What is the normal discount given by audio dealers there to the walk-in end user? Now that we have a scenario of less 85% from the factory, would the dealer not give even less 5% off the MSRP? Or maybe he gives 30% off the MSRP to the the end user?
Is it "whats best forum" , or what's more expensive
- Thread starter MarinJim
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Should probably still emphasise the product margin for Transparent like you did earlier as I am sure this gets lost within the debate.
low 30% margin for Transparent is pretty reasonable-fair for a manufacturer, and I am coming from a background of high end engineering/product manufacturing so know I am correct when I mention many technology manufacturers aim for the golden above 60%.
Just to add.
Once all (should be emphasised) overheads-costs-logistics-R&D-etc for a manufacturer are taken into consideration the profit drops down to around 8% to 25% (if lucky to be able to do the 60%+ markup at manufacturer before sales channel and dealers), in general anyway but I am sure there will be a few "manufacturers" in cabling with very low costs for certain lines; not talking about companies such as Nordost-Transparent-Crystal Cable-Yter-Supra Cables-comparable others.
Using quote on manufacturers because there are some that are more like a logistics-service addon by terminating others cables (although this still has associated costs); also have experience working at a large industrial cabling with logistics company (think undersea cables,seriously massive infrastructure cabling,etc) in the past.
Thanks for the definite heads up on said margins for both manufacturer and dealer as it is refreshing to discuss this in the positive way you are.
Cheers
Orb
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This could be tricky because a lot of dealers are locked into what the maximum discount they offer and can be penalised/blacklisted by a manufacturer or distributor (applies to all components from my own chats to dealers I know well).
Sometimes costs are not just enforced or dictated by manufacturer but also by the major sales channel-distributors.
Cheers
Orb
I see. And I understand that mail order online stores like Acoustic Sounds, on software and hardware, do not give any amount of discount, say for example, on a Koetsu Blue Lace which is priced at a staggering $20,000. Long time ago, when I would import a pair of Thiel speakers from Audio Excellence, SF, the store manager told me even if I bought 10 pairs, there would be not a single cent of discount from the MSRP. So I was wondering if things have changed now.
It is possible for some products and models depending upon who the Distributor is.
At the other extreme I know a few distributors here in the UK that are a nightmare for dealers because they ignore rrp and slash to the bone selling direct while also selling to dealers.
Short term great for any consumer but then it has ramifications, kills resale value and before long dealers with said models are shafted and either go out of business or stop working with the distributor and that product.
Others such as Absolute Sound are more disciplined and behave as a distributor should while also monitoring the dealers they sell to-work with, so discounts are more controlled but you know there is greater longivity and interest in 2nd hand market.
One manufacturer example; I know that Devialet are keeping strong control of their rrp even though distributors debate with them they could charge more, the margin on this product would be interesting to know for manufacturer-distributor-dealer, pretty tight IMO but they are selling well although that does not change a product margin.
Cheers
Orb
At the other extreme I know a few distributors here in the UK that are a nightmare for dealers because they ignore rrp and slash to the bone selling direct while also selling to dealers.
Short term great for any consumer but then it has ramifications, kills resale value and before long dealers with said models are shafted and either go out of business or stop working with the distributor and that product.
Others such as Absolute Sound are more disciplined and behave as a distributor should while also monitoring the dealers they sell to-work with, so discounts are more controlled but you know there is greater longivity and interest in 2nd hand market.
One manufacturer example; I know that Devialet are keeping strong control of their rrp even though distributors debate with them they could charge more, the margin on this product would be interesting to know for manufacturer-distributor-dealer, pretty tight IMO but they are selling well although that does not change a product margin.
Cheers
Orb
For another thread, why to most (not a all) women go for jewelry, and most (except watches) men a/v?
To paraphrase Myles, 'who cares?' If you aren't in the market for a 50k cable, it really doesn't matter does it, unless you assume that a high asking price at the top level encourages more ambitious pricing at the lower rungs.
As to these business owners driving Rollers, those cars are probably the some of the heaviest depreciating rolling stock on the market. (I'm assuming you are talking newish ones, not the vintage collectibles). Dan D'Agostino used to drive a newish Bentley as I remember, and nobody accused him of overpricing or gouging. Ditto, Mark Levinson- I seem to remember he had an Aston-Martin.
As to these business owners driving Rollers, those cars are probably the some of the heaviest depreciating rolling stock on the market. (I'm assuming you are talking newish ones, not the vintage collectibles). Dan D'Agostino used to drive a newish Bentley as I remember, and nobody accused him of overpricing or gouging. Ditto, Mark Levinson- I seem to remember he had an Aston-Martin.
steve williams
Site Founder, Site Owner, Administrator
Yes, but that's class warfare and revolution. I don't think this is about people begrudging the idle rich. I do think there are legitimate questions about gear, value and pricing, but isn't it academic unless it affects the market you are in? The new Rolls is a good example. Who cares how much they charge for one, new? Most of us, even those who could afford it, won't buy it, because it is a bling-mobile, and it has no enduring value. Nor does its pricing affect more real world cars offered by the same company. Ditto the Veyron. I just don't take it seriously, and if I did have the money to spend on that kind of car, I certainly wouldn't buy that. So, it's easy to carp about the pricing of this stuff, and whether it affords 'real world value,' but that's not the premise of these products. And some, I suspect, actually do deliver the goods, albeit at a price. To the extent there is any trickle down effect from blue sky efforts, I don't think the presence of uber-priced gear hurts. Sure, it's good fodder for articles in hi-fi mags, but the reality is, there is more good gear than ever available at a wide range of price points.Some lady long ago talked her head off when she said "let them eat cake"
I can tell you that both D'Agostino and Levinson were booted (Levinson multiple times) from the firms they founded for spending lavishly,
bringing the companies to the the edge of bankruptcy, and for basically trying to live well beyond their means.
Levinson was one of the first companies to price gear at levels that really raised eyebrows if I remember correctly. I remember my dad
being shocked at the price tags of some of their stuff when I was a kid.
Good post. Here is how I think arbitrarily priced gear affects us all. When a few companies brazenly come to market with gear priced at what really seems priced to a selling point, it emboldends all the other companies to start to follow suit.
It happened with cables. Hobbyists were aghast when the first $1000 interconnect cable came around...they could not believe it. They all followed suit once they saw the first company get away with it.
Audio Research just raised their prices by $500. Now was that to cover their rising costs? Who knows? they now sell no gear under $5500.
And to your point, there certainly is expensive stuff that does deliver the goods.
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steve williams
Site Founder, Site Owner, Administrator
Thanks Steve. I hope everyone knows we are not trying to beat up on anybody.
But we don't want high end audio companies to end up like the American car makers who were driven to edge of the cliff
by people who did not respond the market and were putting out products that did not serve the best interest of society or
the whole industry.
I am really surprised that some are not aware of the really high margins that cables fetch. It feels like this is news to quite a few. Wow. Would it help if I also told you there is also the grey market where you can buy from unauthorized dealers (thus no warranty) who advertise and sell them as "used" or "open box", fed by truly authorized dealers as new at deep discounts, products that are then opened by the grey marketers and re-sold as "used" at even larger discounts??? And they sell them at up to 50% off MSRP from what I have seen, which indicates a factory-to-dealer mark-up of well over 100%, because in the end everyone makes money? Not only do I believe Jeff's numbers, I really applaud him for the expose, which I thought was common knowledge.
steve williams
Site Founder, Site Owner, Administrator
I don't think that we didn't know but rather that we didn't know how high the dealer margins for these two cable products are (of which I must admit that I have both in my system)
OK fine, so long as no one claims that cables have high development and manufacturing costs again.
I guess if I had a son....
I too remember when Levinson was first introduced and it was sticker shocking. But it was innovative too. As to Mark's spendthrift ways, I won't argue that.
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