The market for pens. Are prices too high?.
Last month I reflected on the future of pens as a result of a conversation I had with my nephew and with my experience of the "New Generation" entering the workplace. The future seemed uncertain.
Recently, an article in the magazine Stylus highlighted the Pelikan pen company. The company celebrates 170 years of making pens this year. Nancy Olsen interviewed Steven Roth, the President of Chartpak. Chartpack is the North American distribution of Pelikan products.
It is an interesting article, and when asked about his view on changes in the pen market, Steven Roth notes that pen enthusiasts are looking for distinctive collectibles and they have become more price conscious.
That struck a cord with me, and I know that I find myself having established a price point. To buy a pen priced over that point needs some other special motivation.
I thought that Steven Roth's view is very similar to that of Dante del Vecchio, the CEO of Visconti pens. I met with Dante in September and over lunch we had a good discussion about his development of the Visconti pen company and his views on the future of the pen business.
Dante's views was success a pen requires the pen to be something deemed of value by the purchaser. He drew the comparison between a Ferrari and a regular car. Do you need a Ferrari? Not really, but do you want one? That is the driving force behind the decision. (It was a great analogy, as that week just outside of Milan there was a festival for Ferrari owners. As a couple of Ferrari cars zoomed by us on the Autostrada I must admit, I felt the urge to want one!)
But back to the discussion with Dante, he felt that for a pen to be a success, rather than produce another colour of the same model, Visconti would focus on distinctive new designs. That was the challenge of the pen business. To come up with something different.
So while Steven Roth notes there is a continued softening in the marketplace, it creates a larger challenge for the pen companies. Despite the softening in the marketplace, Steven noted that Pelikan has continued to gain market share for fine writing instruments. He notes the need to expand business through education and targeting future pen users.
I think the group of future pen users is not as large a group as those that currently using fountain pens so this will be a challenge. I base that on my interaction with the new generation of people in the workplace.
So as I am pondering the question: just what is the price point that is a no-go for me, I reflected on the price of pens. Well timed, the Fountain Pen Hospital 2009 Annual arrives. Fountain Pen Hospital is a great pen store and good people to deal with. Their annual catalogue is something I find myself reading cover to cover!
I looked through the regular list prices for the lines of pens that I have in my collection. Some of companies are producing regular production lines that are the $1,000 US point. I know there are limited edition collector items at much higher prices, but I focused on the regular production models. It was only a scan of prices, and looking at what would generally be the top four or five price points gives a sense of what the market has set the price of quality fountain pens.
I have worked in retail long enough to know that the psychology of $900 and $1,000 is considerable. A number of the companies have pens that are at or over the $1,000 US mark. Interesting to see how they fair in the market, especially with the current economic tightening.
|Wall Street Celluloid||$540||Le Grand 146||$630|
|Black Divina (Oversize)||$825||Starwalker Cool Blue||$600|
|Black Divina (Mid Size)||$695||Le Grand Carbon Steel||$1,045|
|Extra 1930 Collection Fountain Pen||$1,100||Pahsa de Cartier Platinum||$1,000|
|Emblema||$735||Black & Gold||$515|
|Nero Uno||$500||Bordeaux Lacquered Trinity||$735|
|Paragon, Arte Italiana Celluloid||$1,095||Optima Black||$495|
|Milford Arte Italiana Celluloid||$825||Optima Marble||$625|
|Bologna Celluloid||$730||Reflessi, Black||$895|
|Exception, Oversized, Platinum||$600||Sterling Silver Duofold||$1,000|
|Edson, Blue||$800||Duofold, Pearl & Black, Centennial||$525|
|Edson, Black Diamond||$1,000||Duofold, Centennial, Black||$450|
|Carene, Pink Gold||$490|
|Majesty, Sterling||$1,350||Dolcevita Oversized||$625|
|Souveran 1000||$700||Dolcevita, Full Size||$595|
The question I asked myself was: has my price point kept up? Well in looking through the 2005 Fountain Pen Hospital Annual I compared price where the same pen was available in 2005 as now in 2009. I found the average price of matches was $507 in 2005 and is now $675 — an increase of 33%.
In deed, some of the lines increased more than the average. So my price point has not kept up. Has the cost of manufacturing gone up on average 33%? Only the pen companies know that but my view is that the cost is more linked to market placement rather than directly to the cost of production.
It will be a challenge for the pen companies to keep quality pens priced at point that consumers feel comfortable buying.