Do Dealers think it is sinful..........

Avnut: You said that you agree 75%, but I would say that I agree with your last post 100%. I hope you get the good service you deserve. Cornfedboy: Are you buying your Audio equipment in the former Soviet Union? …If not, why are you paying 40-70% margin? Do you know the difference between markup and margin? If your numbers were correct dealers would be marking up goods 67% to roughly 234% - that’s a huge range. How many dealers would you say charge 2&1/3 times their costs? I’d suggest that 67% would be the high end of the spectrum (except for cables, IC’s and PC’s). You must be thinking of markup or manufacture margin. I would suggest that the only products with high margins are cables & tweaks. With regard to your question: Have I ever bought Hi end gear? Does your sarcasm imply that one must spend “X” dollars or have owned brand “X” to have a perspective? Maybe you’d feel better if I listed all of my equipment & how much I paid for each piece? You could evaluate my purchases and inform me if I’d spent enough or own equipment prestigious enough for you to respect my opinion. To give you a baseline I wasn’t talking about 100k+ systems. …More like the equivalent of Stereophile A and or B rated gear. ...I think we all are aware that as price rises margin falls, even on 20-30K systems. I’m not against discounts. If you are like me, and buy new toys to upgrade your system every month chances are you get a significant discount already. I merely take issue with folks who seem to believe they should get a discount for no other reason than that they have a pulse. I’ve got nothing against buying and selling used items online, however I see a lot of what I believe to be gray-market sleazing going on, and THAT does bother me. Dealers and manufacturers that whore their goods devalue all of our “investments”. The only thing that should cause rapid depreciation is significant technological advances or wear. But despite the lack of technological breakthrough and very low wear to gear we still see average 40-50% deprecation.

Sorry Cornfedboy, I respectfully disagree with you. If you read my prior thread in this post, I used to work for a dealer during college. Granted, it may have been a while ago but I don't think things have changed too much. When I worked in the HiFi shop, most margins were 20% maximum. You are absolutely right about the accessories though, 60% or so margin on those. Think of it, a dealer makes $7000 on a $10,000 amp? If that were true, we are both in the wrong business. The dealer I used to work for, gave accessory credits for cables etc. usually about 10% of the purchase price to make up for not getting a discount. The customers seemed to like it because they would not have to shell out another $1000 for those high end speaker cables after purchasing that $10,000 amp.

I think the mark up is quite a bit especially on accesories and speakers. What you have to take into consideration is the cost of a business. Small high end dealers have a small customer base and dont move a lot of equipment like circuit city. They have to cover there overhead. Employees, rent, elctricity, and dont forget putting up all that money to have equipment for you to listen to when you come in.

As a person who worked as a dealer, I have to put my two cents in. Markups ARE high. Higher than you would expect. Speakers are 100%. The lowest margin product we carried($99 Sony throwaway mass market garbage CD player - dealer cost $84) had an 18% markup. Most electronics went for 35 to 60% profit. And we would give great discounts, provided you asked. Example: PSB Gold i speakers, retail $2499. I have seen the owner several times go all the way down to $1300 on the pair on the floor, and $1500 for a pair he would order. His philosophy, "Hey, I just made $300 for writing a sales slip, and making a phone call. Less than 5 minutes work." And don't spend so much time letting your heart bleed for dealers. If you heard the stuff I heard about customers from so many dealers, you wouldn't have so much sympathy for them.

Everybody needs to do the math in the same direction or we'll disagree forever - If a pair of speakers retails for $4000 and costs the dealer $2000, that's 100% markup but a 50% margin. I don't think anyone believes there are many $10,000 amps that cost the dealer only $3000, which would be a 233% markup and 70% margin. There is an interesting article in the Stereophile archives (tho it is several years old) regarding the business of being an audio dealer and the rough numbers I remember from it were that dealers worked on roughly a 40% margin (70% markup) and tried to keep their costs to 35% of sales, meaning that they cleared about a 5% profit.