Domestic Appliance Spares Pricing
- Created: Friday, 07 November 2003 21:48
- Last Updated: Thursday, 28 July 2016 09:34
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Spares Prices Too High
This is a recurring topic amongst repair agents and one that is often complained about by customers, why are spares so expensive? This is a very complex topic and we are assuming that most people will understand the major points here without going into minute details.
To a degree (and there are no definite answers here only speculation since no-one wants to talk about it) it lowers the initial retail price of the appliance as you take funding a spares operation out of it. In the case of some manufacturers it reduces the cost of running their own service operations and, in one case we know of, actually almost completely funds an operation that loses thousands upon thousands of pounds a month, thereby, yet again, subsidising a cost that should be built into the appliance at point of sale.
Of course manufacturers do build in some cost for service into the product but not enough given that the retail prices are falling and the cost of service is rising.
Alternative Or Compatible Spare Parts
To illustrate the point about spares sales let's take just one example.
A pump made by a company called Askoll is imported by XXX manufacturer for just over £1, or at least that's what's on the invoice from Askoll. The same pump is then sold to the trade at around about £26 and the public are charged 25-35% on that price.
The exact same drain pump can be bought from a European, or in some cases, a UK supplier that imports directly for under £5!!
As this illustrates very clearly the huge bulk of the profit is to the manufacturers and wee are not going to name names here but just look at the price of the appliance and then the prices of spares for it, they don't tally up in any way shape or form! In a recent case a repair was carried out on a washing machine that retails for £189.99 and the spares cost alone without labour was over £297, it's insane. If you add up the spares cost to build an appliance retailing at around the £200-300 mark you'll almost always find that to build it from spares would cost in excess of £1500 these days and it will easily exceed £1000 every time, is that justifiable?
It is not uncommon these days to find a single major spare such as a module, motor or timer that the cost to buy the spare alone exceeds the original purchase price of the whole appliance! Is this in the interest of the consumer?
As service agents this gives us a problem as, quite frankly, we cannot afford to hold the stock required in many cases to enable first time fixes and, it's getting worse as time goes on.
But there is a lot more to this behind the scenes.
If we as agents and spares distributors hold stock of any of theses over-priced spares it's quite a lot of money in the manufacturer's coffers. To put that in perspective, as an example, if a network of repairers buys in say £7000 of stock that's costing the manufacturer (we'll be kind here) £1500 that could easily equate to over £300,000 without any problem. Nice little earner.
Add in the spares distributors holding much larger stocks and it is vast sums of money, remember the spares market is worth millions every year.
But high spares prices have other effects as well, such as pushing up insurance premiums for extended warranties which directly affect the end user as well as making the extended warranties look very poor value for money on the surface. As well as costing the insurers huge amounts that they should not have to endure paying and neither should the consumer. Just think, a major insurer could be paying out millions of pounds a year in spares for repairs, how much would they save if spares were more realistically priced and how much lower would premiums be because of that?
The end user is faced with high and very disproportionate repair costs in many cases to the price that they paid for the appliance.
The repairers do not carry the stock they should so the first time fix rate is low which directly affect s their profitability ad indeed, their viability as well as giving the customer huge inconveniences as often two calls are required to effect a repair.
The lifespan of the product is shortened dramatically as repairs become more uneconomical far sooner and this gives rise to problems with disposal and the ensuing environmental issues.
As you can no doubt appreciate this is a huge factor in our industry and, we think, one that the manufacturers have to look at very closely indeed. At the end of the day there's no party that wins on high spares pricing, the manufacturer and the customer both lose!
Customers, in general, accept that repairs will be needed at some point in the appliance's lifespan which is generally perceived to be up to 10 years. What they do not expect is many of the common use spares to cost more than a new appliance would! This is highlighted by the fact that many machines are "written-off" prematurely, in some cases these days, under 2 year old appliances are effectively scrap because to replace a module can easily cost £130 plus VAT and a new appliance can be had for not much more.
We of course often source spares far cheaper than anywhere else and some of the prices that we see on-line are just ridiculous. If you want to save some money then please give us a try.
We Tell You What's What With Spare Parts
We use a really simple system to let people know if a spare part for an appliance is a "genuine" item or an alternative, compatible or whatever term you choose to use and, in our store which is which is shown on each spare part.
What you see if you click the "Additional" tab, where there's all the other info we have, is the item marked as being genuine or not.
It's very simple, very clear and you know what you are buying.