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Montblanc Profit Margins



Brookzy
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Hello everyone,

 

A few days ago I saw that Richemont, owner of Montblanc, among many other high end brands, released their financial results for 2010.

 

Interestingly, Richemont as a whole had a profit jump of 95%, with a sales increase of, if I remember correctly, 65%. Their overall profit margin increased by around 60% compared to FY 2009.

 

(Now obviously these figures do not necessarily represent the profits or profit margin on Montblanc themselves, only all of Richemont, but this got me thinking.)

 

How much money does MB make on their pens? Take the 149 for example. It currently retails at £510 (inc. VAT), with a price increase expected in May. But just how much does it cost to manufacture this pen? Of course only Montblanc knows that.

 

In all honesty, and I say this as a fan of MB (look at the sig :rolleyes: ), the Meisterstuck range is made of 'resin', a nice way of saying shiny plastic. It must cost less than £20 to make the barrel of the pen. The cap I suspect would be a little more with the gold clip, but I say that the whole pen excluding nib can be made for less than £30 per unit.

 

The nib is gold, yes, but it's not that much gold. I'd say the complete nib would cost £50 max including the stamping and sanding etc.

 

And the piston mechanism, add a tenner.

 

So my rough guesstimate is £80 to make a 149.

 

I know it must be considered, however, margins are not the whole story, I'm sure MB have lots of overheads, with machinery and maintaining boutiques and service centres worldwide.

 

Furthermore, of course, with a brand like Montblanc, I guess it is more the snowflake you pay for rather than the actual product.

 

But what do you guys think if this? Are Montblanc ripping us all off, or are their products genuinely expensive to produce? Do you think they are all brand or truly top class?

 

I only started researching their profits etc. after I was looking at my pens in the cupboard, almost grinning with happiness at the exclusive instruments in front of me, when I wondered if there really only was a couple of hundred pounds worth of material actually there.

 

Now I think that's my longest post to date. Sorry to bore. :embarrassed_smile:

 

[/endrant]

 

Would love to hear your thoughts.

 

Brookzy.

MB Starwalker Black Resin BP • MB Starwalker Black Mystery RB • MB Starwalker Black Mystery FP (M)

MB Meisterstück Diamond Classique FP (M) • MB Starwalker 100 Years SE FP (M)

MB John Lennon FP (M) • MB Meisterstück Geometric Dimension FP (BB)

MB Carlo Collodi WE FP (M)

 

Design is not just what it looks and feels like. Design is how it works! — Steve Jobs

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I would imagine that fountain pens play a small part in Montblancs financials, and in support suggest looking at relative shelf space in Boutiques.

 

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To your three points....

 

£80 to make a 149 - With a lot of experience in manufacturing, I'd be utterly astonished if it was anywhere close to that figure ( £80 = US$132 ). My own SWAG would be closer to half that, probably a fair bit less.

Is Montblanc ripping us all off - Not unless they put a gun to your head and force you to buy it. Since when did the price / value of any product have anything to do with what it costs to make it? We are all free to make our own decisions. Even more so with fountain pens since they are hardly life sustaining staples controlled by a global cartel. We only buy these because we want them, not cause we need them. How can we be ripped off if we make a free choice for a non-essential luxury good?

 

Do you think they are all brand or truly top class - IMO, not all and not top. But then again, that's just one man's opinion and YMMV.

 

 

Edited by Powerbroker

A proud member of the Pittsburgh Fountain Pen Club

Fall Down 7, Stand Up 8

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To your three points....

 

£80 to make a 149 - With a lot of experience in manufacturing, I'd be utterly astonished if it was anywhere close to that figure ( £80 = US$132 ). My own SWAG would be closer to half that, probably a fair bit less.

Is Montblanc ripping us all off - Not unless they put a gun to your head and force you to buy it. Since when did the price / value of any product have anything to do with what it costs to make it? We are all free to make our own decisions. Even more so with fountain pens since they are hardly life sustaining staples controlled by a global cartel. We only buy these because we want them, not cause we need them. How can we be ripped off if we make a free choice for a non-essential luxury good?

 

Do you think they are all brand or truly top class - IMO, not all and not top. But then again, that's just one man's opinion and YMMV.

 

Oh you are absolutely correct, perhaps I shouldn't have used the phrase 'ripped off'. Fountain pens by no means a necessity, and I know that.

 

But I do think that perceived value directly corrolates to production cost. If, hypothetically, a MB cost £500 or whatever to make, I would perceive it as much more valuable than a MB that cost £10 to make, again, hypothetically.

 

But you really think a 149 costs less than £40 to make? I think I might give up this hobby.

 

Ignorance is bliss, I guess.

MB Starwalker Black Resin BP • MB Starwalker Black Mystery RB • MB Starwalker Black Mystery FP (M)

MB Meisterstück Diamond Classique FP (M) • MB Starwalker 100 Years SE FP (M)

MB John Lennon FP (M) • MB Meisterstück Geometric Dimension FP (BB)

MB Carlo Collodi WE FP (M)

 

Design is not just what it looks and feels like. Design is how it works! — Steve Jobs

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I would imagine that fountain pens play a small part in Montblancs financials, and in support suggest looking at relative shelf space in Boutiques.

 

In the boutiques I have visited, the pens are by far the most prominently placed products, followed by leather goods, watches and finally jewellery.

MB Starwalker Black Resin BP • MB Starwalker Black Mystery RB • MB Starwalker Black Mystery FP (M)

MB Meisterstück Diamond Classique FP (M) • MB Starwalker 100 Years SE FP (M)

MB John Lennon FP (M) • MB Meisterstück Geometric Dimension FP (BB)

MB Carlo Collodi WE FP (M)

 

Design is not just what it looks and feels like. Design is how it works! — Steve Jobs

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Oh you are absolutely correct, perhaps I shouldn't have used the phrase 'ripped off'. Fountain pens by no means a necessity, and I know that.

But I do think that perceived value directly corrolates to production cost. If, hypothetically, a MB cost £500 or whatever to make, I would perceive it as much more valuable than a MB that cost £10 to make, again, hypothetically.

But you really think a 149 costs less than £40 to make? I think I might give up this hobby.

Ignorance is bliss, I guess.

 

 

 

Well, in a not-so-distant past life I made a medical product that sells today on Amazon for $56 to $71 and my total manufacturing cost (labor, overhead, shipping and materials) was 76 cents. If that kind of thing bugs you on pens and other stuff, be prepared to do without a lot of things. R&D costs money, market research costs money, building a brand costs money and products that fizzle cost money too so those large margins go to a lot of other important things that sustain great companies. MB isn't my cup of tea but I say that they have build a great brand and if people are willing to pay the prices they ask, then that's A-OK with me.

Edited by Powerbroker

A proud member of the Pittsburgh Fountain Pen Club

Fall Down 7, Stand Up 8

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Oh you are absolutely correct, perhaps I shouldn't have used the phrase 'ripped off'. Fountain pens by no means a necessity, and I know that.

But I do think that perceived value directly corrolates to production cost. If, hypothetically, a MB cost £500 or whatever to make, I would perceive it as much more valuable than a MB that cost £10 to make, again, hypothetically.

But you really think a 149 costs less than £40 to make? I think I might give up this hobby.

Ignorance is bliss, I guess.

 

 

 

Well, in a not-so-distant past life I made a medical product that sells today on Amazon for $56 to $71 and my total manufacturing cost (labor, overhead, shipping and materials) was 76 cents. If that kind of thing bugs you on pens and other stuff, be prepared to do without a lot of things. R&D costs money, market research costs money, building a brand costs money and products that fizzle cost money too so those large margins go to a lot of other important things that sustain great companies. MB isn't my cup of tea but I say that they have build a great brand and if people are willing to pay the prices they ask, then that's A-OK with me.

 

Yes, that's right. If they build a brand, they deserve to profit from it. If you see in my OP I mention they probably have high running costs, ie Research and Development, Advertising, etc.

 

I'm perfectly ok with someone charging what the want so long the product is high quality and is markedly better than the competition, or has a unique selling point.

 

But I'm starting to feel that MB's only selling point is in fact the retail price, which makes the products exclusive.

 

I'm sure I'll continue to buy MBs, but I'm sure this will bug me in the future as well.

 

For example, has anyone notices how the 'resin' they use scratches really easily? It's things like this which I don't like then you spend so much on something. A rubbishy Parker would be more resilient.

 

But anyway...

MB Starwalker Black Resin BP • MB Starwalker Black Mystery RB • MB Starwalker Black Mystery FP (M)

MB Meisterstück Diamond Classique FP (M) • MB Starwalker 100 Years SE FP (M)

MB John Lennon FP (M) • MB Meisterstück Geometric Dimension FP (BB)

MB Carlo Collodi WE FP (M)

 

Design is not just what it looks and feels like. Design is how it works! — Steve Jobs

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Blade Runner

If it's that inexpensive, why don't you or others make a pen and try to make of success of it?

 

MB has hundreds working at Hamburg creating, manufacturing, testing, marketing pens, using a huge variety of materials and producing a larger range of fountain pens than any other brand on the planet, they have a worldwide network of boutiques and service centers whom they employ to offer products and service.

 

In contrast there are other brands, take for example Conway Stewart, who employs 7 people in their factory, don't make their own nibs, don't offer a filling system than an off the shelf convertor, don't have service centers all over the world, yet charges very high prices as a "top" tier brand. Talk about margin profits and ripping off! :roflmho:

Edited by Blade Runner
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talkinghead

[

The parts used to construct the iPhone 4 cost about $187.51, according to a teardown analysis conducted by research firm iSuppli.

iSuppli dissected a 16GB iPhone 4, which went on sale Thursday, and estimated the cost of each component based on the manufacturer and volume. iSuppli's analysis is only an estimate because Apple is able to negotiate costs with each manufacturer. It also does not include how much Apple spent on shipping and labor to build the phone, or advertising, software development, and patent licensing.

"Over the years, the iPhone has generally tended to hover in the $170-$180 cost range because Apple seems to be trying to hit some kind of budget," iSuppli's Kevin Keller told BusinessWeek.

The iPhone 3GS teardown a year ago revealed a build cost of $178.96. The Nexus One, built by HTC, was estimated in January to have cost $174.15.

The higher costs for the iPhone 4 are because of two specific parts new to this year's model. The "retina display," which Steve Jobs called the most important component of the phone, is also the most expensive. iSuppli says each display, likely built by LG, costs $28.50.

The new gyroscope chip, thought to be supplied by STMicroelectronics, costs $2.60 each. The phone's Apple-designed A4 processor, which was built by Samsung, costs $10.75 each.

The retail price of the 16GB phone without a wireless contract is $599. AT&T subsidizes much of that cost to the consumer when he or she signs a two-year contract and the price drops to $199. AT&T is also thought to pay Apple for each phone as part of its exclusive agreement, though neither company has disclosed the amount.

 

 

Everybody does it...every industry

 

 

I love my iPhone 4 and I love my Meisterstucks

 

Rick

MY-stair-shtook eyn-HOON-dairt noyn und FEART-seeg (Meisterstuck #149)

"the last pen I bought is the next to the last pen I will ever buy.."---jar

WTB: Sheaffer OS Balance with FLEX nibs

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I wouldn't make it anything more than it is.

 

Sure, you can espouse the novelty of the boutique store and the hamburg factory, but when it comes down to it, Montblanc is a well oiled machine that does one thing good: make a nice product for as cheaply as possible and sell it more as most as possible.

 

Nothing more.

 

MB makes top of the line products, that is not in question.

 

But, they make overpriced products. Why are they overpriced? Not because of manufacturing or their impressive staff, but because there is a market. Obviously MB knows it can maintain these things (boutiques and a massive staff) while still making a profit. This would all turn around if people did not buy the pens and etc.

MB would be quick to cut the boutiques and factory costs if there was not such a huge market.

 

It is not the other way around, in that their products are overpriced because of the boutiques and factories. Rather because of the market for the products they can afford (no pun intended) to raise the costs and keep their customers. But, one more price jump and I don't know...

Will the boutiques start to vanish, or will MB take lesser profit? I think the choice is obvious there...

To hold a pen is to be at war

-Voltaire

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professionaldilettante

Hello everyone,

 

A few days ago I saw that Richemont, owner of Montblanc, among many other high end brands, released their financial results for 2010.

 

Interestingly, Richemont as a whole had a profit jump of 95%, with a sales increase of, if I remember correctly, 65%. Their overall profit margin increased by around 60% compared to FY 2009.

 

(Now obviously these figures do not necessarily represent the profits or profit margin on Montblanc themselves, only all of Richemont, but this got me thinking.)

 

How much money does MB make on their pens? Take the 149 for example. It currently retails at £510 (inc. VAT), with a price increase expected in May. But just how much does it cost to manufacture this pen? Of course only Montblanc knows that.

 

In all honesty, and I say this as a fan of MB (look at the sig :rolleyes: ), the Meisterstuck range is made of 'resin', a nice way of saying shiny plastic. It must cost less than £20 to make the barrel of the pen. The cap I suspect would be a little more with the gold clip, but I say that the whole pen excluding nib can be made for less than £30 per unit.

 

The nib is gold, yes, but it's not that much gold. I'd say the complete nib would cost £50 max including the stamping and sanding etc.

 

And the piston mechanism, add a tenner.

 

So my rough guesstimate is £80 to make a 149.

 

I know it must be considered, however, margins are not the whole story, I'm sure MB have lots of overheads, with machinery and maintaining boutiques and service centres worldwide.

 

Furthermore, of course, with a brand like Montblanc, I guess it is more the snowflake you pay for rather than the actual product.

 

But what do you guys think if this? Are Montblanc ripping us all off, or are their products genuinely expensive to produce? Do you think they are all brand or truly top class?

 

I only started researching their profits etc. after I was looking at my pens in the cupboard, almost grinning with happiness at the exclusive instruments in front of me, when I wondered if there really only was a couple of hundred pounds worth of material actually there.

 

Now I think that's my longest post to date. Sorry to bore. :embarrassed_smile:

 

[/endrant]

 

Would love to hear your thoughts.

 

Brookzy.

That would be like saying how much does a human being cost to make? Well, broken down into its elements, a human being is worth approximately $4.50. However, put together, it's worth much more, I would suppose. :ltcapd:

You need to consider that MB's are built from the ground up by hand, as I have seen in a video on youtube of the MB factory. On top of that, they are targeting a very select market that can plop down a half k for a pen without flinching, just because they can. I think this is like all luxury items, and a fruitless endeavor trying to work out how much we are being "ripped off". I would much rather not know, an feel special than knowing that the pen i hold cost $10 to make, and I bought it for $500.

The heart has its reasons which reason knows nothing of.

Blaise Pascal

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Tell me about any of your new pens and help with fountain pen quality control research!

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professionaldilettante

Montblanc is a well oiled machine that does one thing good: make a nice product for as cheaply as possible and sell it more as most as possible.

 

Nothing more.

 

but isn't that the point of any other company out there? To do the best you can with the lowest production cost, and to sell it at a profit. I would be hardpressed to find a company that makes something for free.

The heart has its reasons which reason knows nothing of.

Blaise Pascal

fpn_1336709688__pen_01.jpg

Tell me about any of your new pens and help with fountain pen quality control research!

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I want Montblanc to make money so that they will be in business and ready to fix the next pen I somehow break.

"Don't hurry, don't worry. It's better to be late at the Golden Gate than to arrive in Hell on time."
--Sign in a bar and grill, Ormond Beach, Florida, 1960.

 

 

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The mark-up on one end-product covers much more than the cost of material and effort to produce one piece of the product. Example:

 

For about 15 years, I worked in the time-sharing division of GE. It would now be called "cloud-computing". To simplify, GE provided the mainframes on which two Dartmouth professors wrote BASIC and a time-sharing operating system that gave each user the illusion that the computer was interacting only with them. Not much different that the system of PC/MAC/Linux computer you have that puts these words and pictures on your screen: a terminal, a network, and some big servers in the middle.

 

About 20 years ago, we were selling computing power networked to 870 cities around the world. We sold "transactions", which we priced by "computer resource units", a near-mystical measurement that included CPU-seconds, disk access, and use of RAM.

 

One CRU sold for about 16 cents. I asked one of our old-timers how much it really cost to "make" a CRU. He was a programmer who had been in the business since the mid-50s and who had probably helped to commercialize the Dartmouth system into a GE product.

 

Answer: in the late '80s it "cost" about 1/16 of a cent to "make" a CRU. By the early '90s, the cost was so small that no one could measure it.

 

How?

 

GE had already built the network, already built several big data-centers, already written the O/S. Any additional usage was free, to us, until usage forced us to add more network or more servers or more support staff.

 

Still, our profit margin was around 10% (and that's just a guess) because the transactions we sold paid the salaries of about 1800 engineers and commercial staff; it paid for the PCs we bought; it paid for the travel we did to meet customers when developing a project; it paid for office space and expensive data-center space (computers are more demanding than people); it also paid a chunk to corporate HQ which paid dividends to GE share-holders.

 

So...I assume that MB works the same way, but that a pen business is much smaller than a good-sized computer business. A history of Parker mentions that the company had revenues of about $50 million a year from the pen business in the mid-70s, when they bought the temp agency Manpower. The Parker family sold Parker pens to their UK management because Manpower had about ten times more revenue.

 

For another comparison: Brian Gray makes fine fountain pens one at a time. His price is about comparable to MB's price when you consider that MB carries a research and design staff that evaluates new products and such. MB has a lot more overhead.

Washington Nationals 2019: the fight for .500; "stay in the fight"; WON the fight

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It's a little frustrating that they increase their prices more than inflation, but what can you do about it? It's called supply and demand.

 

I bought my Starwalker ballpoint when they were first released and paid about £120 for it. They are now worth nearly double if bought brand new. This its self is a positive as a well kept MB tends to hold its value more than other lesser brands.

My Collection: Montblanc Writers Edition: Hemingway, Christie, Wilde, Voltaire, Dumas, Dostoevsky, Poe, Proust, Schiller, Dickens, Fitzgerald (set), Verne, Kafka, Cervantes, Woolf, Faulkner, Shaw, Mann, Twain, Collodi, Swift, Balzac, Defoe, Tolstoy, Shakespeare, Saint-Exupery, Homer & Kipling. Montblanc Einstein (3,000) FP. Montblanc Heritage 1912 Resin FP. Montblanc Starwalker Resin: FP/BP/MP. Montblanc Traveller FP.

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Well this seems to have provoked quite a reaction overnight :roflmho: .

 

I think you all make some very valid points, and I made some oversights in my impression of Montblanc.

 

Somebody mentioned an iPhone 4. Yes, the BOM will be much lower than the retail cost, but an iPhone has an actual R&D cost. The only major R&D done at MB recently was the introduction of the Starwalker design.

 

I also didn't factor in a point make by Pajaro. MB's service is of a high standard, yes, and the prolonged success of Montblanc will maintain that standard.

 

I do love MB pens. I'm sure I'll continue to buy them.

Edited by Brookzy

MB Starwalker Black Resin BP • MB Starwalker Black Mystery RB • MB Starwalker Black Mystery FP (M)

MB Meisterstück Diamond Classique FP (M) • MB Starwalker 100 Years SE FP (M)

MB John Lennon FP (M) • MB Meisterstück Geometric Dimension FP (BB)

MB Carlo Collodi WE FP (M)

 

Design is not just what it looks and feels like. Design is how it works! — Steve Jobs

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Of course it's a rip-off. They could knock down their prices and still be raking in the dough. But more is always better! :bunny01: And if there isn't gold, diamonds, or silver involved on the cap and barrel, why $385 for a ballpoint pen?

empyrean Conklin,Stipula Pyrite, Bon Voyage & Tuscany Dreams Siena, Levengers, Sailor 1911,Pelikan M200, Bexley BX802, AoLiWen Music Notes pen, Jinhao's,1935 Parker Deluxe Challenger, 1930s Eversharp Gold Seal RingTop, 1940s Sheaffer Tuckaway, 1944 Sheaffer Triumph, Visconti Van Gogh midi, Esties!(SJ, T, and J),Cross Townsend Medalist & Aventura, 1930s Mentmore Autoflow, A bunch of Conway-Stewarts 84, Platinum 3776 Chartres Blue(med); Montegrappa Elmo (broad nib), Delta "The Journal" (med nib), Conklin Yellowstone (med nib)
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Sorry - only skim read, but I don't think anyone's mentioned the retailers. I had a friend selling MBs in a dept. store. That store marked up MBs (and everything else) by 100%. Same with all makes, I guess.

Sincerely, beak.

 

God does not work in mysterious ways – he works in ways that are indistinguishable from his non-existence.

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penparadise

... what do you guys think if this? Are Montblanc ripping us all off, or are their products genuinely expensive to produce?

Obviously you haven't visited the Montblanc headquater and never made a factory tour. If you would your question would be: Why are Montblanc pens so cheap?

Axel

Montblanc collector since 1968. Former owner of the Montblanc Boutique Bremen, retired 2007 and sold it.
Collecting Montblanc safeties, eyedroppers, lever fillers, button fillers, compressors - all from 1908 - 1929,
Montblanc ephemera and paraphernalia from 1908 to 1929,
Montblanc Meisterstück from 1924 up to the 50s,
Montblanc special and limited editions from 1991 to 2006
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