I'm Getting Annoyed!

[geoffreywh]

Reading the new RAA magazine again this morning I notice an increase in adverts quoting prices as ( for example the Pioneer ad. ) $112,000 + gst. This type of price quoting almost certainly breaches the Trade Practices Act. There are Govt. guidelines for advertising and pricing. The price you are going to pay is $112,000 + 10%. That is $123,200. The Govt. GST website strictly forbids this type of pricing. Personally I hate it. You are always going to pay the GST Inclusive amount, so why not state what the end price is going to be. The GST is not an "extra" it is INCLUDED. Some lucky buggers can claim it back, but it is always going to be paid in the first place.....Are the advertisers trying the old "bait and switch" technique ? Get the customer in the door and signed up at the less gst price, then at the checkout pull the price switch to the gst included price? I suppose it is up to the mag. to make sure that the advertising they place is couched in legal terms....I shall be writing to them as well...Geoff

 

 

[BigPete]

I'm with you Geoff.

 

Friend of mine negotiated a deal for long term hanger rent, only to find out on his first payment that it hadn't included the GST.

 

Not impressed.

 

regards

 

 

[geoffreywh]

That was illegal....

 

 

[Thx1137]

That was illegal....

Certainly was.

 

 

[Guest terry]

im getting annoyed

 

Me too. It bugs the hell out of me. It is illegal to advertise something at a certain rate and then add gst to it later. It's not illegal to advertise something at a certain rate and then say plus gst but it must be at the same time. If it's not then it's illegal, cannot be done, I want a lawyer,

 

see you in court Harrrrrrrr you b******

 

 

[geoffreywh]

Have a look at the GST website . It SPECIFICALLY states:- >

 

DO NOT ADVERTISE > One component part of the price, plus an unspecified amount, e.g. ‘$500 plus GST’ .....DO NOT ADVERTISE A price with an asterisk qualifier in a non-prominent place, separate from the headline print, detailing additional compulsory amounts payable, e.g. ‘$500*’...I don't care if the mag goes overseas or not...My objections stand..

 

 

[Yenn]

I think most of us are aware of the hidden GST cost, but there is more. How often do you see speeds quoted in mph or kph and i have even seen an ad with cruise and top speeds in mph and stall in knots. There is also the well known plane with 5" wider cockpit, which isn't 5" wider really, but is wider where the old model had narrowed down.

 

Looking at aircraft ads we need to be able to sort out the fact from the fiction and some of it is practically science fiction.

 

 

[dazza 38]

Hi all, im not sure if correct, but didnt the law change so cars have to be sold now at drive away prices. With all the hidden costs shown up front. I know a car isnt a aeroplane but the principle is the same. Or am i barking up the wrong tree ?

 

 

[Guest terry]

i'm annoyed

 

Hi Geoff, I'm with you 100%. What I said was; [it's not illegal to advertise something at a certain rate and then say plus gst but it must be at the same time. If it's not then it's illegal]

 

What I should have said; It's not illegal to advertise something at a certain rate and then say plus $10.00 gst but it must be at the same time. If it's not then it's illegal,

 

I suppose what they are trying to do is to say to people that they have to pay gst from the money they receive from the sale so they want to add the gst to the price so that you pay it for them. Anybody who purchases a plane under these these circumstances has rocks in their head. What these con men are failing to tell you is the reason they have to pay the gst on the sale price of their second hand plane is because they claimed the gst on their new plane from the tax office and recieved it back in the form of a credit in real dollars. So it's not unreasonable for the tax office to say to them when they sell their plane give us that money back as a percentage of the sale price. So if you buy a second hand plane even if it only has one hour on it don't pay a gst component as part of the cost because all you are doing is paying their debt of gst to the tax office for them which has nothing to do with you.

 

 

[Guest Cloudsuck]

I am surprised at how many are adding GST. If it is a private plane and it is being sold second hand (i.e. not being sold by a business but a private owner), there is no GST on such an item. I think that a lot of private sellers think that because they paid GST on the plane when new, they have to charge GST when selling second hand. This is simply not the case.

 

 

[turboplanner]

I had a lot of problems with dealers quoting + GST some years ago, and their interpretations of the Act rivalled some of the inventive threads you see here.

 

So I wrote to the ATO for an Opinion, and got one.

 

It is illegal, and the penalties are harsh if you quote a price without GST.

 

You can quote $100.00 plus $10 GST, Total $110.00 if you like, but in all cases the Total price including GST must be shown.

 

Check the ATO website to see whether you are obligated to collect GST on the item you are selling, beware of blanket assumptions.

 

 

[Flyingphot]

While we are on the go, and just to digress slightly, I also get peed off with ads that don't include a price. If the seller dosen't want you to know the price up front there must be a problem with that price. My practice, no price, no enquiry.

 

Cheers

 

Bill

 

 

[HEON]

While I agree with the general thrust of this forum there are some problems for large long lead time low volume items. For example:

 

I am currently importing aircraft from overseas which are sold to me in US$ with a considerable lead time and three percentage payments on order, 60 day, and when ready for shipping. Since I have no idea what the exchange rates will be on these three dates, nor the actual fraight rate or port costs when shipped and actually arrive at my hanger, there is no way I can quote a A$ price including GST, WITHOUT ADDING A LARGER MARGIN to cover the unexpected.

 

I do not consider this satisfactory.

 

What I do is quote a price in US$ and state to a potential purchaser: convert to A$ using the exchange rate you think it will be remembering to factor in the Bank's percentage; add 10% for GST; then add a average figure I supply which I have obtained from two Companies as an INDERCATION of expected freight and port costs likely to be incured, noting you may only have to pay half if another aircraft is ready to ship in the same container (ie. container can hold two). Allow for minor other costs (ie. RAA aircraft rego). Due to these variables without an explanation when contacted by an interested party, a price such as "FOB at factory" is meaningless.

 

Another area that prevents a firm price is if the purchaser wants their own avionics or other items fitted which are not in the standard aircraft or on the option list (thus in US$ which can be included in the initial conversion). This prevents the firm pricing even after adding a larger margin as the cost of the item changes so much due to the exchange rate (look at advertised prices of Garmin 296 GPS's for last 12 months!) and fitting costs can change even more!.

 

While "drive away, no more to pay" sounds good the only way to do it (and remain in business) in the situation I have described is to add a suitable (LARGER) margin.

 

Please, if there is a better way for the situation I have described, let me know.

 

 

[skeptic36]

I am currently importing aircraft from overseas which are sold to me in US$ with a considerable lead time and three percentage payments on order, 60 day, and when ready for shipping. Since I have no idea what the exchange rates will be on these three dates, nor the actual fraight rate or port costs when shipped and actually arrive at my hanger, there is no way I can quote a A$ price including GST, WITHOUT ADDING A LARGER MARGIN to cover the unexpected.

Hi Heon

 

I have no experience in this area, but couldn't you convert the entire purchase price including freight and any other extras, to US$ on the day the order is placed and that way you would be insulated from any fluctuations and be able to quote a fixed price.

 

Regards Bill

 

 

[turboplanner]

Heon, you're covering two subject - GST and Exchange Rates, and there's a third - variable pricing from the supplier.

 

I've done literally thousands of deals for high cost capital equipment on the following basis, and this has always been accepted by my customers:

 

The initial quote is fully itemised with all costs including GST.

 

One of the terms is that pricing is subject to variation after the quotation date.

 

So, if you have the unit in stock, and the customer orders that day he gets it at that price. You're covered if he has a delay getting money from his bank etc, and the parameters change, but mostly wioth a stock item he can come back a few days later and there will be no need to change pricing.

 

He knows what he's paying, you know what you're getting and the transaction is simple.

 

Some people might say that this is an open ended variation clause, and the customer isn't protected, but I've always been meticulously honest, and explained any variation in exact detail, and over many years have never had a dispute from customers including some of Australia's biggest vehicle fleets.

 

So summarising to date:

 

If all costs are stable, the customer knows what he is paying if he orders immediately, and he knows that if he gets delayed the price may change, but he'll get to have another discussion on the day he is ready to order and a nedw set of figure will be provided which he can accept or reject.

 

The next example relates to your scenario Heon, where you are selling to an overseas factory order.

 

It isn't unusual for my products to have a base price, 40 options, several delivery segment costs etc, and these are all quoted including GST and any margin required (no bulk margin at the end).

 

In this way, the customer can add extras or delete any item at Nett at any time during the delivery sequence where it is practicable (ie not after the manufacturer has built it into the product).

 

There is nothing more disconcerting to a customer than to delete an item he was going to be charged $2000.00 for and be told the price reduction is $1400.00, so this method gives the customer confidence and doesn't leave you out of pocket.

 

To cover factory specification updates, factory price variations based on roll off dates, changes in duty rates, wars, and exchange rates you can write a price variation clause, but I found that you were always taken out by something obscure which hadn't been covered.

 

So I use the same simple blanket variation clause as for stock units, and I was able to convert two of the Federal Government Department's biggest fleet buyers to this, because they also had been bitten by unusal changes.

 

However, what needs to be added for long term supply cases is the basis on which the quote is provided/order is agreed.

 

This might include:

 

Price breakdown with each item including GST as above.

 

Exchange rate basis at time of quote/order

 

Freight Rate at time of quote/order

 

and so on

 

When the item arrives and local extras are added etc. you can then show, for example the exchange rate at date of quotation/order, the exchange rate on the date you paid for the item, and make a variation addition which the client can cross check.

 

Trying to forecast what the situation will be when the customer takes delivery has sent a number of big Australian distributors to the wall, and adding a margin to cover variations is also suicide because in a competitive environment your price may be so inflated that the customer buys from someone else and then his mate also buys the competitive product and so on.

 

As I mentioned these basic principles have worked for me over many yours and many millions of dollars turnover, and I have never had to quote a price without GST.

 

 

[HEON]

Thank you turdoplanner for your detailed reply. I think you have stated three things of great importance;

 

inform the customer of potential for price variations

 

don't pad your price

 

be honest

 

You have answered skeptic36 also I think. Situation for something sitting on your floor quite different as the unknowns have been removed.

 

I have a kit on order for stock which I have paid 50% (thus know actual cost) but 50% due when ready to ship (thus exchange unknown). Currently still quoting in US$ with note on GST liability, freight etc. Only when that second final payment is made (including any factory price changes) can I quote exact A$ price including GST,with note on freight etc EXPECTED costs. When on my floor, and only then, would the quote be to the exact cent PROBABLY with a time for payment clause. Any other way you could make, or lose, a lot!

 

 

[Yenn]

I will probably be buying a kit from the US. Price is known and steady until Feb 1, so the only variable is exchange rate. I then have to get a shipper to take it from the factory to port, across the Pacific and into Australia, through customs. I have a quote for that, part in $US and part in A$, so there is no way to get a final price because of the 8 weeks wait for manufacture of the kit. All I can do is hope the A$ stays high , but it is often cheaper to buy goods in US and ship them in, rather than buy in Aus.