The difficulty of selling quality
by B.B. Pelletier
Randy Stratman took this week’s winning photo.
I made a remark in a comment this week that surprised me. Blog reader /Dave asked me to approach Crosman about resurrecting the Sterling rifle and I told him the following:
I doubt anyone will ever make this airgun again. As well-made as it is, this would be a $500-600 air rifle.
It’s sad that it’s just too nice to be made today, but that’s probably why Crosman decided to drop it when they took over. After the initial 300 sold to enthusiasts, they would sell maybe 50 a year. They need numbers of a thousand or more.
I made that comment rather quickly after reading his request; but after I read what I had said, I thought about it for a long time. Is quality really that difficult to sell today?
You might argue that it isn’t and use any one of a number of products to support your point. Rolex has long been a name used to connote quality among watches, though there are other makers like Audemars Piguet and Patek Phillippe whose products are made just as well if not better. And in the world of automobiles, Rolls Royce is the name everyone thinks of when they think of the best.
I could go on, but I’m sure you see my point. So, why do I say it’s difficult to sell quality?
Because it can be.
It’s particularly difficult to sell quality when the brand name is either not known or when the name has been used to brand similar products of a lower quality to benefit from the marketing cachet of the original good name.
What’s in a name?
Take the name Luger. The name Luger was never officially applied to the handgun we all call the German Luger. Lugers weren’t called Lugers — they were the model P08. But the Stoeger Corporation purchased the rights to the Luger name in 1923 and has used it ever since. Ask any gun collector whether a Stoeger Luger is a real Luger, and you’ll get a laugh. Yes, the guns they sell are legally Lugers, but no firearms collector categorizes them that way.
Here is another example. In the 1960s and ’70s, Daisy was very interested in getting into formal target shooting in a big way. One thing they did, and it’s a mistake that a lot of companies make, was to import FWB target rifles with the Daisy name imprinted on them. Those guns sold — not because they said Daisy on the outside, but in spite of it. The Feinwerkbau name was so well-known in the world of target shooting that it negated the Daisy name on the gun. To American shooters, the name Daisy is forever connected to inexpensive BB guns. Hence, the reason Daisy created their Avanti line — to distance their own name from target guns.
Back to quality
But this report isn’t about brand names — it’s about quality and how difficult marketing it can be. Let me illustrate the problem with a couple hypotheticals.
Let’s say Crosman decides to remake the Benjamin Sterling. This time, they’ll “do it right.” They won’t just use a Lothar Walther barrel — it will be a match-grade Lothar Walther barrel. And yes, there is a difference. They have the Sterling drawings, and they decide that much of the gun can be made on a CNC machine — lowering production costs in the end. They currently own several CNC machines, but all of them are operating at full capacity, so this project requires the purchase of a new six-axis, dual-spindle machine that can handle all the machining operations. It will cost them $330,000.
They’ll make the trigger on an EDM machine that they are using only 75 percent of the time, so figure $5,000/month for that. They calculate that the special dies they will need for various small parts like the sights will cost $115,000. The time spent inputting the drawings into the CAD software and debugging each routine will cost another $50,000. And so on. Let’s say that after the miscellaneous tooling gets added in, the cost is up to $600,000. That’s just for startup.
Now, let’s build the gun. The barrels will cost $71 each, unfinished. That’s the price when you buy 1,000 at a time and guarantee at least 5,000 per year. Finishing adds about $8.50. The other raw materials for the action will cost $86, and the additional processing costs on all of them will add $157. The walnut stock blanks will cost $27 each, and the processing costs for shaping, inletting, checkering, sanding, sealing, staining and finishing will bump that up to $49. Add all the material costs together and the labor required to assemble, test and package each rifle and the number comes out at $401 delivered to the loading dock. Crosman adds their markup on top of that, and their top-tier distributors are able to purchase the rifle for $512 (I’m being extremely conservative — they would want to make a lot more than that for an expense this large!). So the lowest street price you will ever see for this new model is $635.
But this new rifle is wonderful! It’s easy to cock, smooth-shooting and has a delightful trigger. On top of that, the finish is flawless and the woodwork is stunning. It compares visually to the TX200, which is a simpler design because of not having the Sterling’s bolt. But the new Sterling is also 11.5 foot-pounds, at best. Think of an 8-grain .177 pellet traveling 800 f.p.s.
Why did they do that? Why would they build a marvelous air rifle like this and leave it anemic? Well, they tried to boost the power, but it required either a larger-diameter piston or a longer stroke. Either modification added hundreds of thousands of dollars to the development costs. You and I look at an extra inch of spring tube and figure five dollars, and maybe that’s all it costs to buy the raw materials, but the cost to redesign all the powerplant parts that have to be changed to accommodate the extra inch is what the manufacturer has to think of. The piston, piston rod, cocking lever link and perhaps other parts all have to be changed just to accommodate the extra inch. And they need a new longer stock blank to hold the longer action, so all that work must be redone, as well. And all those parts have to be entered into CAD software and input into various CNC routines and then debugged, etc.
Now Crosman tries to market this beautiful new air rifle and what happens? They’re met with a hailstorm of criticism on airgun forums all over, telling them what they should have done. And people are leaving snide remarks that say, “If only they built it this way, I would buy two!”
TWO? With over half a million dollars of development costs and a large part of their engineering time invested, they really need to sell more than just two. Or two hundred, or even two thousand.
Before you manufacturing guys jump down my throat, I’m aware that the whole purchase cost of the new CNC machine doesn’t have to be paid off the first year, and yes, they will probably schedule the machine to support other product lines at some point. But when you’re standing before the CEO pitching your “great idea,” these are the kinds of things he’s going to want to know.
Quality lesson two
There’s a better path to quality, however. Let’s say you have a company called Mendoza building airguns for you, and let’s say their guns have some important features. They have accurate barrels and wonderful triggers. One day they send you a rifle that looks like it was designed by Pablo Picasso on an acid trip. But take the barreled action out of the stock, and you have a nice youth-level rifle for a very affordable price.
You get a custom stockmaker to build you one custom western-looking stock for the rifle that you then send back to Mendoza and say, “Make them like this.” You also ask them to leave out the fiberoptic sight elements and eliminate the oil hole on the side of the spring tube. You keep the name Bronco, and add a bucking horse to the spring tube. A new model is born.
This “development” cost only a couple thousand dollars (because of a consulting trip for the designer and several iterations with the manufacturer sending samples back and forth), and you’ve got a spring rifle for older youth and adults that can sell at an extremely competitive price. Why was this so easy?
Mendoza was already making good barrels. They already had a wonderful, if somewhat quirky, trigger reminiscent of the Savage Accu-Trigger. They had superior metal finishing on their existing guns, so nothing had to change. The modifications you made didn’t disrupt their business in a major way. The biggest thing that changed was the stock, but you worked with them to accommodate their existing plant, tooling and personnel. So, after getting a commitment to purchase X-hundred rifles per year from Pyramyd Air, they began production of the new Bronco.
The lesson is that you don’t ask Rolls Royce to make shopping carts and don’t ask McDonalds to cater the Oscars. Quality is hard to sell, but not impossible. If you spend the time and money to build and promote a high-quality product, people will buy your Rolexes. But if Rolex starts making pastel plastic fashion watches tomorrow, or if they outsource their main watch models to China, I give them one year before their name is utterly destroyed.
As a final note, you younger readers may not believe what I am about to say, but when I was a kid in the 1950s, the term Made in Japan meant something was cheap and worthless. When Japanese cars first hit the U.S. shores, they were too small, underpowered (remember the Subaru 360?) and had the dark cloud of Made in Japan hanging over them.
This past Christmas, my gearhead brother-in-law was so proud to show off his new/old Lexus—a 12-year-old creampuff sedan he recently acquired, which his wife wrested away from him the day he got it. This guy who used to restore vintage ’50s T-Birds and Vettes as a hobby now refuses to drive anything that isn’t made by Toyota.
It’s possible to go both directions on the quality highway. Going up can take decades. Going down happens overnight.