I was really looking forward on getting the my very first luxury pen, the "Montblanc 146 or 149" until i came across this on wikipedia

http://en.wikipedia.org/wiki/Montblanc_(pens)

Value

Frank Dubiel, author of the standard text on fountain pen construction and their restoration, estimated that a Montblanc 146 costs $25 to make although it sells for $600. Compare this to the lower cost pens made by Parker and Pelikan who charge almost as much for their high end pens, but do not even manufacture their own nibs and the profit margin increases exponentially. Of course none of these numbers reflect things such as R&D etc, they are pure cost for one pen.


can someone confirm this?

In raw materials, possibly.

I don't think so. Some plexiglass, a bit of gold, a bit of brass, and a tiny bit of nylon for the piston. I doubt if that will be $25. Especially since the dollar was much higher against the euro when Frank made that statement.

I think it's true that making that pen won't cost more than 20 - 30 euro, but I think Montblanc is no different from other manufacturers there. They all spend most of their money on marketing, I guess, and not on the manufacturing of their pens.

Frank could be irascible (and definitely didn't like spendy pens, iirc), and here's where he made that statement.

I didn't believe him then, either.

Why would it cost much more? I mean, if producing a MB 146 would cost EUR 100, I think MB ought to optimize their production process. Even if I factor in the cost of human labor for the refinement of the nibs and the final inpection, I don't think that a single pen costs more than EUR 30 to produce. And only a fraction of that is raw materials.

Edit: The calculation won't be much different for other pen brands, so if you like that MB and you're willing to pay the price for it, buy it and enjoy it!

QA, returns, damaged goods, tariffs, capital equipment, training of personnel.

The usual rule of thumb is that retail cost is 5-10x manufacturing cost. I doubt that Montblanc is successful at keeping things around 20x; if so, then LV would have kept and milked that cash cow.

Maybe, but then still EUR 100 would seem to be a LOT of money to produce a MB146 pen. Maybe if you factor in the cost of handling returns, warranty repairs and damaged goods, but otherwise I would be very surprised if it would be that much.

Repairs, returns, and damaged goods are indeed a part of COST.

Hmm, look at the price of luxury watches. I would be very suprised if a $5000 watch would cost $500 to make, given e.g. the price of ETA calibers. But I am only thinking of production costs, not marketing, administrative overhead and such.

There's also packaging, marketing/brand awareness/sponsorship, distribution, and last but not least, around 30% margin for the reseller.

Yes, but I deliberately excluded those costs, since we were only talking about making the pen.

If you add up those secondary costs, I do realize that they are a major part of the cost price of their pens. Which is the same for all luxury products. Maintaining and protecting the brand image costs a lot of money.

Btw, I don't know much about marketing costs, I only know a bit about manufacturing costs for certain products (and only in a European context, because that is where I work).

Edit: Richemont's gross margin in 2007 (broken book year) was about 63%. If you add up 60% for the final consumer price (very rough estimate of margin for the importer and the retailer), then direct production costs will be about 20% of the final price. Of course it is impossible to extrapolate that to the price of a single Montblanc pen, but it makes Deirdre's assumption more realistic indeed.

That way a EUR 500 Montblanc pen would cost EUR 100 to produce indeed.

MB is not trying to mass produce their pens, and I think it is a good thing that costs are as high as they are. Mass production would reduce costs, but it would dilute the brand value and alienate their target market. One can also assume that the materials would cheapen too with the cost reduction.
If you are talking about the "outrageous" over pricing of MB pens in light of their production costs, need not feel ripped off. The pen may not be technically worth the several hundred dollars, but the brand is; possibly more. As an example, BMW bought the Rolls Royce Motor Cars division in 1998 (give or take a year or two). It walked away with no car plans, no production plant; nothing but the mascot and logo. They paid over $700 million just for the brand! Their cars (pre-BMW acquisition), many agreed that they were far from being "the world's best", yet there was still brand value which one can't create overnight. So, is that a good enough justification of Montblanc's prices, or did I just answer the question that was never asked?
Oh well...
PRAG

US$25 is more than I think. I think the materials cost should be just about $10US.

[quote name='PigRatAndGoat' date='Feb 2 2008, 04:16 PM' post='500500']
MB is not trying to mass produce their pens, and I think it is a good thing that costs are as high as they are. Mass production would reduce costs, but it would dilute the brand value and alienate their target market. One can also assume that the materials would cheapen too with the cost reduction.
[quote]

Actually I think that the materials used by Pelikan are at least of the same quality as the materials Montblanc uses. Montblanc makes nice pens, but I don't think the materials and workmanship are better (or worse) than Pelikan and Faber-Castell. Or than Cleo Scribent, to name a relative newcomer to the German market.

I agree with some of the others above - Raw material costs would certainly be much less than $25.

However, there are a lot of other costs that must be factored into making the pen. Tools, machinery, facilities, workers, benefits, overhead, electricity, R&D, quality control, human resources, bookkeeping, marketing, advertising, and the list goes on and on.

The most money in the pen is probably the nib... just to grind it would cost the most. And still, I think it only cost $20 to make.

Well, it is the same with any other product. How much is the cost of the materials of anything? An apple cake, probably costs about 90 eurocents in raw materilas, if you consider the cost of materials when you yourself buy those in a grocery store. However, then there is the making of the cake, the tools you need, the baking, electricity, packaging, transportation/distribution, marketing, personnel, etc., etc., and you end up with an applecake of 5 euros. A small apple cake that is.

And an apple cake is a simple thing to produce, sell, and market, it doesn't require any special or expensive tooling, neither does it require documentation and fancy pakaging or a long warranty period.

From the materials cost only, the price may seem unfair, but you need to take the whole concept into consideration, the whole process from idea until a product is finally available in a store, including the design, etc.

HTH, warm regards, Wim

Yes, of course. If you bought up the aluminum, copper and plastic that goes into making a car you'd be out $200. It's the overhead: maintaining a factory, marketing, research, suing the copycat production companies, hiring personnel to staff your boutiques and work in your factory, shipping your products internationally, &c.

Any consumer product you care to look at will have a raw material cost orders of magnitude less than the MSRP. Now when you start talking about luxury items like Mont Blanc pens, you should expect even more mark-up. You're buying a rarified item that by it's nature, everyone doesn't have. You want the reputation and exclusivity of it all.

Given that pens are a luxury product, there are no unfair prices

Many people buy more than the pen when they buy a Montblanc ... they buy a part of the brand image.

Very true. Fountain pens are a very pure luxury good.

jthole wrote:

"Given that pens are a luxury product, there are no unfair prices."

I think I have to agree with that statement. Do I wish MB pens cost less than they currently do? Of course. Like some of the other folks here, I am interested in the pens, not in any image. But all the pen manufacturers are raising prices. In the Italian forum, some of us just discussed the horrid prices of Aurora pens. There, too, raw materials cost only a nominal amount. But there are myriad other factors influencing retail price points. The bottom line must always be, "What will the market bear?"

I do not buy my MB pens new. Current retail prices are out of my league. I look in the used market, and even there I pay as much as some good pens cost new in the box. When that secondary market tops my financial ability, I will just stop buying and remain happy with the pens I have.

(By the way, what is the current market value of the raw materials in the human body? It is still well under $3 USD, isn't it?)

This is what i love about Pelikan, same or better quality than MB and since they allow dealer discount you can get a $650 M1000 for as little as $350 USD with a little bit of looking around.

Not to mention that with my experience with MB the "precious resin" or as i call it, plastic, cracks at the smallest drop and some pens are big leakers.

However, if what you care about most is the "brand appeal" or having people notice you have an expensive pen, then by all means, you won't find better than MB. No other pen in my experience will get more attention from non FP users.

MB turned me off their pens because non of the dealers are allowed to offer lower prices than the MSRP and the last dealer i went to tried to sell me one by trying to appeal to my "snub factor." However, am a pretty down to earth person so that turned me off a lot.

I just can't bring myself to spend $800 on another MB pen when i know there are brands just as good or better for less than a quarter that price (am sure many of you are praying to the great MB lord in the sky to send me to MB hell)

In all fairness though, there is one great thing about MB that no other brand has, as stated above, it is often the only brand non FP users know, and it interests some of them enough to get them to jump aboard the FP Express! For that MB deserves a lot of credit and admiration!!!

I disagree. A factor when buying a fountain pen is also it's price/performance ratio. Buying a pen that costs about € 25,- or $ 25,- to make. that will sell for at least € 400 , that has one of the the worst warranty conditions in the pen business from a manufacturer with known quality issues/problems is in my opinion unfair. Many people do only buy a pen. They don't buy the 'product' of a marketing department.

If enough people think it's unfair, they won't buy it. So, if the pens still sell, people probably don't see the pricing and conditions as unfair.

The accepted price is largely set because of brand image, and not because of inherent quality or customer service.

Btw, I also hear very good stories about Montblanc customer service ... I don't know if Montblanc is worse than other luxury brands.

Completely untrue. My first fountain pen was a cartridge feed Schaeffer that only cost a few bucks. Inexpensive fountain pens are readily available at places like Staples, etc.

Looks like the argument continues: http://www.fountainpennetwork.com/forum/in...showtopic=53745

FS goldfish: did you ever decide whether or not you're going to buy a MB?

Hmmm, I think you are confused. By definition a luxury good is any inessential, desirable item that is often expensive or difficult to obtain. Fountain pens are these, they are at least inessential and often expensive. The fact that you found an inexpensive one does not make it any more essential.

Hmm. I'm troubled by your use of the phrase "by definition" for something where definition is up for discussion. What is strictly "essential"? Certainly nothing other than air, food, or water, right? Clothing is just a social convention and shelter is really unnecessary in some climates.

I find it hard to use that definition of "essential" to in turn define "luxury". This makes the 1982 Honda Civic my neighbor uses to get to and from work a "luxury item." Ballpoint pens and spiral-bound notebooks? Luxury items. Books and newspapers? Luxury items as well. Hogwash!

I don't have any sales figures in front of me, but I'd be willing to bet that for every $100-or-more fountain pen sold in the world, there are a hundred sold below $20. I'm not talking how many models there are, I mean how many units are sold. Maybe an $18 pen seems like an extravagance compared to an 18 cent ballpoint, but I think that's simply the difference between disposable goods and durable ones. I find it hard to consider an 18 cent ballpoint one uses for taking notes in a business meeting a luxury item. It's a utilitarian item, a tool. Sure, no one "needs" to have a job in the strictest sense, but that's getting ridiculous. Something necessary for performing the tasks of your profession is not a luxury good.

If the 18 cent disposable ballpoint isn't a luxury good, then neither is the 18 dollar fountain pen. Since these are in the majority, it follows that fountain pens are not categorically luxury items. The existence of high-end pens does not mean that fountain pens are categorically luxury goods any more than a diamond-studded screwdriver makes screwdrivers luxury goods.

They would have to prove to me that the cost of the material and production cost is that cheap. I believe it wold be closer to $75.00.

I'm using definition as just that, the definition of a word. Look up luxury or luxury good in a dictionary and the definition that I posted follows.

A fountain pen is absolutely a luxury. If they all vanished suddenly today, people would still live and humankind would continue on. Handwriting would still continue, through other mediums. Anyone who desired to write can get a ballpoint for around seven cents new or can get an advertising one free from most businesses.

No one suffers for not having a fountain pen.



Very true, the Honda is a luxury. Your neighbor could carpool, walk, ride a bike, take public transportation, telecommute, get a job closer to home, start her own business...billions of people without cars do it everyday.

Books and newspapers, again something that are not essential to you. You'll still go on living if you don't read the Washington Post every morning. Before the onset of 40-hr work weeks and rise of the leisure culture, the only book most people had the luxury of having of reading? The Bible. They turned out ok.

Fountain pens are luxury goods, you don't need them but you buy them because you feel they enrich your life and you enjoy them. You get to enjoy them by virtue of living in a developed nation with a premium on leisure and materialistic pursuits. There is no price that is incorrect or too high for a luxury good. There is no regulation on them like food stuffs, precisely because they are a nice thing to have if you can get them, but are a luxury.

But you don't actually use that definition. You're engaging in sophistry. Hey, I know how fun it is to try to prove something true that is not, but I don't think this is the time or place.



No one suffers for not eating rice. They can just as well eat potatoes. It looks here as though you are confessing that handwriting is not a luxury. Remember this for later on.

Also note that even though you say price is not part of the definition of luxury, here you seem to be saying that it is.



See, now you're just playing devil's advocate. I can do that too.

By your definition, almost all food is a luxury item. We should be able to get by on bread or maybe a little rice. Occasionally a vegetable or fruit, perhaps. All beverages: milk, for example, unnecessary. Water is the only liquid that's required. Socks are luxury items, as people went for millions of years before socks were invented.

And really. Devil's advocate mode off, now. We can't take one another seriously if we're blathering hyperbole. You can't say that ballpoints are not a luxury item if fountain pens are. Is a 20-cent ballpoint pen in the hands of a journalist a luxury item? It's what she uses to make her living! Of course, the newspaper she writes for is a luxury item, so really it's inessential, right? She doesn't have to make her living from journalism, she could go out into the woods and live off of roots and nuts.

But handwriting is essential, or at least so you said.

You're taking "essential" to an extreme--it's time for you to go look at your dictionary. Essential does not mean "that without which life ceases." I'm just looking at a crappy electronic dictionary and I see given as an example, "it is essential to keep up-to-date records". Of course, you know this; you're just playing word games with me and getting a good laugh out of it.

You're also limiting your definition of "luxury" to that one word "inessential." My crappy-but-convenient dictionary says "great comfort" and "extravagant living." Not just any comfort, but a great comfort. Not just any living, but extravagant living. "An inessential, desirable item that is expensive or difficult to obtain." I think this is the same definition cited earlier. So even if we agree that 'inessential' means anything other than food or water (which I do not, but for the sake of argument will go along with) and we agree that fountain pens are desirable (which I gladly will), they are categorically neither expensive or difficult to obtain. That there are examples of fountain pens which are expensive or difficult to obtain I will not deny, but categorically? No, they are not.

I'm not following you here. I think you might be lost in the weeds. Just to make sure you're reading the same post, here is the definition again:



-inessential: If you want to write you have a wide variety of options which are readily available, the cited free ballpoint pen.
-desirable: You're on a fountain pen discussion board, so I don't think there is much debate here.
-often expensive: Again, I'm sure you'll agree FP's are often expensive, especially compared to their closest competitors, felt tip pens or refillable ballpoints.
-difficult to obtain: There are scads of threads on here about how Office Depot, Staples, &c don't have any or don't have the right fps. There is a whole section of this board based on buying/selling/trading fps, precisely because they are difficult to obtain in modern society.

I'm not really sure where you are confused and coming to the conclusion that I'm running a sophistic argument...

The point being, fps are not an item you need to complete any task. As such there is no price which is too high or too low. Fountain pens are a pure luxury good, the price is what the niche market will bear. If Mont Blanc can gin up a pen for a total cost of $25 and sell it for $400, that is perfectly reasonable. There are millions of people who have heard of MB, will never see one and who's lives will be none the worse.

The late Frank Dubiel was the author of one of the standard texts on fountain pen construction and repair. Back in the mid-1990s, home fountain pen repair was rare, and his book opened up fountain pen internals for many people. However, "Da Book" is colored by Frank's life as a pen repairer, and has some information that has been superseded or or was just plain wrong (one example I recall is that he advocates using nail polish instead of orange shellac as a section sealant to hold the pen together; nail polish can damage some barrel and section materials).

Frank posted to alt.collecting.pens.pencils on Usenet, which is where the activity that now takes place in forums took place between about 1981 and 1998 (I started using the internet in 1982, and Usenet in 1985). Frank was highly open with his opinions, and often curmudgeonly, but also willing to answer questions and help people with pen repair. He disliked Montblanc pens and the company that makes them intensely; those were his personal opinions, but they're now reported around the Internet as fact, including his remark that 149's must cost only $25 to make.

Wikipedia is a terrible source for this kind of information, because the quality of information isn't controlled. People use the ability to edit articles to inject their own opinions, and to cite other people's opinions as fact in order to make their own opinions look like factual information.