Saw Prices coming Down.....

[Woodhog]

I was wondering if anyone has noticed if Chain Saw prices are starting to come down in price.

Everything seems to be in place for a price decrease,  bottom is out of all metals prices, transportation costs have been reduced on land trucking and sea freight, demand is low, however around here the price of saws remains the same.

[sawguy21]

Our prices are going UP because the Canbuck dropped like a stone. :-\

[beenthere]

Woodhog
What indication is there that the demand is low?
Did you see it reported somewhere?

Just curious. :

[Woodhog]

Woodhog
What indication is there that the demand is low?
Did you see it reported somewhere?

It is not worth cutting wood with the low prices, so I assumed people would not be buying many pro saws of late, plus all the mills that  on slowdown or closed up.

[Bernhard]

There is no reason for saw prices to drop, I guess. Why should they? Which saws, excepted the smaller ones, ar really made in USA?

The onliest saws which are special offers now, are the chinese ones offered at german ebay.

In 2006/07 they wented for 180-200$...now around 80 bucks in the middle! :D

[2stroker]

I was at my local Stihl Dealer on th 31st and he had just gotten a price increase from Stihl.
It wasn't across the board, but only on selected items.

Regards,
Don

[Cut4fun]

Where? Husky went up twice in 08 and I think stihl had 1 increase. I watched saws I bought for $499 go up to $629 now. So where are they decreasing?

[TexasTimbers]

Not speaking for Woodhog just making an observation about his post and how some seem to be reading it.

He never claimed saw prices are coming down. He asked "if" anyone has noticed saw prices coming down, and then he elaborated on why he thought they might come down based on what he is seeing in key sectors of industry. Lower raw material costs, lower transportation costs. A perceived drop in demand, etc.

       

        I was wondering if anyone has noticed if Chain Saw prices are starting to come down in price.
        Everything seems to be in place for a price decrease.......

emphasis added by TexasTimbers

A question mark would have helped your cause Hog. ;) I am no economics professor and I don't have any degrees hanging on my wall. But from what country-boy skewling I do have, here is my opinion.

All of your assumptions make sense to me, if the demand drops for an extended period of time. If demand for saws do not drop, and for an extended period of time then prices will not drop either no matter the per-unit manufacturing costs may drop or not.  They will just pocket the profit, and maybe one day their various boards or powers-that-be decide they need to compete with the other orange saw maker on price and so lower a little.

Another possible scenario prices might drop; If they see a sustained drop in demand, and their manufacturing costs drop significantly, and they decide they cannot, or do not, want to ride out negative numbers indefinitely by using cash, other equitable assets, low-interest loans then price drops will follow but they generally lag in most industires except some commodities markets.

Another side to this equation in my head says, pro saw sales may never come down short an outright recession/depression; think of it as if you were King Stihl. A logger who is not bringing in a paycheck is not likely to spend $600 on a saw that was $700 last month, even though he might want to. He knows he will be logging again one day, but most loggers are not rolling in the dough. It is doubtful a price drop is going to help a manufacturer of chain saws move enough saws to counter a drop much, maybe even especially when demand is down.  :-\ 

Three sides to every coin remember. Most people only look at the two flat ones but there is a tiny round edge that goes around them.  :P

Now that is just my humble opinion and I don't think I am very smart so maybe just stick it in your pipe and smoke it, but don't buy or sell stock or other equitable positions based on what comes out of my pie hole.  ;D ;)

[John Mc]

From what I've been hearing in my area, demand for chainsaws was up last summer and into the fall (I haven't checked since then). With the high home heating fuel prices, everyone who could was converting to wood heat - buying a wood stove or boiler if they didn't already have one, or increasing their use of an existing wood stove. A number of these people were buying saws, planning to cut some of their own wood. The commercial firewood guys were also very busy - many of them sold out of seasoned firewood by late summer or early fall, and were looking for Ash or standing dead trees to cut.

The two saw shops I visit both commented on the number of homeowners who were in the market for saws. Most were buying homeowner grade or mid-grade saws. (Both shop owners were concerned about the large numbers of inexperienced users going out into the woods to cut... not to mention the number of people planning on burning green wood.)

So even though demand may be down among loggers, it's possible that overall demand has been pretty good.

Also, it often takes a while for raw material price decreases to work their way through the supply chain. Manufacturers may have to work off old, higher-priced inventory, then their customers may have to work off their inventory, and so on down through the supply chain. If some of these people in the supply chain are convinced the price drop is temporary or short term, they may resist lowering their prices for fear of getting caught short when things start back up again.

[underdog]

All i know? or think i know.
Went to a Big city Wednesday. Stopped by a Saw shop there to look over Echo chain saws.
Had a big sign out front saying they where a dealer and all like that.
Went in and the place was empty. Asked the person behind the counter if there was a problem with the sign out front.
No problem with sign; Claimed they sold everything they had over the holiday. They had re-orderd but with new year and all it would be the fifth of January before they could start re-stocking the store.
So were they the exeption or the rule.
I really wanted to look over the Echo CS-530.
They said they did not have any of those orderd but could get one in three days.
Maybe next time.

[stonebroke]

this is what happens when you have a monopoly or duopoly. the market does not respond normally.

Stonebroke

[John Mc]

this is what happens when you have a monopoly or duopoly. the market does not respond normally.

I don't really consider it abnormal for a market not to respond instantly. Whether it's a monopoly or an all out competitive environment, it's natural for a business to want to clear out it's expensive inventory before cutting prices... if they can hold out. If another competitor clears out their expensive inventory first, they may force prices down as they chase more of the market volume.

There's also an interesting area of study known as "Game Theory" which studies how businesses strategize and otherwise "play the game". A common example of game theory uses the prisoner dilemma: My partner and I are charged with a crime. If neither of us confess, we both get 5 years in jail. If one of us confesses, he can get a lighter sentence in exchange for giving evidence against his partner. The guy who confesses gets 2 years, the partner gets 10 (extra tacked on for lying under oath). If we both confess, we each get 7 years - we've each implicated each other.

Obviously, if both keep quite, we are both better off than if we both confess. The question is, can I trust my partner to keep quiet? There's an incentive for me to confess if I can make my partner believe I'll keep quiet. I also have to consider how much I trust him to keep quiet.

Businesses are in this game all the time as they consider cutting prices. Keeping them up gets you higher margins on each sale you make. Cutting prices might give you enough more sales to more than make up for the lower price. On the other hand, if all your competitors follow your lead, you'll end up with a lower market price, and everyone at about the same volume as they were before the price cuts... everyone loses (from the point of view of the competitors in the game... though the customers may be happy). The competitors could just get together and agree to hold a certain price, and divide up the market between them. But that's a violation of antitrust laws... they'd never do that, would they?

[stonebroke]

That is just my point. If there were more players in the game , It would be more likely that at least one would cut prices, look at the airline industry, but with only two they are going to hold out.

Stonebroke

[Glenn]

With the high cost of heating with oil, propane and electric there has been a huge increase in the sale of saws locally.  Lots of guys who have never handled a saw have bought them thinking they can cut their own wood to save money.  Next year i'm planning to buy them all cause i know most of those guys will never cut their own wood for more than 1 year.  This is the same group that paniced in 2000 and bought cookstoves and large amounts of food.  They also all ran out and bought generators after the ice storm and then sold them 2 years later with only a couple of hours on them !  It's a great circle !!

[tyb525]

Grizzly upped their prices on some things too. Like the 12 1/2" planer I ordered last weekend, went from 245 to 295 a few days later.