Do Dealers Who Deeply Discount Gear Hurt the Industry?
- Thread starter caesar
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He probably has one of the best audio systems for around 50k then. And lots of records and master tapes.
Does that mean you think the previous version is a bargain and are willing to buy Peter's as he upgrades to the latest?
Every product one way or another settles on the price it deserves. It’s an open market. And for those highly discounted prices, the retail was high in the first place, not the discount.
Those high markup products, Wilson/Magico or Rockport to name a few don't really have much appeal for a guy like me that's looking for the best bang for the buck. Most everyone has been in or knows someone in sales and being witness to the average salesman's lifestyle and realizing there's several more in the food chain above them gives us fair insight into the actual value of any product and then just how many sharks circle that water. I don't chum for sharks. Don't know how salesmen or politicians can sleep at night making a living that provides 0 service.
There are rare occasions I meet somebody more fluent in what they're selling than me and what I'm shopping for(unbelievably rare, be it car, motorcycle or specific hifi). These professionals have already made me for whatever they classify me as and offer me a discount without my asking. These guys earn and get my business. The place holders towing the company line of bs get nothing from me. Discounted products are essential and baked into the retail price already.
Disclaimer, written and posted before my morning constitution.
There are rare occasions I meet somebody more fluent in what they're selling than me and what I'm shopping for(unbelievably rare, be it car, motorcycle or specific hifi). These professionals have already made me for whatever they classify me as and offer me a discount without my asking. These guys earn and get my business. The place holders towing the company line of bs get nothing from me. Discounted products are essential and baked into the retail price already.
Disclaimer, written and posted before my morning constitution.
Lol, the sales guys in the audio business I know don't make much money.
Great topic and tough to answer. I do not pay MSRP for any product regardless if it is a washing machine, car, stove, or audio component. I spend a lot of time researching before I purchase any product. I know once you walk out of the showroom you have lost up to 50% of the value in many cases. You get more money on a trade or in selling on well-known established brands. I just want a fair deal and I want to feel good about my purchase. If I get a fair deal and I am happy then that retailer has earned my future business and recommendations to other friends which is important.
I have walked away from audio stores because they would not discount anything. It is their loss in my mind. I understand they have to make a profit and I am not asking for them to give me a $100 dollar over cost type deal. I just want a fair deal where both sides can be happy.
I didn't really answer the question but I am providing my perspective.
I have walked away from audio stores because they would not discount anything. It is their loss in my mind. I understand they have to make a profit and I am not asking for them to give me a $100 dollar over cost type deal. I just want a fair deal where both sides can be happy.
I didn't really answer the question but I am providing my perspective.
Having just bought a Gryphon 300 with DAC from the main dealer still under manufacturer warranty for 60% below the retail price, I don’t feel so bad. A big “thank you“ to whoever bought it about a year ago and then decided to get the 333.
Does manufacture keep setting insane prices hurt the industry?
Wilgolf, allow me to start saying that, in my view, the high-end audio and distribution model today faces several challenges today, one of which is pricing practices.
Concerning your post, allow me to provide a perspective (not as a consumer or retailer but as an importer) that you and others may not have considered. In other luxury goods sectors, e.g., watches and automobiles, brands that more tightly control their distribution and do not regularly offer discounts retain a much higher percentage of their resale value, thereby protecting the original purchaser's investment in a different way then achieving discounts at time of purchase. Rolex and Porche are two such examples.
Given many retailers' penchant for offering discounts (some rather large ones), consumers have come to expect them to protect their downside. Our strategy with our brands is a different one and while it may take longer to establish is the best path for the long-term.
a) we sell through a limited number of dedicated retailers that believe that at the price our products are listed represent high value for the dollar,
b) retailers that have the ability to clearly demonstrate that value
c) provide exceptional levels of service both at the time of sale and throughout the customer's ownership of the product and
d) are savvy and well-financed enough to resist the temptation to sell boxes and take a long term view of the value of a customer relationship.
This is not the norm in today's disaggregated marketplace, with a plethora of brands and retailers of all shapes and sizes competing for consumers' dollars, often with the discount being their differentiator. I place no blame on consumers for expecting discounts since they are widely available. On the other hand, we are of the belief that consumers should judge a products value in absolute terms and that the size of the discount is often a poor yard stick.
Allow me to acknowledge your approach of not forcing people to provide you with an outsize discount, rather offering a sincere opportunity to build a mutually beneficial, long-term relationship. That, approach in our view, is a win-win for consumers, retailers and brands.
Concerning your post, allow me to provide a perspective (not as a consumer or retailer but as an importer) that you and others may not have considered. In other luxury goods sectors, e.g., watches and automobiles, brands that more tightly control their distribution and do not regularly offer discounts retain a much higher percentage of their resale value, thereby protecting the original purchaser's investment in a different way then achieving discounts at time of purchase. Rolex and Porche are two such examples.
Given many retailers' penchant for offering discounts (some rather large ones), consumers have come to expect them to protect their downside. Our strategy with our brands is a different one and while it may take longer to establish is the best path for the long-term.
a) we sell through a limited number of dedicated retailers that believe that at the price our products are listed represent high value for the dollar,
b) retailers that have the ability to clearly demonstrate that value
c) provide exceptional levels of service both at the time of sale and throughout the customer's ownership of the product and
d) are savvy and well-financed enough to resist the temptation to sell boxes and take a long term view of the value of a customer relationship.
This is not the norm in today's disaggregated marketplace, with a plethora of brands and retailers of all shapes and sizes competing for consumers' dollars, often with the discount being their differentiator. I place no blame on consumers for expecting discounts since they are widely available. On the other hand, we are of the belief that consumers should judge a products value in absolute terms and that the size of the discount is often a poor yard stick.
Allow me to acknowledge your approach of not forcing people to provide you with an outsize discount, rather offering a sincere opportunity to build a mutually beneficial, long-term relationship. That, approach in our view, is a win-win for consumers, retailers and brands.
Fair points. I would be better off in the long run to buy used equipment but I have never been able to get myself to do that. I do have my end game system now so I no longer have to worry about haggling.
As you somewhat stated not all dealers are the same and the level of service vastly varies between dealers. This can take away from the buying / long-term relationship process and arrogance is a big problem with many.
I do find that most people have no idea how expensive it it to run a small hifi company or high end audio store.
They only focus on the "high" end price with NO concept of how that price came about.
They have no concept of small volume, R&D costs, operating expenses, taxes, crazy inflation rates, rent, payroll, money tied up in parts and inventory, cash reserves, utilities, machinery, shipping, cost of shows and marketing, etc. etc. etc.
I think it's very simple - companies can ask any price they want and people have every right to CHOOSE to pay it or not. If a majority of people agree it's overpriced either it won't sell or discounts will be offered. But if others are buying it, I don't understand why people whine and cry on the forums about how they can't afford stuff. Of course these very same people CHOOSE to spend money elsewhere in places I would never ever - $12 Starbucks every day, $80K pick up trucks, $5K TV's, new iPhone every year, etc. etc. and that's their right. I don't cry about how expensive those things are.
I know this wasn't the OP's point, but having 30 years in the corporate world and running businesses I see most people have zero clue about where the money goes on these expensive pieces of gear and instead just prefer to complain endlessly.
Trust me there is a lot of gear I wish I could afford but can't.
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Wilgolf, I believe we met at Steve's Taiko demo in California. It's great that you have your end-game system, and it's exactly what you wanted. If more buyers took the time and effort you did to find their dream system, there would be less need to sell something expensive that does not work long-term. Dealers who focus on helping a client meet their needs will be the ones who stick around and create lasting value. Enjoy the music!
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So I bought a Gryphon Diablo 300 amplifier with DAC module this week. The most recent list price was £22,000. so for an amplifier that in the UK probably has more dealers than it needs, there are three or four on the market, two are ex-demo dealer units priced at £11,000 and £15,000, and my unit which was priced at £9500, taken by the dealer as a trade-in for a 333. It is less than a year old, still has almost a year of manufacturer warranty and if there are any issues with it in the future I can go back to the dealer who I bought it from because they are a Gryphon main dealer. The dealer is 250 miles away, but is going to deliver and install it.
I have absolutely no issues buying used or ex-demo, but I want the same service and support as if I bought a new unit. It has to be the right product, I don’t just buy something because it’s a good deal. Two of my amp prerequisites were that the unit is black and that it fits in a space about 20 inches deep. I was interested in both of the Pass Labs INT250, which I would have bought new most likely at full retail price as a black one is a special order item, and the Soulution 330, which unfortunately only comes in silver and is far too deep. My primary dealer has an ex-demo 330, his starting prices for ex-demo are quite high so I would have negotiated with him.
I’ve worked in financial dispute resolution for over 30 years and been involved in thousands of negotiations, so I hope I’m a reasonably good judge of when a deal can be done or when I should respect that the dealer has to make a profit. To some extent, it’s an investment in a long-term relationship. For example, my dealer for analog phoned me up to offer me a Reed 3p he had in stock. Reed were about to increase their prices by 15% and he offered it at the original price, plus they were about to change the distributor which would bump up the price again, and in the end resulted in a further 20% increase. I had a new tonearm in mind, so it was an ideal sale where we both got we wanted. He also threw in a Zavfino DIN cable, which I’m using.
I was intimately aware of the finances of my main dealer before a change in management about 10 years ago because I was involved in resolving a claim when the premises were flooded and severely damaged, not least because they have demo facilities and most of their storage in a basement. Even though they’d been in business for almost 50 years and had become quite high end, they really had to work hard to make a profit. You have to sell an awful lot of hi-fi to pay central London rent and wages, which is probably why almost all new dealers that have set up in recent years are in barns in the countryside with much lower overheads.
Ultimately, every dealer I know that runs a successful business has a business model that offers significantly more to their customers than a box shifting store or an online retailer. There are many forms of customer engagement, giving the customer base the opportunity to hear new equipment and become familiar with, brands and products without any financial outlay. It makes investing in hi-fi more fun and less risky.
My take-away on this is how little Gryphon brings on the used market. Sounds like you got a GREAT deal. Nice job!
It feels like there is a case by case answer to the original question.
**Lower prices HELP the industry by:
1. Clearing dealer inventory.
2. Clearing old inventory of consumers.
3. Making a more affordable entry for newer audiophiles.
**Lower prices HURT the industry by:
1. Disrupting existing price structures of manufacturers, distributors, and dealers (ie. lower profit margins, more channel conflict).
2. Creating consumer angst if they paid more for the same gear.
3. Impacting used values in online and offline marketplaces.
**Lower prices HELP the industry by:
1. Clearing dealer inventory.
2. Clearing old inventory of consumers.
3. Making a more affordable entry for newer audiophiles.
**Lower prices HURT the industry by:
1. Disrupting existing price structures of manufacturers, distributors, and dealers (ie. lower profit margins, more channel conflict).
2. Creating consumer angst if they paid more for the same gear.
3. Impacting used values in online and offline marketplaces.
"So cheaper prices from an international dealer or direct selling manufacturer are not equivalent to domestic dealer prices because of the lack of consumer protection." So, you are buying insurance embedded in the product price.
So many rules and regulations.... helps me understand why the England and EU stock markets perform so poorly. Invest instead in the SP500 you don't need no stinkin' discounts.
There just don't seem to be that many buyers around. I was offered a PS Audio BHK250 and BHK pre-amp combo for £8,000, a little over half price. The BHK pre is a current model and these are fine units, but I don't have the space. The dealer said he'd had them in stock since January.
On the other hand, I saw a Holo May L2 DAC on eBay after speaking to the European distributor. I had a trip planned to Amsterdam to have a listen and perhaps buy one. I called the seller, who was nearby. He told me that in three hours he already had four people contact him and were going to visit him over the next couple of days. I asked him what he was doing that afternoon, arranged to pick him up at 4 pm, had a home demo and bought it. It was just over two years old, out of warranty and only about 30% discount from new price. The seller was a friend of Cameron Oatley (Goldensound) and they jointly bought two of these DACs from Wildism in Hong Kong in 2021. There was no way to get a home demo of a new unit as there is only one European distributor, near Amsterdam.
Holo May have only got three dealers globally and due to their extreme popularity I doubt they have ever discounted anything from Holo Audio. Same withEverSolo.
I suspect whatever discounting goes on is primarily a matter of supply and demand and often dealers making a living and keeping their customers happy.
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