Hot Tub Forum
Original => Hot Tub Forum => Topic started by: NittanyLion on July 20, 2006, 11:26:49 am
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Now I don't mean to upset anyone with this thread, I really doubt there are many spa manufacturers on the forum, but does anyone else feel spas are really overpriced? I mean, if you look at the parts that go in versus the sale price, it doesn't even seem close. 9K for a spa thats usually $50 worth of lumber, maybe a couple hundred in pipe/tubing, a couple $250 pumps, some wiring... I'd be surprised if everything excluding the shell hit $1000, so the shell would have to be 8K, probably more like $500.
I know there are labor costs, advertising, shipping, etc. but its hard to believe an automaker can make a car (much more complicated than a spa) in a foreign country and get it here and sell for 11K and a spa is 9K. I'm not knocking dealers, and I as a consumer was willing to pay for a spa, just makes you wonder...did all spa makers start out as defense contractors selling to the Pentagon?
With the perceived mfr mark-up it explains why so many brands (albeit not all quality brands), thinking of starting my own sucker line (20hp, 400 jets, disco ball, each seat naughty-part jets, popcorn maker) ;)
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I hear ya Natty. Spas are exspensive. Dealers here are slow to name prices and costs and overhead, and I can understand that.
Then with franchises and dealerships, same brand competition is virtually non existent. Also, Spas are a luxary item and yea, youre going to pay for that too.
Some dealers in here give me the impression it's a tough business,and struggle to compete with the internet, big box stores and new dealerships. others I get the impression they are doing well. Very well. (Good for them).
Still others tell me it's the factory/manufactuer that makes the "real" money.
As a consumer, forums like this are good, we can talk price, features, compare tubs and challenge the dealers, it helps.
As far as making your own tub....sure. Sounds like the Costco and home depot tubs....not to mention the lunatic in CO.
;)
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Yes they are IMO!
I can buy a car for $12,000 or bought my spa for $6,700. I purchased it, am happy with it BUT think in the economies of scale - it is WAYYYYY overpriced. But then again there are people buying a same sized MB as my Sonata, paid probably $30,000 more and we all get in the same traffic jam, as we sit in A/C comfort, listening to 6 speaker stereos with our 4 speed transmissions ... you get the point! ;D
BTW, this has nothing to do with dealers unless you artificially inflate the price to buy the above mention MB!
And remember before we all get crazy about MB ... They are Chrysler now!!!! ::)
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The same goes for grand pianos. I bought one last year and many brands cost more than a new Mercedes.
It all comes down to the luxury item thing. There are always going to be enough people with the means to buy these things which keeps the cost up.
Yeah, spas are way overpriced for what it probably costs to make and deliver them. But what are ya gonna do? If you want a tub of hot water to soak in, you buy one and hope to shave as much as you can off the price.
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And remember before we all get crazy about MB ... They are Chrysler now!!!! ::)
Even my Jeep is a stinkin' Chrysler now.
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folks be glad you didn't buy the Mercedes-Benz AMG CLK-GTR.
It only runs for 10 blocks and MB wont fix it.
http://www.cnn.com/2006/AUTOS/06/14/pricey_lemon/index.html
It's the world most exspensive lemon:
(http://i77.photobucket.com/albums/j61/GodlikeMoron/lemon.jpg)
butr then again, I'm sure Chas and all these other dealers can afford two or three of em. ;)
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There's a lot more costs involved than you listed. You haven't factored in warranty costs that the manuf. has to absorb. I bet a $40,000 car only has less than $5000 in raw materials costs, so what's the difference?
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Yes they are overpriced.
There should be half as many hot tub manufacturers, and they should cost half a much.
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There's a lot more costs involved than you listed. You haven't factored in warranty costs that the manuf. has to absorb. I bet a $40,000 car only has less than $5000 in raw materials costs, so what's the difference?
Exactly my point!
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Another factor, even though the prices are the same, Even Hyundai expects to sell nearly a million cars here this year. How many spas are sold total in the US and Canada each year? My house has 3 cars, but only one hot tub.
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You all make good points, although I disagree that there is only $5000 in raw materials in a car. As far as cost of metal goes that make be right, but look at all the casting, machining, forming, etc. thats needed for all those thousands of individual parts vs. a tub where all but the shell is basically off the shelf, most of which is available at the home depot.
Once again, not knocking dealers, they work with what they're given, its the manufacturers that I think are laughing all the way to the bank. Good call though on volume sold wmccall, less volume needs more markup.
By the way, no feedback on the disco ball, the popcorn maker, and the naughty-part jets? I was serious about those, I'll have to write Thermospas and share with them.
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As far as cost of metal goes that make be right, but look at all the casting, machining, forming, etc
1/2 million each for the front and rear fasia molds, now lets add up the door panels, door handles, ashtray, instrument panel, interior cladding panels etc.etc.etc. My point is that there is alot more than raw materials in a car.
I would imagine the the cost of a tub mold should be around $250 000. If you factor this into the number produced, well I think you can see my point.
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Let's not forget the hot tubs that are directly connected to the stock market by way of their parent companies. Hot Spring for example, they are always under pressure to squeeze out maximum profits while keeping expenses as low as possible. Great for the stockholder, not so great for the average consumer.
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Yes and charging a nice fat 30% fuel surcharge that goes right into Watkins pocket.
Let's not forget the hot tubs that are directly connected to the stock market by way of their parent companies. Hot Spring for example, they are always under pressure to squeeze out maximum profits while keeping expenses as low as possible. Great for the stockholder, not so great for the average consumer.
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Costs for labor to to build the spas. Costs for research and development. It is amazing the costs involved in designing a new chip for a board. Marketing, order desk, warranty, and many other departments have to be paid for as well.
The manufacturer has to make a profit and the dealer has to make a profit.
Since none of us know (at least, I don't think any of us know) the budgets and expenses of an entire manufacturing company, it is very hard for us to speculate on wether or not a spa is overpriced.
9k for a spa doesn't mean it costs 9k to make.
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And remember before we all get crazy about MB ... They are Chrysler now!!!! ::)
You can tell yourself that if it makes you feel better about the good old U.S.of A. ;)
Here in Michigan we know that it was not a "merger" as advertised. Daimler- Benz BOUGHT Chrysler. Trust me there are a lot more Dieters and Gunthers running around The "D" than a few years back (i.e. Dr. Z on the TV commercials)
BTW - German management has kept "Chrysler" out of the papers with the doomsday headlines that GM and now more recently Ford have been receiving.
I for one am excited at the prospect of a "merger" between GM and Toyota.(maybe that will keep my family working!) It's a global economy, we should adjust accordingly.
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I have no idea what it costs in materials for a manufacturer to make a spa.
A few months ago I spent several days at the Coleman manufacturing plant, I'ld like to just take the first step of the manufacturing process, the spa shell.
Lets say a sheet of acrylic costs the manufacturer $250.00. Thats just the first step, they have to pay to produce the mold and keep up the maintence of that mold because it gets put under exteme temperatures under a big hot oven that vacumes the acrylic over the form of the model they are making.
This machine is run by a computer, which needs to be serviced and maintained.
It takes two guys to get the sheet of acrylic to and from the oven. You now have wages, withholding, insurance, workmans comp,ect.
This process was loud and the oven area was hot and looked like if one didn't know what they were doing it could be dangerous. So I'm sure the insuance premiums reflect that.
The molds are stacked on pallets that must be at least 20 feet high so they need a loader and a loader operator to access them. Thats more maintenence and insuance, wages, ect.
The manufacuring area is huge and there are costs to light, heat, and cool it on a daily basis. That oven alone must use a ton of electricity to operate.
I'm sure I've missed many other expences, but this is just to get a flat piece of acylic molded to the shape of the model being produced.
And how many cars have a five year warranty on parts, labor, electrical, and although this does not apply to cars, plumbing.
Lets not forget that if a spa manufacturer didn't make a profit they wouldn't be around to warranty thier spas for all of you. 8)
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but then again, I'm sure Chas and all these other dealers can afford two or three of em. ;)
I just recently paid off the Taurus.
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If it only cost $1000 to make a quality spa, one of the 200+ spa manufacturers would be making a killing off of a spa they could sell for lets say $1500..and taking away the market share from all of the other manuf.
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OK, I guess I am really stupid because I think like this:
What does it take to make and deliver a spa?
Costs associated with research and development.
Cost of raw materials: (subject to market changes, oil etc)-can be very unpredictable.
Cost associated manufacturing process: Labor, benefits for manufacturing facility personnel. Quality control testing and development of manufacturing guidelines.
Delivery costs from manufacturer to dealers.
Cost associated with marketing including advertising and
promotions and financing programs.
Additional costs to the dealer including sales force,(do you sales folks have benefit packages?) overhead (rent electric, WATER). Service personnel, accountants etc.
Warranty work that probably never really gets paid back in full from the corporation.
Delivery costs to the customer, gas and service equipment ...service trucks, dollies..delivery equipment.
I am sure I have missed many many cost associated with getting a spa from someone's concept to your backyard.
Ooooh like the corporate execs that make grand salaries for business decisions and keeping the company on track and profitable!
I think with all this considered, I got a deal at $9700.00.
;)
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First as far as chips are concerned a Dell computer can be had for $299 ... look inside it's 90% chips. AND the question of how complicated a spa control needs to be ... not very.
Who really needs to have a reminder - hey stupid change your filter! The "computerizing" of the spa with digital controls is a great idea, having 4 or 5 layers of menus is not. I personally wear glasses and I can't see a thing without them but I know where those lit buttons are to turn everything on or off - I don't have to read a display!
As far as MB vs Chyrysler - My point is that MB isn't MB any more, I'm sure they have Chrysler parts in them - (Jacuzzi vs Sundance - sound familiar). It is bound to happen. I could swear that MB's new Pacifica is just that - with a MB medalion for the snob factor. Hey, I have a 99 Plymouth Voyager (remember Plymouth) that was sitting next to a Chyrsler Town and Country when I bought - mine was $10,000 cheaper - other rhan leather bucket seats it's the same van.
IMO, the problem with the US auto worker is 3 fold - 1st, the greedy CEO's have destroyed "Made in America" by farming out auto work to Mexico - I've said it before - how many of Mexican auto workes have cars, houses, pools or hot tubs - very few I believe and keeping the car prices artificially high without any value. 2nd - The US government allowed NAFTA to be passed leading to the scenario in the 1st reason and 3rd - the US press - EVERYONE needs to buy a foreign car - people would rather buy a Toyota vs Buick, why - 'their much better'. It might not be the case. I remember years ago when the Toyota Corrolla and Chevy Nova was being made at a Detroit Chevy plant - the Toyota won hands down and the Chevy was a POS according to car magazines. A paper interviewed the plant manager asking why the Chevy is a POS - his response was "They are the same car, we just slap different emblems on them"
Yes, I bought a Hyundai - there wasn't another car out there that gave me as much value for the money. Would I have bought an American car if there was one - you bet - was there - NO. I was able to buy a pretty loaded Sonata for $17,000 (a little more than some spas :D) and I got a great value.
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Spa Happy has really put out a great post....The labor cost are very high for manufacturing of any kind...cars off the charts.....Bill also points to the very small market that spas are about 600,00 per year....Markee points to the simple fact that we live in a free market economy if someone could build it better for less they would corner the market....I know from being on the side of fence I am on retail...you are not going to get rich overnight but you hope you can build a sucessful business and earn a decent wage doing so...
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How skilled a laboror are spa manufacturers using?
Their not building rockets or maintaining airplanes - their building spas. How much is a person going to make financially spraying on fiberglass, rolling it and sending it over to another person. If they work 40 hours a week and make $15 per hour thats $24,000 per year add 1/3 more for benefits and that's $32,000 a year. Maybe they have a dozen workers x 32000 = $384,000 in salary and benis now say they produce 1000 spas a year and each spa costs $384 in labor + $1,000 in parts and make $1,000 profit - make that for sake of argument $2,500 cost & profit for each spa - they make $1,000,000 profit per year. Of course there will be some people making significantly more money - engineers, craftsman and production supervisors. (add $300,000 for their salary) Also, part of this has to be for buying equipment, maintaining the equipment and expanding the business - take out $400,000 per year for this reason. If this isn't a big corporation (Arctic, Artesian, Bullfrog, ...) this is good money. If it's a big Corporation (Masco, Sundance, Marquis (?), ...) this is not good money.
This is over simplistic but that's the idea in a nutshell. A bigger operation will have more people, a smaller operation less.
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Ok, maybe I have been defending the price of pharmaceuticals for too long! ;)
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How skilled a laboror are spa manufacturers using?
Their not building rockets or maintaining airplanes - their building spas. How much is a person going to make financially spraying on fiberglass, rolling it and sending it over to another person. If they work 40 hours a week and make $15 per hour that's $24,000 per year add 1/3 more for benefits and that's $32,000 a year. Maybe they have a dozen workers x 32000 = $384,000 in salary and benis now say they produce 1000 spas a year and each spa costs $384 in labor + $1,000 in parts and make $1,000 profit - make that for sake of argument $2,500 cost & profit for each spa - they make $1,000,000 profit per year. Of course there will be some people making significantly more money - engineers, craftsman and production supervisors. (add $300,000 for their salary) Also, part of this has to be for buying equipment, maintaining the equipment and expanding the business - take out $400,000 per year for this reason. If this isn't a big corporation (Arctic, Artesian, Bullfrog, ...) this is good money. If it's a big Corporation (Masco, Sundance, Marquis (?), ...) this is not good money.
This is over simplistic but that's the idea in a nutshell. A bigger operation will have more people, a smaller operation less.
Marquis has just over 300 employees....so if you take your numbers no matter how close they are...( I really do not know )...your labor costs just went up over 9 million....spas are not the cash cow many think they are.....its just people making a living much the same way that many consumers here do....getting paid to do a job and really most everyone thinking they deserve more..... ;)
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Then comes the idea of pricing being set on value as well. We paid between $6k-7k more than 3 years ago. I guess we have owned our spa for around 1300 days. Thats about $5 a day. If it lasts another 3 years, that gets cut in half
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Let me tell you about expensive spas. My neighbor directly across the street decided that he wanted a spa in the back yard. By local code the spa must be shielded with either a privacy wall or a fence. He wanted a walk along the side of the house going from front to back for access. The spa is being built by a local pool contractor. It is sunk into the ground and is being surfaced in mozaic tile. One jet per seat times 4 seats, and the thing looks maybe 6 feet in diameter. It has been under construction all summer so his yard is all torn up. Just for fun try to guess the cost before scolling down for the answer.
$30,000. Also consider that his taxes will go up to reflect the value of this beauty. I giggle every time I climb into my Envoy and feel that there is a lot of value in portable spas.
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I agree that I see much more complexity in the design and manufacturing of a Kia Rio or a Toyota Yaris than in any full equiped 8' * 8' spa.
But I don't think there's more greed in one industry than in another. And in every industry there's some company that makes big profits while one of their competitor go bankrupt.
I have got some concrete work around my house and it cost as much as my Mazda Protege5. But I see much more engineering, work, garantee fee, etc in the car than in the concrete.
Whether it's the concrete construction industry that is inefficient or the car industry that is super efficient is a matter of seeing the glass half full or half empty.
The car industry is bigger and older than most manufacturing. While there is no doubt that some improvement would be possible in the spa manufacturing, we can't expect them to perform as toyota or Kia.
If you only want too consume products and services that have been produced in an efficient way, buy a car, live in it, and eat at the drive-in fast food chain. Never travel in luxury hotels, avoid any situation that could involve having the need for a lawyer... :-)
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OK all, a quick lesson in Business Economics. When most folks think of teh "cost" to produce something, whether that be a car, a spa, or a pill, they tend to think of teh raw materials, labor, maybe some of the immediate overhead. What people tend to forget is the past overhead such as R&D, engineering, drawings, UL certification, etc, etc, etc. that has to be passed on.
Here's the rub with spas... They don't make that many!! Say for example, it costs $1M to get teh spa even to the point where they can start down the line. That $1M needs to be amortized against all of the spas down the line. I am not a manufacturer or dealer, I am a user. But say they make 1000 units of a particular model during a model year before they redesign. Right off the bat, you are looking at $1000 of allocated costs before the first one even has the opportunity to accrue more overhead. I am sure the numbers are off, but plug in the real numbers and you will see a result.
I am in the Real Estate game, that is why you see 5 models in a community of 500 homes. It is cheaper to build that way.
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I think this is very easy to see...We live in a free market economy if there is a market and someone sees a way to build a better "mouse trap" so to speak someone will and than they will reap the rewards....but that's not happening in the spa world the reason being is it is such a highly competitive market already and that is whats great about our system( open market economy) it has built into it checks and balances if you will....almost so to speak is that if you cannot keep yourself sharp and honest your competition will do it for you....also I think this why so many pipe up so quickly when something is out of line they (we) know that is a quick or short sided option......things like rebates that are not legit or spas that have no energy efficiency and that's why they cost lessbecasue they are not are built the same....
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Mendo,
What you said about people working and thinking they deserve more is very true.
The fact of the matter ANY price is driven by supply and demand, for that lesson by lskarp. That's business 101!
Obviously I paid a particular price for a spa and am OK with it ... people will pay $400,000 for my house that I paid $200,000 for 6 years ago and the person I bought from paid $70,000 20 years before me - Supply & Demand. Computers are the same ...
As I see it any item that is "hot" and doesn't have a glut of it will increase in price - this time is spas, a year ago was houses, big screen TV's, the list goes on. Eventually, they all come down in price.
I was actually thinking about changing careers and opening up a spa store was something I was thinking about ... Marquis doesn't have a dealer around here any more ... anyway, thinking about the future economy, I don't see a good time ahead so starting to sell a luxury item is not a good thing IMO. Once the electric prices start to climb, anything that cosumes electric will fall - supply and demand!
Apparently trucks and SUV's are cheap to buy!
Vinny
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Vinny,
I agree with much of what you said....The problem is much of a spa is made with petroleum by-products and unless the cost of oil drops spas prices are not coming down....some company's may not make it in slow market but pricing is not go to drop with any great significance ....with all that's going on in the world many people are wanting their home to be a place of comfort and security and a spa is a rich addition to that....
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Just a fun fact...............
Every car that GM sells has about $1800 built in just to pay for the retirement benefits of previous employees. Yep, almost 2 grand before they start!
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lol..YES they do....Thats why I mentioned the cost to build for cars is off the charts....again there is no great mystery if there was money to be had in spas by building them and selling them for less people would do it....the market is what it is based on demand and the cost to produce....