Originally Posted by toor
Though his rational for the pricing in Europe doesnt make sense from an economics point of view.
I don't know what part you don't understand? Imported goods are more expensive than their domestic counterparts. Imported goods are cheaper in their originating country. In order to protect dealers, distribution networks need to be controled, and they are, through binding contracts. Each distributor is able to sell to their respective zone, which happens to be by country in most cases. The US is fortunate in that they are able to purchase directly from Grado Labs. This cuts out a middle man. The price then is cheaper. Grado sells the phones to the distributors of other countries at a lower price than he sells to the dealers in the US. He makes less money with the international sales. If for example, Tyll sold via the internet to folks in Germany, the German distributor is cut out of the equation as are the potential German dealers. If the German dealers feel they can't compete with online sales from US dealers who get their phones at a better price, then they will stop carrying the Grado line. This means fewer people will have access to Grado products through those stores. Grado has built up its business around "brink and mortar" stores, not online sales outlets, and out of appreciation to them, John insists on protecting them. This also means that the industry has a greater respect for Grado products and they will then likely more readily want to sell his products.
Do Americans order BMW's online and have them shipped over at a cheaper price? No...and the reasons are more complicated due to shipping costs...but in the end, BMW's ARE pricier here because of the extra costs in shipping, distribution, storage etc. Same with the phones. They leave Grado and are shipping overseas, are stored at a distribution warehouse, then shipped to dealers and stored at dealers' shops and warehouses.
Shipping costs
Distributor takes his cut which also includes his storage costs
Dealer takes his cut which also includes his storage costs
The end result? The consumer pays more.