Non US Pricing

[gdavies]

Hi Guys,

This is just a quick vent on the distribution channel currently developed by Control4. The pricing of product outside of the US is outrageous. I am considering upgrading from version 1.7 to 2.0 (the install was only completed in August 2010? but was convinced by the installer that 1.8 was not stable and I should not consider 2.0) I was informed that in order to run 2.0 effectively I need to install a HC 1000 (I have a 300 and 200 already installed). The price of the HC 1000 is $3100. I understand we run on 240V in South Africa but a 240 to 120 convertor is only $35. The "programming" to change from version 1.7 to 2 is going to cost $2500. I truly wish I could buy the equipment in the US and fly out an installer to South Africa. It will be way cheaper.

[xc420]

$2500 to hit an upgrade button and let the c4software do the rest? I'm in the wrong line of work. I need to do 2.0 upgrades for a living.

[CFUG]

Correct me if I'm wrong but aren't you dealing with currency and importation duty issues? Last time I checked the Rand was not worth but a fraction of a USD...

[gdavies]

The rand does fluctuate with the dollar which is why I posted the value in dollars. I was quoted R22000 for the HC 1000. The import duties are not significant on equipment we cannot produce ourselves. The price we pay in South Africa is similar to what the UK will also pay. Someone in the supply chain is making an extra ordinary amount of money for the value they add. The take up of Control4 is limited as a result of these inflated costs.

[codex]

Have to agree, in the UK we pay roughly the same £ as you do $ (ie if it's $300 in US it's £300 in UK) so an effective 25-30% more.

[alanchow]

Since Control4 goes through distributors in the majority of non US countries the cost includes importing the stock, tax on importing, warehousing costs, costs of distributor's employee's (sales staff, tech staff, admin staff, etc), costs to freight out to dealers, etc etc.

I can tell you now at $3100us the distributor and dealer is making crap all margin. I'm surprised that its that cheap. Then again they would be making their money back on the installation.

[ILoveC4]

That is too bad that at $3,100 US the distributor isn't making any money. Here in the US, at $1,600, the dealer makes about $640.

EDIT: The math I did in my head was off by $100. Thanks for pointing that out Brent.

[brucecampbell]

Agree - very expensive out of the US

Here in New Zealand we pay (retail) over $4000 USD ($5499 NZD) for the HC1000.

I may have to look at purchasing overseas if I upgrade down the track.....Though the support from the local dist is very good, but maybe not thousands of dollars good......

[dogdvr]

That is too bad that at $3,100 US the distributor isn't making any money. Here in the US, at $1,600, the dealer makes about $740.

Boy I sure would like to get your dealer pricing Dan

Brent

[ILoveC4]

I'm not a dealer, so I don't have "dealer pricing". Am I incorrect? Last price sheet I saw showed it at $959, with an MSRP of $1600.

You're right, I am incorrect. I will edit my post.

[RyanE]

Yeah, a few on here are throwing around 'imaginary' numbers.

Yes, going through a distributor will always be more expensive for international. Distributors have to make their money as well, and there's no way around it. If you're a dealer in a distributor-distributed country, you buy through the distributor. If Control4 is going direct in the country your dealer lives in, your dealer buys direct. In either case, if they're outside the US, there's additional import fees, duties, storage, and transportation costs that may or may not affect that final price.

It is what it is, and it's not something that is unique to Control4.

Sorry.

RyanE

[tebery]

That is too bad that at $3,100 US the distributor isn't making any money. Here in the US, at $1,600, the dealer makes about $640.

EDIT: The math I did in my head was off by $100. Thanks for pointing that out Brent.

Dan, I came up with $720.

[gdavies]

HI Guys, Having been involved in the IT industry in South Africa for most of my life I am well aware of the tax and excise duties on IT products. We understand it will be more expensive but we typically pay about 30% more than the US market. We are talking about a 100% margin on this product. For an installation I have just done which cost a little under $50 000. it would have been much cheaper to buy in the US and fly out an installer. The pricing is not in line with other IT products and the value we receive for the benefit of having a distributor and dealer network is not apparent.

[alanchow]

The product is not an IT product.

IT margins are at 5%. The reason why IT products are low margin is because they are high turnover. Home Automation Products are generally 30% margin (at least it is here in Australia) because it is not a high turnover product.

At the end of the day if you want to fly out an installer from the states then feel free. Just remember that your warranty on the product will not be valid in your country so do not expect any support from your local dealers / distributors. Pretty simple.

Eg in aus if anyone buys products from overseas we don't warranty it but if it requires repair we charge an arm and a leg. Why should the distributor who did not make any money off of the product you obtained by grey importing a product help you?.

Also note that certain products may not have regulatory compliance in your country should you purchase it from overseas. Ensure you do get the right product otherwise if your house burns down your insurance company will not compensate you.

Anyway that is my rant.

[gdavies]

HI I really think you are missing the point. The margins should be similar no matter what country you operate in. Ie. I expect the margins in the US to be similar to the margins in South Africa or Australia. Home Automation is IT and I am not sure how you think the customs and excise taxes would be different for these products. HA is not a high turn over consumer product and the margins around the globe will be similar. The problem is probably in the distributor channel looking for retail as opposed to wholesale margins on these products. So putting it in simple terms. If I buy a product in the US and the cost is $1000. I should expect to pay approximately $1300 in another country, unless of course higher margins are been levied for the same product by the distributors. It makes no sense to pay 100-150% more for any item just because a distributor has you over a barrel.

We had the same issues with Apple in South Africa. The market turned around and began grey marketing product in. Apple soon woke up and the margins are now in line with other imported hi-tech products. Control4 will go through the same process. The threat that we will not get serviced by the local distributor falls flat, in that the local distributor is not the manufacturer and therefore does not carry the warranty. Control4 US carries the warranty of their product. Support can be done via the net in any event and hence support is not an major issue. Hence if we can manage the warranty and have international support I am not sure where the 100%-150% mark up value of the distributor really is?

It may be more constructive not to shoot the messenger but re-look at some basic business principles to the problem. I strongly advocate to all and sundry considering Control4 product to buy from the US and deal with the issues separately. With the huge amount of money saved buy an extra controller and multiple spare switches. Fly in an expert and have it done quickly. This is the issue the distributors will face.

The solution would be to charge realistic prices for the products in these countries and the volumes would probably increase.

[neildilgee]

HI I really think you are missing the point. The margins should be similar no matter what country you operate in. Ie. I expect the margins in the US to be similar to the margins in South Africa or Australia. Home Automation is IT and I am not sure how you think the customs and excise taxes would be different for these products. HA is not a high turn over consumer product and the margins around the globe will be similar. The problem is probably in the distributor channel looking for retail as opposed to wholesale margins on these products. So putting it in simple terms. If I buy a product in the US and the cost is $1000. I should expect to pay approximately $1300 in another country, unless of course higher margins are been levied for the same product by the distributors. It makes no sense to pay 100-150% more for any item just because a distributor has you over a barrel.

We had the same issues with Apple in South Africa. The market turned around and began grey marketing product in. Apple soon woke up and the margins are now in line with other imported hi-tech products. Control4 will go through the same process. The threat that we will not get serviced by the local distributor falls flat, in that the local distributor is not the manufacturer and therefore does not carry the warranty. Control4 US carries the warranty of their product. Support can be done via the net in any event and hence support is not an major issue. Hence if we can manage the warranty and have international support I am not sure where the 100%-150% mark up value of the distributor really is?

It may be more constructive not to shoot the messenger but re-look at some basic business principles to the problem. I strongly advocate to all and sundry considering Control4 product to buy from the US and deal with the issues separately. With the huge amount of money saved buy an extra controller and multiple spare switches. Fly in an expert and have it done quickly. This is the issue the distributors will face.

The solution would be to charge realistic prices for the products in these countries and the volumes would probably increase.

Definatly increase, If I was able to buy at US prices, I would most certainly have had 2 HC 1000's now to run my bathroom's lights.

[CFUG]

I use LabVIEW to flush my toilet...

[kcoxferris]

I use LabVIEW to flush my toilet...

LOL how many connections did that take.