The Martin Tax

Tannin

1: MARTIN PRICES AROUND THE WORLD

People here are always complaining about Martin prices in the UK, going so far as to call it the "Martin Tax". 

People say Martin charge way, way more for their guitars in the UK than they do in the US. (Or whoever is responsible for Martin's UK distribution does. We don't actually care whether it is Martin or some agent for them, we only care about the actual prices. So for simplicity we will assume it is Martin.) 

This was mentioned most recently in the thread about the anniversary edition OMJM. Having nothing better to do on a wet Sunday afternoon, I looked these up in a few different countries, taking the first Google hit I got for retailers in each country (bar the USA where they still have a minimum advertised price system, something which has been illegal everywhere else for many years). So $3999 USD for America, and prices from (as it happened) Peach in the UK, Mannys in Oz, Max Guitar in the Netherlands, and Ishibashi in Japan. (Later on I did some cross-checking: these are representative prices for everywhere except Japan, where I can't puzzle out the language well enough to get a reliable picture.)

RETAIL PRICES (lowest prices at the top, all converted to GBP)

£3,249 - USA

£4,010 - Australia

£4,019 - Japan

£4,250 - UK

£4,321 - Netherlands

Actually OMJMs are likely to be both more and less than £3,249 in the USA - both at the same time! More because (contrast with all normal civilised countries) advertised US prices don't include sales tax. Also less because they don't advertise *actual* prices in the USA - manufacturers are allowed to and indeed do require retailers to advertise at a fixed, uniform price or have their supplies cut off. Actual selling prices are different. But we will soldier on as best we can.

On the face of things, the prices above seem to make the UK look like the second-worst place to buy a Martin (after the Netherlands). However most of the price differences in different places is taxes - import duties, consumption taxes, and often both.

The Netherlands and the UK both have crazy-high VAT rates - 21% and 20% respectively.  The equivalent Australian and Japanese taxes (GST and Consumption Tax) are 10%. Americans typically pay anything up to about 10% in state and local sales taxes, which are not advertised or shown on price stickers. 

But before consumption taxes like VAT are charged there is import duty. This is not payable in the USA for a US-made guitar, of course, nor in Australia because of the AU-US free trade agreement. So zero for both those places. As best as I can figure it out, EU countries charge 3.2% on a US-made guitar, the UK 3.7%, and Japan 4.3%.

So the *actual* prices for an OMJM around the world, after deducting duties and taxes, are as follows:

ACTUAL PRICES (excluding taxes - lowest at the top)

£3,249 - USA

£3,415 - UK

£3,460 - Netherlands

£3,503 - Japan

£3,645 - Australia

Now remember that it costs around £200 to ship a guitar between continents on a commercial basis. (As a one-time retail customer, you'll spend around double that to ship a single instrument, but bulk discounts in the freight game are significant.) Let's adjust for that. 

ACTUAL PRICES (excluding taxes and shipping)

£3,215 - UK

£3,249 - USA

£3,260 - Netherlands

£3,302 - Japan

£3,445 - Australia

We can safely ignore within-continent shipping (say from Frankfurt airport to Madrid or Melbourne airport to Brisbane) as that applies equally to the US domestic market (for example shipping from the factory in Pennsylvania to Dallas or Detroit). 

Apologists claim that warranty service is much more expensive so far away from the factory. This sometimes makes some sense, sometimes doesn't. In the case of Martin, it makes no sense at all - Martin refuses to perform any warranty work after 12 months if the guitar is outside the USA, meaning that their foreign warranty costs are actually *lower* than their domestic costs. 

Tannin

2: PRICE COMPARISONS

So it seems that the UK, the Netherlands, and Japan are all somewhere near enough to par with US prices once you adjust for tax, duty, and shipping. The only country from our sample where Martin is clearly over-charging is also the only country which doesn't charge any import duty on American guitars. 

DIFFERENCE IN ACTUAL PRICES to US PRICES (all excluding taxes and shipping)

£196 higher - Australia

£54 higher - Japan

£11 higher - Netherlands

£34 lower - UK

Politicians tout free trade treaties as a way to lower prices for consumers. Clearly the Australia-USA free trade agreement hasn't done that. Martin (or some agent for them) has simply swallowed the £200 of import duty they no longer have to pay since the FTA. 

Martin is not alone in this. I understand that when the UK-Australia free trade agreement came into force earlier this year, theoretically reducing the UK price of Australian-made Maton guitars by over 4%, the price UK retailers pay went UP! 

As a double check on my hypothesis that the manufacturer (or importer) swallows the free trade import duty discount, I thought I'd check New Zealand. I couldn't find an OMJM there so I compared prices for an HD-28. Kiwis pay 15% GST but there is no import duty and, sure enough, the importer swallows the duty and laughs all the way to the bank. New Zealand actually costs a bit more again than Australia (after allowing for currency and tax rates) but that is not unreasonable considering the small size of the market there (less than 20% the size of Australia; less than 10% the size of the UK). 

Now notice the irony - the cheapest place outside America to buy a Martin looking at the retail price you pay Australia) is actually the place where Martin is making the fattest profit. Conveniently, if questioned they can say truthfully but misleadingly "but they are cheaper in Australia than in the UK, Japan, or the Netherlands". 

So far, all of this adds up to a simple conclusion: Martin prices around the world are pretty fair and reasonable (other than in Australia and New Zealand where they swallow the customs duty discount and charge about £200 too much).

That seems clear enough. 

And it's dead wrong. 

Who can see the trick?

Tannin

3: THE TRICK

It is, of course, the American Minimum Advertised Price system. Resale price maintenance and related consumer-unfriendly practices are illegal in the civilised world - illegal in Japan, the UK, Australia, the whole of Europe, Korea, New Zealand, and so on - but standard practice in the USA. Martin (and many other businesses) set a Minimum Advertised Price no dealer can go below. This is why all the advertised prices for an OMJM in the US say $3999 USD.  In reality, nobody pays that price. The actual price you pay is negotiable; 15% off MAP is pretty standard for Martin guitars, 10% off is a bit dear, 20% off is a great deal and 25% off is a screaming bargain. 

Obviously, discounts off advertised prices are not unique to the USA, but who amongst us here reckons he or she could ask for and expect to get 15% or 20% off the price of a new Martin at Peach or Mannys or Guitar Guitar? A free packet of strings, sure. A setup, maybe. A discount? How much can you realistically expect to get off a Martin at somewhere like Peach? 

I can't tell you what discounts Australian retailers offer of their advertised prices, but I reckon they would be fairly small. (When I buy, I expect to take as long as I like, play as many instruments as I like, and take advantage of all the facilities the shop has to offer. In return, I happily pay the asking price. Fair is fair. Could I bargain a few dollars off the price? Probably. But screw that, if I don't like a shop's price I'll go somewhere else. And no-one is going to give anything like 15%.)

TLDR. 

* Point one: there is no "Martin tax" in the UK. 

* Point two: well actually there is. It amounts to the difference between *actual* American prices and *advertised* American prices, minus the difference between actual and advertised prices in UK shops, all after adjusting for import duty, VAT and shipping. 

TheMadMick

Interestingly, many years ago I was after my "forever"  guitar (futile I now know) and was in SanFrancisco on business. Took time out to go to a guitar shop and tried both Taylor and Takamine. But the shop would not negotiate  on the ticket price.

stickyfiddle

If I'd heard someone talk about the "Martin Tax" I would have assumed it was more about what you get for the money compared to any other brand without that name on the headstock, no? 

Snags

Yup, I'm with the fiddling sticky one. I've always viewed it as paying "over the odds" because of brand (ditto with Taylor, Gibson, Fender etc.) if you compare instruments at different price points with some of the smaller brands, particularly eastern European or Chinese etc. (Dowina, Furch, blah blah blah).

Alexlotl

How does this compare to other brands, though?

A quick check shows a USA made Taylor 814ce has a list price of £3230 on Guitar Centre in the US, and £3666 at Gear4Music in the UK. So that’s a much smaller difference than the headline Martin prices even without considering taxes and shipping costs.

Your maths suggests that perhaps Martin aren’t charging more for the UK once you take taxes and expenses into account, but it also suggests they’re not reducing their overseas profit margins in order to hit equivalently affordable price points in the same way other brands might be doing. 

Stuckfast

I suspect the difference here is that Taylor have their own European subsidiary which handles distribution to the EU and the UK. Martin use a UK-based distribution company who will need to take their cut and be independently profitable.

Tannin

stickyfiddle said:

If I'd heard someone talk about the "Martin Tax" I would have assumed it was more about what you get for the money compared to any other brand without that name on the headstock, no? 

It gets used in that sense as well - and in that second sense I wouldn't waste a thread on it, it's beyond question! 

But in the sense of "Martin are charging us here in the UK way more than they charge Americans", the term is used here regularly. Counting that and posts which make the same complaint without using that exact term, I reckon it comes up about once every month or two. Like Gibson headstocks and Floyd Roses, it's a hardy perennial. Here is the latest example:

https://www.thefretboard.co.uk/discussion/comment/3678634/#Comment_3678634

Alexlotl said:

How does this compare to other brands, though?

It's not Sunday so my first impulse is to say "some other bugger can do the research for that one". On the other hand, it's cold and windy and raining on this early-spring Wednesday, and I can't play guitar much because of the cut on my finger, so maybe I will.

I've looked at similar questions in the past (pre-pandemic for the most part) and found that it varies a lot. Maton and Cole Clark both used to charge a lot more in the UK, Europe and the States than they do in the home market (after allowing for taxes and shipping and so on). Maton stil does, Cole Clark seems to have moderated quite a bit. Yamaha and Takamine used to charge pretty much the same price everywhere (US, UK, AU, Europe). Again, that was pre-pandemic, it's probably still the case. I ran the numbers for Gibson and Taylor as well, if my memory is to be trusted. The conclusion was that Gibsons outside the USA can be very dear indeed, Taylors less so. 

Alexlotl said:

Your maths suggests that perhaps Martin aren’t charging more for the UK once you take taxes and expenses into account, but it also suggests they’re not reducing their overseas profit margins in order to hit equivalently affordable price points in the same way other brands might be doing. 

Uh, no they don't. Not once we take into account the advertised price fixing that they do in the USA. Actual Martin prices in the US are 10-20% lower than the advertised prices, 15% lower is pretty standard. Here, for example (in condensed form for readability), is a current discussion on a large American guitar forum. 

Q: Are there still discounts on new Martin guitars? I remember a few years ago you could call most online retailers for Martin guitars and there would be a decent discount off the asking price.
A: Not nearly to the same extent. A few percent points. Lots of threads on this over the past couple years. Maury's is one of the better bets.
A: They were doing 20% this month if you post about it.
A: The percentage discounts used to be higher, but off of a higher starting price. As an example, the MSRP of an HD-28 was $100 more in 2009 than the current MAP for an HD-28 ($3,499 in 2009 vs. $3,399 in 2023). In relative terms, the 15% discount off of MAP that is generally available today from larger retailers results in a comparable street price as the higher discounts off of MSRP in the past.
A: To keep it apples to apples, the old 40% off MSRP would roughly translate to 25% off of MAP.
A: Musician's Friend will automatically give you 15% off is you call them, rather than using the web. Just ask the rep that answers the phone.

The same sort of thread runs over there regularly and has for many years. Discounts used to look much larger pre-pandemic but were only somewhat larger in reality - Martin and other vendors dropped the pointless list price (called "MSRP" in the US) a few years ago. During the pandemic, discounts became smaller and less common and pretty much disappeared during the height of the shortages, but have now returned to something approaching normal. 

DavidR

My take on Martin catalogue is not that there is a UK-unfavourable mark-up in comparison with other countries but that Martin's generally are overpriced. Everywhere.

Martin's are very nice but so are many similar quality cheaper acoustics. This means that you are paying a premium just for owning a Martin. My argument therefore would be to buy a different brand on the grounds of value.

Unless you want, and must have, a Martin. Which many must, and they are great.

Simples.

DavidR

Just had one more thought.

There is one reason why we should be grateful for Martin's (relative) dominance of the acoustic market and their pricing model.

And that is, if you're a maker of top end acoustics, you really ain't going to sell many unless you can make instruments of comparable quality to Martin - but cheaper. 

So thank you Martin for giving us so many other competing brands! You keep producing your lovely but expensive instruments and us punters will have enormous fun scouring the globe for just as good cheaper instruments to fall in love with.

Larrivée anyone?

:-)

GoldenEraGuitars

All this talk of Martin reminded me that I had 3 Martin acoustics sent to me for work about 3 years ago. They were for a large stage production so they had to look identical (for obvious reasons). But I remember being keen to play them as I’d never played a Martin up until that point.

Quite possibly the worst sounding acoustic guitar I’ve heard, not just one.. all 3 of them. Now, maybe someone else would have heard them and thought they sounded great. But to my ears they were extremely flat, muddy, no clarity etc..

I thought okay, avoid cheap Martins.. not worth the £500 etc. Ha, no.. I was way off the mark. I googled the model number before they left out of curiosity - £3k. I had 3 x £3,000 Martin acoustics and they sounded equally terrible (imo). I’ve genuinely never heard of the Martin tax tbh, but even at £500 I wouldn’t buy one.

DavidR

GoldenEraGuitars said:

All this talk of Martin reminded me that I had 3 Martin acoustics sent to me for work about 3 years ago. They were for a large stage production so they had to look identical (for obvious reasons). But I remember being keen to play them as I’d never played a Martin up until that point.

Quite possibly the worst sounding acoustic guitar I’ve heard, not just one.. all 3 of them. Now, maybe someone else would have heard them and thought they sounded great. But to my ears they were extremely flat, muddy, no clarity etc..

I thought okay, avoid cheap Martins.. not worth the £500 etc. Ha, no.. I was way off the mark. I googled the model number before they left out of curiosity - £3k. I had 3 x £3,000 Martin acoustics and they sounded equally terrible (imo). I’ve genuinely never heard of the Martin tax tbh, but even at £500 I wouldn’t buy one.

Only on the grounds of 1 guitar I would concur. Used to own a Martin OOOX1 - would describe it as acceptable but not in any way cosmic. Martin's lower end competing with a huge and diverse market now. You will find better guitars in that area of the marketplace.

All that being said, if I could only have just 1 out of my current 8 instruments it would be my 2018 Martin OM28 Re-imagined. Bought for £2,899. Currently £3,659. (Although current 'best' OM28, the Modern Deluxe, £4,499).

And that's what I mean really. Martin's best OM28 cost £2,899 in 2018 but 5y on the best OM28 costs £4,499. They are different instruments to be fair but they're not that much better, just different.  £2,899 in 2018, adjusted for inflation since, is £3,580 in current money. So the best OM28 is currently 26% more expensive than it was in 2018.  (Although, to be fair, the cost of the Re-imagined, currently called the Standard, has stayed approx. the same.) 

It's Martin's top-end which is a bit costly imho. Their mid-range more competitive.

ditchboy

Agree with @DavidR the best acoustic I’ve ever heard is my OM28. It has blown everything else out of the water, I’ve had a D28, a Larrivee dread, a Furch dread, a Takamine jumbo but this is notably better. 

slacker

I played everything in coda and walked away with an om28e re-imagined. 

maltingsaudio

To me discussion of price points around the world , whilst interesting from an economic point of view, is really rather irrelevant when it comes to buying your guitar, even if you have your own private jet or instant travel machine, and even then irrelevant . My reasoning is that, especially with acoustic guitars, the one in your hand is either the one you want to buy or not. The price is what the seller is asking based on what he had to pay for it, not what it the manufacturer reckons it cost them to produce at a profit.

There is no doubt there are better equivalent guitars to any Martin you may mention, in someone else’s eyes. The real tragedy in all this is the stubborn brand loyalty of the general buying public that Martin ( or Gibson Guild etc) are the best, and that other equivalent instruments and manufacturers are always considered a compromise. 

Soupman

I guess it's the dilemma of brand loyalty versus the feeling you're being ripped off, hence the thread!

crunchman

Martin's do vary, but if you get a good one, they are very good.

I do have one, but I don't think I'd buy another given current prices.  I'd probably look at an Atkin if I was looking for a good acoustic now.

Jez6345789

Thanks for doing the work, I think the shipping figure at £200 is overblown yes perhaps when container prices peaked through COVID-19 possibly, but container prices are back down to normal levels, and without knowing the box dims I am not sure how many you can load into a container but on the basis of 200 quid and perhaps 100 guitars per container, it makes no sense. Even if they are air freighting on pallets £200 quid is high. So more tax in the details. :-). I used a quick container packing tool and you will get over 600 Martins in 40ft container £200 quid is one of the pinch points. 

Also I have not tried since the court cases were levied of price fixing at musical instrument trade a few years back but when I went looking before then I came up with pretty much zero discount between Andertons, Guitar Guitar, GAK, and Guitar Village, one, in particular, lectured me that they were not prepared to lose their dealership for being found out they were offering a discount I was at the time looking to drop decent money on a special birthday guitar. 

So I still think there is a UK Martin TAX and unless people tell me otherwise Martin dealerships are or have been a cartel

maltingsaudio

Jez6345789 said:

unless people tell me otherwise Martin dealerships are or have been a cartel

Instrument dealerships like car dealerships require considerable investment and commitment to stocking levels to become a dealership, as well as a high standard of customer service to reflect the quality of the brand. The return is better margins and advertising, so probably in the strictest  definition of Cartel they are but you should respect their commitment. I don’t know what that deal is but would expect it to be a minimum stock holding of say 10 models across the range with a commitment to, A always having 10 in stock, and B a minimum sales volume over the year.

You won’t be able to buy a new Martin from any run of the mill music shop, and if it were possible , there is noway a one off purchase by the dealer would ever match the approved dealer price .

Dave_Mc

Jez6345789 said:

one, in particular, lectured me that they were not prepared to lose their dealership for being found out they were offering a discount

I could be wrong, but isn't that illegal? I know it's difficult to prove etc., of course, but at least technically I think it is. There's supposed to be competition between shops.