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should a discount be available on boutique speakers?

post #1 of 36
Thread Starter 
I'm contemplating driving four hours to hear a pair of speakers that list for nearly five figures. They would have to be beyond outstanding for me to consider buying them but I have read glowing reviews so they just may put a large dent in my savings account. I have yet to pay full price for any of my equipment purchased from a retail store, the s in msrp is for suggested after all. Would I be laughed out of the store if I ask for a 15 to 20% discount? Any one out there ever tried this?
post #2 of 36
Depends on how much money the store is willing to lose, or if they are not making any money, really depends if they will mark them down for you or not. Most likely they won't is my two cents. They will mark down extras like cables or mounts, since those have a higher mark-up, but stuff like electronics or speakers, they are barely making a profit on them.
post #3 of 36
The margin on speakers is huge I think you can definitely get a discount. Most companies would rather make a smaller margin rather than no margin and be stuck with inventory. I cant see too many five figure speakers selling frequently so I think its within reason to negotiate. Good luck on your purchase.
post #4 of 36
It doesn't hurt to ask, but don't EXPECT to receive a discount. It's all at the discretion of the salesperson or owner.

And the margin isn't necessarily huge. Different manufactures have different pricing structures.
post #5 of 36
Thread Starter 
A local dealer used to run a December special. Buy one get one half off (essentially 25% off) which makes me believe 15-20 may be doable.
post #6 of 36
Quote:
Originally Posted by g_bartman View Post

I'm contemplating driving four hours to hear a pair of speakers that list for nearly five figures. They would have to be beyond outstanding for me to consider buying them but I have read glowing reviews so they just may put a large dent in my savings account. I have yet to pay full price for any of my equipment purchased from a retail store, the s in msrp is for suggested after all. Would I be laughed out of the store if I ask for a 15 to 20% discount? Any one out there ever tried this?

It will also depend on the the policy of the individual brands. B&W and McIntosh, for example, will not hesitate cutting off relationships with dealers who discount their amps or diamond series. B&W also has a significantly smaller margin that other B&M brands so they would be less likely to discount them anyway. MartinLogan, on the other hand, has a much larger margin and don't have as strict of a policy with resellers discounting them.

What brand/model are you looking at? I used to work for a boutique-ish reseller (Magnolia Design Center). Discount on cables are extremely easy to get. AudioQuest cables have about a 70% profit margin so a 50% discount still makes them a lot of money. Another thing to keep in mind, in my experience, managers and sales associates are much more willing to work with you on price if you are nice. Seems simple but as soon as you start acting like you deserve a discount or that the sales people are below you, you've guaranteed you will get nothing from them.
post #7 of 36
Quote:
It doesn't hurt to ask, but don't EXPECT to receive a discount. It's all at the discretion of the salesperson or owner.
+1. I find it funny when consumers talk about "demanding" and "expecting" discounts, as though they're entitled to them. If you get one, great; if you don't, it's nothing to get offended about, so either buy or walk away.
post #8 of 36
It depends on the dealer and brand in question.
post #9 of 36
Quote:
Originally Posted by g_bartman View Post

I'm contemplating driving four hours to hear a pair of speakers that list for nearly five figures. They would have to be beyond outstanding for me to consider buying them but I have read glowing reviews so they just may put a large dent in my savings account. I have yet to pay full price for any of my equipment purchased from a retail store, the s in msrp is for suggested after all. Would I be laughed out of the store if I ask for a 15 to 20% discount? Any one out there ever tried this?
I look at it from a basic contract law perspective... you are actually negotiating the terms of a contract of sale. The price tag on the item (or shelf it's sitting on) is actually an invitation to treat (or consider). IOW, it's not an offer. As a prospective buyer, you are absolutely, perfectly entitled to make an offer. The vendor then has the option of rejecting or accepting the offer, or making a counter offer. Then it's your turn again - reject; accept; counter... and on it goes until an agreement is reached or it's obvious no agreement can be reached.

You do it when buying a house, a car or a lawnmower... you're actually even entitled to do it with a can of beans at the supermarket (but by convention we usually don't - there's an assumption that we tacitly accept the invited price and offer that amount at checkout), so why not at the high end audio shop?

My advice is, don't couch it in terms of asking for (or demanding) a discount - make them a serious offer and put the onus on them. Don't be put off by the amateur theatrics of the sales staff (laughing, gnashing of teeth) - firmly remind them that, as a prospective buyer you are perfectly entitled to make an offer on the goods. Contract law has primacy over "store policy" or whatever sad story they come up with.
post #10 of 36
Quote:
Originally Posted by GIEGAR View Post

I look at it from a basic contract law perspective... you are actually negotiating the terms of a contract of sale. The price tag on the item (or shelf it's sitting on) is actually an invitation to treat (or consider). IOW, it's not an offer. As a prospective buyer, you are absolutely, perfectly entitled to make an offer. The vendor then has the option of rejecting or accepting the offer, or making a counter offer. Then it's your turn again - reject; accept; counter... and on it goes until an agreement is reached or it's obvious no agreement can be reached.

You do it when buying a house, a car or a lawnmower... you're actually even entitled to do it with a can of beans at the supermarket (but by convention we usually don't - there's an assumption that we tacitly accept the invited price and offer that amount at checkout), so why not at the high end audio shop?

My advice is, don't couch it in terms of asking for (or demanding) a discount - make them a serious offer and put the onus on them. Don't be put off by the amateur theatrics of the sales staff (laughing, gnashing of teeth) - firmly remind them that, as a prospective buyer you are perfectly entitled to make an offer on the goods. Contract law has primacy over "store policy" or whatever sad story they come up with.

I don't think anyone is saying you can't ask for a deal or negotiate a price, only that you shouldn't immediately demand a discount (just from a tactics standpoint it's a bad idea) or be completely surprised if they do not accept an offer below MSRP. Like I said, there are some companies that have in their distribution agreements that you cannot discount BNIB products. It's happening in all areas of consumer electronics. TV's have been the most recent addition with UMRP pricing for Samsung, Sony, Panasonic, etc.

That being said, I wouldn't have a moments hesitation buying an open box item as long as you are able to listen and look at it beforehand. typically it's the best way to negotiate a price and, at least for Best Buy/MHT/MDC, they come with full return policy and warranty.
post #11 of 36
Quote:
Originally Posted by Petden View Post

The margin on speakers is huge I think you can definitely get a discount. Most companies would rather make a smaller margin rather than no margin and be stuck with inventory. I cant see too many five figure speakers selling frequently so I think its within reason to negotiate. Good luck on your purchase.
Do not know where you got that from. Margin on speakers is very small, just like electronics. Places make up for what they are losing, by selling accessories at a high cost.
post #12 of 36
Quote:
Originally Posted by gregzoll View Post

Do not know where you got that from. Margin on speakers is very small, just like electronics. Places make up for what they are losing, by selling accessories at a high cost.

In all seriousness, i'm not trying to be sarcastic when i ask this, but where do you get your information from? Speakers have a comparatively enormous margin. Typically speaker margin is between 35-60%, that's for all the brands that best buy/magnolia HT/ Magnolia Design Center carry. There are a few outliers though, speakercraft and sonance (in-walls) about 65-70% and oddly enough, the pioneer andrew jones line is only about 20-25%. HTiB's about about 40-45%. Receivers about 30-35%. Name brand cables like monster and audio quest, approximately 65%. Generic cables, 85-95%.

My source, working in BBY HT/MHT/MDC for 4 years, including assistant manager in MDC. All Best Buy vendor pricing is readily available to all best buy employees. It's no secret how high the margin is.
post #13 of 36
You have to add 5-10% in additional margin, across the board, from MDC, MHT and BB due to the large volume deals that they make with the manufacturers.
post #14 of 36
Quote:
Originally Posted by ifor View Post

You have to add 5-10% in additional margin across the board from MDC, MHT and BB due to the large volume deals that they make with the manufacturers.

30-55% margin still not anything to scoff at
post #15 of 36
Ok, we are derailing this thread but... How much overhead does BB and MHT have? A LOT!!!!! That margin now becomes tiny when you have to pay for 15-20 employees per store.

And then almost everything is discounted for no reason whatsoever, why else do you think BB is loosing money as fast as they can?
And there is a reason that Bose and ID manufacturers are succeeding, they either don't have the overhead and/or they never, ever discount.
Edited by ifor - 7/18/13 at 1:46pm
post #16 of 36
a typical Best Buy will run 8-9% margin after all is said and done. However, does that really matter when looking at a single purchase? if the OP goes to the store and buys nothing the store makes nothing but is still paying overhead. If he goes and buys a product around 10k, even with say a 30% margin because it's not a best buy store (i'm guessing), $3,000 profit isn't exactly just breaking even.

And BTW, Bose discounts all the time. Their v35 was sale at one point for like 3 months straight!

that being said, when it comes to the original question I think we are in agreement. doesn't hurt to ask and try negotiating, but don't expect a big discount just for walking in the door.
post #17 of 36
Most brand name speakers have 40-50% margins... if you play with multiple retailers, I have found (in Canada) discounts that average 30% (Paradigm, B W Diamond). I have even been offered 40% off the latest Dynaudio C1 (which I am still considering). As other mention, it all depends on the dealer, and your patience to "play the game".
post #18 of 36
Quote:
Originally Posted by simp1yamazn View Post

30-55% margin still not anything to scoff at
You do realize that that 30-55% price margin is very little, profit to the retailer. Might want to take Business 101 & Economics, to learn how this stuff works. I spent over 15 years in retail, and have spent 25+ years working with financial info, so when a person states that a retailer makes more on items like accessories, not electronics or speakers, they are not lying about it, they are telling the truth.

As for BBY, they are barely hanging on by their teeth, due to the economy, and that more people are shopping online or mom & pop shops that can give better deals, have salespeople that have been there for a very long time, and know what they are talking about, than the snot nosed kid at BBY.

This is a old thread from 2007, that goes into this exact same discussion http://www.avsforum.com/t/797576/markup-and-other-lies/0_100
post #19 of 36
I never said that they don't make more on accessories. I never said that those ancillary items aren't important. Obviously if they have the option of selling $1000 at 90% margin in cables or $1000 in speakers they will choose cables. But with best buys overall goal of a 30% margin, I don't think you can put speakers in the loss-leader category.

And for the record, best buy has had an 85% increase in stock prices over the last 6 months.
post #20 of 36
I work for an electronics retailer. I can see the costs of any and all products we carry. The 30-60% is quite accurate. We are not talking about markup, this is 30-60% of the final price is potential profit. Items with 30% margin are more electronic based, such as avrs and soundbars. Most speakers are easily 50% +, not many deviate from this, however some are slightly lower and some are slightly higher however to estimate 50% is fair. In addition to this is the vendor paid for endorsements. The amount that vendors pay for an 8 cu. ft. space is incredible.

Year end profitability was mentioned earlier and while that is important so is revenue. A highly inefficient business can have 70% + margin on all products and still be in the red, conversely a company with say only 10% margin can be in the black. The point of this is not whether or not the business can make money but whether the buyer can ask for a discount. The answer is absolutely. Why would you lose a profitable sale when you dont have to. Sure, if the buyer is make an outrageous offer then you can tell him to walk however if he asks for 10-15% off you now need to think, how much time have you spent, what else could you have done during this time, if you dont make the sale today is your company in a better place? All of these should be asked and this is a consideration every time I receive an offer. Will the company be in a better or worse position if I process this sale at this price.
post #21 of 36
Best Buy went from $52/share to $11/share in five years. They are SLOWLY coming back, but are trading at $26/share right now. So...coming from $11 to $26 is great, they still lost half of their worth in five years.
And the only reason they are up is because they sold 50% of their stake in Best Buy Europe and closed 114 stores.

BUT THEY STILL LOST $81 MILLION THIS FIRST QUARTER!!!
post #22 of 36
Quote:
Originally Posted by ifor View Post

Best Buy went from $52/share to $11/share in five years. They are SLOWLY coming back, but are trading at $26/share right now. So...coming from $11 to $26 is great, they still lost half of their worth in five years.
And the only reason they are up is because they sold 50% of their stake in Best Buy Europe and closed 114 stores.

BUT THEY STILL LOST $81 MILLION THIS FIRST QUARTER!!!
They are nowhere coming back. They are due to scale back more this year, and within two more years, they are forecasted to not have their doors open.
post #23 of 36
Thread Starter 
Quote:
Originally Posted by simp1yamazn View Post

It will also depend on the the policy of the individual brands. B&W and McIntosh, for example, will not hesitate cutting off relationships with dealers who discount their amps or diamond series. B&W also has a significantly smaller margin that other B&M brands so they would be less likely to discount them anyway. MartinLogan, on the other hand, has a much larger margin and don't have as strict of a policy with resellers discounting them.

What brand/model are you looking at? I used to work for a boutique-ish reseller (Magnolia Design Center). Discount on cables are extremely easy to get. AudioQuest cables have about a 70% profit margin so a 50% discount still makes them a lot of money. Another thing to keep in mind, in my experience, managers and sales associates are much more willing to work with you on price if you are nice. Seems simple but as soon as you start acting like you deserve a discount or that the sales people are below you, you've guaranteed you will get nothing from them.

I am always nice to sales people unless they are rude to me. In that case I just turn around and walk out. I have no problem buying floor models, have done so in the past. I do not demand or even expect a discount but it sure would be nice. The speakers in question are Aerial 7t's.
post #24 of 36
Gregzoll, on what planet are you an authority on anything? Just curious.
post #25 of 36
g_bartman.......I would think those Aerials would have to be orgasmic for you to purchase those to replace the Def Techs in your gear photo.......

One thing to bring up with the vendor.......see if he/she will allow you to demo them in your own setup for 2-4 weeks with full refund if you don't like them.......many people here recommend doing this to ensure the speakers sound as good in your own environment as they do when you hear them in the vendor's environment.........
post #26 of 36
Quote:
Originally Posted by simp1yamazn View Post

30-55% margin still not anything to scoff at
40% is the benchmark for specialty shops. Higher volume big boxes can get by with 20%, but they have to turn over a lot of inventory. That may not seem like much, but supermarkets seldom do better than 5%, relying on huge volume. New car dealers also run around 5%. They also make a few points on the financing, though it's the parts and service where they make their profits.
post #27 of 36
Quote:
Originally Posted by Bill Fitzmaurice View Post

40% is the benchmark for specialty shops. Higher volume big boxes can get by with 20%, but they have to turn over a lot of inventory. That may not seem like much, but supermarkets seldom do better than 5%, relying on huge volume. New car dealers also run around 5%. They also make a few points on the financing, though it's the parts and service where they make their profits.

A 40% gross margin (that would mean a speaker that costs the dealer $600 would sell for $1,000) used to be the norm, but I know from personal experience that dealers will demand closer to 50%. The gross margins for supermarkets is considerably higher than 5%. It may range from something like 16% for a well-known brand like Crest Toothpaste to maybe 50% for odds and ends of things (like thermometers and mops that you would not do any comparison shopping on). Of course when all of the overhead and operating costs are paid, a supermarket may only clear 1% on sales. Anyhow, I think you have all the advice you need. Politely ask for a discount, and wing it from there. Don't be offended if you don't get anywhere. It's not easy being an audio dealer these days, and many have signed resale maintenance contracts not to sell below list.
post #28 of 36

Being in this industry I can tell you margins vary greatly and so do dealer agreements.  Some manufacturers are starting to crack down on dealers which do not follow their pricing rules other turn a blind eye because they need product moved.  In some cases margins have dropped but their rules are strictly MSRP or Minimum Selling Price.  I have seen one if you are going to discount you have to call the rep and get approval and then it is maybe 10-15% tops.  Here are some examples

 

Higher end stuff not found in big box stores or on the internet tend to have stricter policies.

 

Brand A

 Product A: MSRP $299 Dealer Cost $254.  Only sold at MSRP.

 Product B: MSRP $699 Dealer Cost $567.  Only sold at MSRP.

 

Brand B

 Product A: MSRP $1999 Dealer cost $1100.  Found on the internet for $1299. No dealer pricing rules.

 

Brand C

 Product A: MSRP $1999 Dealer cost $850.  Not sold on the internet.  Minimum selling price $1499.

 

Brand D

 Product A: MSRP $2499 Dealer cost $1550.  Found on the internet for $1800. No dealer pricing rules.

 

So whether a dealer discounts or not it might have more involved then them just seeming to stand their ground on the price. There are a lot of different agreements out there.

post #29 of 36
Quote:
Originally Posted by simp1yamazn View Post

Quote:
Originally Posted by GIEGAR View Post

I look at it from a basic contract law perspective... you are actually negotiating the terms of a contract of sale. The price tag on the item (or shelf it's sitting on) is actually an invitation to treat (or consider). IOW, it's not an offer. As a prospective buyer, you are absolutely, perfectly entitled to make an offer. The vendor then has the option of rejecting or accepting the offer, or making a counter offer. Then it's your turn again - reject; accept; counter... and on it goes until an agreement is reached or it's obvious no agreement can be reached.

You do it when buying a house, a car or a lawnmower... you're actually even entitled to do it with a can of beans at the supermarket (but by convention we usually don't - there's an assumption that we tacitly accept the invited price and offer that amount at checkout), so why not at the high end audio shop?

My advice is, don't couch it in terms of asking for (or demanding) a discount - make them a serious offer and put the onus on them. Don't be put off by the amateur theatrics of the sales staff (laughing, gnashing of teeth) - firmly remind them that, as a prospective buyer you are perfectly entitled to make an offer on the goods. Contract law has primacy over "store policy" or whatever sad story they come up with.

I don't think anyone is saying you can't ask for a deal or negotiate a price, only that you shouldn't immediately demand a discount (just from a tactics standpoint it's a bad idea) or be completely surprised if they do not accept an offer below MSRP. Like I said, there are some companies that have in their distribution agreements that you cannot discount BNIB products. It's happening in all areas of consumer electronics. TV's have been the most recent addition with UMRP pricing for Samsung, Sony, Panasonic, etc.

I didn't say they were, did I? Simply addressed the OP pointing out the alternative to: "Can you please give me discount?", and reinforced the reason why a purchaser is always entitled to put an offer to the vendor. The vendor is always entitled to say "no" of course.

Can you please explain what the BNIB and UMRP FLA's mean? smile.gif
post #30 of 36

BNIB - Brand New In Box

UMRP - Unilateral Minimum Resale Price

 

While some TVs have UMRP most still have poor margins and many installers stopped selling TVs especially the lower end models.  The big box stores try to make up for poor margins by pushing cables, surge protectors and extended warranties.

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