Gaziano & Girling USA Trunk Show Schedule April 2007

[grimslade]

Originally Posted by teddieriley

They charge GBP 2000. That is like 2000 U.S. dollars to them. Not unfair for bespoke. Yes, it's unfortunate the exchange rate is the way it is, and that it might result in turning away some (if not many) U.S. customers, but G&G doesn't look at it as costing $4000 USD. To them, it's 2000 of their own currency. Unreasonable? Maybe not.

This is, with all respect, silly and untrue on its face. did everything suddenly become 2,000x cheaper in Italy when it converted from the lira to the euro? Obviously not. The size of the unit of account is meaningless when comparing price levels.

Consider: GDP per capita in the UK in 2006 was approximately 15,000 pounds. In the US, it was $40,000. Does this mean brits are only 40% as wealthy as Americans, on average? Of course not.

Convert both to dollars and you'll see that UK per capita GDP last year was about $30,000, or 25% lower than in the US. Still lower, but not 60% lower. What does this have to do with anything? Well, it shows that "a dollar" does not simply equal "a pound." In nominal terms, Brits earn a lot fewer pounds, on average, than Americans earn dollars.

To think of it another way, British prices are, overall, about 20% higher than American prices. In other words, at about $1.60 to the pound, the overall price levels in the two countries would be similar. At $1.60, G&G bespoke would cost an American $3,200. So one way to think about the 2,000-pounds price in "local" terms is to say that, in terms of everything else that a Brit could buy (and leaving out the lower income levels overall...), buying a pair of G&Gs at 2,000 pounds "feels" like spending $3,200. Not $2,000.

 

[aportnoy]

I have no issue with the price of the shoes and much more of an issue with a 30% price increase in their first year of operation. That tells me that they either woefully underestimated the cost of making the shoes or decided to offer breakeven pricing to attract customers and then were planning to spring this increase all along. Neither being a good scenario.

I know of recent examples of bespoke tailors demanding a 30% increase in fees, consequently many of thier customers have walked.

 

[itsstillmatt]

Originally Posted by aportnoy

I have no issue with the price of the shoes and much more of an issue with a 30% price increase in their first year of operation. That tells me that they either woefully underestimated the cost of making the shoes or decided to offer breakeven pricing to attract customers and then were planning to spring this increase all along. Neither being a good scenario.

I know of recent examples of bespoke tailors demanding a 30% increase in fees, consequently many of thier customers have walked.
where?

 

[aportnoy]

Originally Posted by iammatt

where?

If I told you, I have to kill you.

 

[grimslade]

Originally Posted by aportnoy

I have no issue with the price of the shoes and much more of an issue with a 30% price increase in their first year of operation. That tells me that they either woefully underestimated the cost of making the shoes or decided to offer breakeven pricing to attract customers and then were planning to spring this increase all along. Neither being a good scenario.

I know of recent examples of bespoke tailors demanding a 30% increase in fees, consequently many of thier customers have walked.

Portnoy is assuming that prices are set based on the cost of production. I would wager that the earlier-offered explanation is more likely. They are producing at capacity, demand has exceeded expectations, so they are attempting to maximize their profits at a given level of production. They may, it is true, have miscalculated their customers' ability to sustain demand at a 30% higher price, in which case they may have to re-evaluate in a year or so. but if they can maintain full-capacity production at the higher price, that would suggest that their (rumored) decision was "correct."

 

[aportnoy]

Originally Posted by grimslade

Portnoy is assuming that prices are set based on the cost of production. I would wager that the earlier-offered explanation is more likely. They are producing at capacity, demand has exceeded expectations, so they are attempting to maximize their profits at a given level of production. They may, it is true, have miscalculated their customers' ability to sustain demand at a 30% higher price, in which case they may have to re-evaluate in a year or so. but if they can maintain full-capacity production at the higher price, that would suggest that their (rumored) decision was "correct."

I'm not calling it a bad decision, only an unfortunate one for me as I will now need to find other options.

 

[zjpj83]

Originally Posted by aportnoy

I have no issue with the price of the shoes and much more of an issue with a 30% price increase in their first year of operation. That tells me that they either woefully underestimated the cost of making the shoes or decided to offer breakeven pricing to attract customers and then were planning to spring this increase all along. Neither being a good scenario.

I know of recent examples of bespoke tailors demanding a 30% increase in fees, consequently many of thier customers have walked.

In antitrust, you'd call this "predatory pricing."

 

[grimslade]

Originally Posted by zjpj83

In antitrust, you'd call this "predatory pricing."

Which is why the concept is mostly silly. As portnoy has personally demonstrated, it is very difficult to lock in your customers through predatory pricing, so no one is harmed, except insofar as their expectations are dashed. There's no evidence that G&G has driven anyone from the market through its pricing, even assuming that portnoy's supposition about their motives and intent is correct.

 

[zjpj83]

Originally Posted by grimslade

Which is why the concept is mostly silly. As portnoy has personally demonstrated, it is very difficult to lock in your customers through predatory pricing, so no one is harmed, except insofar as their expectations are dashed. There's no evidence that G&G has driven anyone from the market through its pricing, even assuming that portnoy's supposition about their motives and intent is correct.
Well, we are now speaking completely in the hypothetical here, and this is not an accusation leveled at G&G whatsoever. But, hypothetically speaking: If G&G planned to have lower prices in order to lock in customers in the initial wave of orders, their competitors (other bespoke shoe makers) could argue that, on the contrary, many consumers will be locked in because once you have a last that fits you perfectly, you will be less willing to go try other bespoke makers who will have to start the last-making process from the beginning and may not get it right the first time. So there's an incentive to staying with G&G despite the higher prices because you are already satisfied with the end product (your last). I don't think it would be a winning argument, but that doesn't mean there's nothing to it. I think it's true that people get used to and comfortable with their bespoke makers, and bouncing around to someone new isn't as easy as just snapping your fingers. You have a certain rapport with them, they have built up a certain amount of goodwill in the shoe-buying community, etc. In any event, all the speculation should probably cease until we hear the facts (of the supposed price increase) verified.

 

[Artisan Fan]

my bespoke shoes from Italy are costing me EU700. Last time I checked, that was cheaper. Quality is +/- same as Lattanzi.

Really? Wow, that's a deal. Isn't that around $900 for bespoke. I gotta get myself to Naples.

 

[Cantabrigian]

Originally Posted by aportnoy

I'm not calling it a bad decision, only an unfortunate one for me as I will now need to find other options.
Like buying four fewer Lobbs rather than buying three fewer?

 

[itsstillmatt]

Originally Posted by Artisan Fan

Really? Wow, that's a deal. Isn't that around $900 for bespoke. I gotta get myself to Naples.
Florence. Ugolini.

 

[aportnoy]

Originally Posted by Cantabrigian

Like buying four fewer Lobbs rather than buying three fewer?

 

[iyorito]

Dear Sirs,

We will be increasing prices to GBP2,000 including the VAT. So for those of
you who live outside of the EU, the price would be approximately GBP1,680
excluding the import duty of the country where the customer receives the shoes.

Very truly yours,


Masaichi Hasegawa
Director, Gaziano and Girling Limited

PS That would be including the trees and shipping by UPS

 

[A Y]

Originally Posted by iyorito

We will be increasing prices to GBP2,000 including the VAT. So for those of
you who live outside of the EU, the price would be approximately GBP1,680
excluding the import duty of the country where the customer receives the shoes.

Thank you for the (very welcome) clarification! I apologize for causing such a fuss.

--Andre