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Crescendo
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Re: Blue Oasis Audio letter


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Sorry, I feel your comparison is pineapples to Toyotas.

Thanks for the education. Really. I actually learned something more about retail today. It's a good day! Now
for some meat and potato's questions of I may.

Let's cut through the "retail B.S." for all of us.

Does anyone know how much of a markup their is on a typical 4 door sedan sold here in the U.S.? Being uneducated in buying automobiles (not being sarcastic) I have been very satisfied with my previous purchases. Most have been from 3-5% below dealer invoice and of course I receive all the incentives. I have been happy so far (ignorance is bliss). If I really knew how much they were REALLY making I am sure I would cry.

Now please, I am not SINGLING out anyone. I wish I could afford some of this equipment (no I don't go audition, drool and leave). If auditioning I am serious!!!

How much of a markup is there on let's say:

B&K?
Krell?
McIntosh?
Audio Research?
Avid Volvere?
Wilson Audio?

Gosh, I couldn't imagine! (and yes, I would love to own any of these fine manufacturers equipment). ANY!

Is there a 5,10,20,40,50 or more percent markup? Both auto and audio dealers have brick mortar concerns, salries or commissions, employees, old stock, benefits, on and on, and yes volume incentives really do help the auto industry where they do not help in the audio industry. However, there is still a HUGE mark up in retail. I know I would be more willing to pay 2,500 or an amp instead of 5,000 (it's all affordability). I drive a Chevy not a Benz.

So, I have to shop. This is true for audio as well. Simply put. If I cannot walk into a high end audio store to compare 1000.00-2000.00 turntables without being made to feel bad I will buy it from Audiogon or others. Sometimes you have a good idea when you go in there, but you don't make that decision on impulse (I don't). It may take 1-2 visits. If this is out of line, I will buy used and from someone with lesser expectations.

I like new, I like sophisticated, I like quality. I don't mind buying new, but I am not going to be admonished into thinking that browsing or auditioning is wrong. Even from multiple dealers. Again, if it is I will buy from an individual and ALWAYS will. I respect ANYONE who can make a living in retail. ESPECIALLY in today's economy. However, we all have families (or ourselves) and obligations. We all have a duty to ourselves to purchase wisely.

In retrospect, I have actually paid more for items from someone who was nice and allowed me the opporunity to shop. A small reward for good customer service. My recent acqusition was my turntable. If I had known what the owner of this company was like, he would have never gotten my money. NO matter HOW good he thinks his equipment is. Oh well, water under the bridge.

So yes, I will agree with the pineapple to toyota comparison (because I forgot incentives for auto's). I had no idea that if you were the largest re-seller of a brand, they would NOT give you, the retailer, a break or incentive to pass along to your customer. Wow. Oh well, live and learn.

Thanks Jan. Have a good one.

bifcake
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Re: Blue Oasis Audio letter


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How much of a markup is there on let's say:

B&K?
Krell?
McIntosh?
Audio Research?
Avid Volvere?
Wilson Audio?

Gosh, I couldn't imagine! (and yes, I would love to own any of these fine manufacturers equipment). ANY!

There is either a 50% or a 100% markup depending on how you want to look at it. In the end, it's all the same. The dealer sells the item for twice as much as what it costs him to buy it. So, the dealers bend you over and give it to you raw any time you decide to shop retail.

If I remember correctly, the car dealer makes about 10-20% depending on the make and model. In other words, they tack on 10-20% to what they pay.

mrlowry
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Re: Blue Oasis Audio letter


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There is either a 50% or a 100% markup depending on how you want to look at it. In the end, it's all the same. The dealer sells the item for twice as much as what it costs him to buy it. So, the dealers bend you over and give it to you raw any time you decide to shop retail.

If I remember correctly, the car dealer makes about 10-20% depending on the make and model. In other words, they tack on 10-20% to what they pay.

I must correct the inaccuracy. ALMOST NOTHING is at 50 points mark up. If everything were at 50 points dealers would truly be on easy street. Car dealers have lots of hidden ways to make money, audio dealers don't.

Jan Vigne
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Re: Blue Oasis Audio letter


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There is either a 50% or a 100% markup depending on how you want to look at it. In the end, it's all the same. The dealer sells the item for twice as much as what it costs him to buy it. So, the dealers bend you over and give it to you raw any time you decide to shop retail.

If I remember correctly, the car dealer makes about 10-20% depending on the make and model. In other words, they tack on 10-20% to what they pay.

Alex doesn't have clue. He and I have been through this already. He thinks if a retailer buys the product for $100 and then sells it for $200 the dealer has doubled his money - which he considers unfair to him. He ignores the original $100 that came out of the dealer's cash flow. Actually, Alex ignores lots of things in this whole equation.

Auto dealers for major companies make their profit in the service department and off the used car lot - go ask one. A good finance manager can make a dealer a not unreasonable extra profit depending on how the dealership is set up - lots of financing with the manufacturer's own bank gets the dealer an extra 0.5% or an extra $1k financed on tough deals when it's needed to close the sale. High volume dealerships rely on manufacturer's banks a lot.

Every retail industry has incentives. But all retailers pay the same wholesale price within a region. You don't get money off the wholesale cost just because you sell more product than the guy in another city. If that's what you took from my post, you misread what is there.

You can pick up a Consumer Reports April Car Edition or several other magazines or get on line to find out the dealer wholesale on virtually any automobile sold in the US. They will also give you transportation cost which is included in the dealer's bottom line. State and local taxes and fees are non-negotiable. Each dealer decides how much minimum profit they must make on each deal. Bread and butter cars like the Accord LX sedan sell for not very much above dealer book cost.

Almost all industries offer "special pricing" at certain times of the year. The more you buy, the lower the cost per unit. A dealer usually has to buy a goodly number to make the pricing more than just a little extra to work with. But you might be restricted to certain items from the manufacturer's stock. However, a volume retailer with a good size storage facility will normally stock up on the products offered at the special pricing knowing there is always someone who will take a white Accord DX, four cylinder, stick shift without air conditioning if the discount is big enough - or a silver preamp to go with their new black amplifier. Most of the time the dealer doesn't end up making any more profit on these deals but they can use a larger discount to close a deal. Like any other retailer an audio dealer decides how much per centage of profit they must make on a deal to stay in business and negotiates from that per centage. The "deal" comes down to per centage not dollars.

Incentives come in other ways. A dealer who has earned the ability to have five hard to find, in demand cars on the lot is in better shape than a dealer with one on order from the factory - in Japan. The same thing applies to incentives for audio retailers. Some, not all, audio companies will allocate equipment by the relative size of the dealership. A dealer who sells one base line amplifier a month probably won't be the first to get the new top o'the line product. A top dealer gets his salespeople invited to the factory for intensive training or maybe just gets a plaque to hang on the wall saying they're great. Sometimes you just get invited to a better restaurant by the rep.

It appears to me that you are asking how much of a discount you should insist upon before you make a retail purchase of any audio gear. It doesn't work like that. A product is worth whatever it's worth to the person buying that product. That doesn't change whether you're buying a Benz or a $79 cartridge.

I will tell you, for the lines you list, the actual mark up from wholesale book cost (% of profit) is typically less than for a Pioneer receiver or a Polk speaker.

If you get a big discount and you're unhappy with the product, it really doesn't matter how much you got off the price. This happens quite often with audio gear because people don't pay attention to sound quality as much as they pay attention to discount. IMO, if you pay over full retail and you're still happy with what you own six months or six years later, you got a good deal. Unfortunately, too many people think a bargain and a deal are the same thing. They're not.

Here's a story I always told my clients when we were discussing price. I bought a 1985 Honda CRX Si. The first one to come into the SouthWest US. I had to wait six months for the car to come in with the Si set up. The basic CRX was already a hot seller when I made the deal and the local Honda dealers were getting $300 over retail for any CRX. I got the car and loved it but I felt somewhat bad about the extra $300 profit for the dealer doing nothing they wouldn't have done for any other car. Still, the first black 1985 CRX Si in Dallas got a lot of stares and comments.

One day when I was selling a guy a hifi we got talking about cars and he said he had just purchased a Porsche 944 - the first to come into the SouthWest US. He pair $1,500 over retail and had to take a bus to Oklahoma to pick up the car then drive it back to Dallas.

I never felt bad about my extra $300 again. And I still have the car and it still gets a fair amount of stares and comments when I occasionally pull it out of the garage. I figure I got a good deal.

In audio, I bought my McIntosh tube amps twenty six years ago. I use them everyday and every night. I knew I could when I bought them.

The deal is what you think it is, not what you pay.

bifcake
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Re: Blue Oasis Audio letter


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I must correct the inaccuracy. ALMOST NOTHING is at 50 points mark up. If everything were at 50 points dealers would truly be on easy street. Car dealers have lots of hidden ways to make money, audio dealers don't.

I beg to differ. Regardless of what you may think of my character, I saw the wholesale price. There is a 50 point mark up. In other words, the consumer pays twice as much as what the dealer pays wholesale.

Regardless of whether I think this is fair or unfair, regardless of all the noise concerning what makes a bargain or a deal or anything of that nature, a simple question deserves a simple answer: The dealer charges twice as much as what it costs him to buy the gear wholesale.

mrlowry
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Re: Blue Oasis Audio letter

I'm not calling into question your honesty Alex. Have I ever been less than civil to you even when we've strongly disagree? I don't know what item you saw the cost of but different items have different profit margins. Profit margins vary widely by product category and even from manufacturer to manufacturer. There is no universal markup. Very, very, very few items are at 50 points. They are out there no question about it, but it is certainly the minority. That is not debatable I worked in the high-end audio industry for nearly 10 years for small Mom and Pop dealers, regional chains, distributors, and rep. firms. I still work in the electronics industry, just not with audio. I'm just pointing out that you are making a broad assumption based on very, very little information and that your conclusion is incorrect.

bifcake
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Re: Blue Oasis Audio letter

Ok, that's fair enough. In that case, what would say is the average markup? I understand that different items fetch different markup, but what would you say the is the markup on the majority of items?

BTW, this is the item I saw.

Jan Vigne
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Re: Blue Oasis Audio letter


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Regardless of whether I think this is fair or unfair ... The dealer charges twice as much as what it costs him to buy the gear wholesale.

Don't you listen to yourself at all? This is why you find upd so entertaining.

OK, it's not about what's fair. Then what's your point if it's not that you think it's "unfair" to you?

The dealer doesn't set wholesale cost or MSRP. Why are you upset with the dealer?

What is your point other than you think dealers are "unfair"?

bifcake
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Re: Blue Oasis Audio letter

I was simply responding to your post, while answering the question posted earlier. You brought up the fairness issue. So, I simply responded that it makes no difference what I think is fair or isn't as it has no bearing on the immediate question at hand.

Sometimes I have a feeling you just scan the posts rather than actually reading them thoroughly.

Jan Vigne
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Re: Blue Oasis Audio letter

No, you brought up the "unfairness" issue and it is "the issue at hand".

1) The dealer doesn't have anything to do with establishing the numbers you saw.

2) You had no right to look at those numbers in the first place.

3) If the dealer gave a discount, the MSRP doesn't matter at all.

4) If the dealer asked full price according to MSRP, you don't have to buy from them. But to use an internet dealer after shopping the local dealer - even if you hate to talk to the sales staff (they don't like talking to you either), and to use that internet price as a wedge - a baseline - instead of as a bargaining chip, is wrong. That point has been made multiple times by numerous individuals. Why are you still going on about how unfair the dealer is? No one here agrees with you.

A dealer has the right to make whatever profit they feel is appropriate. If you don't like that, shop elsewhere but don't use the dealer's services to find out what you want to buy from someone else. That's theft.

Your statemments above are absolutely contradictory to one another. You are not consistent because your only argument is the dealers are "financial leeches". They are, in your opinion, leeches because you want to own a better system than you can afford at regular "fair" prices. You've said so yourself in the previous thread.

This is all about Alex and no one else. You've said that and that should have ended this thread because you aren't going to change your ways even though just a few posts back you suggested you might. You shift and sway and say one thing and then contradict it in the next two posts. In short, you lie. Do you have any idea why no one - no one - other than upd, agrees with you here?

As to, "Ok, that's fair enough. In that case, what would say is the average markup?" That's none of your business. Just as it was none of your business to look at the dealer's cost sheet.

All you want is a notion of how much more you can screw off the internet dealer. Bugger off, Alex.

Now, we don't need to go through your rationalisation of why it was fair for you to cheat when you looked at the dealer cost sheet - "Because the dealer charges too much - and it's unfair" - do we? I'll say this again, what if the dealer made you show him your bank account and hand over your credit cards before letting you in the door? Would that be "fair"? Looking at the dealer's private business is not what you should be doing.

The dealer is not the problem with you, Alex. You are the problem with Alex. You are only concerned with what gets you what you want - no matter what's fair.

What is your point about mark up if it is not that the dealer is being "unfair" to Alex? Please, answer that question.

bifcake
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Re: Blue Oasis Audio letter


Quote:

What is your point about mark up if it is not that the dealer is being "unfair" to Alex? Please, answer that question.

The point about the markup was an answer to a poster who asked the following:


Quote:
How much of a markup is there on let's say:

B&K?
Krell?
McIntosh?
Audio Research?
Avid Volvere?
Wilson Audio?

You should really read the threads before you get your panties in a bunch.

Jan Vigne
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Re: Blue Oasis Audio letter

Ohhh, Alex!

ethanwiner
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Re: Blue Oasis Audio letter

I'm mostly staying out of this thread but I can't resist making one point:


Quote:
Car dealers have lots of hidden ways to make money, audio dealers don't.


Car dealers make a higher profit selling accessories, and so do audio dealers. But instead of selling you undercoating, audio dealers sell you expensive cables and "power conditioner" products.

--Ethan

Jan Vigne
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Re: Blue Oasis Audio letter


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But instead of selling you undercoating, audio dealers sell you expensive cables and "power conditioner" products.

Yep, they force you to want those things by "enticing" you to be sold those items by having them on display. They take the money out of your wallet and come right into your home with it. They put it right there in your system without your permission.

Let's get this straight once again, retailers do not "force" anyone to buy something. Audio retailers do not sit on the phone calling people to make them come into the shop to buy stuff. I never did cold calls when I sold audio. OK?

If you don't want a salesperson checking up on you after the sale, tell them so. No salesperson enjoys being hung up on. But don't expect, as Alex does, that not calling you will reduce the price.

And it's really cheesy for an accessories dealer to take a swipe at another accessory industry. Whether you choose to use their products is your business, Ethan, but this isn't a thread that needs to disparage the audio industry. You don't want it, nobody's going to make you buy it. Someone else wants it, they get to buy it. And people do "buy" stuff rather than dealers "selling" stuff. So, if that's your best contribution to this thread, Ethan, thanks, now you can go argue with SAS.

bifcake
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Re: Blue Oasis Audio letter


Quote:

Quote:
But instead of selling you undercoating, audio dealers sell you expensive cables and "power conditioner" products.

Yep, they force you to want those things by "enticing" you to be sold those items by having them on display. They take the money out of your wallet and come right into your home with it. They put it right there in your system without your permission.

Where in Ethan's post did you see any of this? Where did you get this thing about them coming into your home without permission?


Quote:

Let's get this straight once again, retailers do not "force" anyone to buy something. Audio retailers do not sit on the phone calling people to make them come into the shop to buy stuff. I never did cold calls when I sold audio. OK?

Where did Ethan or anyone else say anything about dealers "forcing" or cold calling? What does that have to do with anything? Are you reading these posts at all??


Quote:
If you don't want a salesperson checking up on you after the sale, tell them so. No salesperson enjoys being hung up on. But don't expect, as Alex does, that not calling you will reduce the price.

What the hell does that mean? Can someone translate this?


Quote:

And it's really cheesy for an accessories dealer to take a swipe at another accessory industry. Whether you choose to use their products is your business, Ethan, but this isn't a thread that needs to disparage the audio industry. You don't want it, nobody's going to make you buy it. Someone else wants it, they get to buy it. And people do "buy" stuff rather than dealers "selling" stuff. So, if that's your best contribution to this thread, Ethan, thanks, now you can go argue with SAS.

I didn't see Ethan taking a swipe at another accessory industry. He stated simple facts about how audio dealers make money and related it to the auto industry.

I don't get where you come up with this stuff. I strongly suggest you see a doctor about removing whatever it is that's bugging you.

Elk
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Re: Blue Oasis Audio letter

To me, the automobile dealer analogy is inapropos.

Cars are ubiquitous, nearly essential items in our society. Thus, the distribution system is well-worked out and each member of the system makes adequate money to stay in business.

For example, no one has mentioned dealer holdbacks. (Depending on manufacturer, holdbacks reward dealers with typically 3-4% of the vehicle's price. This is paid by the manufacturer to the dealer after the sale. Thus, buying at invoice is not paying what the dealer paid for the car.)

On the other hand, high end audio salons are purveyors of specialty products to a niche market.

Car dealers as a group will remain in business even if one fails.

This is not true of high end audio dealers. They will disappear if we do not support them.

Moreover if we do not support them ,Alex will have no place to audition products before buying them on the Internet; that is, Alex will have no means by which to make a decision as to what to buy. Thus, we owe it to both Alex and the Internet dealers to keep the brick and mortar dealers in business so that they can both survive.

ethanwiner
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Re: Blue Oasis Audio letter


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Where in Ethan's post did you see any of this? Where did you get this thing about them coming into your home without permission?


No shit. I was just pointing out a well known fact that in many businesses more profit (not necessarily more money) is made selling accessories. Jan is so in the mode of attacking people - not just me, but often me - that he has lost all objectivity. It seems no matter what I say, Jan sees red and starts in with the name calling and accusations.

Jan, please chill out, okay? Thanks. I'm not your enemy. Hell, nobody here is your enemy. Not even DUP. We all share a common interest in hi-fi, even if we don't always agree on the fine points.

--Ethan

Jan Vigne
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Re: Blue Oasis Audio letter


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Are you reading these posts at all??

Are you even comprehending these posts at all?

Why are you even continuing to carry this thread forward? No one agrees with you, which should have been quite obvious by about fifteen pages back. You aren't going to change your despicable behavior, you'll only say you will and then not within the span of two posts.

What point are you trying to make here, Alex? Or, have you caught upd-itis? You just repeat yourself to convince yousrefl.

bifcake
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Re: Blue Oasis Audio letter


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What point are you trying to make here, Alex?

Jan,

I think that this link makes the point much more eloquently than I ever could.

Jan Vigne
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Re: Blue Oasis Audio letter

Well, then, Ethan, what was the point of your post? Why not pick on vacuum record cleaners, equipment stands or, wow, maybe room treatments? How "over priced" are room treatments? About the same as a power line conditioner from what I remember. So what was your point?

Poor Little Ethan! Jan often picks on him.

Boof'inghoo!

I don't attack you, Ethan, I respond to your posts, most of which I find insulting in one way or another. You don't believe in line conditioners and cables so they become your target. You make a poor representative for the audio industry when you disparage other members of this industry, Ethan. But that doesn't seem to matter to you. And for what purpose? We weren't discussing line conditioners and cables?

Ethan, get over this cry baby "I'm being picked on" shit you always pull just before you start insulting someone - usually me. Usually me! What a great line. I feel so picked on. Picked on by Ethan. What an Honor! It's like being insulted by Alex or upd. Priceless! Worthless.

You want to talk about mark up on accessories? What's your mark up from raw materials to retail pricing? How much do you discount off MSRP? Do you consider yourself a "financial leech"?

ethanwiner
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Re: Blue Oasis Audio letter

WTF? Where did I insult anyone or denigrate any type of accessories in this thread? Jan, you are incorrigible!

--Ethan

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Re: Blue Oasis Audio letter


Quote:
This is not true of high end audio dealers. They will disappear if we do not support them.

Moreover if we do not support them, Alex will have no place to audition products before buying them on the Internet; that is, Alex will have no means by which to make a decision as to what to buy. Thus, we owe it to both Alex and the Internet dealers to keep the brick and mortar dealers in business so that they can both survive.

What an excellent point. Pity it wasn't the end of this thread.

Jan Vigne
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Re: Blue Oasis Audio letter

You are right, sir! You can't even be eloquent when saying "You dick!" You simply can't put two words together that aren't a contradiction.

You've reached the point of upd's status.

ROTFLMAO at how stupid Alex is.

And, Alex, I'd like to say the same about you, but I don't even hold you in that much regard. You are a bit farther South in my estimation.

Now, where is any of this getting us? You want to continue, Alex? Cause I can insult you all day and all night. It's easy. Or, do you want to stop the childish BS and not insult me again?

Answer the question, Alex, what are you trying to prove by continuing a thread where everyone disagrees with you and has made that obvious?

Jan Vigne
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Re: Blue Oasis Audio letter


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Jan, you are incorrigible!

And you're a rotten example of an audio industry retailer! Explain what I asked and then we can talk.

ethanwiner
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Re: Blue Oasis Audio letter


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Explain what I asked and then we can talk.


Against my better judgment I'll gladly do that. But first promise you'll be civil. Deal?

--Ethan

Jan Vigne
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Re: Blue Oasis Audio letter

You get what you give.

ethanwiner
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Re: Blue Oasis Audio letter


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You get what you give.


Okay, I'll take that as the best Jan can muster as an offer to be civil.


Quote:
What's your mark up from raw materials to retail pricing?


Raw materials is almost irrelevant compared to the cost of labor, employee insurance (we pay 100 percent with no co-pay), factory rent, property taxes, gas and electricity, shipping boxes and packaging, and half a dozen other things I'm probably forgetting. When all of those are included our cost is about half the list price. Understand this is not "corporate profit" in the usual sense. Rather, it is my salary and my partner's salary. And believe me, no way am I a rich man. When sales are slow the owners don't get paid!


Quote:
How much do you discount off MSRP?


We sell mainly direct, but we do occasionally sell through dealers if they're knowledgeable enough about acoustics to explain to customers why they need acoustic treatment, and why our products are better than typical foam. Even when we do sell through dealers our discount is smaller than for most audio products. We simply don't have enough margin. I'm not about to post our dealer discounts publicly, but if you email me from the Contact page of my company's site I'll be glad to share more if you really care.

--Ethan

Jan Vigne
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Re: Blue Oasis Audio letter


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Okay, I'll take that as the best Jan can muster as an offer to be civil.

Take it as I don't trust you either, Ethan.

No, I really don't need specific dealer discounts. The only thing I would say is important is whether a dealer has to charge more than your on line price. And how you see that as fair if that's the case.


Quote:
When all of those are included our cost is about half the list price.

I wasn't asking for the purpose of finding out specific discounts. So, you make about 50 points on retail when you sell to a client on line. That would make you a leech in Alex's estimation. Congratulations!

But you forgot the most important question.


Quote:
Well, then, Ethan, what was the point of your post? Why not pick on vacuum record cleaners, equipment stands or, wow, maybe room treatments? How "over priced" are room treatments? About the same as a power line conditioner from what I remember. So what was your point?

How does what you sell differ from a power line conditioner when it comes to how a dealer would make some profit? I'm just talking dollars not whether you believe in the efficacy of line conditioners.

ethanwiner
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Re: Blue Oasis Audio letter


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The only thing I would say is important is whether a dealer has to charge more than your on line price. And how you see that as fair if that's the case.


I can't imagine a dealer charging more than we sell for because nobody would buy from them in that case. But understand that dealers don't buy our products for inventory, and we'll even drop ship to save double shipping. So they have zero investment, other than their time which of course is worth something. All they have to do to earn their commission is bring in customers.


Quote:
So, you make about 50 points on retail when you sell to a client on line. That would make you a leech in Alex's estimation. Congratulations!


I can't imagine anyone begrudging a normal profit. But some situations yield much higher profits. There's a well-known microphone importer who pays $85 for a complete microphone from China and resells it for $1,000. For their $85 they get the microphone, shock mount, mic cable, draw-string bag, fancy cherry wood box, the store display box, and even the outer shipping box.


Quote:
Well, then, Ethan, what was the point of your post? Why not pick on vacuum record cleaners, equipment stands or, wow, maybe room treatments? How "over priced" are room treatments? About the same as a power line conditioner from what I remember. So what was your point?


I never picked on anything! I simply stated "accessories" and listed a few examples.


Quote:
How does what you sell differ from a power line conditioner when it comes to how a dealer would make some profit? I'm just talking dollars not whether you believe in the efficacy of line conditioners.


In that case the only / main difference is they do not have to purchase inventory.

--Ethan

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I never picked on anything! I simply stated "accessories" and listed a few examples.

OK, Ethan, I'll take your word for your intentions. It just seemed unusual you would choose two items you have recently called "snake oil" and their manufacturers "charlatans" to make your point when room treatments would have been just as apt an example. The implication I took from your post was that such "snake oil" items are a good way for a dealer to jack up their profit margins by selling over priced junk. If that isn't what you meant, then I would assume you would agree that on average a dealer selling accessories with a new amplifier wouldn't substantially increase their total margin for that sale just by including accessories whether those items be cables or room treatments. The overall total sale, and thus total profit, would increase but the difference in margin would be slight even if the accessories sold at full retail. That's fair to say. Though most accessories are also discounted in a system sale. And most accessories are sold on a try it and listen basis with the potential for a returned item. I've lost a few dollars in commission when a surge protector was returned.

By contrast a car dealer makes a substantial amount of their total profit margin by selling accessories and financing. What can start as a bare bones commission on a bread and butter car can turn into a good deal of money when those two items are factored into the salesperson's commission. I once sold an Acura TL ($30k) that netted me $150 commission on the car itself and another $685 after the client picked virtually ever accessory in the catalog.


Quote:
There's a well-known microphone importer who pays $85 for a complete microphone from China and resells it for $1,000. For their $85 they get the microphone, shock mount, mic cable, draw-string bag, fancy cherry wood box, the store display box, and even the outer shipping box.

And if the client buys the mic and is happy, the deal is still in what you think it is, not what you pay.

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Re: Blue Oasis Audio letter


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For example, no one has mentioned dealer holdbacks. (Depending on manufacturer, holdbacks reward dealers with typically 3-4% of the vehicle's price. This is paid by the manufacturer to the dealer after the sale. Thus, buying at invoice is not paying what the dealer paid for the car.)

That's a somewhat misleading statement. Dealers will not deal on hold back since they never know what that amount will be until at least 30, sometimes 120 or more, days later. The factory sets objectives and the dealer must meet those goals to get anything. Most dealers get paid on the customer satisfaction scores turned in with client surveys. A bad CSI score can really hurt a dealer and volume dealers seldom do as well as slower dealers on CSI.

However, a volume dealer with a good finance and after the sale department can make a good margin bump, if they hit the right numbers. A small town dealer with higher overhead per car isn't as likely to see the real advantages of hold back. At the three dealers I worked for over a period of twenty years years, I never saw a deal go out on hold back though that was often tried by "educated" customers.

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Ok, that's fair enough. In that case, what would say is the average markup? I understand that different items fetch different markup, but what would you say the is the markup on the majority of items?

BTW, this is the item I saw.

The item that you mentioned wouldn't surprise me being at 50 points. All of their stuff is over-priced, no offense if you've owned it or currently own it. But again 50 points is the absolute maximum that I have ever seen on a High-end product. On the low side many video products are break even once freight from the manufacturer is figured in and lose money after that. There is an industry accepted figure of profit that really is required for a brick and mortal to stay in business (I

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There is an industry accepted figure of profit that really is required for a brick and mortal to stay in business (I
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Re: Blue Oasis Audio letter

Oh, Alex.

Years ago almost every high end dealership had a full service department that was staffed by well trained techs. The oldest dealers I ever worked for had, at the time I worked there, three or four full time service techs, several who had a double "E". Only once did I work with Devry graduate and he was a disaster when it came to high end product and was eventually - before he was fired - restricted to Yamaha recievers and Denon cassette decks. Many of the techs made a higher salary than any of the sales staff and they produced no appreciable income - they were just considered part of "the cost of doing business". In most shops where I worked we fixed 95% of our own equipment in house and were a regional service center for several brands.

In house service departments gradually faded away because of their incredible drain on cash flow for the dealer. A well stocked service department had, in 1990 $'s, about $1/4-1/3 million in parts and equipment and took up one third of the floor space that could have been devoted to sales merchandising. That's rent money that's not bringing back any income. Like auto mechanics facing the computerized vehicle the equipment required to service products with vanishingly low distortion and noise numbers and higher and higher levels of sophistication started to put even more stress on the cash flow issues. Some high end manufacturers didn't want anyone but their techs doing service on their products. The unreliable or just the 1% failures in any good line of high end products that sneak in every now and again present special problems to a dealer when the client has spent $20-30k in a weekend.

It just became a service that wasn't sustainable. There was more money to be made in whole house pre wires for HT systems. Independent service shops are closing for many of the same reasons. Modern equipment isn't built for servicing. And at $65-85 per hour just for troubleshooting, people don't want to pay for the service when new often times costs less than repaired. Add to that equation most high end dealers now carry home theater equipment and the costs and space required to have a fully functional shop for that sort of repair are expotentially higher than what a dealer faced just a few years ago.

No, Alex, you do not have an idea of how the audio business works. And you wouldn't pay for the services anyway since most of these dealers sold at full retail and justified their pricing with full service.

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Re: Blue Oasis Audio letter

Alex-

Let's just say that if the 50 point mark was correct all of the salesman would dress significantly better and have nicer cars. By moving to another area in the electronics industry I'm expecting to make double what I did last year, with the same education, experience, and abilities. I've shared my knowledge and experience to try to give you a little more perspective on "profit." Profit isn't what you make on a sale, it's what you have at the end of the year after all of the expenses are paid. I've said as much as I'm comfortable saying about profit margins. It's not my place to represent the industry as a whole.

I hope that you are at least softening your position as you are starting to understand what goes on behind the scenes. Yes manufacturers SHOULD pay for labor when things are under warranty, but that's simply NOT how it's done in the Audio industry. A dealer could try to REQUIRE their manufactures to pay, but would be told to go scratch and would quickly find himself with no brands to sell.

I handled service for my old store for about a year. A manufacture NEVER offered to pay labor on warranty repairs, even when it was due to gross negligence on their part. A really famous electronics manufacture (think first tier solid state) didn't soldier the output devices in the right channel causing an amp to go thermal and self destruct, they didn't even cover shipping of the defective unit back to them which we had to return or be billed for. I twisted every arm there was to twist, as did the owner of my old company. Not too many years previous we were their biggest dealer in the country. In the end we dropped them, in part because of that. But there was a guy "down the street" that wanted a marque brand and he picked them up. So we cut off our nose to spite our face. All of the loyalists to that brand are now his customers.

Add to the above that I regularly had to undercharge on labor to keep good customers happy for repairs where I didn't mark up the parts cost and you see the difficulties that a brick and mortar dealer faces that internet resellers do not. Did I want to give away labor? No but I had to because my brick and mortar competitors did.

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Re: Blue Oasis Audio letter

Ok, but obviously the current business model isn't working. The distribution chains are changing, customers have access to venues other than local dealerships, the dealers are feeling the pinch. Obviously, the old model is failing.

You have mentioned all the things that can't be done. What can be done? My idea was to shift the pricing from retail to repair, service, installation, etc. You're saying that's not feasible. Then, what is? If nothing else is feasible then the dealers as we know them will cease to exist.

There seem to be a few dealers that are striving. One of the most interesting dealerships I've come across is Upscale Audio. This is a brick and mortar store that sells on the Internet as well. They seem to have found a formula that works. They do modifications, sell tubes, etc. They seem to be doing really well. Perhaps that's a model to embrace.

The thing is that if dealers are to survive, something has to be done. Something other than what they're doing now. Crying about it, blaming the Internet or brow beating people who buy on the Internet isn't going to help.

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The thing is that if dealers are to survive, something has to be done. Something other than what they're doing now. Crying about it, blaming the Internet or brow beating people who buy on the Internet isn't going to help.

Why don't you drop this jag? It's something you've made up and want to cling to in order to further justify getting what you want for you and you alone. You've decided since the local dealer can't stop you from doing what you do, they are poor business people and therefore they "deserve what they get". One more rationalisation made from oatmeal.

Bottom line; for dealer's to survive, those people who want the products, knowledge and services they repesent must support them fully and with eyes open to how business really works in a small boutique industry which is swimming in the same waters as some large, hungry sharks.

In your case, you consider a sales transaction to be a "subsidy". You consider dealers to be "leeches" placed here on this Earth to suck your bank account dry and keep you from having the higher priced system you feel you "deserve". You consider a dealer cost sheet, sent to him by the manufacturer, to be the sole responsibility of the dealer. You consider all of your actions justified. You place the responsisbility for a dealer's survival solely at the feet of the dealer as if the client base had nothing to do with how a business survives. You consider this entire affair a "All for Me" proposition and screw the rest if they can't figure out how to survive. Then you bitch that they aren't figuring out how to survive.

That's rich!

What difference does it make to you if a local dealer survives, Alex? If they go out of business, another will take their place. If it's in another community, so what? So why all the concern? What's it to you? If the brick and mortar business model doesn't work and everyone sticks to a failing (by your account) model, so what? How is that going to affect Alex? Because what affects Alex is all you have cared about here.

You'll still have your internet dealers to shop with. Of course, you can't look in their price books. And no matter how hard you try no one who knows will tell you the margins dealers operate on.

Well, I'll tell you what, Alex, I'll do that for you. I'll tell you just what that "magic" number is. I'll unlock the door to an untold ability to finagle a dealer down even further on their pricing so you can afford even higher priced gear at even lower cost to you and you can screw more dealers. How's that sound?

There's only one thing ...

First you'll have to post your bank account numbers with routing information and your Mother's name (or any such pertinent information) and your Social Security number online. I'll need three major credit cards with expiration dates, security numbers and correct billing information. I'll need to run a credit check through the usual sources and I'll need some cash up front - a few hundred will do for a start - to cover my expenses since this brick and mortar affair will require a subsidy to get up and running. I'll post all of that information on Yahoo and, if you'll just wait 6-8 weeks for shipping, I'll give you the "magic" number. I'll never call you back to check on how things are going and - I hope - you'll never speak to me again.

How's that business model work for ya? You get what you want at minimal cost and I get what I need in the short run. Brilliant!

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Re: Blue Oasis Audio letter

The funny thing is Alex, it

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Re: Blue Oasis Audio letter

Alex, I've been thinking this over, and there is a middle path.

Go to several stores and audition the finest computer speakers you can find.

Then, go buy them on the internet and save some cash.

Thereafter, when you shop, you can ask the internet sellers to play the piece of gear you are interested in while you listen to it over the internet!

Et voila, problem solved! You are no longer parasitizing the time and resources of the retailers you have such disdain for, and it will require the internet seller to participate in the demonstration and set up of the gear they sell.

There, I hope this settles all the commotion.

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Re: Blue Oasis Audio letter


Quote:

You admit to finding value in the ability to listen to gear at dealers but you find dealer price excessive when compared to online resellers. When presented with some basics regarding the costs of doing business, one of them being the ability to let you listen to gear, you suggest a re-think of the

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Re: Blue Oasis Audio letter

I don't think that nail penetrated.

Picking good components isn't difficult thanks to among others, Stereophile. Building a system is another matter altogether. My experience, which is admittedly limited, says that a fair amount of people fail to recognize the importance of the room and associated gear during their component auditions. Let

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Re: Blue Oasis Audio letter


Quote:
Let
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Re: Blue Oasis Audio letter

Hi Buddha,

I would very much prefer to discuss this over cocktails. Preferably yours. Coming to NYC any time soon?

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Re: Blue Oasis Audio letter


Quote:
Let
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Re: Blue Oasis Audio letter

Blowing out the candles and making a wish is my favorite part of the party too. I look forward to your version over beers.

bifcake
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Re: Blue Oasis Audio letter

What are you doing Friday? I'm buying.

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Re: Blue Oasis Audio letter

Damn! This week is n.g. Let's try to schedule something off line. In the mean time, I'm outta here but I think it would be generous of you to share your approach right here. I'm sure others would like to hear it as well.

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Re: Blue Oasis Audio letter


Quote:
Agreed. I try to avoid them [hifi store] as much as I can.

You can easily avoid them completely.

Just don't walk in.

Since you feel they are not worth supporting, they should have nothing of value behind their doors to interest you in any event.

bifcake
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Re: Blue Oasis Audio letter

They don't, except the previews.

Jan Vigne
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Re: Blue Oasis Audio letter

Then pay the ticket price as if you were staying for the entire movie.

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