Originally Posted by STIGUY2014
You are correct, I have made many changes in a short period of time. I am slowing down now because I have spent too much money in the last 2 months. I also have a big interest in portable systems and my buying mode has ended. It will be small changes over time from now on. You know how it is sometimes. One goes out and spends a lot of money on equipment and then are set for many years before the next big purchase.
The store was a big box retailer and the speakers were common mass produced brands that included Klipsch and Velodyne. Through the family member, I had access to what the company paid for the speakers and it was disgusting to see the markup. That is why on many speakers especially when a new model comes out you will see clearance sales 40% to 60% off msrp but these are usually the mass produced ones. I understand the need for the markup to sustain the store. Items such as laptops and tv's have very little or no markup or even sold at a loss but the store makes up by selling accessories and extended warranties.
I work in manufacturing and there is a huge manufacturing cost with amplifiers and a much lower cost for speakers. This includes both labor and materials.
The development of a speaker takes far longer than for an amplifier. Also, again, the manufacturing cost has nothing to do with the dealer cost or retail price. The manufacturer decides on a rough price point, then tries to make something that can retail for that price. Then, they select components and try to come in at a cost that allows them to make money when they sell to distributors or dealers. Then, there are times when a driver was tested and they base the design on it and when it comes to the order date, they find out it was discontinued, so they need to re-design it. This can happen to a line that's already in production, too. Phillips was making some very nice drivers and then, they left the speaker component market. All of the speaker system manufacturers had to come out with new models and speaker lines. You're also ignoring the need to keep stock on hand of old drivers fro warranty replacement- that can be expensive and there's no way to know how many will be needed once the last ones of that model/line have been sold.
There are some very expensive drivers out there- don't kid yourself into thinking there's no reason for a tweeter to cost more than $9 or a woofer more than $30.
Ever looked inside of an old Klipsch speaker? Nothing special going on. EV or Motorola horn tweeters, Eminence woofers, electrolytic caps and industrial-looking screw-down inductors that were likely used as chokes for other applications, or wound for them. Walnut/Oak veneered plywood, minimal damping (if any), a grill and a name plate.
Again, those brands may have had those margins, but I assure you by being able to buy as a dealer, those days are long gone. Online resellers and online-only availability has made it hard to justify prices, for some manufacturers. Those in the truly high-end, don't care because they have their market but now that the old, standard Klipsch speakers are special-order only, that pricing is dead.
I looked at buying the assets of a store and continuing operations at the same location with the same staff, recently. I passed. Knowing the rent, insurance, payroll, utilities and all of the other overhead made it a bad idea. I would have had to make $146K in profit, just to break even, and that was without paying myself.
I don't know how old you are, but before the internet and all of the "I want the best price, I don't care if it's not the best" attitude, we used to take quite a bit of time for demonstrating equipment, in order to make sure the buyer would be happy with their purchase. We demo'd turntables, cartridges, cassette decks, speakers- everything. If you don't think there's a cost associated with that, you're dead wrong. If you think a dealer's need to make a profit is disgusting, that's up to you but being able to listen in a shop prevents a lot of what you have done in the last few months- flail around, trying to find something that satisfies you. Having a showroom and demo space is a service, that is dying out because people want the best price and the cost of the space can no longer be justified when mass-merchandised crap is troweled out. $99/pair speakers? Go to Walmart, not someone who cares about selling good equipment. $600/pair speakers? We'll get them if the customer wants, but the time involved in making $100-$150 isn't worth the aggravation. Do we do it? Yes, because the customer wants them and if we send them to someone else, it would be idiotic.