Speaker MSRP

[Bob_99]

I probably should visit more high end shops but I was just curious to know if the places that sell speakers like Vandersteen, B&W, Dynaudio, Focal, etc. stick to the manufacturer's MSRP. I understand that it depends on the dealer but was wondering if anyone has gotten decent deals at these places.

Also, I noticed that most of these manufacturers offer 5.1 systems and curious to know how many people on this forum have gone with the manufacturer's sub versus buying something like an SVS.

Thanks

Bob

[thxgoon]

If you are willing to negotiate and stick to your guns I'm sure you could get any of those brands below MSRP, especially if you are buying a package. Speakers have a LOT of mark up in them so even at 25% off the dealer is making out well.

[Bob_99]

thxgoon wrote:

If you are willing to negotiate and stick to your guns I'm sure you could get any of those brands below MSRP, especially if you are buying a package. Speakers have a LOT of mark up in them so even at 25% off the dealer is making out well.

Thanks for the response. I didn't realize the mark up would be that high but the information will be useful when I start to shop around to update my system.

Bob

[thxgoon]

Bob_99 wrote:

I didn't realize the mark up would be that high

Ya, generally double or more from dealer cost

[lcaillo]

Most better brands have a profit margin of between 40% and 50%. Custom installation products can sometimes be more.

[lcaillo]

thxgoon wrote:

If you are willing to negotiate and stick to your guns I'm sure you could get any of those brands below MSRP, especially if you are buying a package. Speakers have a LOT of mark up in them so even at 25% off the dealer is making out well.

Actually, most dealers could not stay in business if not for the higher margins on speakers and other higher margin products. If a dealer (with an actual storefront) was to sell all of their speakers at a margin of 25% they would be history before long. I have been in the business for nearly 3 decades and have seen many dealers come and go, and a business just cannot be sustained at that kind of margin on everything. Also note that there is a difference between 25% markup and 25% profit margin.

[thxgoon]

lcaillo wrote:

Actually, most dealers could not stay in business if not for the higher margins on speakers and other higher margin products.

I understand this. Especially with the ultra tight HDTV margins and competition. Speakers, accessories, cables and extended warranties are what really keep these places in business. Not tv's computers and playstations.

I was thinking things might be different when you started to get into the level of speakers Bob99 was looking at, where 25% margins would be rather substantial, but then again I'm sure those dealers move much less volume.

I bought my first package of speakers from a business like this, and through a series of mistakes on their part and negotiations and time I was able to pay about 30% less than retail for them. As a business or a salesman, it's best to recognize these customers and take a quick easy sale at 20 points and move the product, then to sell nothing at all. I think that if you don't take up too much of their time there is nothing wrong with trying to strike a deal. Most people who know what they want also know that it can be found on the internet somewhere for a lot less.

[lcaillo]

Don't get me wrong, there is nothing wrong with negotiating a deal that you think is fair and getting the best price that you can. The point that I was trying to make is that a 25% margin is not, in general, a nice profit. Selling at that once in a while to get a deal that you might otherwise not get is a necessity in most locations. The point is that few dealers could survive at that kind of margin. Speakers have not yet become the commodity that video products have, and are one of the items that keep retailers in business.

[Sonnie]

Martin Logan is one of the strictest manufacturers I know of on their dealers. If they hear of a dealer selling below retail on a non-demo new product they will threaten pulling the line from them. This actually happened with me. I called around looking for a deal on a particular ML speaker since there were no ML dealers within 2 hours of me... closest was about 3 hours. It was going to be mail order no matter where I went. Well... I called one dealer and told him that such and such a dealer has quoted me a particular price (I wasn't really thinking logically when I did this)... and then asked that dealer if he could beat that price. The dealer stated he could not cut the price and that the other dealer was not supposed to do this either. Turns out that second dealer I called ended up calling ML and reporting the other dealer. He then advised me he could not sell me the speaker below retail. Of course there are always ways to get around this and I eventually got the speaker at a bargain price, but I had to jump through a few hoops to do it. I would simply shop around until you find the right price... sooner or later you will find it.

The problem I see with most manufactured subs from companies that primarily specialize in speakers is that they are not as good of a bang for the buck as someone who specializes more in subs, like SVS. Although the SVS 5.1 systems are an exception, mainly because you can choose your .1 sub from a line up of stellar subs.

[Bob_99]

Martin Logan is one of the strictest manufacturers I know of on their dealers. If they hear of a dealer selling below retail on a non-demo new product they will threaten pulling the line from them. This actually happened with me. I called around looking for a deal on a particular ML speaker since there were no ML dealers within 2 hours of me... closest was about 3 hours. It was going to be mail order no matter where I went. Well... I called one dealer and told him that such and such a dealer has quoted me a particular price (I wasn't really thinking logically when I did this)... and then asked that dealer if he could beat that price. The dealer stated he could not cut the price and that the other dealer was not supposed to do this either. Turns out that second dealer I called ended up calling ML and reporting the other dealer. He then advised me he could not sell me the speaker below cost. Of course there are always ways to get around this and I eventually got the speaker at a bargain price, but I had to jump through a few hoops to do it. I would simply shop around until you find the right price... sooner or later you will find it.

I had heard a similar story which partly prompted me to post my question because I was curious to know if other big name manufacturers were as strict with their dealers. If life is done throwing spit balls at me, I'm considering an upgrade of my system and this time I want to do it correctly by doing all my fact checking before hand and taking my time to audition as many speakers as possible.

Thanks to everyone for their input.

bob

[conchyjoe7]

While I certainly don't endorse what the dealer Sonnie was dealing with did, I certainly understand why the guy would not sell him the speakers at below cost. I have many close friends in the industry, and that have been in it for a very long time. Speakers and accessories are the last vestige of profit in the business. Receivers and the like may net you 10%. Big HDTVs are now even less margin than that. You're right that the higher end speaker manufacturers do try to maintain much stricter control of pricing than the giant Asian behemoths who are (semi) happy with what they sell their wares to the big box (and everybody else) stores for. Speaking for myself, and most likely Sonnie and others...I don't like paying anymore than I have to for speakers or celery for that matter and I'm betting neither does Sonnie or the many others that do without other things so that we may enjoy our "passion" whether it be for film or music or both...Everyone wants a good deal...everyone! That said, is there anyone here that works for free or who would be excited at the prospect? I think not. A dealer selling a pair of high end speakers such as Sonnie, myself and others have, have a very high overhead. Most high end manufacturers will not send them a "demo piece" for freebie...you can't in multi thousand dollar transactions. Many of them do not sell the multi thousands of units that would enable them to do such. So, if you sell a pair of speakers at 10K, and they cost you 5K+ to get them into the store, add in all the associated costs of retail and that man NEEDS to get a 50% or as close as he can get margin to survive.

I think we all know that Macy's, Belk, and all large dept. stores operate on a 100% MINIMUM markup on just about all of their merchandise and we don't scream and yell about that. I know my wife's jewellry is marked up at 500% most of the time along with Prada and the like. Let's also remember that putting profit on, and discounting margin off are 2 very different things. If you bring in something that costs you say $100.00 and add 100% to retail the item at, that brings it to $200.00...basic math here. But, if you take off 25% of the price, that 25% is $50.00 (25% of $200.00), or 50% of what he originally added onto his cost price. Now, if he has to discount the product by 50%, that means he is taking $100.00 off, or his entire 100% margin he originally added on making it so that he makes zero profit, unless of course there is some sort of "spiff" from the manufacturer.

Now, whether or not you buy high end speakers or high end anything, the fact remains that "high end" is where the passionate artists (disguised as physicists or electrical engineers) reside and most genuine improvements come from and subsequently "trickle down".
I love a deal, but I want the few (and dwindling) high end stores to survive and as such as long as I feel the deal is fair...he makes a dollar and I get what I consider a "fair" price, I will continue to patronize these stores. I think you will also find that if you go into these stores and do NOT spend the entire time trying to beat up the proprietor solely about price, you'll get a better price. We need to remember that very few owners of high end stores get wealthy doing that. They too are passionate about this wonderful hobby most of us here have chosen, and most of them delight in intelligent discussion about it. Next time, try it and see for yourself.
I hope this has made some sense to some and enlightened (versus angered) others.
Cheers,
Konky.

[Bob_99]

Konky,

I understand and agree with your post but just want to mention that a 100% markup on a $100.00 item is still just $200.00 while a 10% saving on a $15,000 system is $1,500.00 which would make me a happy clam. But seriously, I do think your points are pretty much right on target.

Thanks.

Bob

[Sonnie]

conchyjoe7 wrote:

While I certainly don't endorse what the dealer Sonnie was dealing with did, I certainly understand why the guy would not sell him the speakers at below cost.

oops... sorry... I typed that incorrectly. I meant to say below retail (MSRP), not meaning below dealer cost. The discount was respectable, not too much, but fair. He definitely made money for a easy sale.

[thxgoon]

conchyjoe7 wrote:

Receivers and the like may net you 10%.

Actually receivers are also up around 40% margin, most of home audio is. Good points in your post.

[conchyjoe7]

Bob: $200.00 was merely a figure I used to make it easier for the math challenged to follow what I was saying and had no basis in reality to any product at all. I agree with what you're saying about the $1,500.00, and frankly I do believe if you are looking at a system in the $15,000.00 range you will have no problem getting $1,500.00 off making you as you said "a happy clam", and making some salesman and owner's day as well...you will have received a fair price and he will have made a dollar...all will be well.

Sonnie: I thought you might have mistyped that, and I probably should have confirmed with you before writing, but in any case it got straightened out, and I personally actually felt sure you weren't trying to get anything below dealer cost...I do believe you are a dealer as well...no?! I'm sure you were a very easy sale as you knew exactly what you wanted and all parties concerned were happy with the outcome...based on what I've seen you say about your MLs, I KNOW you're very happy! (and should be).

THX: I beg to differ for the most part that receivers are in the 40% margin. While their theoretical MSRP may be along those lines, as we all know VERY few receivers sell for anywhere near their MSRPs. Now, I know there are a few very high end and or hard to obtain receivers that command such a margin, but they are few and far between, and today's run of the mill receivers are I still do believe in the 10% - 25% max margin...not much has changed since I was schlepping $199.99 brand "X" receivers around a showroom floor decades ago.

Basically, I think we all for the most part agree with the general premise that we all want a deal, but we all also want everyone to make a fair living; and that's what makes the world go around. I have run into a few sordid characters that have bragged online in a lot of forums as to how proud they are that they will and never do purchase anything that they can't get below dealer cost. While it's not my desire to do business with any of those folks; be assured should they run into me and I recognize them; they will receive a mega dose of their own medicine.

Cheers all,
Konky.
(still patiently waiting for my Eggleston Andras....)

[thxgoon]

conchyjoe7 wrote:

I beg to differ for the most part that receivers are in the 40% margin. While their theoretical MSRP may be along those lines, as we all know VERY few receivers sell for anywhere near their MSRPs.

This might be the case on the internet, but at your big box retailers the 10% off sales are 'good deals', that have the retailer still in the %25 margin range. Entry level receivers have much less. When I sold electronics, home audio was the most lucrative part of the store, second only to extra warranties and cables, but that's another story...