Yet another price increase?

Gombessa

I assume every maker has once-every-year-or-two price adjustment to beat inflation and test market price elasticity, but it always seems to catch me unawares. I just got this email from a prominent piano dealer chain:

I assume the price adjustment is a real thing, and something that happens pretty regularly?

FrankCox

It is no longer enough for companies in pretty much any industry to make a consistent profit. Most that do are considered to be underperforming unless they deliver an increased profit in every year.

This puts great pressure on them to juice their profits in any way they can.

Further, executive compensation that's tied to stock prices gives those executives an incentive to take actions that will increase the profits (and the stock price) in the short term and if that comes at the expense of the longer term nobody much cares.

You can contrast this to the way such things as blue chip companies were run in the past and there's really quite a contrast, and it's not a favourable one. But it's a combination of modern investors' expectations and the way the compensation for corporate management is set.

Seeker

FrankCox You can contrast this to the way such things as blue chip companies were run in the past and there's really quite a contrast, and it's not a favourable one.

I agree. I had the good fortune to work for IBM in the 80's. We were well paid, benefits were good, there was an emphasis on being good corporate citizens wherever we had facilities, be they offices or factories. Things changed in the early 90's , and not for the better IMO. Sigh,

ShiroKuro

I was thinking of a different explanation, but I suspect that the real reason is what @FrankCox wrote.

Still, I’ll share what my initial thought was. Namely, that the Japanese economy is all messed up and the yen-to-the-dollar is so out of whack, I was thinking maybe Yamaha was needing to raise its prices because of that. For example, the weak yen is beneficial when selling Japanese products abroad, but the yen’s buying power is limited because it’s so weak, such that something like a piano, which must use wood and other materials sourced outside of Japan, would be come increasingly expensive.

But yeah, I don’t think that’s the explanation here.

JohnCW

Manufacturing cost increases due primarily on double digit increase in electricity in Japan is probably the most likely explanation. Every component of the piano will be affected by this rapid escalation in costs, even timber and wool (up 8% on the previous year).

Joseph-Fleetwood

Yamaha pianos in the USA are already far more expensive than they are in virtually every other country in the world. Even in the UK, one of the more expensive countries, the price of pianos is almost half what it is here in the USA. I'm not sure why Yamaha want to increase the prices further.

Gombessa

Just a guess:

There is a lot more competition in Europe (from native, more premium/prestigious brands that don't have tariffs or high shipping costs) and from Asia (from native, budget brands that increase price pressure). But in the US, you don't have any real domestic makers (outside of Steinway, M&H and maybe a couple others), AND because acoustic pianos are really in decline, much of the remaining market is increasing upper-middle-class and above, and these households have a lot more price tolerance.

Anyone who has $10k in entirely discretionary income to spend on a piano, can probably afford $15k or even more. But there are so many people who are struggling to put together $500 or $1k for even a digital piano, and they're completely priced out so there's little point in trying to decrease acoustic prices to capture that market.