Never Paid Retail on any audio!!!
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I have been a small dealer for a long time and can tell you that it depends on who you talk to and what your relationship is. If someone Emails me and asks my best price it is list. If someone comes in and is willing to negotiate a price that is fair to both of us I am open to it. I have been a dealer for a considerable number of high end products and have never been ask to give assurances that I would never sell below retail. What is expected is that you do not engage in blatant discounting to get sales outside your territory. It is expected that you give good customers some consideration, how much depends on circumstances. A really high end store has an enormous overhead and you will rightly pay for the convenience of being able to hear a large selection of expensive components in the same place.
I'm sure it depends on many factors. Especially in a normal economy.
Times are a little different now.
Most businesses operate on credit. When the sales are slow, the HELOC is closed, the credit card limits reduced and the savings are being depleted....a store might have to discount certain items as if they were a Compton foreclosure just to keep things rolling through tough times.
If the store (and owner) are debt free and flush with cash, they can scoff at your requests for a discount. Of course, this has more to do with the hubris of the owner/salesmen, rather than their lack of economic comprehension. I have a feeling that these stores are more the exception than the rule.
That's just the way it works when you unwind a hyper-leveraged economic system...and that's what's going on now just in case you hadn't noticed.
I expect to see many audio dealers/manufacturers chase the market down (with their discounts/pricing) just like the homeowners...sometimes to the point of bankruptcy.
Should the dealer have to eat it all?
No...absolutely not. The manufacturer might want to wake up to what's going on also and cut the dealer a retroactive discount.
If you really want to see how cheap things *really* are currently. Just ask any dealer that is a buyer of used equipment what they'll pay YOU for a piece of your equipment if you're not intending to trade up and just want to sell.
They don't *want* anymore inventory.
They *need* cash.
Despite the MSRP, does anyone know what the markup is on equipment? Is it different than a luxury car dealership? Whenever there is a post about it, it just seems that the industry is wound so tightly that dealers and retailers have no room to negotiate. It just sounds like the audio industry has been suffocating itself for a very long time.
There are some Mfg's that sell 'seconds' directly for greatly dicounted price.
On inspection I found no cosmetic defect at all. It is merely a way to bypass their distributors.
I saw some speakers advertised by a dealer as 'mint trade in' For a good price. When I inquired what veneer they were in I was told I could have any finish I wanted.
This was someone who wasn't supposed to advertise new below a certain price level.
As to the orig Q...
I've paid for new stuff and for used stuff... but I don't think I've paid the list price exactly in any case.
Dealers have ther overhead as Stan said... and every dealer will make or be forced to choose if they let a qualified buyer 'walk' out on them, given the parameters specific to the deal.
There used to be price protection with some lines, geography or regional protection as well. Both of these plans were to protect dealers and provide good profit margins.
Much of this ideology was overseen and enforced on ADV items.... posted pricing.
What happens behind closed doors is a whole other world. Just don't expect the bottom to fall out of the list price, when you go to close a deal in a BM retail outlet with brand new pieces. Then we're back to the relationship, item, overall $$$ being spent, cash, credit, trade, previous business, close out, demo, support, service, etc.
I'd say a 20% discount on new gear is an average to good deal in a flat out, 'see ya later' transaction. So more off would be better of course.
There are too, those dealers that simply won't move off list, begrudgingly (if at all) allow auditions, etc. and let folks walk out on them all day long. I neither waste my time there, or their's and seek out those which are more customer friendly and accomodating. It confounds me how they stay in business.
In fact I'd pay more to those who are attendant to my own needs, than to a jerk selling the same thing for another 10 to 15% off... but that's just me and my ways. I think people matter and are more than just another 'faceless deal'.
My exp in retail showed me looking to genuinely attend to a customers needs and providing them a fair deal was sufficient to obtain their return and gain referrals. Nailing someone for at or above retail list price does get ya a couple things Namely, a one time deal, and most likely a remorseful buyer that can be detrimental to your business reputation., via the best or worst advertising, word of mouth. Good news travels fast, bad news goes faster.
I think a big problem for many is the level of their expectations following some good experiences in buying preowned gear, here or elsewhere. One can get used to buying quality made components preowned and be pretty happy doing so . Discounting the items that come with buying new.
There are however some exceptionally positive attributes going with new gear. Notably, the prospect another may gain still greater savings buying that piece later on in the preowned market perhaps.
Cyclonicman, the industry term is "points" of margin, which describes the percentage of MSRP that is profit to the dealer. That is to say, if the a product retails for $1000 at 40 points, dealer cost is $600 . . . because 40 percentage "points" ($400) is the dealer's profit. Having said that . . .
Electronics are usually 40 points.
Freestanding/bookshelf passive speakers are usually 50 points.
In-wall speakers usually start at 50 points for the lower-priced, increasing to about 75 points at the top of the line.
TVs and video electronics are usually 20-30 points.
Pre-made cables are usually 50-60 points. Bulk installation wire is usually more.
Racks and furniture are usually 50 points.
Phono cartridges from major cartridge manufacturers used to be obscene, like 75 points or more . . . but this isn't as much the case anymore. Cartridges from electronics manufacturers (i.e. Linn, B&O) were usually more like 40 points.
You may be thinking, wow, that's a lot of profit!! But there are many things that can erode the margin, such as . . .
Freight costs - most manufacturers charge freight unless the order is a substantial number of pieces. For any defective returns, the dealer generally has to pay the freight.
Credit card fees & chargebacks - putting something on an Amex card can take 4% of margin away from the dealer. Also, the "buyer's protection" plans that many card companies have simply debit the merchant in the case of fraud, with virtually no recourse.
Display inventory - once a product comes out of the box, it's instantly worth less money.
Backstock - the worst kind of non-performing asset.
I can definately feel it both ways - on one hand, running a hi-fi store is NOT something people generally get rich from, so it's not intrinsicly high-profit. But on the other hand, so many dealers have no idea how to actually earn their margin . . . the only way they can add value is to leave money on the table. Which in a long-term sense, won't keep them alive.
I don't think it is always up to the manufacturer what the shop prices are. I think a large part of the prices are dictated by the distributor/import company. The small exclusive audio shops dont do big sales since they have little or no stock. The big shops do have sales so they can get rid of old stock or because they buy in bigger volumes so they can get a bigger discount from the distributor.
Agree with Stanwal. The margins in the industry when mid to high end audio was in demand when people had lots of disposable moeny to spend kept them going.
However, even then, most retailers were moving to 'custom installations' where they can charge $100/man hr to install a system and the money is being made there...not on the components per se. Within this economy, more retailers ae moving in this direction to survive and are now carrying lesser priced components that revove around a home theater set-up.
Carrying high end 2 channel audio and selling for 20 point margin will put a retailer out of business in short order. The margin is too low and many people come look, listen then buy used or where they can get another 5% off. So don't be surpirsed if your dealer doesn't have the stock they used to; they can't afford the carrying costs or have the inventory sit there and if they sell it for a 20% discount, they get in trouble with the OEM and can't make enough to stay in business.
Some audio components are only 30 points and some high end cable OEMs are only 45-50 points. But most HT customers just don't care on the cables and run the cheapest thing they can to het it all hooked up and ae willing to pay $100/man hr for the installation which can really add up to serious money.
The worst of all OEMs are those that protect territories and prices among individual dealers but then have a special program for internet sellers that often do cut prices. I won't name names.
Standard mark-up in the industry is 40-50%. There's lots of overhead in 'bricks and mortor' stores and audiophiles are very cautious with there purchases. A lot of people have gone into the retail side because they love being a part of the high-end scene. Business failure rate is incredibly high. It's hard to believe that anyone would pay retail these days, unless it's for a lower price tweek of some kind. I suppose that some established dealers will survive the recession, but sadly most will find this to be the 'last straw'. Inventory 'fire sale' will probably then be made available on a site such as AudioGon.
And mark-up is only part of it. Collecting sales taxes are an extra burden on the local dealer, 6% in my state. The local dealer doesn't have a chance with many of us.
Add the 6% plus MSRP, I can usually get at least 15% plus the 6% sales tax from mail order/out of state dealer (not collecting out-of-state sales taxes), the local dealer has to give me 21% off to compete, not really fair to him. The added personal service, possible auditioning has to be worth the extra 6% to you.
I'm not making any judgement calls about state sales taxes and/or dealer markups, I'm simply bringing to light consumer considerations. Dealers seem to have it tough, state sales taxes, likely higher overhead costs, contracts stipulating no out-of-state sales all serve to make life tough for them.
I bought my system about six years ago. The front end (TT, arm, catridge and CDP) and the speakers were new from a dealer. The electronics (amp, preamp, phono amp) were used from Audiogon. The dealer set everything up and provided excellent service for which I paid MSRP. In the six years since, I have upgraded the electonics with items found here on Audiogon.
Paid retail only once @ a local BM store, anticipating and having an understanding (which wasn't mutual, it appears) that the dealer would provide an adequate after-sale service...you know, loaner when the damn thing broke, promptly getting accesories from the distributor for which I'd naturally pay etc. None of it had happened,the dealer took my money and laughed all the way to the bank... so no longer an audio virgin, I made a promise to myself that I'd never ever pay retail again and beat every BM store dealer to the last bloody penny, if I ever were to buy anything from them again. And expect nothing in return. I did keep my promise!
That 40% mark-up that some talk about here forget just a few small expenses a B&M store has to contend with to keep his doors open.
* Rent on the building (can be a big cost.. Location, Location!)
* Utility bills
* Phone bill
* Yellow page ad in the phone book
* Fire content insurance premiums
* Liability insurance premiums
* Advertising expenses
* Fees paid to the accountant
* Possible interest $$ for Bank line of credit to buy inventory?
Many manufactures require payment up front before they will ship their merchandise. And of course that is plus shipping costs as well. So if the B&M store is of any real size he has to have a banker.
* Business permits, Fees, required by the city, and or state.
* Employee/s base wages
* Employee/s commissions (percentage $$ for selling an item)
* Employee State unemployment insurance
* Employee workman compensation insurance
* Matching FICA taxes on wages
* Any health benefits?
* Any paid holidays?
* something I probably left out....
* Owners wages?
* Owners health insurance premium?
....... profit .........
How could a dealer possibly give a 20% to 25% discount to every customer coming through his door?
you are correct jea48, and there's the cost of the money(itself) they need to operate...same applies to manfacturers....and shipping is higher than ever too. when i worked for a manufacturer, our 'raw' cost of goods was about 20 percent of wholesale. the wholesale in turn was 50% off of retail. throw in all the above, as well as advertising co-op, marketing, travel to bs shows, mia gear, payments, etc, and you're lucky to keep your head above water.....the business was murder fifteen years ago, can't be anything but worse now. you really have to love it to hang in at any level.
That 40% mark-up that some talk about here forget just a few small expenses a B&M store has to contend with to keep his doors open.
There is a larger force at work...haven't you noticed anything a little...say...different lately?
Let's call him "Mr. Market".
Mr. Market doesn't care what your overhead is. Mr. Market doesn't care about your rent, your insurance, your utility bills, your employees salaries or their healthplans.
None of it.
In fact, Mr. Market is a pretty insensitive person. He doesn't care about anything. Mr. Market doesn't care if you can keep your house or even feed your family.
Mr. Market is going to give audio manufacturers, audio dealers and even private sellers of used gear on Agon a very uncomfortable lesson in Economics over the next few years.
We can choose to live in denial, but the fundamentals will win out every time.
I have paid retail but ... I have always received something in return !
Discounts can be hard to come by in some situations but incentives can be had in the form of on hand/in stock merchandise . I have received interconnects , speaker cables , speaker stands and CD's as a 'reward' for doing buisness with retailers .
It doesn't make a lot of sense but it works for me !
Good luck .
I think there may be a 'sample bias' issue here in that many Audiogon users actually use the commercial side of this website. As some mentioned, the 'installation' and design/customization business has grown significant, and effectively, those people 'pay retail', even if the equipment cost plus the time cost is less together than it would be separately because the dealer is effectively getting more money for his time than he would without the package. In addition, there are plenty of people who pay because their time is worth more than the difference when they kibbitz. They are happy to pay for great stereos, but they also have decided they do not need to spend a lot of time learning about it and feeding the habit. They have the money but not the time. There are times I wish I was in their shoes.
I paid retail for my ESP Bodhran SE speakers plus freight. They were custom built with my requested finish. So, it would be unlikely to receive a discount on a rare product custom built to your order. If I ever sell them, the next buyer will be getting the great deal.
I paid retail for my Cary Sli50 and don't regret doing so. Most of my other equipment i purchased used here on A-Gon so I got a good deal on those pieces.
If it's something you really want, I don't think it's wrong to pay retail. I often receive discounts from my local dealer, but I don't demand it.
I paid retail once, the very first time I bought hi-end amp. I had bought whole system for 15% off at first, then found out the 200 w amps not good enough. To upgrade within first month to 400 w amp, i had to pay full price for the amp. It was worth it though as I kept the amp for a long time and it was very very good.
I would pay retail (or buy a demo unit) if I wanted to demo the unit at home, and especially if it was a high demand unit with high resale value (such as McIntosh or Audio Research). Like many audiophiles, I like to try different things, and dealers don't stock many items, so I just end up purchasing used here, and if it doesn't work out, sell it again. Of course, somebody must be buying new in the first place.
The trouble with audio is that you can't just walk into a dealer, listen to a system, and know how it will sound in your home. One of the local dealers does well with cash flush people looking for gear that is high end to show off in their $500,000 condo, those guys aren't picky as long as the gear is flashy and has a "name". These are the same guys that had an incredible Dynaudio C4 playing on a McIntosh MC275 amp: terrible combo (no juice for the speakers) not to mention the listening room was a big, square cinder-block room with no acoustical treatment whatsoever.
Dealing with audiophiles, many are much pickier, as gear matching can be finicky, and we are often looking for brands other than the big ones that are easily found. The other thing: I am no audio expert, but find myself more knowledgeable about gear and system matching than most people at a dealer. They seem to only know what they sell, and if you ask how your source might match with that preamp they are selling, they give you a blank look. They have to run a business, I get to fool around on the forums, read threads, and see what is working for people.
With that said, if I had money and had a great local dealer who took care of me, I wouldn't hesitate to spend my money with them, at full retail. I work in retail myself, and greatly value service and knowledge. Saving money is nice, but often isn't worth the hassle, and can cost you money in the end. The wrong gear at a discount is still the wrong gear. I do think it is unfortunate that so many customers place monetary concerns as their first, second, and third priorities when buying items. I think it is because we Americans buy way , way too much stuff. If we only made a few important purchases, things that were really dear to us, instead of buying lots of cheap stuff, we would be willing to pay for service, as the purchase would bring us years of enjoyment.
I bought retail Rowland 102 and Benchmark DAC1. Both of them have 5 years warranty but only for the first owner.
Buying new provides always newest revision of the gear. Buying used Benchmark might end-up getting older unit with thin sounding op-amps (Signetics NE5532) or high output impedance on unbalanced outputs. They already have about 10 revisions. Buying used Rowland was also risky since it was brand new technology (Icepower) and reliability was uknown.
A lot has to do with the price point of the product along with availability, and how desireable it is to own. A new Krell amp is not likely to be discounted while a new Cambridge amp may carry an expectation of a discounted price.
I doubt any Ferrari Enzo's are sold at a discount. At the same time, I doubt any Chevy Cavaliers are sold at retail.
In most cases, I can only afford the luxury ticket items purchased used.