (I think) and I recall people throwing a fit. Titleist quickly followed suit on the 905 series, although I specifically remember our Titleist rep at my club back then mentioned that the initial MSRP was going to be $409 until TM came to market and announced the R7 at a higher price point.

 Nowadays, $550+ is the norm. Over 17 years that difference doesn't add up to much, but what happens in another 15 years?

Stock drivers listed at $800?

Stock FW's at $500?

Iron sets off the rack at $2,000?

Wedges at $200 a piece?

Putters (too many variables here honestly, but let's say $400 average)

That means if you want to revamp an entire bag, you'll be dropping somewhere in the neighborhood of $4,300 if you stick to stock options and don't get fitted for upgraded shafts and specs.

Maybe I'm just completely off base here and my opinion is wrong, but I'd be curious to here what some of you folks think. 

Feel free to roast me if I sound like an idiot 

 

[RickyBobby_PR 10,207]

Msrp has usually been high. Titleist as an example would list their iron sets at $210/club but map would be significantly less. 
 

As for production there may be aspects of the manufacturing of the club that’s automated or mass produced without human intervention but thinks like shafts are all hand rolled and hand painted in one fashion ir another.

The assembly of the club is still done by hand and many of the brands assemble in the US so labor costs are going to be higher for that.

The market will determine if they are shooting themsleves in the foot but based on recent sales $1299 for a 7piecs set of irons, $150+ for wedges and $500+ for driver isn’t an issue. 

 

[bens197 12,886]

I struggle with the concept that golf equipment should be immune from inflation, supply and overall macroeconomic policy.

Google any simple CPI inflation calculator and type in the price of a PING TiSi driver in January 2000.  It was $399, I bought one.

Today that $399 would be $645.31.

A PING G425 driver from any big box is $499.

Sounds like we're doing OK.

 

[ChitownM2 767]

I would say that prices are definitely climbing faster than inflation and towards an unsustainable point down the line.

That Ping driver may have cost $400 in 2000, but that was the exception not the rule.  I remember shopping for clubs back then and most drivers were $300 and you could pick up "last year's" model for $200 which is what I did.  Vokey wedges might have been $110 as well but cleveland and callaway were cheaper.  I remember picking up "zip groove" wedges for like $90 each.

The OEM's have gotten much better on their inventory control to the point where they now have shortages of clubs rather than a bunch of extras being discounted as happened in the past which further contributes to the price hikes.  It's hard to walk into a golf store and find a Mavrik driver or a TS2 hybrid because they are either long gone or only sold at a few discount golf websites so you can't actually hit them before buying.  

I'm hoping that once this Covid surge passes we will see prices flatten out for a good long period but I'm not holding my breath.  That doesn't seem to be the way any industry operates anymore.  Having a solid profitable business with repeat customers, etc is no longer acceptable.  Every business has to demonstrate "growth" and increased revenue which means either charging more money or trying to steal someone else's market share.  IMO, both of these tend to lead to more spending on marketing and hype generation than any actual improvement in equipment.  

[PMookie 17,631]

Clubs stayed the same price for a long time, and, as @bens197mentions, comparatively they were higher priced years ago compared to inflation/dollar value. The cost of everything will always go-up, so as long as the cost of clubs don’t rise as fast as college tuition has, I’m good.

One thing that has crossed my mind is that with so many more people in the game right now OEMs are going to increase prices a bit to try and balance the losses of recent years. It is what it is, and maybe more folks end-up waiting to buy until what’s “new” is marked-down.

[caeye0710 19]

3 minutes ago, PMookie said:

Clubs stayed the same price for a long time, and, as @bens197mentions, comparatively they were higher priced years ago compared to inflation/dollar value. The cost of everything will always go-up, so as long as the cost clubs don’t rise as fast as college tuition has, we should be good! 

@bens197 definitely made a ton of good points. I also didn't mean for my post to make it sound like I was insinuating that golf shouldn't be subject to inflation. The point of my story is at that some point, it's gotta get to where it's too crazy, right?

We might be all be 95 years old and barely reminiscing on the days of when we could actually go to the bathroom on our own, much less play golf and complain about the price of a new gap wedge. 

Speaking of college tuition, my first kid will be going into her freshman year in 15 years, so I doubt I'll be buying many golf clubs at that time anyways. According to Vanguard and some other reports, 4 years of in-state school is forecasted to cost $50,000 per year by 2034. 

Anyone know of a place where I can donate a kidney?

[PMookie 17,631]

20 minutes ago, caeye0710 said:

@bens197 definitely made a ton of good points. I also didn't mean for my post to make it sound like I was insinuating that golf shouldn't be subject to inflation. The point of my story is at that some point, it's gotta get to where it's too crazy, right?

We might be all be 95 years old and barely reminiscing on the days of when we could actually go to the bathroom on our own, much less play golf and complain about the price of a new gap wedge. 

Speaking of college tuition, my first kid will be going into her freshman year in 15 years, so I doubt I'll be buying many golf clubs at that time anyways. According to Vanguard and some other reports, 4 years of in-state school is forecasted to cost $50,000 per year by 2034. 

Anyone know of a place where I can donate a kidney?

FYI, my youngest is 10, and a financial guy told me to expect in-state tuition at LSU to be around $60,000 a year in 8 years. Another discussion for another day, in another thread…..

[russtopherb 9,785]

Materials costs are through the roof everywhere. If you can even *get* the materials in a timely manner. 

Golf OEMs are no different.

[bens197 12,886]

2 hours ago, russtopherb said:

Materials costs are through the roof everywhere. If you can even *get* the materials in a timely manner. 

Golf OEMs are no different.

I was thinking about mentioning this but in a little different context...hopefully I don't screw this up...

Golf equipment (metals) on a higher tier require specific metals.  304, 17-4 and 431 Stainless, 6-4 titanium...point being, these are specific density metals, not mist-mash repurposed metals from your local melt-em-down scrap yard.  

The specific density metals command a higher price...this is a particular reason why some ordinary metals haven't increased in cost, making golf clubs appear as if they cost more than other common purchases.

I think I got it...someone feel free to correct it if need be...

[bens197 12,886]

And just to add to that...when PING was casting their irons in their Phoenix foundry, the metal sampling was incredible to witness.  

The attention to detail for each batch of steel raw material would make the most obsessive compulsive person blush.  

[ChitownM2 767]

Had to come back to this thread when I got an email from MGS this morning announcing Callaway's new $400 hybrid!!!!!  Here I was thinking that $270 hybrids to replace $165 (high end) irons were ridiculous.  This hybrid is almost as expensive as Cobra's driver!

[Tarheelvolvo 1,477]

16 minutes ago, ChitownM2 said:

Had to come back to this thread when I got an email from MGS this morning announcing Callaway's new $400 hybrid!!!!!  Here I was thinking that $270 hybrids to replace $165 (high end) irons were ridiculous.  This hybrid is almost as expensive as Cobra's driver!

Lots of good comments on this thread! One thing that I didn't see mentioned is the increased demand for golf equipment. If demand is there, OEM's will charge what they can to maximize profits...like $400 for a hybrid. Throw in the supply shortages and we have the classic economics 101 model. 

Do I think that production costs have gone up? Probably not, as @caeye0710noted the increase in automation will keep production costs relatively flat YoY, so then you have materials costs, which have gone up for the same supply/demand reasons. Other costs you guys didn't mention would be R&D costs that will increase since you need qualified employees to design, test, and build the new clubs and they need a pay increase each year to keep with inflation. And then lastly you have the marketing budget, which, coming from a guy in marketing for a large corp, doesn't go down over time, haha! Those ad spots get more and more expensive every year! 

With all of that said, do I think it's appropriate to pay $400 for a hybrid? Heck no! The last piece of "new" equipment I purchased was a prior gen G410, right before the G425 came out. Unless the hybrid guarantees I hit it 225+ and it's always in the fairway, I'll pass and get last gen model if I need a new one, but as the saying goes - a fool and his money are soon parted 

[Shankster 33,163]

The demand can go away any time now.  Pretty soon there won’t be enough room on golf courses.  They are slow as it is.  
 

The game grew… that’s what everyone wanted right?  
 

Everyone must like slow play.

[Lacassem 17,551]

So much good stuff here. I’ll add my 2 cents:

1) as many have said supply and demand. It’s a beautiful thing. Here I am waiting to do an addition as we speak because of prices.

2) for me wedges are a tough pill to swallow at 200 because now that I’m playing more they need to be replaced but is what it is. But think about all the R&D research year in year out, gotta pay that premium at some point

3) while I would never spend $4300 in a year I can see myself spending $1000 a year! 

 

[Headhammer 3,338]

On 8/12/2021 at 10:04 AM, RickyBobby_PR said:

 

The assembly of the club is still done by hand and many of the brands assemble in the US so labor costs are going to be higher for that.

 

Is this true? The last couple clubs I've purchased have all said "Assembled in Mexico".

[RickyBobby_PR 10,207]

4 minutes ago, Headhammer said:

Is this true? The last couple clubs I've purchased have all said "Assembled in Mexico".

It depends on the brand. Callaway uses mexico, cali and iirc Texas. Several brands assemble in the US like Srixon, ping, pxg off the top of my head. Ping had  job advertisement for their build team in Arizona just a few weeks back

[TheProfessor 17]

I think fairway woods are still somewhat reasonable, hybrids are borderline, drivers and wedges have gotten insane to me, especially if you want an upgraded shaft in the driver. I think I got a pretty fair price for my MP-20s, but it seems like they are cutting off custom orders soon after price drops. Hopefully it levels off for a while. One good thing is wood shafts are largely interchangeable if you stick with the same OEM, so you can buy off the rack after price drops as an option. 

[Titleist87 280]

Using the inflation calculator, my 1987 $300 set of 3-PW Titleist Tour Model irons would be $720 today. Today, a comparable set of 3-PW Titleist 620MB is $1400.

Edited August 20, 2021 by Titleist87

[HDTVMAN 167]

All OEM's. from all facets of industries, use MSRP to control their sales and advertising they allow. It is legal to tell a re-seller that if you advertise for less than, for example, $499, we'll drop you, or if we pay coop advertising, we won't pay our share. Courts have ruled in favor of the manufacturers.

[Badge95 0]

I understand that most things are market controlled, but the rising prices reminds me of when I was younger. Back then golf was a rich mans sport. I’m starting to see the signs of that coming back. Golf wants to keep expanding  and they want everyone to be able to play. That has always been the problem, it was too expensive for the average person to play. You will always have upper middle class and the rich playing, but if they want the average person to take up golf and play and grow the game, price will always be a concern. There isn’t  as much lower end equipment now and large companies buy up smaller ones and stop producing. Adams, northwestern etc are some.  I’m seeing courses closing in my area, private courses as well, because their aren’t enough people out there willing to ponie up the money. Golf courses and manufacturers need to be conscious of this.