I think the distributor model is great. Pinball machines are complex devices that break frequently. I would suspect a large amount of sales are by people that have zero technical aptitude which drives the need for more hand holding. The distributor model allows Stern to maintain a higher level of customer service than they would by a direct sales model. These are luxury goods and I think people are willing to pay extra for a higher level of service. I use Trent at Tilt Amusements and he's been great to deal with. Anytime I have an issue he's a quick text away and usually solves my issue quickly. I would hate to try and call Stern's help line anytime I have an issue. The distributors are really an advocate for the customer, they are the feet on the street.

That wholesale price makes sense. The pinball guys in MN were buying bulk from cointaker and getting pretty close to wholesale. Years ago when TWD came out, they all paid $4k each. Would have been nice to be a cool kid back then and get that pricing. Though cointaker doing this probably caused the strict MAP we are seeing now.

The distributor model IS really dated given the way people shop today. They are trying to sell them like cars when they should be sold like TV's (obviously on a smaller scale than either). Ultimately there should be both ways.

EDIT: I realize that the use case for pins has expanded over the years and I've talked about this in other threads...

Pinball was always majority bought by bars/arcades and such. The main purpose as we know was to draw people for entertainment and make some money back - and hopefully make some money. The distributor model makes sense for that demographic. What I feel it doesn't make sense for is home use. Home use cases are simply expensive toys, like computers used to be, or high end video/audio equipment, or any other niche hobby. This distinction is key.

I would be curious to know ratios these days going to route type use versus going straight to homes.

Although I would like to pay less for a pinball machine I still think distribution is key to the overall health of the hobby. Yes back in the days some distributors where content on making a couple hundred bucks on a game. Many larger brick and mortar distributors were unable to sell machines for a couple hundred bucks profit and still maintain profitability. I think some people do not understand how much effort and work often goes into a pinball sale. If there is a defect or problem it takes a considerable amount of time and effort to correct the problem(Not worth $200 profit).

The other part of how distribution helps is to help pinball manufacturers make it's turns in a timely fashion. Pinball manufacturers sell out most runs directly to distributors willing to take additional allocation of machines. The distributors then have to hold the machines until they sell, meanwhile paying rent, taxes, wages and fees. The holding cost alone makes minimum margins necessary in order to keep the doors open. This allows pinball manufacturers the ability to keep producing new titles for the public without having stagnant inventory clouding the books.

Now we have the major reason for local distribution: Help increase awareness by having machines set up in a showroom to play and try out before purchasing, having a personal contact for any issues, supporting small businesses, helping with local pinball shows(again-awareness), etc.

People think pinball is exploding and super popular- well it is not. Still a boutique hobby with limited amount of people willing to fork over thousands of dollars for a machine. We NEED distribution to grow the hobby and keep it alive.

Valid points but it seems stern does not agree. They have actively been pushing for distributors to have retail stores and at a minimum a show room. After years of not taking new distributors they recently added a bunch. If you go to them with a pitch about a retail store they pretty much up the door as wide as possible for you even if your area is already covered by another distributor.

This doesn't smell right. $1800 profit for drop shipping most of the time?

Sign me up to be a distributor. I'll deliver them all personally in a 2019 G Wagon.

if that's the case I am selling the wrong Brands as most are working on 500 to $1000 Max

question, if anyone knows the answer... do distributors have to sign something that says they wont also be operators? or are they allowed to do both?

just curious...

I agree. Many have hinted that they make around $500 on a stern pro once shipped.

Maybe that is sterns bottom price if you take a huge number. I could see someone like Automated getting that price but it's not uncommon for them to take 50 LE's on many of the games. If you call stern and want 2 pro's I doubt the price is the same as when you call and say I'll take 50 LE's, 20 premiums, and 20 pro's.

Stern does 'runs' usually 100-200 machines at a time. Right now they have backorders-which is great. So in a way they are producing based on demand.

Can the market continue to take all of the $7000-$9000 machines being produced? Time will tell, I think once the economy slows down-we will see a slowdown in pinball as well. It is all about supply and demand, people thought WOZ was overpriced when it first came out. Then people started defending WOZ pricing stating it was packed full of features and that's why it was priced so high. I think Jack lost his ass on the first couple runs because he did not realize the true cost to manufacture. In a weird way WOZ started the high end pricing. People want something special and are willing to pay to have the best. All LE's or Special Editions will sell at x price upon release but if they are a dud- the market will determine pricing. WWE LE has taken a huge hit, again supply and demand determine pricing.

They are allowed to do both. Most distributors started of as OP's and still have some of their routes. All of the distributors I know all have a side business-very smart. The key to success in business is to have your hands in as many people's pockets as possible.

I think it's not that distributors are outdated, but HOW those distributors operate is outdated.

ie:

Not taking Credit Cards, or making it hard on the buyer to use it (cash discounts).

Existing as a commodity business (letting a customer call around looking for the best price on a machine, because that's the only thing the customer can tell the distributors apart)

All competing for the same buyer and not expanding their own market

It all comes down to logistics. Some of these newer boutique games are quite complex and require a 'local' rep or technician for help with issues. Many pinball owners are not on Pinside and do not have someone to hold their hand. There are so many parts and components involved in a pinball machine that it is almost inevitable that a issue will arise over time. If a Boutique Pinball manufacturer tried to go about it themselves I am afraid they would shoot themselves in the foot. Trying to find technicians in certain regions, taking all of the calls, and trying to support product directly would take a considerable amount of personal and time. Pinball machines need to have distributors to support the service aspect, just too complex of a machine not to have distribution.

Exactly this. The number of owners of $4000+ needs to increase almost exponentially each year that has 1000s of new machines. I can't imagine this is sustainable unless a new market opens up or the hobby somehow enters national awareness. Looking very close at what happens in Texas this Spring.

I started thinking about Nic's venture to expand his brick and mortars in major cities. I personally do not see this as a successful business model and I would not walk away from investing I would run. Problem here again is logistics. So many variables in a brick and mortar location. Location, location, location is a major factor for opening a store front. The cost per square foot in a desirable location is ridiculous, profit margins have to be very good in order to afford monthly rents, fees, etc. Then you have the whole issue with trying to find 'qualified' personal to run these brick and mortar locations. Right now with the economy being on an upturn it is very difficult to find qualified applicants that are willing to work for x wages. Not to mention that again pinball is a boutique hobby and there have been distributors covering these territories for decades. Talk about stepping on someone's toes.

At 4k+ it would only ever be a niche hobby. Again, for any actual growth, they would need to constantly expand in their original market - not home use. I don't see them coming back as big as they were, it's a nostalgia fad (great as it is) that is happening right now. It won't last forever and will go back to actual pinheads.

Where does this $4k wholesale pricing come from? Someone earlier mentioned TWD. When TWD was being made, pro pricing was around $4600-$4800 if I recall so that's not a huge margin. I'd be very surprised if Stern were wholesaling the latest releases at $4k. My guess would be closer to $4800, but I have no idea and I'd guess none of us really do.

Personally, I am happy with the distributor model. I buy from Cointaker (and I bought my DI from PinballStar) and have always been very satisfied with the model.

That works with those because they have titles they can put a lien on and registration is regulated - lots of government tracking and backup. You could probably do a rent-to-own scenario, but as delicate as these things are..I sure wouldn't want to take that risk for a home user You could get a personal loan today from any number of places today if you have good credit, but most people aren't going to do that.

Yeah the $1800 profit per machine is BS. Try $400-500. Also Stern has a showroom requirement for distributors now. I know many don't technically have a showroom, but it is in place. The whole idea is that someone local has a physical place to go to play and buy a machine.

Seems like a logistical nightmare, trying to find a tech to go to someone's house in the boonies. Levi lives in a major city and he just set up a machine. What about having a major issue with JJP POTC that requires removing the upper playfield. Most newbies are not comfortable doing that, and having a local distributor's technician come out and fix under warranty is reassuring when you are spending the same amount on a pinball machine that you could purchase a car with. Again-logistics

I was just about to say in his thread- hey Nic-'What does Gary think of your plan?' But I already knew the answer.

So then are we alluding to price fixing?

I still don't believe the numbers are accurate. Nick also said that they sold 40 some Jetson's which is also twice as many as any other model and next was SW. So at most they were selling around 20 of each stern title. That might be enough to get some decent discounts but I don't think it gets you close to a 4K pro.

Another reason I think this is my distributor told me before face to face that The Beatles were 7K each and he could do a 10 pack for 70K or just buy single golds as needed for 7K. He was somewhat happy that stern was going to have them list for 8K as that was a good bit better profit then they normally make on premiums and pro sales. That backs up most of them making $500-$600 per pro and premium sale.

People need to also keep in mind that they have to take a certain number of LE's on each cornerstone title from stern. Most are still sitting on GOTG LE's so making $500 doesn't seem like much when you have 50K-100K in games in your storage building waiting for a sale and 23K is in 3 GOTG LE's that no one wants.

No. Dealing with you people directly would be an absolute nightmare for Stern.

The "distros" earn their pay.

You're vastly underestimating the sheer cost and scale of a direct manufacturer business model. Stern's expertise is manufacturing pinball machines, thus they would rapidly need to become experts in all channels. It is quite possible that going directly to the consumer would actually cause their prices to rise not to fall. A number of issues would have to be addressed.

Inventory storage (new building possibly or a complete restructuring of the current process)
New utility bills (order fulfillment costs would all be assumed by manufacturer)
Employment increase/wage increase (sales, marketing, distribution management, consumer troubleshooting techs, website management, software management, etc.)

Stern doesn't have to attempt to compete with the way the current market is. They have the largest share and the best model by far. If they randomly pivot their successful business model, they'll be shooting themselves in their own foot. From what Deeproot has described, their intentions don't indicate that Stern is the one that needs to be worried. It's the smaller boutique companies that are on notice. It's a classic strategy of cannibalization marketing that is aimed at getting a higher share of the market over time. You don't do that by picking on the top dog. You do that by picking off the weak points of the herd.

I want this LE, no I don't I want this game, now I want this one instead, nevermind just give me my money back or I'll bash you online. Nevermind, I'm going to bash you online anyway.

I am torn because I have been on both sides of the fence. I personally have a difficult time paying full retail and I have drawn a line in the sand at $8000 for a pinball machine. I now am priced out of my budget- I have a Munsters LE on my radar but I am not willing to pay a crazy price. What these recent increases in pricing have done to me is make me want to find some deals on older titles. So many choices-which is good.

I think Stern could protect map pricing for x amount of days after initial release-(Say 90 days) after that throw the distributors a bone by allowing them to sell at whatever price so they can clear there stagnant inventory and purchase more newer machines-keep the cycle going.

I think distribution is different is every area.
1800$ profit is fare for a local, honest, pinball promoting dealer. Setting up shows, offering service, running leagues.

If you don’t have a GOOD local distribution dealer, you are not getting much value.

I am 2 hours from my ONLY choice and pinball is not their priority. They are successful and have bigger irons in the fire.

I would 100% like to buy direct because I live outside a well serviced area.
Just my 2cents

I have also had the idea that OP's get a special price compared to consumers. Operators are the lifeline of pinball, and deserve a discount. If you have a copy of your contract and can get notarized or approved by a local distributor then you get OP pricing(Say $500-$700 off retail MAP). Just a thought

Suddenly we'd all become "operators."

Regardless, I don't think losing $500-700 on half their sales is something anybody in the chain would want.

Wouldn't that be great! It actually may help increase the amount of operators and locations. Honestly most established OP's already get a under the table deal but if they legitimize the process it may encourage more location pinball. What would requirements be? Contract between OP and location, business license, and an agreement to have on location for x amount of time. OP's should not pay anywhere near full MAP pricing.

They always have. For like 100 years.

Dealers can and do sell for lower than MAP. They just aren't allowed to advertise a lower price.

I would like to see Stern lower their retail prices. I think they may sell more units and keep the hobby healthy. All of us are cheap bastards that want to save money-who doesn't? What would be nice is if you could buy local and pay the same amount including taxes. I know the tax laws are changing to address this but eventually pinball purchases will be more local driven and people will(and ought to) want to buy local for technical support and also to help support the local economy in that area.

Wrong- Distributors are being threatened to lose their distributor rights if they do not follow guidelines, it has become a good ol boy network with everything done on the phone, nothing in writing.

They're not wrong. The FTC allows people to sell below MAP pricing as it's literally "Minimum Advertised Pricing." That being said, you're not wrong either for a manufacturer to pull out products from a distributor at any time they deem necessary.

I won't get anyone in trouble, but I am not wrong. They do sell below MAP.

You don't know Gary

Yes distributors will occasionally flex the rules. If you get an exception and get a deal-please keep it to yourself. Loose lips sink ships