Parasound Owners Thread - Page 143 - AVS | Home Theater Discussions And Reviews
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post #4261 of 4266 Unread Today, 05:30 PM
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Originally Posted by gsr View Post
Given the discounts some dealers will give on some product lines, there are still plenty of high end lines with very healthy markups. If a dealer will give a 40% discount on a product, I'm going to go out on a limb and make the assumption that they're still making at least a 10-20% profit on the sale, which is still $200-400 on a $2k sale or $2-4k on a $20k sale. If this is a customer who walks into the store and says "here's my credit card, I want to buy X", that's not so bad. If the customer takes many hours of the salesperson's time auditioning products, asking for setup advice, etc., then it might not be worthwhile. There are some brands (or some products within a brand) with small markups where discounts just aren't possible if the dealer wants to make any money. It would obviously be crazy for a dealer to sell an item below their cost unless it's something they've had in inventory for a long time and just need to recover what they can to get rid of it.

The main reason it would be idiotic to send the customer elsewhere for a small sale is that the customer most likely won't come back for a bigger purchase down the road as they'll most likely locate a dealer who actually wants their business and has the sense to know that sometimes you have to make a small sale to make a bigger sale later. I've run into that exact situation where a dealer made me feel like I was wasting their time on a small purchase - guess who I didn't purchase my Revel Salon 2 speakers from?
We sell a dozen different speaker lines and none of them are 60%. Making 10% may be enough to keep the doors open, but not enough to make a profit, if you are talking 2K sales. So you think taking in $200 is good? The sales staff has to be paid out of that and you have all of your overhead to take out. Keep in mind, most pay with credit card and there is 3% taken right there. Out of that $200, there would be nothing left for profit for the owner. If owners are not making a profit, they are not going to keep the doors open and since most of them have closed down, that should tell you that they were not making money.

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post #4262 of 4266 Unread Today, 05:57 PM
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Exactly Mike. Business is business and the overhead for running a Brick and Mortar business in the USA varies by market from a low of 25% to a high of 44% (in San Francisco). You have to be able to cover this overhead if you want to keep the doors open. Why do you think so many B&M AV Specialty shops closed up their doors in the recession? They had already been hit hard by Internet-direct companies (Amazon, SVS, HSU, etc.) where in some cases (SVS and HSU) could sell you a better product than what they carried at 1/4 of the price. Then you take their bread and butter products (speakers, AV receivers, etc.), where Amazon and other companies would undercut them by 30% because Amazon didn't care whether they made money or not, they wanted to change people's shopping habits (and they did). Finally, you had TV's going from heavy boxes to small one's with flat screen technology, and now it was easy to order something from across the country and save hundreds of dollars. Smart B&M companies like Steve H's and Value Electronics were able to weather the recession storm and adjusted their business model for the Internet world by providing great service and tech support, being active on AVS and other forums for some "free" advertising, and are willing to ship product all around the USA at competitive prices. Furthermore, they sell some boutique items that have higher profit margins.

I'm all for getting the best deal possible, but sometimes I'm willing to pay a little bit more to buy locally to keep a local business in town. For example, I have a Lowes and Home Depot less than 7 minutes from me, but I'll drive 12-15 minutes across town to shop at a local Ace store because the owners live in the town, their kids went to the local schools, and I know the profit will go back into our local economy versus being shipped off to the corporate office in Atlanta or someplace else.

I'll get off my soap box now
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post #4263 of 4266 Unread Today, 06:06 PM
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Quote:
Originally Posted by AV Science Sales 5 View Post
We sell a dozen different speaker lines and none of them are 60%. Making 10% may be enough to keep the doors open, but not enough to make a profit, if you are talking 2K sales. So you think taking in $200 is good? The sales staff has to be paid out of that and you have all of your overhead to take out. Keep in mind, most pay with credit card and there is 3% taken right there. Out of that $200, there would be nothing left for profit for the owner. If owners are not making a profit, they are not going to keep the doors open and since most of them have closed down, that should tell you that they were not making money.
A dealer obviously can't sell product to every customer who comes through the door at just above cost and expect to get rich and it wasn't my intent to suggest that they can. However, we both know that many product lines do have pretty healthy markups. I have access to dealer pricing info for a few product lines where I can confirm that the dealer cost is 50% of the MSRP and have bought a number of products for 30-50% off of MSRP over the years, including a Lexicon MC-12B, a bunch of Crestron gear, Focal Electra series speakers, and some recent purchases (which I won't be as specific about as I've been asked not to be and respect that request), all when the products were current products. I also purchased an open box Denon AVP-A1HDCI for 50% of MSRP from Vann's while it was still a current product. In all cases, the dealer was still able to make at least a bit of profit on the sale and I typically bought directly from the owner rather than another salesperson, which presumably makes it easier to do those prices. We all know that the AVS Store and some other sources give pretty nice discounts on Denon AVR's if you call and ask (calling AVS is the #1 recommendation any time someone asks about getting a discount in the Denon threads). Obviously some of the boutique brands work on tighter margins and higher volume items such as TV's and lower cost items (such as lower end Bluray players or AVR's) tend to be on even tighter margins, so the dealer cost obviously isn't 50% of MSRP across the board, though some items such as accessories and cables have even higher markup.

A lot of dealers have closed down because they just don't know how to treat their customers. The guy who mentioned trying to buy a couple of $1000 DAC's several posts back and essentially got blown off by the salesperson is a perfect example. Why would one go back to that store after being treated like that? And is the salesperson so rich that they can afford to turn away an easy $2000 sale (even if it's "only" a hundred bucks or so of commission)? I worked in retail briefly while in college and I loved it when somebody walked in with cash in hand and asked for a large ticket item as it was obviously a lot less work than the customer you need to spend hours with to get the same sale.

I have no problem with a dealer making a good profit as they might want to have a nice home, a nice car, and be able to support a family just like the rest of us, but let's be honest that there are a number of product lines that still have pretty good markups where the dealer has a pretty decent amount of flexibility in pricing depending on the situation and their relationship with the customer.
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post #4264 of 4266 Unread Today, 08:33 PM
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Quote:
Originally Posted by gsr View Post
A dealer obviously can't sell product to every customer who comes through the door at just above cost and expect to get rich and it wasn't my intent to suggest that they can. However, we both know that many product lines do have pretty healthy markups. I have access to dealer pricing info for a few product lines where I can confirm that the dealer cost is 50% of the MSRP and have bought a number of products for 30-50% off of MSRP over the years, including a Lexicon MC-12B, a bunch of Crestron gear, Focal Electra series speakers, and some recent purchases (which I won't be as specific about as I've been asked not to be and respect that request), all when the products were current products. I also purchased an open box Denon AVP-A1HDCI for 50% of MSRP from Vann's while it was still a current product. In all cases, the dealer was still able to make at least a bit of profit on the sale and I typically bought directly from the owner rather than another salesperson, which presumably makes it easier to do those prices. We all know that the AVS Store and some other sources give pretty nice discounts on Denon AVR's if you call and ask (calling AVS is the #1 recommendation any time someone asks about getting a discount in the Denon threads). Obviously some of the boutique brands work on tighter margins and higher volume items such as TV's and lower cost items (such as lower end Bluray players or AVR's) tend to be on even tighter margins, so the dealer cost obviously isn't 50% of MSRP across the board, though some items such as accessories and cables have even higher markup.

A lot of dealers have closed down because they just don't know how to treat their customers. The guy who mentioned trying to buy a couple of $1000 DAC's several posts back and essentially got blown off by the salesperson is a perfect example. Why would one go back to that store after being treated like that? And is the salesperson so rich that they can afford to turn away an easy $2000 sale (even if it's "only" a hundred bucks or so of commission)? I worked in retail briefly while in college and I loved it when somebody walked in with cash in hand and asked for a large ticket item as it was obviously a lot less work than the customer you need to spend hours with to get the same sale.

I have no problem with a dealer making a good profit as they might want to have a nice home, a nice car, and be able to support a family just like the rest of us, but let's be honest that there are a number of product lines that still have pretty good markups where the dealer has a pretty decent amount of flexibility in pricing depending on the situation and their relationship with the customer.
Open box is different and Vann's may have bought that from Denon as an open box item. Regardless, Full list price is a marketing tool, nothing more. To your point about selling at just over cost- if they do that, it's not a matter of getting rich, it's a matter of staying open.

Assuming you save money from your job, there's absolutely no difference between that and making a profit but the difference is that you don't want anyone to make a profit from YOU. Profit pays the bills, wages, covers cost increases when they order new product, pays for tools, supplies, training and a lot of things you aren't considering. If they need to make more, they have few choices- charge more or cut costs and when they cut costs, quality salepeople are one result. Ever go to Best Buy when they still had commissioned salespeople? They were a lot better than the little, useless dorks that take up space, now.
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post #4265 of 4266 Unread Today, 08:43 PM
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You need to know that if the item is advertized, the dealers have signed an agreement to not advertise below a certain price. Also, some have adopted UAP, which is Unilaterally Advertised Price and one thing that prevents is Amazon and other online sellers undercutting real dealers. Pioneer cut off Amazon over two years ago and it was because Amazon basically told Pioneer to pound sand when they received a Cease And Desist letter. The have Pioneer again, but are playing along. A dealer shouldn't have to change the lines they carry every couple of years, just because someone wants to whore it out. The internet has erased most of the fundamental laws of economics because some people are too stupid or crooked to follow them. Operating out of a garage and not stocking the items advertised at/near dealer cost before the items even reach US shore is stupid. They didn't have the items I'm referring to and they never got them because they didn't have dealer accounts with the distributors who carried them. That still screwed up the market for over a year.
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post #4266 of 4266 Unread Today, 09:23 PM
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^ Like I said, I have no problem with a dealer making a good income. But if an authorized dealer (I never purchase from dealers who aren't authorized) offers me a generous discount on a purchase, I'm not inclined to turn it down as they're presumably still making a profit that they're happy with on the sale or they wouldn't be offering the discount.

We probably ought to agree to disagree on some of these points and allow this thread to get back on topic.
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