Eastman / Aero price gouging on overseas sales

[SuinBruin]

Eastman (and Aero -- thanks mods for changing the thread title) do not charge one price. They charge two different prices depending on the location of the buyer.

The issue isn't total cost (retail + tax), it's pretax price. The pretax price of an Aero or ELC jacket is x in the EU. The pretax price of an Aero or ELC jacket overseas is x + y (or 1.2 times x). Two different prices based on the location of the buyer.

That's unfair. But what's worse is the fact that Aero and ELC don't disclose the discrepancy, and at least in ELC's communications with Jeff they tried to deliberately conceal the overcharge. That is unethical, in my book, and I won't patronize a business that engages in that kind of behavior.

Just because people don't know they're being ripped off doesn't mean they're not being ripped off. Ignorance may be bliss, but it's also quite expensive when dealing with ELC and Aero.

 

[saunders]

Re: Eastman price gouging on overseas sales

And I am sure that Aero, ELC and Chinese sweat shops employ the economy of scale methodology. There is only one John Chapman, and his hourly rate went up around 35% when his GW Executive went to three members. It would HAVE TO cost GW more per jacket for production.


Couchy

What?!?!? Are you saying GW jackets are no longer the solitary result of the hands, mind and eyes of John? If so, wouldn't that lead to some sort of mass hysteria among loyal followers who may begin lining up for ritual sepuku now that their heretofore heirloom-quality GW jackets have been desecrated by the addition of employees, forever damning GW into the ranks of all of the other makers who have gone down the slippery slope of expansion?

Seriously, ask any business owner or manufacturer of craft goods - NOTHING is EVER the same once an employee is brought into the fold. No matter how much you pay the employees, it's not the same for them as it is for the founding father. In the case of A-2s, no matter how much you may wish to believe that John won't let a missed stitch go by, reality dictates he will have to if he plans to grow. No one else will sew like John or care as he does; they'll either be seen as too slow or too fast, and John can't pick apart everything the employee does or he'll have no employees or be better off making the jackets himself. The days of walking on water have given in to a good set of floats ...

 

[derleicaman]

Maybe its just something about Americans and resenting paying taxes when we are not required to do so or when they can't be justified. Remember that little Tea Party in Boston harbor? Or the rebellion against the Stamp Tax that spurred the Revolution against Britain?

Hey whatever floats your boat, the market (small as it is) will ultimately speak. Why risk alienating a segment of your market? I'm sure Gary is a great guy, as are the folks at Aero. I was one of the victims of the Mark Moye debacle, but I did get my money back and the folks at Aero were very supportive. I have purchased from HPA in the past as well. Great folks there as well. Its just that the cavalier attitude of folks towards VAT tax being paid by non-EU customers when they are not required to do so sticks in my craw. Put the shoe on the other foot. Would folks from the EU want to pay my 9.25% Illinois sales tax when they didn't have to?

 

[SuinBruin]

Re: Eastman price gouging on overseas sales

And I am sure that Aero, ELC and Chinese sweat shops employ the economy of scale methodology. There is only one John Chapman, and his hourly rate went up around 35% when his GW Executive went to three members. It would HAVE TO cost GW more per jacket for production.


Couchy

What?!?!? Are you saying GW jackets are no longer the solitary result of the hands, mind and eyes of John? If so, wouldn't that lead to some sort of mass hysteria among loyal followers who may begin lining up for ritual sepuku now that their heretofore heirloom-quality GW jackets have been desecrated by the addition of employees, forever damning GW into the ranks of all of the other makers who have gone down the slippery slope of expansion?

Seriously, ask any business owner or manufacturer of craft goods - NOTHING is EVER the same once an employee is brought into the fold. No matter how much you pay the employees, it's not the same for them as it is for the founding father. In the case of A-2s, no matter how much you may wish to believe that John won't let a missed stitch go by, reality dictates he will have to if he plans to grow. No one else will sew like John or care as he does; they'll either be seen as too slow or too fast, and John can't pick apart everything the employee does or he'll have no employees or be better off making the jackets himself. The days of walking on water have given in to a good set of floats ...

What does this have to do with the subject at hand? Why set up and attack a Good Wear straw man on a completely unrelated issue?

Leave Good Wear out of it. John has nothing to do with this, and, whether you mean to or not, you're coming across as someone who has an agenda to defend or deflect criticism of ELC.

 

[SuinBruin]

Maybe its just something about Americans and resenting paying taxes when we are not required to do so or when they can't be justified. Remember that little Tea Party in Boston harbor? Or the rebellion against the Stamp Tax that spurred the Revolution against Britain?

Hey whatever floats your boat, the market (small as it is) will ultimately speak. Why risk alienating a segment of your market? I'm sure Gary is a great guy, as are the folks at Aero. I was one of the victims of the Mark Moye debacle, but I did get my money back and the folks at Aero were very supportive. I have purchased from HPA in the past as well. Great folks there as well. Its just that the cavalier attitude of folks towards VAT tax being paid by non-EU customers when they are not required to do so sticks in my craw. Put the shoe on the other foot. Would folks from the EU want to pay my 9.25% Illinois sales tax when they didn't have to?

I have no problem paying taxes that are owed. It's the price we pay for living in a civilized society.

But I have a big, big problem with businesses gaming the system to mislead people into paying more than they should. If ELC is willing to sell a jacket to EU purchasers at a certain pretax price, it should be willing to extend the same pricing to overseas customers as well (not including shipping costs). Non-EU buyers of ELC jackets aren't paying 20% EU VAT -- they're paying an extra 20% of pure undisclosed profit straight into the coffers of ELC. (And non-EU Aero customers are apparently doing the same.)

 

[derleicaman]

I'm also curious if someone in the States who has purchased from ELC or Aero in the last 60-90 days might try to apply for a refund of the 20% VAT? I haven't looked at the links to Her Majesty's tax authority, but as I suggested earlier, if this is possible it would take ELC and Aero out of the equation (or blame or accusation of pocketing the extra profit) and get a non-EU purchasers tax refunded to which he is legally entitled. I think this would be a very happy solution for all parties involved.

 

[Jeff M]

Re: Eastman price gouging on overseas sales

Removed post.
Wasn't constructive.

 

[SuinBruin]

I'm also curious if someone in the States who has purchased from ELC or Aero in the last 60-90 days might try to apply for a refund of the 20% VAT? I haven't looked at the links to Her Majesty's tax authority, but as I suggested earlier, if this is possible it would take ELC and Aero out of the equation (or blame or accusation of pocketing the extra profit) and get a non-EU purchasers tax refunded to which he is legally entitled. I think this would be a very happy solution for all parties involved.

This assumes ELC and Aero are paying the 20% as VAT to the government. I seriously doubt that they are; if they were, then they would want to advertise and sell their products overseas VAT-free to reduce the price and increase the number of sales.

Someone may want to try it, but I expect the response from the tax authority would be, "This was a non-VAT transaction, so there is no refund to be had."

 

[Jeff M]

I don't believe you can apply for VAT unless your receipt shows you paid it.
Do the ELC receipts to those in the UK show that they paid a VAT?
Do receipts in the UK not have to show when VAT is added to an item?
Who is being charged the VAT..the buyer, or the company that sold the item?
In states in the US that have a sales tax, the business has to show what that was on every item sold in that state.

 

[saunders]

Re: Eastman price gouging on overseas sales

and, even more so GW, make more like 3 times their actual cost to produce an A-2

I can't wait to receive that amount. It sure ain't what I get now. I'm wondering if you know what the cost of parts are from higher-end tanneries, zippers, makers, and labor. I don't have a clue as to what ELC or Real McCoy's or Buzz Rickson is making, but I'll tell you now that I certainly don't make that. The cost of leather/parts is insane.

Respectfully,
John @ Good Wear Leather

Well, I'l tell ya how I came to this conclusion, John, and I'll do it respectfully, too, cuz I do respect ya. Firstly, I made this calculation on the basis of you being the only one responsible for making the jackets, which is what I thought prevailed at GW, but I'm now hearing you have an employee or two, so if that's so, then my fancy 6th-grade cypherin' just fell apart faster than one of Ellie Mae's surprise loafs fallin' from the top of Commerce Bank. :lol: Employee wages would surely erode the equation, but only if employees actually engage in making the jackets (cutting and sewing and assembly) vs. engaging in clerical activity, which then becomes part of something else but not the cost of producing jackets. Please don't take offense, as I certainly meant you none; now here's how I derived 3 x your cost:

Leather: $10/sq. ft. x approx. 30 sq. ft/A-2 = $300
Repro zippers: $20-$25 approx.
Hardware, thread and labels: $5-$10 total approx.
Knit: $15-$25 approx.
Lining: $7-$10/yd. approx. x 1.5 yds/A-2 = $15
Total materials cost/A-2 = $375
When you make/made the jackets fully on your own, you had no wages to pay for making the A-2 and only materials to cover, thus profit per unit was/is your compensation; accordingly, $375 was your cost using my numbers above, which would be multiplied by 3 to yield a retail price of $1, 125. That's how I came to say GW worked on 3 x cost for its retail price.

The numbers on material cost were a bit different on my ELC calculations, mostly being less on the cost of leather since they buy from Italy and its shipped to the UK vs. GW buying leather that originates from a tannery in Italy (in the blue or gray state?) and gets shipped to Japan for finishing, then ships to you in the USA (that must double the cost vs. what ELC pays). I also factored in ELC cutters and sewers averaging the equivalent of $20-$25/hr. and allowing 4-5 hours to complete one A-2. But I failed to allow for the VAT ELC must pay on their UK sales, so they cannot be operating on 3 x cost on retail prices and must be working on a number more like 2.50 - 2.75 x cost, which falls within traditional retail models.

This isn't personal and isn't an attack, John, so please stay cool. But seeing as how we have some nasty allegations being levied at ELC for gouging on prices (and Aero, to a lesser degree), it seems more than fair to analyze price structures on anyone in the game, especially those who have gained exception or favor here. I suppose glory can come with a price ...

With kind personal regards, I remain,


Sincerely yours,


Saunders

 

[saunders]

Re: Eastman price gouging on overseas sales

And I am sure that Aero, ELC and Chinese sweat shops employ the economy of scale methodology. There is only one John Chapman, and his hourly rate went up around 35% when his GW Executive went to three members. It would HAVE TO cost GW more per jacket for production.


Couchy

What?!?!? Are you saying GW jackets are no longer the solitary result of the hands, mind and eyes of John? If so, wouldn't that lead to some sort of mass hysteria among loyal followers who may begin lining up for ritual sepuku now that their heretofore heirloom-quality GW jackets have been desecrated by the addition of employees, forever damning GW into the ranks of all of the other makers who have gone down the slippery slope of expansion?

Seriously, ask any business owner or manufacturer of craft goods - NOTHING is EVER the same once an employee is brought into the fold. No matter how much you pay the employees, it's not the same for them as it is for the founding father. In the case of A-2s, no matter how much you may wish to believe that John won't let a missed stitch go by, reality dictates he will have to if he plans to grow. No one else will sew like John or care as he does; they'll either be seen as too slow or too fast, and John can't pick apart everything the employee does or he'll have no employees or be better off making the jackets himself. The days of walking on water have given in to a good set of floats ...

What does this have to do with the subject at hand? Why set up and attack a Good Wear straw man on a completely unrelated issue?

Leave Good Wear out of it. John has nothing to do with this, and, whether you mean to or not, you're coming across as someone who has an agenda to defend or deflect criticism of ELC.

It's not an attack, it's an observation followed by an opinion. If you or someone else wants to get defensive, that's a choice you make. This is in direct response to a comment posted in THIS thread, so it would logically follow to be commented on in THIS thread. It could also be part of an entirely new thread on GW, but I had no inclination to start one since it was just a passing observation and comment in response to a passing comment. And if you read older postings on this forum, you'll see that numerous others have raised this very concern about the "what ifs" of GW one day not being the direct product of JC. I'm sure JC is mature enough to handle his own matters and, perhaps, not see this as an attack. As Bill French encouraged in his posting, I'm engaging in valid debate about a company and product that is well considered and treated as hands off on this forum and you have helped punctuate the reason why Bill felt it necessary to make his posting. Please cool down and go back to attacking ELC; vigilante seems to suit you better than caped crusader.

 

[Jeff M]

Re: Eastman price gouging on overseas sales

Re; the "nasty allegations"....
When I contacted ELC and Aero, both confirmed that the final price paid for their products is the same for both UK and non UK customers. This isn't an "allegation". It's a fact.
Both companies, I assume, are handing over VAT for UK sales to the tax man.
You can try to cut it any way you want...the bottom line is UK companies are required to hand over 20% of the price of the products they sell to UK customers to Her Majesties tax office.
They do not have to hand this over on non UK sales.

 

[SuinBruin]

Re: Eastman price gouging on overseas sales

This isn't personal and isn't an attack, John, so please stay cool. But seeing as how we have some nasty allegations being levied at ELC for gouging on prices (and Aero, to a lesser degree), it seems more than fair to analyze price structures on anyone in the game, especially those who have gained exception or favor here. I suppose glory can come with a price ...

"Analyze price structures"? All you did was make up some numbers and guess that they applied to Good Wear's business, without a shred of evidence to support your conclusion. Based on that rank speculation you felt comfortable asserting that GW had a certain margin.

Contrast this with what we KNOW to be the case with ELC.

1. ELC advertises prices for jackets on their web site. These prices include VAT payable in the EU.
2. VAT is not payable on out-of-EU sales transactions.
3. ELC charges the full, VAT-inclusive price on all transactions irrespective of whether or not they originate outside of the EU.
4. Based on 2 and 3, ELC is reaping an additional 20% on out-of-EU sales.
5. ELC does not disclose 2 or 4 on its web site.
6. When asked about VAT on out-of-EU sales, ELC declines to discount the price and declares that "the price you see on the website doesn't include VAT to the US" when there is no VAT to (or in) the US. ELC claims it "absorbs" the VAT on in-EU sales when in fact it is obligated to pay a percentage VAT based on the retail price of its products.
7. Other retailers in the UK and EU routinely discount out-of-EU sales by the value of the VAT that is not payable on them.

Now... which of these constitute "nasty allegations"? Are any of them mistaken in any material way?

It's not an attack, it's an observation followed by an opinion.

mass hysteria among loyal followers who may begin lining up for ritual sepuku now that their heretofore heirloom-quality GW jackets have been desecrated by the addition of employees, forever damning GW into the ranks of all of the other makers who have gone down the slippery slope of expansion?

I'm sorry... was this part of the observation, or the opinion? It's kind of hard to tell.

Let's be clear.... No one is above critique. No one is perfect. But if we're going to discuss these issues, let's stick to facts and not speculation or patently false equivalencies. If you want to carry water for ELC, that's up to you. I have no dog in the fight one way or another -- I haven't bought from ELC and I don't care if other people do so long as they are making an informed decision with knowledge of all of the facts. If ELC (and Aero) want to engage in these practices as a matter of their business, that's up to them -- they're big boys. But if they can take the profit, they should be able to take the scrutiny and the criticism that comes with it, too. Just like John doesn't need me to stick up for him, ELC shouldn't need you to weigh in for them. Or is being a caped crusader only OK so long as the badge on your chest reads E-L-C?

 

[rrackleyadams]

I'd like to comment on some of the price evaluation that has arisen here on GW...in short: you can't analyze a product by purely costing out materials. There is much more to it...John has spent thousands of hours researching A2s (and other great jackets) and what makes each of them unique. He has traveled the globe, bought, disassembled and patterned many, and is more than happy to share his knowledge with all of us. To commodotize his business in "cost per square foot" is unfair in my opinion. For example, you can't look at a Rolex GMT Master and say: cost of steel: $X. Cost of movement: $X. Market demand is a major factor here. GW is an altogether different beast than any other jacket manufacturer in my opinion, with levels of detail and product knowledge going beyond what I've ever imagined. As you know, costs evolve from market demand...if he charged what he does and didn't sell anything than he's out of whack. If he charges what he does and has a one-year waiting list (as he currently does), then economically-speaking he's undercharging.

Just a huge, huge fan of getting what I pay for and I have from John Chapman...just didn't want what he charges to get pulled into a VAT rip-off debate.

 

[Vcruiser]

You have got to be kidding me...
Posts about GW and JC filled with snarky insults and imaginary detailed pure speculation..with attempts to sugar coat all that by adding faux 'respect' and 'kindest reguards'?...and then all of this allowed to stand....and continue simply because we must just not play any favorites whatsoever?
Well...John has been a favorite here for many reasons. His magnificent jacket creations are just icing on the cake. He is well respected here. Doesn't make him or his jackets above and beyond any honest criticism. Honest being the key word. However..attempting to build something up and suggest that his business practices surely must be dishonest or equivalent to what WAS being discussed here is ridiculous. Seems an all out effort to pressure him to appear and explain himself. If it were me..I certainly wouldn't give this Saunders the time of day.
What is happening to the VLJ..? Is it now manditory that we must put up with completely unfair posts by someone so full of himself that he could care less about what is actually fair or not? What the hell good does that do for the forum?

 

[Jeff M]

Re: Eastman price gouging on overseas sales

...
I am British and am happy to pay a price for any item advertised, be it jackets, or a dishwasher if I accept it to be good value.
I am a business man and sell items to the US, Canada and Australia etc and never charge VAT on those goods.
Partly because the end user knows I cannot charge it to them and frankly its unfair as my costs are my costs unless I want to overcharge and make a hefty profit margin on the item(s). I choose not to and hope to drive further sales by being competitive in a tough market (which one isn't at the moment !!)
..
Alan

..

Alan, or anybody with the knowledge....
What are the requirements in the UK for selling items that are subject to the VAT as regards to the receipts?
When you sell an item that lets say costs 500.00, does the receipt show a total of 600.00, itemized as 500.00 as the cost of the product and 100.00 tax, as is done here in the states?
Or is how the receipt drawn up left up to the seller?
Those of you in the UK who have purchased ELC items, can you recall if there was a separate VAT component to the receipt?

 

[nogbat]

ok ladies calm down , if you want a jacket you buy it if you dont you dont ,,, they are all buissiness men at the end of the day, its just some have nicer people skills than others .. :evil:

 

[John Lever]

I something that you have all missed is the VAT goes to the government.

 

[Jeff M]

I something that you have all missed is the VAT goes to the government.

Right...understood.
But...there is no VAT on goods sold outside of the UK...so, charging the same for non UK sales as you do for UK sales (where 20% of what you collect is going to the government) means 20% more profit on non UK sales.

Look at it from the other side.
Lets say California had a 20% sales tax on items sold in California.
I, who live in California, buy an item with a list price (advertised price) of $100. I end up having to pay $120 total.
The receipt I receive has 3 numbers. The list price, the amount I was taxed, and the total.
You, who live iive in the UK, purchase the item on line. You pay $100 total (forgetting the extra charge for shipping and customs).
Your receipt shows the list price of $100...but no tax, as out of state sales are not charged sales tax.
Now lets say you were charged $120. That would have to be list price....as you aren't paying any tax
You are being charged 20% more for the item than a person in California...but that 20% isn't going to the government to pay the tax, it's gont into the sellers bank account.

Did I misunderstand your comment?

 

[John Lever]

The company does not keep the VAT so there is no 20% extra proffit.All the prices shown on the website include VAT so we all pay the same price wherever we come from. It is the same in all our shops all prices include VAT. I understand this may not be the case in the USA.