November 12, 2007 - The old days are gone for good, how $1000 has become the new $2000.
I was talking with the head of a fitness manufacturing company the other day and we were pontificating, polemic pontification to boot, about the quality of what had once been the lower strata of fitness equipment. We were remarking about the remarkable gains in quality that this class of fitness equipment had made. The manufacturing company head did not necessarily see eye to eye with me on the topic, but I do think that he was breaking out into a cold sweat when I was recounting what our opinion of the new generation of fitness equipment was: $1000 was the new $2000.
How, you may ask, can we make such a dramatic statement about the future and quality of fitness equipment? Inflation, the falling dollar, petrol prices rising, and the general apocalyptic state of the US economy would preclude the vision that we espouse … that you can get more for less. Sorry, I started literary hyperventilation due to watching CNBC while the writing of the previous sentence.
Referencing Alan Greenspan far more times than I typically like to in a single year of blog posts, I have to point out that the world has been locked in a deflationary spiral for the last 15 to 20 years. And while prices have generally gone up during this time period, the amount of value that we receive for the prices that we pay has gone up exponentially in comparison. Greenspan generally attributes this to the deflationary affects of the fall of communism and the entry of these markets to the world economy. I attribute this affect to the brutal competition that has been occurring in the fitness marketplace over the last five years. Sorry Alan, I just trust macro-economic analysis less than you do.
Get to the point you say! Oh well, I was enjoying my literary expression a little too much. $1000 is the new $2000 for one simple reason. Quality. Features come and go, and to the experienced and initiated, the features that you receive in a treadmill and elliptical add relatively little to the cost of the product. A seven inch LCD screen adds less than $50 to the cost of a treadmill for example.
What has changed is that the quality of the motors, controllers and other components that directly affect the durability of the unit. These components have become more efficient and cost effective. Waste has been reduced. While over-engineering was a nice luxury a decade ago, it becomes waste when it adds an additional $500 to the retail cost of the machine today. A Baldor motor is nice to have, but a Turdan will give you almost all of the durability that you would ever need in a treadmill.
What we are saying, in short hand, is that when you are using the machine four to five times a week for a walk or a light jog, you are wasting your money if you spend over $1000. With gas going up and the other expenses that you are going to have for the holidays, it is better to make sure that you aren’t over paying for what you don’t need.
November 1, 2007 - This One is for the Consumer – The Crying Game Continued …
We started to catch some flack this week from a manufacturer’s publication about the MSRP’s that are posted on the website. The criticism is that, with one manufacturer in particular, the company lowered their MSRP’s that they provided to us. The publication made a guess that the manufacturer dropped the MSRP to move their equipment into lower review price categories so that they might be able to get some Best Buy awards from us.
My only answer to this criticism is … so what? I really don’t have a problem with this, if that is what they did. Frankly, I don’t have any idea if they actually did this or they planned the price reduction this year. What I do understand is that when any company decides to publish lower prices then both they and their dealers will come under tremendous pressure to sell the product at lower prices. This in turn …get ready for this …gives the consumer a better value for their money … gasp!!!
My contention is that this is not criticism, but a badge of honor. It means that Treadmill Doctor could possibly cause this industry which is widely known of having MSRPs that have nothing in common with reality into a situation where the sales price becomes more transparent from the outset. The consumer would be the primary beneficiary, receiving more product for the money and forcing dealers and manufacturers to become more efficient.
I don’t think that this will happen, but I can hope. My dream scenario would be to have multiple manufacturers finally telling the truth to consumers instead of stating inflated MSRPs with the actual sales price being, in some cases, thousands less. One of the most notorious offenders is Precor. Last year you could buy a Precor 9.27 at one of Precor’s dealers around $2499. You can now get them at some Costco locations for $1299. Why they didn’t sell them for $1,299 last year is beyond me. By-the-way, we learned that Precor was selling their product through Costco from some consumers that wanted to know if it was a good deal. We of course, called the Costco located in Douglas County, CO (Denver Metropolitan Area) to verify that they were indeed selling Precor treadmills. Frankly, it shocked us to find out that it was true. If I had bought a Precor 9.27 last year, I would be very upset.
When pricing transparency occurs, all parties win. The consumer has a realistic idea of his budget on the front end, the consumer is not forced into haggling like she is in the middle of some street market bargain bazaar, and factories and retailers have to become more efficient because they won’t be ripping off some consumers in order to give “deals” to others. That’s one of the major strengths of the Internet; information that empowers the consumer. If we have to take some heat for that…then bring it on!