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Discussion Starter · #1 ·
I started looking around for a local dealer that can sell me a 5803. After some haggling with one dealer he offered me a brandnew 5803 for a little over 3k! He is an authorized Denon dealer so it comes with the full Denon warranty and everything. How can an authorized dealer give such huge discounts ? Are the profit margins on flagship receivers really this big ?
 

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It is expected that the large manufacturers discount their equipment heavily after the first few months. They have always done this, as the market changes so fast, so the original markup is only passed along to the early adopters. I'm sure they are making their margins at whatever the street price settles at.
 

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I can't speak to the markup on Denon gear, but I do happen to know dealer cost on the Pioneer Elite 49TX is around $2100. This piece has a MSRP of $4200. The Denon MSRP is $4300. I would speculate dealer cost around $2500. Perhaps less.
 

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Anyone with a name and a reputation (notice the word - reputation is not a statement of fact) for quality build are, to put it quite simply, over priced at retail. The mark up is very high at the dealer level.


Fortunately these folks manufacture more than the dealer market can sell at that price, so the grey markets, internet sellers and the like will often have the product at a better price (surely the manufacturer isn't a party to this :D ). Shop, compare prices and decide what warranty 'insurance' cost you are willing to accept.
 

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Quote:
Shop, compare prices and decide what warranty 'insurance' cost you are willing to accept.
I did shop around. That's why I was so suprised that an authorized dealer is willing to discount within a $200 range of all the grey market, internet etailers out there. What I don't understand is why Denon will allow authorized etailers to sell only at MSRP while the local guy discounts like crazy.
 

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Tougher for Denon to police. It's easy for Denon to go online and see that an e-tailer is selling below MSRP, while it's tougher for them to determine that a local guy is selling below MSRP. Most local stores will not give quotes over the phone if less than MSRP. If you get the warranty from an authorized dealer and you feel it is a good deal, take it.


-Brett
 

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I found something out that may interest some of you. I am also looking for a good deal on a 5803. Amex has a program that if you buy an item with their card and find it cheaper somewhere else they will refund the difference up to $250 per transaction and $1000 per year. You have to fax them or snail mail the ad with the cheaper price. I read this on the net myself and I couldn't believe it. I called Amex and confirmed everything I just wrote. I haven't a clue how they can do this but they do. Bottom line if you want the warranty and can get within $250 of the bargain dealer buy it with your Amex and get the refund.
 

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Denon 5803 is widely regarded as the best sounding receiver EVER.


To that end, they are priced at $4k--but you get so much! If you went to separates, you'd easily spend $8,000+.


Do what I did. Go to Ubid.com and bid
 

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Quote:
Fortunately these folks manufacture more than the dealer market can sell at that price, so the grey markets, internet sellers and the like will often have the product at a better price (surely the manufacturer isn't a party to this ).
Bubbawat,


Good point. These "grey" markets sometimes crack me up, or rather the idea that such sales channels are offering unbelievable discounts and companies like Denon don't know about it, or if they do, cannot stop them. As I think you are suggesting, albeit ironically, Denon knows enough, and in the end, with a new flagship receiver coming out every year or so, they want to move inventory. And if they can move boxes and not have to honor warranties, even better!


Jim
 

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Quote:
Are the profit margins on flagship receivers really this big ?
Profit margins on most, if not all audio equipment is tremendous. I happen to own an appliance store and have met some friends in the audio biz who will sell me at cost, as long as I take care of them on their major appliance purchases.


What a wonderful concept!


I can give you some examples of recent items I just purchased.


Sunfire Theater Grand II - Retail $3495 Cost - $1905.83

Sunfire Cinema Grand - Retail $2995 - Cost - $1443.11

Klipsch RC-7 Center Channel - Retail $799 - Cost $367.20
 

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Marc,


Do get back to your original thread, the question of value is always complex and highly subjective. I suppose value is ultimately determined by what the market will bear. Is the 5803 overpriced? Hard to say. At $4,300, perhaps it is, but as someone above pointed out, you could spend $8,000 on separates and not have all of the features of the 5803.


When the Audio Critic magazine reviewed the 5800, they speculated that it might be one of the most sophisticated AV pieces around. And the PhD who reviewed it's technical aspects felt that it was worth every penny that Denon charged for it. That's saying a lot from a magazine that definitely questions what manufacturers charge for their gear.



Jim
 

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Sorry for the various typos in my last post, especially where I said, "Do get back to your original thread...." I meant "to get back," because my previous post kind of went off on a tangent. "Do get back" sounds rather bossy. Oops.


Jim
 

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Originally posted by dr150
THEN, since the 5800 is future-proofed, for $800 retail (you can get it for less by shopping around) you can buy the just released outboard which UPGRADES you to the 5803! It's really easy to install...all you need is a screwdriver.
dr150:


First off, there are some differences between an upgraded 5800 and the 5803. Most of them are quite minor, but regardless there are differences. Second, the upgrade is NOT end-user installable. You do not need a screwdriver (though the alcoholic version may be required if you ship UPS; see threads elsewhere re:damaged units). All US units must be sent to Denon service centers in NJ or CA, and the upgrades will be performed there. All Canadian units must be sent to Denon in Ontario for the upgrade.


If you somehow managed to get an upgrade kit yourself, I'ld really like to know how you did it. I know that I am a fully qualified electronics technician (I service medical equipment for a living), but even I am not allowed to do my upgrade. From what I understand this is due to THX re-certification to the Ultra2 level.


As for why a local dealer can discount a high end receiver so much, I would assume it is due to volume purchasing. I got my 5800 at grey markey prices from a local authorized dealer, and so did others. It was even advertised that low, and this was after only a month of being released. In any case, due to the problems I've heard regarding shipment of the receiver, and other issues, I am reluctant to send my 5800 in for upgrade. Instead I'm considering selling it and getting myself something new (not necessarily the 5803).


Still, if you can point me to a way of getting the upgrade kit so I can install it myself (it is not just one board either, it is 3), I may yet end up staying with the Denon 5800.
 

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Quote:
Originally posted by MarcW
I started looking around for a local dealer that can sell me a 5803. After some haggling with one dealer he offered me a brandnew 5803 for a little over 3k! He is an authorized Denon dealer so it comes with the full Denon warranty and everything. How can an authorized dealer give such huge discounts ? Are the profit margins on flagship receivers really this big ?
I think most of Denon products are overpriced these days.
 

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I paid $3125.00 locally, from an authorized dealer (Tweeter) for my 5803. It was more than worth it. Great hub to my home theater.
 

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Chip

Would you mind telling me which Tweeter you purchased your 5803 at. I live in Maryland and would drive to NJ to get a good deal like you got.


Scott
 

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When we talk about "overpriced," we seem to be referring to 3 different things - the dealer markup, the factory-to-dealer markup, and/or price relative to value to the end consumer.


The dealer markups are usually within reason, provided you are not suckered into paying full MSRP. Dealer markups on consumer electronics range from about 10% to 100%, with 100% representing the full MSRP. Where the actual price you get falls in that range is usually a matter for negotiation between you and the dealer, and some of it will depend on the dealer's overhead. I am not surprised to see a 25% markup from a B&M dealer like the one listed above. It is a good price, but not unheard of. Incidentally, the 5803 was released too recently for there to have been any reduction in wholesale pricing.


As far as cost to manufacture relative to the wholesale price, that ratio gets more extreme the more expensive the item is. Denon makes more money per unit sold for a 5803 than for a 1602, but the volume sales on the 1602 is much higher. I'd bet that if Denon opened up its books publically, you'd find that it makes more money off sales of the 1602/1802/2802 than it does off the 3802/4802/5803. The main purpose of a flagship is to gain a prestigious reputation for the brand, which stimulates volume sales of the lower priced components.


The only real value question that matters is - is it worth it to you? Do the features and performance offered justify the price tag? The rest is just economics.
 

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Chip - Me too. Did you really get the 5803 at Tweeter for $3,125.00? Which location? There is a Tweeter down the street from me (I am in Maryland too) and I am gonna go try and get that deal. If would love to have that ace in the hole.
 
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