MSRP under siege: How low will you go?

Tuesday, April 30, 2002

YARMOUTH, Maine — Providers have always offered discounts below the MSRP to provide consumers with the sense that they are getting a deal. But the deep discounting offered by Internet and 1-800 companies has created what Rick Atkins calls a "Wal-Mart mentality."

For example, Atkins explains, a potential customer comes in with printed literature, saying "can you beat this."

"Sometimes there is no way I can," said Atkins of Mobility Plus in Oklahoma City. "And it seems that every time I sell something real close to my costs, that's the customer that has a lot of service issues. That eats my lunch."

When it comes to the Internet, the general consensus is that Online providers aren't doing a ton of business. But because they're often unburdened by the overhead a traditional HME carries, they can discount well below MSRP, especially if they don't have to bill Medicare. So while their sales may be small, the pricing impact they have on the over all market, is significant, providers say.

"Everyone's looking for the cheapest thing they can get and worrying about service later," Atkins said.

That could come back to bite some consumers. More and more HMEs are refusing to service products they didn't sell.
"That is the only leverage we have left," said Tyrrell Hunter, owner of Majors Mobility in Topsham, Maine. "We can't afford to maintain a showroom, stock, employees and pay health insurance benefits and discount the heck out of equipment."

It doesn't' help that customers don't have to pay sales tax when they buy something over the Internet.

Earlier this year, a customer nearly bought a scooter from Majors Mobility, even though Hunter was charging about $300 more then the Internet company. Almost, that is, until the customer learned about the 5% sales tax.

"That was the deal breaker," Hunter said. "She said, 'I can't afford to pay another 5%."'

When it comes to MSRP, the law forbids manufacturers from doing more than "suggesting" a retail price.
"It's black and white," said Lou Slangen, Invacare's vice president of sales and marketing.

But there are ways to control who sells your product.
Leisure Lift does that by not selling scooters and other products to HMEs who don't provide their own service, said President DuWayne Kramer.

Pride Mobility Products refuses sell product to anyone who doesn't provide service and help customers with access to funding, said President Dan Meuser.

"If anyone is being irresponsible and not providing those things, we don't consider them a provider," Meuser said. "And we don't let them sell our product. that is how we handle it, and it is outlined it in our Web rules." HME