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Thread: MSRP vs Selling price |
    
New member Username: 8track
Post Number: 4
Registered: Feb-07
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| Posted on Friday, February 23, 2007 - 08:13 am: |
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Are prices on new audiophile equipment negotiable? I ask because the totem dealer told me he could sell me Model 1's at 200 off MSRP. The Dynaudio guy quoted me the MSRP? Where was his "deal" or should I ask for it? FYI, I have purchased multiple things from the guy who is selling the Model 1s |
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Silver Member Username: Stefanom
Vienna,
VA
United States
Post Number: 392
Registered: Apr-06
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| Posted on Friday, February 23, 2007 - 08:52 am: |
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There is no harm in asking for a discount; you just can't always count on it. Of course the question is which offers you the better value for the money, regardless of who is knocking off 200 from MSRP.
PS: Dealers do tend to treat their loyal customers well, hence probably why you were offered the discount. |
Silver Member Username: Eib_nation
Ohio
EIBville
Post Number: 157
Registered: Jul-06
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| Posted on Friday, February 23, 2007 - 04:00 pm: |
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You should never pay more than 75-80% of MSRP. |
Silver Member Username: Davidpa
Portland,
Oregon
US
Post Number: 402
Registered: Nov-05
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| Posted on Friday, February 23, 2007 - 04:04 pm: |
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I would have to disagree w/your assesment Rush. High End gear will not be sold at 75-80% of retail. Middle of the road gear,and lower end probably somewhere around that. But I've yet to see higher end stuff be discounted anywhere near that much, maybe 10% if you have a solid relationship with the dealer, and even then it can be tough to get. Just what I've experienced anyway. |
Gold Member Username: Artk
Albany,
Oregon
USA
Post Number: 4144
Registered: Feb-05
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| Posted on Friday, February 23, 2007 - 05:05 pm: |
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I agree with David. I have very good relationships with several dealers and can count on 10%...no more. Occasionally if they are closing out a product and want to move it out the will do better...occasionally. |
Gold Member Username: Nuck
Post Number: 5987
Registered: Dec-04
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| Posted on Friday, February 23, 2007 - 07:36 pm: |
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I agree also. 10% is the good dealership seal of approval.
The trade-ins, however are another matter. hehehe |
Gold Member Username: Jan_b_vigne
Dallas,
TX
Post Number: 9845
Registered: May-04
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| Posted on Friday, February 23, 2007 - 10:38 pm: |
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Are you buying something because of the sound or because of the discount? Because of the price or because of the amount taken off the price? Buy what sounds best in your price range and pay what is asked. Whadda drive? Some kinda Chrysler product? |
Silver Member Username: Rysa3
Houston, Texas
Post Number: 115
Registered: Nov-06
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| Posted on Saturday, February 24, 2007 - 12:58 am: |
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Sometimes yes and sometimes no. Not a very definitive answer but I believe a true one. The markup on a high end piece of audio equipment is very very high relative to dealer invoice.
However, some of "the good stuff" is purchased at certain local chains/stores--some stuff is internet only; etc.
In anycase, I do recommend visiting the audiogon.com classifieds for very high end stuff as a price comparison to demos or used equipment, or even new stuff.Demos and used usually sell at 30-40% off retail but thats a mass generalization too.
Figure out what you want as far as product then comparison shop around a little bit. I have some stuff that I paid full retail for and some stuff considerably less. They are all in the same systems etc working and sounding just fine. |
Silver Member Username: Eib_nation
Ohio
EIBville
Post Number: 158
Registered: Jul-06
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| Posted on Saturday, February 24, 2007 - 02:23 am: |
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Suggested retail is for suckers and naive shoppers.
If you possess any negotiation skills whatsoever, you will never pay more than 80% of 'suggested' retail.
Suggested retail is exactly what it's name implies.
Everything is negotiable! You just need to learn how to negotiate. |
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Gold Member Username: Nuck
Post Number: 6003
Registered: Dec-04
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| Posted on Saturday, February 24, 2007 - 08:00 am: |
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Rush, how much wiggle room do you imagine a dealer has for, say, a pair of Revel Ultima speakers? Retail 18,000.
He has a demo pair and one new in boxes.
He had to upfront for the 2 sets, within 30 days.
Now how much room if he bought 5 sets?
Remember, he has to pay up front.
He may have had to finance the purchase of over 50k, or at least carry some cost for the investment. This is for ONE product, he may have 50 products.
The place has taxes, employees, and the like.
It's not like the guy just works out of his car, pickup for 50$ and deliver for 100$.
Economies of scale are vicious.
Support your local dealer! He may be a valuable asset at any time. |
Silver Member Username: Davidpa
Portland,
Oregon
US
Post Number: 405
Registered: Nov-05
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| Posted on Saturday, February 24, 2007 - 10:10 am: |
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Rush, I could only suggest getting to a hi fi dealer, and "deal away" on some quality gear. Try Bryston, Classe or Anthem for starters, move up from there, or like Nuck mentioned the Revel Ultimas. See what you can do with your negotiation skills, and let us know, I think you will find that it has nothing to do with negotiation skills, or for that matter how good of a relationship you have with a particular dealer. They've got a bottom dollar, and the percentage of profit on hi end, is not the same as low-mid fi gear which really doesnt even take negotiation skills to get a bigger percentage off. I personally own some pretty darn expensive speakers, had cash at the time, negotiated, got 10%. Same dealer, different product, 20% off, it really depends on what your getting discounted that ulitimately determines what you can get. |
Gold Member Username: Jan_b_vigne
Dallas,
TX
Post Number: 9850
Registered: May-04
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| Posted on Saturday, February 24, 2007 - 10:51 am: |
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"The markup on a high end piece of audio equipment is very very high relative to dealer invoice."
Forty per cent is high? Your grocer gets a higher per centage profit on a loaf of bread.
Once again, Rush, you live up to your namesake's audacity.
. |
Gold Member Username: Nuck
Post Number: 6008
Registered: Dec-04
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| Posted on Saturday, February 24, 2007 - 12:39 pm: |
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Are you getting it Rush?
Get oughtta the box stores and into some quality. The price and the rewards, are not for the bashful.
Pay the man, Barney.(Fred Flintstone) |
Silver Member Username: Rysa3
Houston, Texas
Post Number: 116
Registered: Nov-06
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| Posted on Saturday, February 24, 2007 - 09:45 pm: |
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Jan-- A loaf of bread isnt 6800 dollars either. So 40% of a 1.29 loaf of bread isnt really a very reasonable analogy, don't ya think?
It's possible to find 40% off of retail on" the good stuff". I've done it a few times. I have also paid full retail too and never looked back.
I am not making a judgement on what a product is worth as an FYI. For instance, a pair of Green Mountain audio Pico Medeas looks pretty good at 6500 or whatever when a Bose special sauce 5.1 system goes for 1200.
It's more a matter of patience and reason, and sometimes packaging. I do think that, despite the pedestrain post, Rush is actually correct that on items 5000 and above, you can get 20% off depending on how you approach it with a higher end dealer. I have found this to be right at the bottom dollar in brick and mortar retail, but I have had to have alternative sources to buy from in hand to get at that 20% off of new product. It's just a game I suppose. Sorry just what I think. |
Gold Member Username: Arande2
400dB could probably d...,
SouthWest Mi...
Too Many DBs...
Post Number: 1647
Registered: Dec-06
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| Posted on Saturday, February 24, 2007 - 11:13 pm: |
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dsjhfjfhdkjghdflkjghdflgjhdflkgjhdflkgjh Well I'm lucky to have immediate family which can sell it half price.  sdfhsd;fgjhsdkl;gjhsdlk;fjghdflkgjh |
Gold Member Username: Nuck
Post Number: 6022
Registered: Dec-04
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| Posted on Sunday, February 25, 2007 - 07:18 am: |
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Andre, what does your brother say about this?
What is the high end of stuff he carries? |
Silver Member Username: Polksavage
Post Number: 150
Registered: Jun-06
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| Posted on Sunday, February 25, 2007 - 10:54 am: |
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well put it this way for mark up. I work at a polk dealer and I paid $620 canadian for my pair of rti10's. so they have alot of room to bargain with you |
Silver Member Username: Polksavage
Post Number: 151
Registered: Jun-06
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| Posted on Sunday, February 25, 2007 - 10:56 am: |
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let me add tho that the electronics side the deals are WAYYYYY smaller. our mark up on some electronics is 10-12% total and that paying me to sell it too
example sony bravia $2000 retail our cost is $1850 right now |
Silver Member Username: Polksavage
Post Number: 152
Registered: Jun-06
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| Posted on Sunday, February 25, 2007 - 10:57 am: |
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most people selling higher end stuff are on commission and are willing to barter |
Gold Member Username: Jan_b_vigne
Dallas,
TX
Post Number: 9860
Registered: May-04
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| Posted on Sunday, February 25, 2007 - 12:14 pm: |
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"A loaf of bread isnt 6800 dollars either. So 40% of a 1.29 loaf of bread isnt really a very reasonable analogy, don't ya think?"
No, how many $1.29 loaves of bread does a store sell everyday? How many $6,800 pair of speakers do you think get loaded into a car everyday? In the end, profit margin is what keeps you in business. You can sell somethings cheap and make it up by selling lots of other stuff with higher margin (ala McDonald's and don't you ask for an extended warranty on most items?) but you can't sell at a loss and make it up on volume.
And Polk is not representative of high end profit margins. Not when they are always blowing out towers at $99 each. If your book cost is allowing less that 10% markup on a Sony TV, your book cost is being cooked. If you work for a big box store or sell mass merchandise (who doesn't sell Sony Bravia?), this isn't uncommon and keeps you, the salesperson, from even thinking about negotiating too low. TV's average about 20-25% margin and have a fair amount of dealer incentives to make things work. If a manufacturer pays for an advertisement or even part of an ad for their product, that ultimately comes off the cost of the item. How many ads have you seen in your local newspaper for a Conrad Johnson pre amp?
Most restricted distribution lines, read high end, are sold at or close to retail. Go negotiate a deal on McIntosh. If the line gets booted around in price, the dealer will more than likely have the product pulled. People want to know what an "authorized dealer", well it's a dealer who respects the wishes of the company. An "unauthorized dealer" is often the guy who sold at a discount more than once, got the line pulled and is now blowing out remaining stock. Some dealers are more willing to show a discount somewhere else in the deal but the retail price is likely to be very close to what you are paying for high end gear, negotiation skills or not. I have told more than one person to take their business elsewhere rather than risk loosing a line.
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Gold Member Username: Nuck
Post Number: 6028
Registered: Dec-04
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| Posted on Sunday, February 25, 2007 - 12:49 pm: |
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Jan is long out of the selling biz, but loooong on the idea. It has not changed.
We are not dealing with volume here people, we are building relationships. If we, as a group of enthusiests, were to march, en masse, into a good store, with credit intact, then, yes, we could buy a number of Ultima's at a great price.
Delivery in 4-6 wks, if you are lucky.
For that type of delivery, the dealer would have to canvass other dealers to meet the demand, much as car dealers have to.
These deals would involve other trades as well, as the network works itself out, in a dizzying array of stunts and coy, to make it all happen.
All of this is presuming that you are going to a FOR REAL dealership. |
Gold Member Username: Nuck
Post Number: 6029
Registered: Dec-04
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| Posted on Sunday, February 25, 2007 - 12:54 pm: |
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I don't beetch to my dealer and he don't stiff me.
Welcome to the jungle, we got fun and games:
We can get everything you want, honey we know the names:
My regular dealer also has strong ties to a Kickass service tech who has more scopes than Marcus Welby. Beat that! |
Gold Member Username: Artk
Albany,
Oregon
USA
Post Number: 4164
Registered: Feb-05
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| Posted on Sunday, February 25, 2007 - 01:10 pm: |
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One of my regular dealers IS an authorized service tech for the products that he carries...how's that! |
Gold Member Username: Nuck
Post Number: 6030
Registered: Dec-04
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| Posted on Sunday, February 25, 2007 - 02:01 pm: |
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How many ads have you seen in your local newspaper for a Conrad Johnson pre amp?
Bear in mind that I am referencing items that are not available at box stores.
OK, let's look at this.last month, I went to a buddy's place, he was putting a set of headers on his '73 Dart 340, and had all the pieces. With the engine up, we tried to fit the left side'over' pipe into the car. It don't fit.
So Buddy goes online with the 'vendor' who don't knows squat, and I got a car half apart.
Turns out a chrysler dealer in the next town has a set as well, and guarantees a fit, or bring 'em back.
They fit.
Specific over and under headers for that car.
Tell me that I ain't calling this guy for more Mopar!
When you deal with the good guy's you pay MONEY!
BTW, the Dart is running 11.5:1 comp, solid cam. Pistol Grip 4 spd., Dana 60 series posi and 3.88 gears. 13.10@106MPH.
It hooks up real good. |
Gold Member Username: Jan_b_vigne
Dallas,
TX
Post Number: 9862
Registered: May-04
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| Posted on Sunday, February 25, 2007 - 02:18 pm: |
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And get's 10 M.P.G. of the expensive stuff. If he keeps his right foot in his lap. |
Silver Member Username: Serniter
Piscataway,
New Jersey
USA
Post Number: 125
Registered: Mar-06
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| Posted on Sunday, February 25, 2007 - 03:18 pm: |
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Nice car.. 11.5 comp? I dont know much about earlier cars but isn't that high compression for a '73? |
Gold Member Username: Arande2
400dB could probably d...,
SouthWest Mi...
Too Many DBs...
Post Number: 1659
Registered: Dec-06
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| Posted on Sunday, February 25, 2007 - 03:26 pm: |
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What do you mean what does he say about it? He uses a Pioneer Elite receiver, a Sony Plasma, some of the Studio series and a Seismic 12, and a Pioneer Elite Dvd Player. It's nothing special. He may have changed it by now. I'd say he saved ~$5k. Pretty good if you ask me. |
Gold Member Username: Nuck
Post Number: 6037
Registered: Dec-04
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| Posted on Sunday, February 25, 2007 - 04:07 pm: |
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The block was a factory special, with webbed center's ,4 bolt through, the heads were W2's and were ezhaust ported to thinness!
Exhaust is a 1 3/4" through Flowmasters.
It grooves. |
Silver Member Username: Rysa3
Houston, Texas
Post Number: 117
Registered: Nov-06
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| Posted on Sunday, February 25, 2007 - 07:08 pm: |
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Thes type of discussions are alwsy interesting. I don't begrudge hi end audio dealers a profit. But Jan pointed out the obvious; there is only a small, and frankly dwindling market for Mcintoshs/Krells etc, so a dealer must make a big profit on a single sale in order to stay afloat. So we agree on this actually. Thats the point. My point is that a customer doesnt have to elect to pay it in many7 instances if they are knowledgable.
Now lets look at the Revel Ultima Salons discussion. These speakers retail at 20,000 a pair. There are four pair I can have today at about 8500-9000 for each pair over at audiogon and there are pics and a sales track record to indicate they are like new. No waiting. Side by side with a new out of box pair ( after a 4-6 week wait?)-- blind listening will show no differences audible in all liklihood.
On the authorized vs non-authorized dealer; this is another area of controversy. Authorized dealer arrangements tend to be financially based in principle on propping up pricing and restricting access and trying to guarantee a certain sales volume to all parties as a way to stabilize economics so to speak for a mnaufacturer primarily and secondarily to an authorized reseller.
The problems come into play whern an authorized resller cant make quota/sales volume. Answer: Where do you think non-authorized dealers get their stuff from? They dont get it from the manufacturer of course. They get it from the authorized dealers. And those dealers are not selling to the grey market at a loss, but the consumer gets the product a lot cheaper. DO the math and figure it out. While there are permutations to the above story; the concept remains the same.
There are many manufacturers and distributors who question the survivability of high end audio due to many current factors. I agree that lots of really excellent equipment manufacturers will go by the wayside over time. I agree and unfortunately, having the better products is no gurantee of surviving at all. Many thing that the av123.com or ascendaudio or axiom audio approaches will survive and that the Meadowlark approach won't. ( whoops too late on that one).
Again, I am not begrudging anyone their money here; but theres a fairly wide markup in real dollars between full retail and dealer invoice. I deal with this every day of my life in some fairly high numbers. |
Gold Member Username: Nuck
Post Number: 6039
Registered: Dec-04
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| Posted on Sunday, February 25, 2007 - 07:18 pm: |
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Meadowlark Shearwater Hotrod's, 2000 for 2 years at a dealership here, they will rot there, too. |
Gold Member Username: Jan_b_vigne
Dallas,
TX
Post Number: 9864
Registered: May-04
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| Posted on Sunday, February 25, 2007 - 10:52 pm: |
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"On the authorized vs non-authorized dealer; this is another area of controversy. Authorized dealer arrangements tend to be financially based in principle on propping up pricing and restricting access ... "
Do you seriously think someone tries to restrict access to $20,000 speakers?
This "propping up" pricing works to the client's advantage also. When you buy a high end product with limited distribution, you pay a set price. When you go to resell the product, everyone knows you paid that price. It's like buying a Honda that isn't sold to fleet companies or a Ford that is given away to fleet companies to make slaes numbers look good. Which has the better resale? You are looking at one aspect of pricing and not considering the whole picture. How much can you get for a year old Yamaha receiver? How much for a year old Audio Research? How much for a ten year old A.R. amp?
Dealers do not, on average, stay afloat by selling $20,000 speakers or $10,000 amplifiers. They stay afloat by selling lots of lower priced gear in between the big sales. For every Mac amplifier a dealer sells, thirty receivers will go out the door. For every pair of high end speakers sold, a couple dozen "average" sets will leave the shop. A dealer might not even stock a $10,00 amplifier other than the demo unit but there will be a dozen $300 CD players in the stock room.
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Silver Member Username: Rysa3
Houston, Texas
Post Number: 118
Registered: Nov-06
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| Posted on Sunday, February 25, 2007 - 11:37 pm: |
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Thanks for the response Jan.
The fact that a 20,000 dollar pair of excellent Revel Ultima speakers can be had for 8500 in seemingly perfect condition would seem to debunk your theory regarding maintenance of resale value however.
With regards to resale values, Honda tends to hold its value because it's a better more reliable car, not based on a fleet contract or lack thereof. The era of the fleet contracts guaranteed a certain mediocrity among US Domestic brands BTW. Not having to be competitive was the real killer there. Nothing else.
Now lets talk about my meaning of restricted access. I would like to use Plasma Television brands as an obvious example. Fujitsu has "restricted access" Getting a grey market Fujitsu is almost impossible. Pioneer is another brand that uses an authorized reseller arrangment that is very tightly controlled, although you can purchase on the net. Fujitsu has no internet purchasing. Panasonic is open competition with no authorized reseller restricted access type situation ( You can use "controlled access" if you want).
Currently, Panasonic has the greatest market share by far and has the highest ratings of all plasmas. Their QA is near perfect ( they throw away defective ones right off the line). Their dead/stuck pixel return policy is liberal.
Pioneer has excellent displays and many prefer them over Panasonic too. Their QA isnt as good, and their dead/stuck pixel policy is more restrictive. Their pricing for a same size display is much higher than the ubiquitous Panasonic, and many fear they will get out of the Plasma business altogether if they dont turn a profit soon. They don't sell enough, despite a GREAT product.
Fujitsu is the most restrictive. AT one time they had far and away the best stuff out there. 5 years later, they have a minute market share, exorbitant pricing, and the rest of the field has caught them.
Depending on how authorized reseller arrangements are done, their presence can be quite restrictive, I assure you.
AS far as the selling of a bunch of little products and a few big ones, thats true to a point for sure. However, I see stores being able to carry less and less lines due to these anti-competitive arrangements. What I do see is higher end stores focusing on Home Theater installations as a profit center and basically installing packages to carry the few lines they do have.
Like I said, the whole reseller thing is going to make it tough for a lot of manufacturers to continue. Its already happening. |
Silver Member Username: Rysa3
Houston, Texas
Post Number: 119
Registered: Nov-06
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| Posted on Sunday, February 25, 2007 - 11:41 pm: |
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Folks seemed to like the Kestrels and the Herons as far as Meadowlarks line. Thye still sell for reasonable dollars, but they are out of business. I never cared for the line myself, but lots of folks like them. |
Gold Member Username: Jan_b_vigne
Dallas,
TX
Post Number: 9871
Registered: May-04
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| Posted on Monday, February 26, 2007 - 05:31 pm: |
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"The fact that a 20,000 dollar pair of excellent Revel Ultima speakers can be had for 8500 in seemingly perfect condition would seem to debunk your theory regarding maintenance of resale value however."
I don't think so. First, anything is worth what someone is willing to pay and (almost) anything of value can be sold faster if it is sold cheaper. I would guess there are a few sellers surprised that someone else will let a pair of Revels go for that price. But it is difficult to bring the price up once it has gone down. You do have to stop and ask yourself, however, why there are so many used $20k speakers from one line available. Still, while Revel gets good press, a better known name with an established reputation for good quality will do a better job keeping resale price up. Check some Martin Logans, Theils or Wilsons, companies that have been around the block once or twice and treat their dealers well.
"With regards to resale values, Honda tends to hold its value because it's a better more reliable car, not based on a fleet contract or lack thereof. The era of the fleet contracts guaranteed a certain mediocrity among US Domestic brands BTW. Not having to be competitive was the real killer there. Nothing else."
I'm afraid most market analysts would disagree as much as I do about several of those statements. Everyone (but you) concedes fleets sales hurt used car prices. The facts that Honda does not offer rebates or incentives and does not have large fleet sales have long been cited as reasons contributing to Honda's higher resale value. The perceived value of the line is most apparent in its high return customer base, one of the best in the industry. Whether they build a better, more reliable car is increasingly in question as reliability of all cars has increased to the point Pontiac has on average fewer new car problems today than Nissan did five years ago. (Those who have read my comments know I have driven Hondas for thirty years and feel I owe my life to my '75 Civic. IMO they are one of the finest automotive lines on the market at any price. But saying fleet sales don't affect resale is simply whistling past the body shop.) In short, resale is ultimately affected by selling price. A new four door, automatic, four cylinder Accord LX sells for the same price the first day in hits the lot as the last day (with few dealer incentives to muck up the works). Not so a Ford, Chevy or Nissan.
I guess I don't understand how your TV examples support your ideas of restrictive trade. Earlier you stated, "Authorized dealer arrangements tend to be financially based in principle on propping up pricing and restricting access and trying to guarantee a certain sales volume to all parties as a way to stabilize economics so to speak for a mnaufacturer primarily and secondarily to an authorized reseller." It would seem your Fujitsu example actually makes the case that this is not true.
Is it possible Fujitsu has voluntarily left the consumer market for more lucrative sales elsewhere? Not always, but most often, a superior product will win out though not always in the discount driven consumer market. And, I'd seriously disagree with your assessment of Pioneer's "tightly controlled" dealer arrangements. Virtually any decent shop can and does sell Pioneer Elite today. That wasn't the case a decade ago.
"Depending on how authorized reseller arrangements are done, their presence can be quite restrictive, I assure you."
I've never, to my recollection, found myself in a situation where I was selling a product with good dealer commitments where I didn't feel it was a benefit to me not to have to compete with five other dealers selling the exact same product. If that is your idea of "restrictive", I think most good dealers would willingly go along with the way it works. There are always those that prefer to be less than good dealers.
I don't want everyone selling what I have worked hard to get, develop as a product line and keep. Ask any original B&O dealer how they feel about the company's policies today. I have sometimes wished for less restricitve policies when I needed another brand to close a sale but never the other way around. 99 times out of 100, "restrictive" trade policies work to the dealer's benefit. If the product is marketable, the manufacturer often can have their choice of several dealers in any one geographic area. I fail to see how "restrictive" trade benefits the manufacturer other than having a dedicated store which will work over time to build the line. Most often even established companies will want to get into an area or decent shop. Once in, dealer support is part of the two way street both parties walk.
"AS far as the selling of a bunch of little products and a few big ones, thats true to a point for sure. However, I see stores being able to carry less and less lines due to these anti-competitive arrangements. What I do see is higher end stores focusing on Home Theater installations as a profit center and basically installing packages to carry the few lines they do have."
Profit margin comes from all sources and it is the only thing that counts at the end of the month. If you continue to make the same profit on the same number of sales year after year, you're doing something wrong. And, as you might guess, I think your ideas of "anti-competitive arrangements" are being seen from a consumer's point of view and not a dealer's or manufacturer's.
While I agree that low ball used prices do not benefit any product line (see my references to fleet sales above), that is but one of the many reasons manufacturers and dealers are rethinking their markets. HT has altered the playing field as much as internet sales have. But dealers who are willing to work both sides of the coin can actually "carry" more lines while having less product in stock. That benefits no one either.
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Silver Member Username: Rysa3
Houston, Texas
Post Number: 120
Registered: Nov-06
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| Posted on Tuesday, February 27, 2007 - 12:55 am: |
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Hmm. Intersting post Jan. I did actually read it through. I think there is some validity to some of the things that you are saying, but I obviously don't truely agree with a lot of it through your posts to be honest.
I do think that mark ups by dealers with authorized reseller arrangments and restricted product channels is very very high, and I do think these things can be negotiated in most instances.
I also see a lot of high end equipment manufacturers, particularly among speaker lines, going out of business over time as well. |
Gold Member Username: Jan_b_vigne
Dallas,
TX
Post Number: 9879
Registered: May-04
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| Posted on Tuesday, February 27, 2007 - 11:28 am: |
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"I also see a lot of high end equipment manufacturers, particularly among speaker lines, going out of business over time as well."
That is the nature of the cottage industry that is most of high end audio. Far too many excellent designers have little to no real business skills. They can design a ciruit that will amaze even the most cynical EE but they can't balance a check book.
I still own a pair of Spica Angelus speakers designed by John Bau in the late 1980's. Spica has become a bit of a cult company because the designs were all well accepted and they had considerable commercial success for a small, hand built high end product and then they just disappeared from the market. Bau just simply closed shop one day saying he was tired of the gamesmanship that went on in the high end audio world and he had better things to do with his life.
I sold Superphon pre amps in the late '80's. Stan Warren, the founder of Superphon, was the last half of the original PS Audio company. The Superphon per amp was considered a superb product at a more than reasonable price - but it was unreliable due to pushing circuits beyond their limits to get the additional last bit of information. His suppliers stopped producing a critical part for the pre amp and his financial resources didn't allow him to continue. There are dozens of stories about why high end companies go bust.
I owned a Dayton Wright pre amp at one time. State of the art! The company was subject to a laundry list of embezzlement, stolen circuit designs, bankers/investors covering their own rear ends and hostile take overs which left Wright all but bankrupt and in massive debt before he finally called it quits after loosing control of his company.
None of these things had anything to do with dealer contracts other than dealers expecting to find support from a manufacturer who was not there when needed - for whatever reason. It is just the way the high end portion of the business operates and dealers face similar problems everyday. Opening a high end audio shop because you love the gear is about the dumbest idea in the world. Take that to the bank and try to get a loan!
"I do think that mark ups by dealers with authorized reseller arrangments and restricted product channels is very very high, and I do think these things can be negotiated in most instances."
Think what you like. Mark up on electronics and gear other than speakers averages 40%. Most speaker lines are 50%. Dealer incentives are floated by most companies once or twice a year and every now and then a manufacturer will sell off some "B" stock. It is not uncommon to find a dealer willing to blow out a product that has sat too long in the stock room (Revel speakers perhaps?). I don't know of any dealer in the current high end market who can afford to give away very much of that profit. Negotiate away! I did learn early on that you don't get what you don't ask for. But keep in mind that you want that dealer to be around in the future. That can't happen if you grind every penney from their profit.
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Silver Member Username: Rysa3
Houston, Texas
Post Number: 121
Registered: Nov-06
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| Posted on Tuesday, February 27, 2007 - 03:22 pm: |
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Jan- Your post is interesting and informative. I like the revelations regarding your past experiences as well. Really.
I am wondering if certain lines tried a bit more wide open distribution channels, assuming they could get the access, if they wouldnt still be around. For instance, what if Foleys distributed Spica Angelus speakers in their electronics department? Would Spica Angelus still be around? There are many reasons to shoot down the possibility, but what I am getting at is availability and competitive pricing.
Folks pay some dollars for Bose setups and it seems those same dollars could be spent on better equipment and manufacturers would still be able to fly. The cottage industry/authorized reseller arragements really seem restrictive. Sorry--its just what I think.
Also, I personally dont try and squeeze pennies myself. But I am not hip to paying full retail for stuff either. Although I did for my Honda Civic Hybrid! hehe. |
Silver Member Username: Stefanom
Vienna,
VA
United States
Post Number: 397
Registered: Apr-06
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| Posted on Tuesday, February 27, 2007 - 03:34 pm: |
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"But I am not hip to paying full retail for stuff either."
What did you pay for your speakers versus their retail price? |
Gold Member Username: Artk
Albany,
Oregon
USA
Post Number: 4190
Registered: Feb-05
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| Posted on Tuesday, February 27, 2007 - 03:41 pm: |
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"But keep in mind that you want that dealer to be around in the future. That can't happen if you grind every penney from their profit."
That's exactly why I'm willing to pay more at a locally owned dealer than at Magnolia. I negotiate at Magnolia and at the others I don't have to, they want me back as a customer and I want them to stay around, so the customary 10% is fine with me. |
Gold Member Username: My_rantz
Australia
Post Number: 1213
Registered: Nov-05
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| Posted on Tuesday, February 27, 2007 - 05:02 pm: |
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If a dealer isn't happy to let a product go for an agreed price then so be it. Usually a price is negotiated between the customer and the dealer and both can part satisfied with the deal. No one is forcing a gun to either party's head, it's a take it or leave it situation for both, but a dealer who'll look after a returning customer well, will see that customer returning again and again. Like my dealer has. RRP here means recommended retail price which is usually set by the distributor and is really only price guide for intending buyers. Usually, it is good to make some profit rather than none - providing that profit is worth the trouble (which really only amounts to making an invoice and replacing the stock). I will always ask for a better price and in most cases get it. The person who never does will lose a lot of money in their lifetime. |
Gold Member Username: Nuck
Post Number: 6059
Registered: Dec-04
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| Posted on Tuesday, February 27, 2007 - 05:16 pm: |
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My dealer emailed me today, as I put him onto this thread.
Giving away taxes here is 14%, just dropped 1% from 15.
Also bear in mind currencies.
The Euro is good, the greenback i saverage and the Loonie is up considerably in the last 3 years, 1.5 in fact.
The lad has to buy a few sets to get a price, and be able and willing to sit one one set(one was sold, thus the order), store 1, and, what demo 1? Gotta do that, but the demo drops in price.
So he sells one and sits on, say 1 and a half.
The dollar rises fast, your profit is Ghandi.
BTW none of that was in the email from him. H just said that it's tough gig. Gotta be smart and QUICK.
Also the Ultima's were at 13k on the tag. My bad. |
Gold Member Username: Artk
Albany,
Oregon
USA
Post Number: 4191
Registered: Feb-05
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| Posted on Tuesday, February 27, 2007 - 05:39 pm: |
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Some profit rather than none doesn't pay the bills if you don't sell in volume. That's why I don't begrudge the small local dealer his/her profit as I want to do my part in helping them stay in business. I guess I see it as my responsibility as a consumer and hobbyist to do business as often as possible with folks who have our interests and our hobby in their heart. And all of us know those folks usually as soon as you meet them.
We have a fabulous new retailer in Eugene that sells only from their home and carry just a few hi end brands and Rega (ofcourse) and they have treated me very well. I didn't even buy my Apollo from them and they are taking care of the softeware issue and loaning me their demo (without my asking). I haven't bought a thing from them...do you think I will when given a chance...oh yes. Will I be happy to give them the money they deserve for the kind service they provide...oh yeah. This weekend I'm going down to see them and they are really excited about giving me a demo on a Roksan Radius...they know that I'm broke and can't afford anything but they are so excited about analog and vinyl that they can't wait to share it. That's the kind of service and enthusiasm that is worth more than you can calculate in dollars. Just my opinion. Sorry if every word is mispelled as I'm at work and in a hurry. |
Gold Member Username: My_rantz
Australia
Post Number: 1214
Registered: Nov-05
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| Posted on Tuesday, February 27, 2007 - 06:01 pm: |
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Sorry, Art - some profit rather than none does indeed help pay the bills - even so, the dealer still has to calculate his costs into the equation. I'd rather get the best price instead of the next guy. Remember, no one is holding a gun to anyone's head to make him do the deal. It's up to the dealer. |
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