Any truth to rumor that the tax credit led to higher stove prices?

[John Ackerly]

I've heard from several people a story that goes like this: "the federal stove tax credit benefitted the stove manufacturers who increased the prices of their stoves by the amount of the credit and when the credit went away they lowered their prices." I've never believed that not seen anything to back it up, but does anyone think there is any truth to it? Maybe companies didn't put their stoves on sale so much during those years?

 

[begreen]

I haven't seen stove prices coming down a lot. If anything they seem to be continuing on the rise.

 

[FyreBug]

It's a pretty competitive market. If any MFG was to increase pricing just because there's a rebate they would be on the losing end of market shares.

We haven't seen this. If anything pricing have been pretty steady for the past few years and only change with the price of steel. For 2013 you should see small if any increases from most MFG.

What might give that impression is in good years (2008, 2009) at the retail side, they may be less inclined to provide deep discount. Now due to the economy, warm weather, election year, uncertainties etc.. many retailers are sitting on large inventory and are willing to deeply discount so as to flush out their inventory.

 

[smokeater]

Anytime the goverment gets involved with tax credits,rebates, etc,trouble is not far behind.

 

[KaptJaq]

What I did see was less bargaining on the part of the dealers. They stayed closer to MSRP and would use the rebate as part of their sales pitch. I don't think the manufacturers benefited(except for increased sales) but the dealers improved their margins.

KaptJaq

 

[seaken]

Hi John, I haven't heard this. Maybe it's just the idea of some cynical consumers that caught on because it re-enforces their own ideas about how much things cost. I know I am sometimes shocked by the price of some stoves. With no way to know the real costs involved some folks just make stuff up. The manufacturers aren't going to tell consumers how much it costs them to create and build a stove and then bring it to market. So consumers make stuff up about why it costs so much to purchase. I've noticed a general distrust from consumers over the past few years and many folks really believe we are trying to rip them off.

It makes no sense to accuse manufacturers of manipulating prices against a tax credit. So why do it? Because that's the way it's done. Assume foul play and don't trust any business. They are all out to get us. That's the only thing I can think of. There's certainly no proof. Like one of the many "urban legends", people just like to pass this kind of stuff along. It feeds the need we have as a collective to distrust the system and stir up controversy.

 

[Huntindog1]

I think the main idea with the rebate was to get more stoves out there lowering the demand on oil and gas.

If stoves are selling good due to the rebate then yes there are less sales going on. Makes sense.

Its easy to see the good the Gov. wanted by doing the rebate but there are other effects also. I saved $300 and glad I did. It helped me. Thats what counts.

 

[firebroad]

You mean like the converter boxes that were supposed to be priced at about $40 to $50 dollars, then when the Government issued $40 coupons so that consumers could get them for free or just a few dollars more, but then the distributors raised the prices of the boxes to $80 to $100 dollars? Nahhh.....

 

[jharkin]

Hi John, I haven't heard this. Maybe it's just the idea of some cynical consumers that caught on because it re-enforces their own ideas about how much things cost. I know I am sometimes shocked by the price of some stoves. With no way to know the real costs involved some folks just make stuff up. The manufacturers aren't going to tell consumers how much it costs them to create and build a stove and then bring it to market. So consumers make stuff up about why it costs so much to purchase. I've noticed a general distrust from consumers over the past few years and many folks really believe we are trying to rip them off.

It makes no sense to accuse manufacturers of manipulating prices against a tax credit. So why do it? Because that's the way it's done. Assume foul play and don't trust any business. They are all out to get us. That's the only thing I can think of. There's certainly no proof. Like one of the many "urban legends", people just like to pass this kind of stuff along. It feeds the need we have as a collective to distrust the system and stir up controversy.

This is so true, most folks have absolutely no idea in the slightest what goes into making the things we buy. Case in point - my better half wont blink an eye at $80-100 for a pair of designer jeans, but thinks that a high end all-clad kitchen pot should "only be $50 because its just a hunk of metal"

I try to explain to her how much energy goes into mining the ore, smelting, forming the shape in a massive press that probably cost millions of dollars, the cost of labor to make it in PA, vs. the dollar a day the worker who made her jeans got paid. Just doesn't compute.

 

[seaken]

You mean like the converter boxes that were supposed to be priced at about $40 to $50 dollars, then when the Government issued $40 coupons so that consumers could get them for free or just a few dollars more, but then the distributors raised the prices of the boxes to $80 to $100 dollars? Nahhh.....

Yep, that's what I mean. Consumers have to have a reason to pay and they resent it if they don't understand why they have to pay. Just the other day one of my customers said "I feel better about the price now". Why? She watched us install her insert. After she saw what was involved she understood the cost. Maybe by the time the government got around to issuing the vouchers the cost of materials and fabrication, distribution, tarrifs, wages, etc.had gone up from the original estimate of $50. Who knows. It's just easier to assume the companies involved are crooks and leave it at that.

 

[FyreBug]

Cost of material and labour to mfg is not all that goes into it... shipping and chanelling via distributors then dealers bring their own markup as well.

And before everyone can scream bloody murder against the hated middle man... they serve a function otherwise all MFG's would have to go direct to consumer. This would bring huge costs and force them into something they are not good at. A few have tried and not very successfully at that. At the end of the day this model would not bring any discount to the consumer with little service to be expected.

 

[EJL923]

I will agree that the dealers seemed to give you less of a break during the tax credit. They used that as their "sale price". Now that Ive gone through it all, i think a lot of the stoves are overly priced. Although, i have no idea what their margins are.

 

[FyreBug]

Although, i have no idea what their margins are.

Overhead costs for a small shop is about 30% or more. So in order to make money they must sell above 30%.

Big box stores will take anywhere from 15% on flyer to 35% max. Costco has a policy of never charging more than 14% on all goods. They make more money on membership.