How Does Rondo Music Offer Guitars At Such Cheap Prices?
After reading over many different posts and forums on the internet about Agile guitars there is one question that seems to come up over and over again. That question is how are these guitars so cheap? When you buy a guitar from Rondo Music, especially an Agile, and assuming that you have done your research and compared with other guitars, one of the first thoughts that goes through your mind when you get your hands on the guitar for the first time is how do they make this for so cheap? You know a similar guitar at a music store is usually twice as much!
How Are These Guitars So Cheap:
Well we thought we would take a stab at answering the question of "How does Rondo Music offer these guitars so cheap?". Before we get started let us just state that the following is pure speculation on our part. However, we do know a little bit about retail vs wholesale pricing and distribution and such that we feel that our speculations could be very plausible. Again, we haven't talked to Rondo Music about this so these are just our own musings on the subject so take them at that.
Here's what we know:
Rondo Music makes the Agile line of guitars. Presumeably, they have a supplier offshore (Korea) that makes the guitars to Rondo Music's specifications. Rondo Music is the only place we know of that you can buy Agile guitars so they are the direct seller of these guitars.
How The Retail Industry Works:
Now if you know anything about how goods are priced than you can probably figure out why these guitars are cheaper. Usually a product is created by a company. Either the company invests and manufactures the product themselves or they have a supplier make the product for them. This first step obviously costs some money so it would be fair to say that it costs the company that makes the product x amount of dollars to create one of the product. Usually, what happens next is the company that makes the product needs a distribution company to get that product into different stores. The distribution company usually buys the product from the company that created the product at a marked up price. The distribution company than sells the product to a store at a marked up price from what they bought it at. This is usually the wholesale price. The store sells the product to the consumer at the retail price which is higher than the wholesale price. Everyone makes money along the way. Many times a product would be marked up at least 100% every step of the way.
So let's say that a company could make a guitar for $100 dollars. If they used a distribution company the distribution company would buy that guitar for $200. The distribution company would sell that guitar to a music store for $400 and the music store would sell the guitar to you the consumer for $800.
In some industries like clothing the markups are much higher than in this scenario. Does a $400 pair of jeans really cost anywhere near that to make? Probably not.
The Rondo Music Way:
The great thing about Rondo Music is that they are direct sellers. This eliminates two steps of marking up the price. So if we use our above numbers the guitar that it costs $100 to make would only cost you $200.
We are guessing that's how Rondo Music offers their guitars so cheap. Does your $200 Agile al2000 stack up to a similar guitar that is $800? We will leave that up to you.
You also have to take into account what price the market will bear. The appeal the of the Agile guitars is that they are such great quality at very affordable prices. Probably not as many people would buy them if the price wasn't so great. Instead they may be more likely to buy a different brand of guitar if the prices were comparable. From that standpoint Rondo Music really has a great business plan to fill a specific niche of the electric guitar market at a specific price point.
We are guessing Rondo Music does quite well with this business model.