In “this sucks!” news, Fanatec have announced (discreetly) that all of their products sold in Europe have received a 20-30% price increase due to a drop in the exchange rate (shown above) between the Euro and United States Dollar (USD). The post goes on to say that the exchange rate isn’t the only reason for the 30% difference between US and European prices. Europeans must also pay a 20% VAT and sales tax. The other 10% comes from higher logistics costs, localization more strict environmental rules and a 2 year warranty instead of 1 year in the US.
Interesting. If you want a good read, make sure to check out the comments on the blog post. People aren’t happy and I tend to agree with them.
Here’s a few of the issues. First, some products jumped more than 30%. The Club Sport Pedals price jumped 45%. Fanatec said this extra jump was due to higher supplier costs and they hope to decrease it in future batches.
This is a situation were a business can either fix the issue or pass the expense to the customer. Unfortunately, Fanatec went with the latter. Traditionally, when the cost of goods sold (COGS – made up of per unit components and labor costs) increases, the company is forced to take less gross profit. Its their issue, not the consumers.
I find this decision to pass their manufacturing issues on to the consumers (who have experienced a good number of well documented quality issues over the years thanks to manufacturing issues) pretty weak. It’s bad business. It’s not taking care of the most important thing to you, your customers.
My second issue is the 10% increase from logistics and the 2 year warranty in Europe versus 1 year in the US. First, having differing warranties for your customers is odd. Make it either 1 year or 2 years for everyone. Next, this is again passing the cost of doing business onto the customers. Other companies don’t do this. Sales tax and the 20% VAT is unavoidable and every company has to pass that expense to the customers. But passing the other expenses along is not good.
It does appear like Europe is heading towards higher prices thanks to the exchange rate. It’s true that Fanatec isn’t the first company to increase prices (even though it appears more tax law based than exchange rate and not nearly as severe) and it sucks for all you Europeans. Maybe there wasn’t a better way to go about this? Maybe other sim racing OEM’s will be forced to do the same?
At the end of the day the free market will decide. It will be interesting to see how this impact Fanatec’s sales and if sim racers turn to other companies such as Thrustmaster, SimXperience, Derek Speare Designs or ProtoSimTech.
I’d say it’s more to do with Pcars console compatibility.
The EU has a directive that says any electronic goods sold within the EU must have a 2 yr warranty. Fanatec are well within their rights to offer the minimum warranty as legally required in the countries that they trade to. So if the US has a requirement of a 1 yr warranty for electronic goods, they aren’t breaking any rules.
On the flip side, those of us in Europe and the UK have been shafted over many years when it comes to $ to £ conversions. For example, a PS4 costing $499 generally gets a 1:1 conversion and so would cost £499 in the UK, when with a proper conversion it should only be £338. £499 to $ is $736. So, you’ve had it good for a long time! 😉
I did not know, thanks for clearing that up. Wish they had a two year warranty in the US. May cost a bit more but think the customers would appreciate it (especially with the quality track record). I am kind of suprise they haven’t done the same thing in the US as you described in the UK so I’ll give them credit for that.
Ouch Ouch Ouch Fanatec on ISR. PCARS or not, if you can afford their products before, the minor markup don’t mean much. To be honest, apart from CSW, personally I don’t think the rest of the Fanatec wheels are worth that price range anymore.
Hahahaha. Just hope they increase quality too…
Good to hear.
I’m still highly pissed off that there was no support or adapter created that allowed for full functionality on an Xbox One. THE FUCKING STEERING WHEEL SAYS ‘FORZA’ ON IT FFS.
Since when do not companies not pass costs on to consumers? They always pass their costs on or they go out of business. price increases happen all the time and the market determines if they are viable or not. It is true that in certain times or situations a company may eat costs to maintain price competitiveness or to gain market share etc. But, in the end, consumers pay for all costs plus an extra margin for profit.
What I’m saying is they are punishing consumers for manufacturing issues with their suppliers. That is why companies invest lots of money in R&D and what not to reduce expenses, thus increasing their profits. Like I said, there are things that make sense to pass along. But increasing the price due to manufacturer issues (the CSP’s have incresed $50 in the US, which have nothing to do with the EU currency issues) isn’t good business practice. Its not your consumers fault that your suppliers cannot deliver at the correct, or old price point. Maybe in the end it won’t matter and people will pay more. We’ll see.