Originally Posted by AV Science Sales 5
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.