What people are willing to Pay for Equipment

Gary Hayden_2

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http://www.washingtonpost.com/wp-dyn/articles/A10155-2004May8.html

Gary Hayden_2

No Cut and Paste Link

Just figured out how to make a link without copy and paste - create in Word and then paste over here (Hot Rod this works - I know you sent the PM link for the staple up post the way I did above in this post for this article) If there is another way - let me know?

Link for great article:

http://www.washingtonpost.com/wp-dyn/articles/A10155-2004May8.html

Gary Hayden_2

Here is the link from the Post - Some having trouble getting it

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Paying A Premium For Quality

By Michelle Singletary

I've been dreaming of a clothes dryer.

It's not just any dryer. It's the upscale Maytag "Neptune Drying Center."

It's not like me to want to go high-end. I'm the kind of girl who won't let my husband put our 20-year-old VCR to rest. It's so old the remote is attached to the machine by a long black wire -- you can only sit a certain distance from the television if you want to change the channel.

I have a microwave that is old as dirt. My husband keeps begging me to upgrade to a newer model that has lots of fancy settings -- like one that can pop your popcorn without you having to guess the right popping time.

So what's wrong with me? Why am I obsessed with the Neptune, which retails for an eye-popping $1,200?

Well, according to a survey by Boston Consulting Group (BCG), I'm not out of my mind (although that is crazy money for a dryer). The fact is, a lot of consumers are willing to spend big dollars to buy quality items that have features they care about.

For example, some consumers are buying higher-priced front-loading washing machines because they use less water and energy and can cause less damage to clothes.

Sixty-seven percent of people making $50,000 or more in yearly household income said it's worth paying more for certain premium-quality products because that's a smarter way to spend money, the BCG survey found.

The management consulting firm says there's a trading-up phenomenon going on. In its survey, which was conducted last year, BCG found that 90 percent of the consumers surveyed were willing to pay more for a premium-quality major appliance.

And the BCG survey found that 68 percent of consumers said that when they buy a high-end product, they "feel a sense of accomplishment and even excitement." Sixty-seven percent said owning a premium-brand or high-quality product is "one of the ways I reward myself for working hard."

That's how I feel about the Neptune (please, fellow penny-pinchers out there, don't throw me out of the club just yet).

I think this Mercedes-class dryer could be worth the high price tag. Maytag's Neptune Drying Center pairs a traditional tumble dryer with an upper drying cabinet that the company promises will minimize shrinkage, speed up the drying process, reduce wrinkles and eliminate odors -- saving me time and money.

I want all those features. I'm tired of trying to find places to hang my delicate clothes, some of which take days to dry. I've ruined any number of items by tossing them in the dryer even at the lowest heat. I hate doing laundry. So if this machine will make it significantly easier to dry my clothes, I'll show Maytag my money.

But I suggest that before anyone buy a top-of-the line appliance, spend some time thinking about whether what you want is really worth the money. Here are a few of my own recommendations:

• Write down the features you wish you had in the appliance you want to replace.

• Keep track of the times you feel frustrated that your current low-tech or discount appliance doesn't do what you want.

• Call a timeout before you buy. Mull over the decision. I've been thinking about buying the Neptune dryer for a year.

• Don't believe all the hype. A manufacturer's promotional pitch always sounds great. Keep in mind that all that's pricey isn't necessarily good. During my research, I've found a number of consumer Web sites where people were complaining about the matching Neptune washer. I had considered buying it, but now I'm not so sure, which means I've got to do more research.

• Buy what you can afford (really). If buying a high-end appliance means incurring more debt, you need to stick to lower-priced products. Many of them will still get the job done.

I'll be honest. My grandmother, Big Mama, wouldn't approve of my even dreaming about buying such an expensive dryer. In fact, she refused to buy a dryer at all.

"That's why God invented sunlight," Big Mama would say whenever I complained about having to hang our clothes outside.

But I don't think it's outrageous to go high-end for the item you really want, so long as you continue to bargain-shop for other things that aren't so important to you.

Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and online at www.npr.org. Readers can write to her in care of The Washington Post, 1150 15th St. NW, Washington, D.C. 20071 or send e-mail to singletarym@washpost.com.

J.C.A._3

Gary, what a concept!

I've always loved giving my customers OPTIONS.

Quoting nothing but the best sometimes loses the job for a contractor. Giving a selection, makes the customer feel like they are being part of the process, and is rewarding.
If you're able to show and explain to them the many types of heating systems they can have, they will get to choose the best for their situation. We all know that price IS the driving factor, but to be able to show them COMFORT,(maybe with a field trip to another customers home?)and the different levels of comfort, they will be willing to spring for that work.

Home improvement shows have done alot of selling for us . Being able to get the consumer into the spaces will do an even better job of selling them on quality equipment.

Thanks for the article. I'm sure lots of eyes were opened by it. Chris

Dave Yates (PAH)

My quotes

for new systems are like reading a menu at a restaurant. From Soup to Nuts, as it were(G). Although I care if they chose the high or low end, it's not up to me (beyond my taking the time to explain the benefits) to decide how deep their pockets are.

You'd be surprised by how many choose the more expensive options. (More than 50%.) For those who don't, we can still get the job(G).

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DaveGateway

High end products

Curious that she never mentioned energy savings. That Maytag probably does save energy. Hell, it seems to have a secondary heat exchanger. When talking about autos, easily the most consumerable of sales pitches, high end usually means gas guzzler. OK..or hybrid. We all see plenty of "keep up with the Jones'" mentality out there. Buying an H2 or other humungous SUV noy only tells their friends they can afford the vehicle but they are RICH enough to put GAS in it. What a F%^$%^%&%CKED UP MENTALITY!!

We sell economy, efficiency, and comfort. It should be so easy to sell the "I own the Best" crowd on top of the line equipment. Unfortunately, sometimes the 5K chandelier or entertainment center get in the way.

When given options explained rationally most will go for the high end. Left to the GC or architect the install will be vanilla at best, non-functioning at worst.

We are all on the right page. Society WILL come on line. Fuel prices are soaring.....don't get me started...system and equipment efficiency have been and should remain THE hot topic for future sales.

All we need is a woman who is as impassioned about saving money on her heating system bills as she is about saving a few ruined sweaters. Of course she would need to write about it in the Post. Kudos to her though for the research effort.

$1200 dryer.....$8000 boiler.....no brainer!!

JMHO.......Tom

jerry scharf

working with architects

I've been thinking about this, and with new construction there seems to be a fundamental problem.

With spec homes, they will get little money for an excellent, efficient hvac system compared to the granite countertop and the fancy front door.

With custom homes, the problem seems to be more one of standard structure of the construction business. By the time it has rolled down from the owner to architect to the GC to the mechanical contractor, the chances of getting the best thing for the customer is mostly lost.

Architects are measured more for their grand visions and how much light a room has that how well things work. GCs are measured by how fast and how cheap they can do a job of quality X (various people want various levels ox X.) Mechanicals are measured by how well they fit into the GCs goals.

So unless you get the owner during the design cycle, there is an inherent "why am I learning all this now" reaction when the actual design of the mechanical system happens. Wouldn't they assume that this was part of what happened during the design phase?

I see Scott has worked out a relationship with a builder and architect. What's stopping more people from working at the front of the process?

jerry

Constantin

Maytag did something interesting...

...with the Neptune they finally stopped the downward trend in profits for the washer industry. For the last 20 years, the washer industry struggled with the fact that the nominal prices of washers did not change (which means that in real terms their prices went down). The Neptune was the first new NA concept in years... then others like Whirlpool have followed suit into front-loader land.

Would you believe it though if I told you that a top-loader is the most efficient washing machine you can buy today? Check out the Fisher-Paykel GWL-10. It always burns me to see uninformed tree huggers extolling the virtues of front-loaders when an even better solution exists in a format that most Americans prefer. The main issue is awareness, as FP patented the unit so well that the other NA manufacturers will have to bide their time before copying all the innovative designs that FP used to make their unit so efficient despite being a top-loader.

Anyway, the main difference between a Neptune and other cleaning appliances is the notion that it is more than a washer. It's a statement, the same way that a sub-zero fridge is or a Wolf stove. It's the ooh and ahh factor, with a healthy dose of showing-off thrown in. Until the heating appliance manufacturers can get the customers excited enough to keep a clean utility room to show off, this marketing ploy is unlikely to take off in a grand way.

However, note the price differentiation on the market today. You can get a Trinity for a lot less money than a Vitodens, yet on the basis of efficiency, the units are allegedly almost the same. Then there is the Ultra and the Munchkin in the middle. All are units that are built with a specific price point in mind. Washers are no different.

John Morrill_2

several efficient top-load options

We tree-huggers aren't blindly extolling the virtues of horizontal-axis (usually front-loading) washers. H-axis machines tend to be more efficient than vertical top-loaders, however, my Calypso washer (Kenmore brand, made by Whirlpool) is a top-loader that is also very efficient. And, the new dryer that I got at the same time as the new washer adds to the savings (ancient lint eliminated, and new rigid exhaust duct instead of flexible plastic means less lint build-up in the future).

RB_2

Emotional

Here's a clip from the NAHB Show...

Jan. 31, 2004 12:00 AM
LAS VEGAS - Energy efficiency is big, according to builders and designers touting the latest in housing design. But it's still not on the list of what most buyers will pay
extra for in their new homes. Although concerned about energy efficiency, most consumers don't want to pay for
it, said Gopal Ahluwalia, staff vice president of research for the National Association of Home Builders. Ahluwalia delivered the results of a buyer-preference survey
during the International Builders' Show, held Jan. 19-22 in Las Vegas. Consumers are more interested in the emotional end of home buying: roof styles, elevations and amenities. According to the NAHB Consumer Preference Survey
2003, consumers want larger homes, front porches, ceiling fans and home offices. Only 17 percent of those surveyed indicated they were willing to pay more for
energy-efficient features, Ahluwalia said.
Forty-five percent said they were concerned about the environment but were not willing to pay more, while 38 percent indicated that they weren't concerned about the
environment when it involved buying a home or were not concerned about the environment at all.


Lets see how emotional they get when the fuel bills show up this winter...today gas hit $1.05/litre in Vancouver...

Dave Yates (PAH)

they're behind the curve

Approximately half of our customers are selecting the higher priced condensing technology from the menu-driven proposals we give them. No arm twisting, no hype, just choices. They're highly motivated by the past two winter's fuel bills.

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leo g_13

RB

the funny thing is that a lot of the stations here still don't have the signage available to go into the dollar per litre range yet. so i notice a lot of stations at 99.5/litre!

leo g

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leo g_13

hey Dave

do you ALWAYS give multple choices on your bids? and if so how many (good, better, best?)?

leo g

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Dave Yates (PAH)

choices

Yes. Sometimes I'll categorize them as good; better; best (plumbing fixtures), but with hydronics and A/C equipment I'll list efficiencies and features.

Doesn't matter to me if they want to drive a Yugo or a Jag - either way I try to position my company as their best choice for any and all PHVAC needs - a one call does it all approach.



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RB_2

...and we we're all worried about the millenium thing...

...and here it is...it will the limted capacity of signs to deal with 1.00/L which crashes the system...who would have thought!

Constantin

Allow me to Elaborate

A long time ago, I worked on the energy efficiency standards for the US Department of Energy. The cost models I developed were the basis for the coming 2004 and 2007 standards. Let's just say that I know every washer sold in this country inside and out because I took them apart, down to the last bolt.

As part of the process, I got flak from industry and environmental groups alike. Obviously, the two do not see eye to eye regarding what is or is not economically justifiable re: energy efficiency (the mandate from Congress). Furthermore, I would argue that the Sierra Club is a very popular club, with a large membership, good representation, etc. Now for my story.

I noticed a copy of the Sierra Newsletter at a friends house, opened it up and read much to my chagrin that the author advocated the exclusive use of front-loading washing machines, despite the fact that the Sierra club was part of the proceedings at the DoE hearings. In other words, they should have known better.

I decided to write a letter to the editor, pointing out their factual error. They refused to print the correction and the author wrote a haughy reply instead of reviewing the information I had submitted along with my letter to the editor. So, as far as I'm concerned, the management of the Sierra newsletter is not only ignorant but arrogant as well. Last time I checked, Energyguide labels are easy to read and I provided the Sierra Club links to the FP web-site to check out the GWL-10 if they had no local access to one.

Granted, the Sierra Club does not stand for every tree hugger. However, they wield a lot of clout in DC and most tree-huggers I know belong to the Sierra Club. Guilt by association? Correlation =! Causation? Yeah, you're right, I probably should not paint with an extra-wide brush here.

Furthermore, you're quite right that H-axis machines are generally more energy efficient than V-axis ones. However, there are exceptions that should be noted so consumers can make informed purchasing decisions. These exceptions should be highlighted, so that someone who is married to the idea of a top-loader can continue to enjoy the use of one, albeit with a much higher efficiency and only a nominal increase in purchase cost.

As I see it, environmental groups would do better to assemble a list of "best of class" in each category instead of allowing hacks to make stupid, oversimplified generalizations in their literature. Such literature does nothing but allow critics to discredit the entire organization as a bunch of ignorant fools.

Best of luck with the Calypso, a neat unit. What final spin speeds does it attain? I wonder because final spin speeds are probably the most important factor after water temps used during washing to lower energy usage (that is, if you use a dryer).