Does anyone or does everyone pay retail price?


I've never bought "new" higher end audio (4k-up) , does everyone pay the MRSP or is there a little or alot of $$ to neg. when buying from a local store? Amp.,speakers,etc.

Gary
garypic

Showing 1 response by kirkus

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.