Does anyone or does everyone pay retail price?

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.

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.

Kirkus, thanks for addressing my questions!

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.