Pelikan Price Differences And U.s. Warranty

[BillH]

No straw men at all. Rattlesnake Junction has no place to buy a good pen. But I am well aware that this is also true for most of the US no matter how large or small the place. Therefore, anyone desiring to purchase a pen will go online to do it. The nature of the internet and the world marketplace is not a straw man either, it is a simple fact of 21st century life. Price, selection, customer service (including FAST shipping)... those are not straw men. Not buying overseas because "amurica" (or british, or french, or german) is pretty low on the list of buying factors for most folks... some of us old guys learned that lesson buying American autos in the 70's and 80's

 

It would be nice if the American dealer was more competitive with UK, European, or Asian dealers (they are not all the same for every pen) but that hasn't been the case over the past couple years. That's what the discussion has been about. And as the discussion has progressed it doesn't always seem to be the case that the VAT is the only reason. Is a third party/middleman distributor the best solution to getting Pelikan pens to American dealers? Perhaps not... How about a dealer buying group as someone above suggested? Hmmm. Maybe... Any other good ideas out there?

 

white_lotus, sorry to see you drop out of the discussion.

Edited May 22, 2017 by BillH

[sirgilbert357]

I agree that BillH's reasons are real -- this is no straw man here...

 

I can buy within the US and pay a whole lot more (the last time I priced out a Pelikan I was interested in, the difference between US based and overseas was a whopping 40%!!) and get a US warranty.

 

-OR-

 

I can buy outside the US, pay much less and not get a US warranty.

 

That pretty much sums it up as I see it. Since Pelikans rarely need more than a dab of silicone grease on their piston wall once in while, I just don't see the value in paying SO much more to get that US warranty. Delivery times are about the same. I get the same exact pen, box, manuals, etc. I mean, literally, what else is there for the end user? Objectively speaking, I look at the transaction and see almost nothing different except the warranty and POSSIBLY a currency conversion fee / customs fee, which is inconsequential with how much money I've saved by buying overseas. And let's not forget, the pen still HAS a warranty, but it will just have to be sent back to Pelikan Germany or somewhere overseas.

 

Not every transaction is going to have such a large price disparity, but more and more, I think people are realizing it's possible to buy from an overseas vendor and save some pretty significant money. I find it is worth it.

[sargetalon]

Fountain pens, for most brands, are not sold in any kind of stationary, office supply, or other kind of store. So it's quite the straw man to toss that out as a reason for purchasing overseas. Even in major metropolitan areas this is the case. And the office supply shop still won't be able to get you any kind of Pelikan or quality fountain pen. A pen you'll have in your collection for years, you complain that it might take a few extra days for it to arrive from a US seller? Your arguments are all straw men.

 

The only reason the American collectors are so fortunate is the US does not have a 19%+ VAT, you all avoid paying any of the import duty or sales tax, and you get 20% discount from MSRP from the foreign sellers, pretty much the same as a US seller. So you can get a Pelikan pen, bought overseas, for nearly 50% off.

 

Anyway I'm out of this discussion.

This is a compelling break down but I'm not sure that it's the whole story.

 

Take the M800 Renaissance Brown as an example. German MSRP is 480 Euro ($539.30) and the pen is sold at retail for 384 Euro ($431.50) to German buyers (including the 19% tax). US MSRP is $800 and the pen is sold at retail for $640 for US buyers. So taking the VAT into account, US buyers still pay more, $200 more in this example per unit. What goes into that $200 premium?

Edited May 22, 2017 by sargetalon

[chromantic]

I get the impression that some people think Pelikan sells their pens to distributors around the world for the same price but that's not how things work. I guarantee Chartpak pays more for the Pelikans they sell to US retailers than the sellers overseas pay for their stock.

 

Companies want to sell their goods everywhere but people everywhere don't earn the same amount of money or have the same amount of disposable income to spend so companies sell the same goods at different prices to the distributors in different countries based on the spending power of the people there. While pen X costs roughly $40 to make, the company sells it to dirt-poor country A's distributors for $50, to somewhat more affluent country B's for $85 and rich country C's for $125. In turn, C's distributor charges retailers a larger mark-up than the distributors in countries A and B charge theirs and C's retailers charge customers a larger mark-up than their counterparts in A and B.

 

As for the warranty situation, it's not only possible but probable that Pelikan told Chartpak to stop performing warranty work on pens bought outside the US. While warranty work is performed free of charge to the customer, someone pays for it and that someone is Pelikan. Chartpak could have considered warranty work as a cash cow and started accepting foreign pens as a way to generate more revenue for themselves. Pelikan, on the other hand, realized that Chartpak was performing waaaaay more warranty repairs than the volume of pens they bought would account for.

 

What difference should it make who does the repair? Well, the same principle applies - just as Pelikan sells the pens for different prices, warranty reimbursements would be higher in C than in A and B. If Pelikan's going to make less money selling the pens to A and B, they certainly expect (and are entitled) to pay less to have them fixed, as well.

[MarkTrain]

Almost all Pelikan distributors/sales around the world are part of Pelikan, Chartpak is not (see Pelikan annual report). How much they pay for Pelikan products is anybody's guess. It is also not clear who actually pays for warranty service, Pelikan or Chartpak.

[BillH]

...snip...

 

Companies want to sell their goods everywhere but people everywhere don't earn the same amount of money or have the same amount of disposable income to spend so companies sell the same goods at different prices to the distributors in different countries based on the spending power of the people there. While pen X costs roughly $40 to make, the company sells it to dirt-poor country A's distributors for $50, to somewhat more affluent country B's for $85 and rich country C's for $125. In turn, C's distributor charges retailers a larger mark-up than the distributors in countries A and B charge theirs and C's retailers charge customers a larger mark-up than their counterparts in A and B.

 

...snip...

 

Now that's an interesting concept. I wonder if there is any evidence that it is true? It'd be something if Chartpak's answer to Joshua said that was the reasoning behind the price discrepancy we "think" we see. I know that "whatever the market will bear" is a long-standing pricing strategy. But again, the internet is the wild card here.

 

I'm skeptical though. Seems to me, by that model, the same pen would be higher priced in Switzerland and Netherlands than in the US, but less in the UK and Japan, and quite inexpensive in Mexico... and it would be the same case whether the name on the pen was Pelikan or Jinhao. Or you'd think it might anyway.

 

@sargetalon, can you say whether Chartpak's relationship with Pelikan is one of distributorship only, or are there some ownership issues we might be overlooking? Reading through their website it is hard to tell, and in fact, they often seem to imply ownership of the brands in their lineup. I'm guessing you might have more understanding how this all fits together.

 

Interesting discussion for sure.

[sargetalon]

 

@sargetalon, can you say whether Chartpak's relationship with Pelikan is one of distributorship only, or are there some ownership issues we might be overlooking? Reading through their website it is hard to tell, and in fact, they often seem to imply ownership of the brands in their lineup. I'm guessing you might have more understanding how this all fits together.

 

Interesting discussion for sure.

 

 

I'm sure that an answer is not going to be forthcoming from Chartpak. I made my inquiry but I'm not going to belabor the point. I expected Mr. Spicer to ignore me before I sent the email (based on what I've heard people speak of him). I have enjoyed the theories put forth here. I'm sure that the true answer is rather complicated. Regardless of the explanation, I think that it is US retailers who pay the price for the current situation most of all. Bill, I believe their relationship is simply one of distributorship but can't be 100% sure.

[EclecticCollector]

This is a compelling break down but I'm not sure that it's the whole story.

 

Take the M800 Renaissance Brown as an example. German MSRP is 480 Euro ($539.30) and the pen is sold at retail for 384 Euro ($431.50) to German buyers (including the 19% tax). US MSRP is $800 and the pen is sold at retail for $640 for US buyers. So taking the VAT into account, US buyers still pay more, $200 more in this example per unit. What goes into that $200 premium?

You've forgotten about local sales tax, which many in the US have to pay (very few states don't have a sales tax). For those of us in California that adds up to another 9%, or $60. If we buy from out of state we're legally required to pay use tax at the same rate.

[FriendAmos]

I have ordered several times from a well-known Netherlandish shop that is an authorized dealer for both Montblanc and Pelikan. I get great service and much lower prices on both brands than I would pay an authorized dealer in the US. It's somewhat ridiculous that when I buy Montblanc from them, I get a full warranty, but with Pelikan, I don't. By the way, this shop is meticulous about signing and stamping warranties, which I appreciate very much. Most US dealers don't do this (although MB boutiques do).

 

Pelikan should kick Chartpak's posterior and tell them to honor warranties, especially at the prices they're charging.

 

Some of us don't know this "well-known Netherlandish shop". Kindly share the name. Thanks.

[FriendAmos]

I get the impression that some people think Pelikan sells their pens to distributors around the world for the same price but that's not how things work. I guarantee Chartpak pays more for the Pelikans they sell to US retailers than the sellers overseas pay for their stock.

 

Companies want to sell their goods everywhere but people everywhere don't earn the same amount of money or have the same amount of disposable income to spend so companies sell the same goods at different prices to the distributors in different countries based on the spending power of the people there. While pen X costs roughly $40 to make, the company sells it to dirt-poor country A's distributors for $50, to somewhat more affluent country B's for $85 and rich country C's for $125. In turn, C's distributor charges retailers a larger mark-up than the distributors in countries A and B charge theirs and C's retailers charge customers a larger mark-up than their counterparts in A and B.

 

As for the warranty situation, it's not only possible but probable that Pelikan told Chartpak to stop performing warranty work on pens bought outside the US. While warranty work is performed free of charge to the customer, someone pays for it and that someone is Pelikan. Chartpak could have considered warranty work as a cash cow and started accepting foreign pens as a way to generate more revenue for themselves. Pelikan, on the other hand, realized that Chartpak was performing waaaaay more warranty repairs than the volume of pens they bought would account for.

 

What difference should it make who does the repair? Well, the same principle applies - just as Pelikan sells the pens for different prices, warranty reimbursements would be higher in C than in A and B. If Pelikan's going to make less money selling the pens to A and B, they certainly expect (and are entitled) to pay less to have them fixed, as well.

 

 

Excellent points.

[jmccarty3]

 

Some of us don't know this "well-known Netherlandish shop". Kindly share the name. Thanks.

 

La Couronne du Comte.

[Wandering Man]

Thanks to everyone participating in this discussion. I'm learning a lot about the business behind the business. I remember going into a Paradise Pens shop a couple of years ago and being disappointed that they no longer carried Pelikan. They said it had to do with unfair discounting of the pens. Now I'm wondering if they were referring to the availability of the pens overseas.

 

PP is no longer in business. Since this brick and mortar chain also had an online presence, I wonder if the overseas competition played a role.

[chromantic]

 

Now that's an interesting concept. I wonder if there is any evidence that it is true? ... I know that "whatever the market will bear" is a long-standing pricing strategy. But again, the internet is the wild card here.

 

Evidence of the "grey market" abounds. From the wikipedia article:

 

"Grey market goods are legal, non-counterfeit goods sold outside normal distribution channels by entities which may have no relationship with the producer of the goods. This form of parallel import frequently occurs when the price of an item is significantly higher in one country than another.^[3] ... Entrepreneurs buy the product where it is available cheaply, often at retail but sometimes at wholesale, and import it legally to the target market. They then sell it at a price high enough to provide a profit but below the normal market price. International efforts to promote free trade ... facilitate this form of arbitrage whenever manufacturers attempt to preserve highly disparate pricing." (emphasis added)

 

The difference nowadays is that the rise of the internet has eliminated the middleman; instead of buying from a retailer who imported these goods from a different region, we buy directly from sellers in those regions.

 

Seagull manufactures all of its pens, including Pen X, at a single factory. That's means the cost to manufacture them is the same no matter where the pen ends up being sold. If Pen X, we said, cost $40 to manufacture and Seagull sells it to distributors in A, B and C for $50, $85 and $125, respectively, Seagull has recouped their manufacturing costs in all three instances. But why does Seagull sell it for different prices to these different countries?

 

Average annual income in C is $30,000., in A it's $3,000. With a retail price of $300 in C, Pen X is easily affordable for someone who makes $30k a year but it's an unrealistic price point for someone in A who makes $3k. If Seagull wants to sell pens to people in A, they have to make them available at a price people in A can afford and, as long as they make some money (recoup costs), they will do so, while relying on the higher margins in C for the bulk of their profits. "What the market will bear" plays a larger role in affluent countries than less affluent ones, where "what the consumer can afford" is a greater consideration. Even if Seagull acts as their own distributor in various regions, rather than working with independent distributors, they will still price their pens for the local markets.

 

Another factor the plays a part in retail price disparities between countries that people often don't take into account are the costs involved in the distribution chain. We've determined that Pen X costs $40 to manufacture, that's a fixed cost that doesn't change. Seagull ships those $40 pens to A and C where the annual incomes of $3k and $30k translates to $1.44 and $14.42 an hour, respectively. That means wages - dockworkers, truck drivers, warehouse persons, office workers, on down the line to retail salespeople - are 10 times greater in C than A; property and rental costs, utilities, insurance and, yes, advertising are all commensurately higher, as well. Even if Seagull sold Pen X for roughly the same price to wholesalers the world over, these additional costs alone would guarantee higher retail prices in more affluent countries.

 

Do these costs actually account for the $200 price difference on the Rennaisance between the US and Germany that Sarge mentions? Hard to say. Greed no doubt plays a part - the "what the market will bear" factor. Europeans tend to pay more taxes so perhaps that means less disposable income. They're also socialists so accepting lower margins mean more people can afford nice pens.

 

Sorry to ramble on at length but it was really slow at work tonight.

[BillH]

Thanks chromantic, no ramble at all, I appreciate the reply. I'm more inclined to believe "what the market will bear" rather than "more people can afford nice pens" though... human nature and all that I think we're back to the middleman thing... Pelikan could be seeing the same unit price for the pens that go to European vendors as those which go to Chartpak. They sell more units plus get out from the hassle (if it is) of dealing with the exports. Chartpak makes whatever cut it thinks it can get.

 

Interesting to think about. We'll never solve it though, and the odds of changing it in all of our favor are pretty long. The market just is... I do like Amazon's business model better than Apple's though, and I really appreciate being able to purchase all over the world.

[Wandering Man]

 

Do these costs actually account for the $200 price difference on the Rennaisance between the US and Germany that Sarge mentions? Hard to say. Greed no doubt plays a part - the "what the market will bear" factor. Europeans tend to pay more taxes so perhaps that means less disposable income. They're also socialists so accepting lower margins mean more people can afford nice pens.

 

Sorry to ramble on at length but it was really slow at work tonight.

 

I think "greed" is too strong a word. When you are talking about reputable businesses, then "what the market will bear" translates to profitability and the ability to make one's business viable. When I was in managing my family's grocery store I learned that what we paid for groceries differed from what the big chain down the street paid. Sometimes the difference was so great that we could buy the product from the big chain for the same price we paid our supplier. The difference, of course, was that we were a small grocer that catered to the shrimping industry in one small town, and the chain was a large business that sold groceries all over the state. We simply couldn't compete with the chain, but we could compete as a niche market.

 

I also learned that there was very little profit/mark-up for some items, such as canned vegetables, and a lot of mark up on other items, such as pots, pans, etc. That was just an industry standard. Participating in commerce with the public is always about selling people what they want at a profit large enough so that you can continue to be interested in the business, can support yourself and your employees. Greed is a nice sound-byte with a really negative connotation that fails to incorporate all of the nuanced reasoning that goes into setting prices or fees.

Edited May 23, 2017 by Wandering Man

[abstract49]

All of this is very interesting indeed, and I've enjoyed reading most of the repartee. But the bottom line for me is this: If Pelikan/Chartpak/whoever does not decide to help U.S. retailers be more competitive, I'll not purchase another Pelikan from same. I have done so in the past, mostly before the U.S. prices began to go crazy. A few dollars to (a) get the warranty, ( b ) give my business to a domestic seller, and ( c ) get the product more quickly was worth it up to a point. That point has been passed in spades.

 

My real question, which I have asked before in other threads regarding other brands, retailers, etc., is: Does anyone at Chartpak or Pelikan read the Pelikan forum on FPN? If they do, do they care? Sargetalon has noted that he has emailed the bigwig at Chartpak and received no significant acknowledgment or, more importantly, a reasonable answer. [i wonder if Mr. Spicer is related to another Mr. Spicer much in the news recently, and that's as political as I'll get, in consideration of our rules]

 

All my Pelikans are modern, purchased new in this century, and I have only ever had one problem, quickly corrected by Chartpak, some years ago [yes, I've read all the more recent posts about difficulties in getting service]. But, all things considered, I believe I am going to start (a) buying from European dealers and/or ( b ) shopping for older Pelikans on eBay or other sites.

[chromantic]

... what we paid for groceries differed from what the big chain down the street paid. Sometimes the difference was so great that we could buy the product from the big chain for the same price we paid our supplier.

 

... there was very little profit/mark-up for some items, such as canned vegetables, and a lot of mark up on other items, such as pots, pans, etc.

 

Greed is a nice sound-byte with a really negative connotation that fails to incorporate all of the nuanced reasoning that goes into setting prices or fees.

 

(based on my experience in helping manage a "neighborhood" TV/electronics store during the 80s)

 

... what we paid for groceries ...

 

Exactly, and this is why the gray market sprang up in the first place. Small shops don't get the volume discounts that big chains do so many started buying from foreign suppliers at lower prices than they could get from the local 'official' distributors in order to compete with the likes of Circuit City (remember them?). Sony TVs were probably the biggest gray market item back n the 80s.

 

 

... there was very little profit ...

 

Again, yes. To compete on price we learned to accept making only a $10 or $20 mark-up on a VCR and relied on making another $50 or $60 on cables, tapes, etc.; extended warranties were another cash cow but the real gold mine was adult movies.

 

... Greed is a nice sound-byte ...

 

Yes, "greed" is probably too harsh - that's the problem with using shorthand to telegraph a message; "a desire to maximize profits" would be putting it more delicately.

 

Either manufacturers sell the same products to different countries for different prices or they sell the goods for roughly the same price and retail price differentials between various regions are primarily due to distribution-chain costs. It's likely a combination of the two.

 

I was simply trying to explain some of the factors which can affect pricing that people don't always stop to consider. There are indeed legitimate reasons why Pelikans might retail for more here in the US than we can buy them for from Singapore or Europe and why Chartpak stopped offering warranty service for foreign purchases.

[invisuu]

 

They're also socialists so accepting lower margins mean more people can afford nice pens.

 

I like to call us capitalist socialists. Which means poor mans' capitalism and poor mans' socialism. Tax rates are easily in the 50+% range and on top of that, you pay an extra 21-23% on EVERYTHING you use your money for. Salaries are lower than those in the US, even in the best European countries.

 

Poor mans' capitalism looks something like this; we want to imitate americans, so we have huge sales on black friday like you guys do. But instead of -70, -80, or even -90% like you guys, we get -15%. Maybe -30% at the very most, for stuff that hasn't sold in years. Nearly everything is more expensive to purchase in the first place. Be it European cars, food, gas, a lot of times even rents.

 

But, we have "free" healthcare, "free" education and so on. Free being a very ... naive word to use. Sure, I don't have to pay anything for education or healthcare (well, it's 0€ for up to phd level of college and ~25€ for healthcare per month, which includes absolutely everything - heart surgery or a dentist), but there's a reason why I'm taxed 50%+ on income and then additionally 23% on everything I spend my money on - be it food, clothes or pens.

Edited May 24, 2017 by invisuu

[chromantic]

Socialist, as in working together for the common good. Sorry if that wasn't clear from the context.

[invisuu]

Yeah I was, unsuccessfully, trying to point out we're only socialist when it comes to collecting tax money. When it comes to common good, "such as lower prices so more people can afford nice pens", we're capitalists.

 

Pelikan is a rare exception of goods that are cheaper in EU than they are in US, even though disposable income is generally lower than in US.