Discussion in 'Fly Fishing Forum' started by Alosa, Aug 6, 2013.
Just because a rod retails for 775$ doesn't mean Sage gets 775$ per rod. More than likely, the fly shops are making a 20% or more margin per rod as well. Also have to take into account, Labor, BOM, Overhead..etc. these rods are most likely priced the way they are to make certain margins which every company does, it's not just like Sage goes ok umm 1000$ per rod. There's a guy out if Montana selling rods for 3 to 4 grand, I think anything that is handcrafted will be exponentially higher priced.
R & D takes time, time is money, thus you not only pay for the labor and materials but also the think tanks behind the product.
X2. The general public has absolutely no idea of the costs involved in bringing a product to market. If fly fishermen have issues with Sage's pricing then I challenge them to leverage everything that they own (house, retirement accounts, vehicles, kid's college fund, etc) take out the big loan and bring a high-end, mid-price point product to market.
I completely agree, I work in finance for a large merchandise agency(promotional items) and the amount of COGS to hit one item is amazing, from licensor royalties to art tickets to freight it eats into the margin. On top of that think about how many different people touch have their hands in selling 1 rod. From the designer to the person selling to fly shops to the customer service reps that answer inquiries. Plus all 175 employees take a salary regardless of how a rod sales.
This is the same reason why pirating software and music is stealing. Even though unit cost of production is small, there is a huge up front engineering investment that needs to be paid off and...yes...profited from.
the guy who brought up the issue of price point relative to this sage thread owns and operates a manufacturing business, and DOES understand all of these matters intimately. for that matter, the general public of the current population probably understands them better than at any other time in history. every rod manufacturer has the same lines in their P&L. all other things being equal, every premium manufacturer has similar expenses in development, materials, production, marketing, OH, etc. but it's a reality that if your brand value is #1 in your marketplace, you can charge more. sage is doing that, unless they are stupid. it may or may not be possible to demonstrate that their most expensive rod is actually better than that of their direct competitors, but there's little doubt that their brand is generally perceived to be the best in the industry. they are cashing in on that. and, i don't know this, but i doubt they are spending significantly more or less on their r&d (or anything else) than orvis or winston, et. al. as a percentage of their overall P&L.
Yup. But I'm sure we all know, it's a double edged sword. You don't get to stay on top and just kick back and enjoy the profits rolling in. You've gotta get right back into the lab and start developing the "NEW" best rod. Then marketing has to figure out how to bullshit customers into believing it's worth replacing the "last NEW best rod" with the "NEW NEW best rod".
I love Sage, and I love my One, but the last marketing campaign was borderline insulting. And it's only gonna get worse.
Just out of curiosity, what was so bad about the marketing of the ONE? Besides the name triggering assumptions by consumers that Sage was saying this was the best and only rod you'd ever need to buy again (they never did say that), I didn't see anything in the marketing that was even inaccurate. Maybe I missed it, but I don't think so.
again, so does the competition. these are not costs unique to sage.
and i'll say again that i don't see anything wrong with sage charging whatever they want for a rod. people got the money, they believe the product is worth it, there are enough of them to make it profitable for sage, so who cares? more power to them. if they push it past the tipping point the market will push back. till then it looks like they know what they are doing. at least they're definitely better at marketing than supplier management.
I respect your posts as an informative opinion. While I think we could have a solidly enjoyable conversation on the topic over a beer - I think you're making a LOT of assumptions here.
Sage has repeatedly been first to market with new rod technology. They're paving the way for a lot of other manufacturers to then reverse engineer and add their own styling or interpretation of those very expensive R&D costs at a much much lower cost.
My "guess" is that Sage's r&d costs are probably twice that of most of their competitors. Furthermore, for a relatively small local company located on a relatively small Washington island.... I am damn proud of them and their ability to create a sustainable and profitable US based manufacturing company.
You always have to realize that a lot of these rods are designed and built by professionals correct ? Well to have the best in the industry, which some say Sage does costs more than say the engineer at another brand. Yes all companies have the same types of costs associated with bringing a product to market, however they don't necessarily have the same amount of costs. Sage might pay there employees more, rent might be more, the products they use my cost more, it might be relative in terms of type but not necessarily the same in terms of Scope. The old owner of Winston sales rods out of his house for 4 grand, bc that's the amount of time effort expertise, testing and materials goes into making one rod while still making a profit to pay the bills. I just don't see why people blast Sage bc they charge high end prices for there high end rods. People make it sound like there just greedy and throwing out an average product but charging steep bc there name is on it.
Cheers to US made rods!!!
Evidently I need to apologize as you must have thought I was arguing with you. I agree with everything you said, and was only adding to it the need to STAY on top once you're there. It all costs money. lots of it. Until someone puts out a product of equal performance for considerably less money and still produce it in the US, these top tier manufacturers will be able to get these kinds of prices. And there's nothing wrong with that. Same with the structured retail pricing that fly shops agree to when bringing on a line.
Huh? So WInston, T&T, Orvis, Loomis and others are simply coasting to success by reverse engineering Sage's designs and laughing all the way to the bank because they have no R&D or COGS expenses?
Wow, just wow.