Control4 CEO Martin Plaehn emailed dealers last Thursday to announce global price increases due to recently announced United States tariffs on imported Chinese goods. Plaehn described the change as a “150 percent increase” over the previously announced 10 percent tariff rate implemented earlier this year.
Control4 is raising both Cost of Goods Sold (COGS) and MSRP pricing on June 14 to preserve dealer margins. We haven’t seen any other electronics manufacturers raise prices after this most recent tariff round, but this opening volley from Control4 will surely be followed by similar hikes by our other vendors.
What to do? We can’t control price increases like these, but we can control how we think about them. I see this 30-day period before prices go up as a chance to manufacture crisis with our customers who might be sitting on the fence or who’ve been contemplating a home technology project but haven’t yet pulled the trigger.
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Here’s what we’ll be doing at Livewire to address Martin’s email:
- Our design engineer, Eli Johnson, is changing COGS and MSRP pricing immediately while auditing any jobs we already have in process that might not have product ordered yet.
- Our purchasing coordinator, Bryce Roberts, will be stocking extra product prior to June 14 so we can maximize the margin opportunity as prices increase — allowing us to benefit from buying better after June 14. By doing this, we’ll see a 10-point boost to our selling margin for anything we sell that was purchased prior to the new deadline.
- We’ll be canvassing our customers to let them know our prices will be increasing 10 percent across the board (parts, labor, and merchandise) effective June 14. I feel like we could be surgical or simple with this process. Simple always works best for us. I don’t want to get into the weeds about which products are affected, and I know we’re sure to see price increases from other manufacturers. A flat 10 percent increase will serve as a proactive step in anticipation of more to come from vendors.
Control4 chose to implement a global price increase across all their markets, not just the United States, because of they’re also shifting manufacturing away from China into other countries. The global price increase represents not only the tariff increases, but the cost of relocation, tooling, etc. This means all markets are now paying the bill for a move by the United States. It will be interesting to hear the perspective from Control4 dealers in other markets such as the United Kingdom as this rolls out.
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As long as other electronics manufacturers follow suit, Control4’s 8.35 percent MSRP increase will be the first in a long line of price hikes where American consumers pay the freight on Chinese goods. If Control4 stands alone, we’re in danger of losing sales to other electronics companies who choose to eat the price hikes. I don’t see this happening in the long run, but it may happen short term.
Nobody likes to pay more for what they perceive to be the same thing. Inflation comes in many different flavors, and this time it’s a new experience for most of us, but we can’t sit by and watch our margins erode. I respect Control4’s move, and we’ll be using it internally to engineer deadlines for ourselves and our clients.
What are you doing about tariff hikes in your business?
Stay frosty, and see you in the field.
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