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jamesgarvin
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Re: Profit margins

"The grocery down the street has the same costs and they don't charge $50 for a piece of fruit to justify their existence."

Your original point was on the % of markup. What is the % of markup on that tomato your purchased? How do you know that it is not 100%? Why are you not asking them? In any event, you are comparing apples to oranges. Food, see, is a necessity. We need it to live. Which explains why supermarkets are generally busier than high end audio emporiums. I strongly suspect that if high end audio dealers had the volume of sales that supermarkets enjoyed, then the markup would be changed accordingly.

"The products they sell are considerably cheaper, hence, their listening environment is worse. You won't find a $5k or a $10k speaker there. If you're selling stuff that's that expensive, then it's only natural that you would provide an ideal listening environment in order to sell the product. Else, no one will hear the difference and buy the 10k speaker. Again, the dealer does you no favors by setting up listening rooms. It's part of the selling process."

That is not what you wrote. You wrote that a listening room is a listening room is a listening room. The same value in a listening room, to use your words, could be had "from any store selling electronics." Well, Best Buy is any store that sells electronics. More care went into the high end audio stores listening environment, and surely that has value. Which you seem to think you should get for free.

"My guess is that it takes 1/8th of the selling price to produce and that includes all the other ancillary costs such as rent, equipment, employees, etc."

You seem to get a lot of mileage from your guesses and assumptions.

I think your last sentence sheds some light on the type of person you are, and consequently the thoughtfullness of your original post. You apparently see nothing wrong with using another person's time and capital without any intent at compensating them for those products. That is no different than theft. A high end audio store's commodity is the time and expertise of the salesman, a commodity you apparently have no issue with taking without any intent to compensate him for. It is no different than walking into a store which sells tomatos, and consuming without paying for. That you have no regard for other's peoples' time and investment, it appears, means there is little point.

By the way, you have still not answered what business you are in.

bifcake
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Re: Profit margins


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What do you do for a living, Alex?

I am a corporate paper pusher.

bifcake
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Re: Profit margins


Quote:

You'd think from all the genius business advice that's been floating around this hobby, some audio Einstein would realize that he'd make really big bucks by operating a store with AlexO's 30% margins.

Bada bing....free money!

My question is, why doesn't this business model exist?

You'd think every town would be dirty with 30% margin stores raking in all the Hi Fi dollars.

Is it a vast conspiracy?

It's not a conspiracy, it's a protected market. The manufacturers ensure that the dealers don't have to compete on price. They do that by writing contracts that set up zones in which a dealer can sell their stuff. This is why you don't see many high end dealers selling over the Internet - they're prevented from doing so by the contracts. Since dealers don't have to compete on price, they don't feel the pressure to discount.


Quote:

I think your last sentence sheds some light on the type of person you are, and consequently the thoughtfullness of your original post. You apparently see nothing wrong with using another person's time and capital without any intent at compensating them for those products. That is no different than theft. A high end audio store's commodity is the time and expertise of the salesman, a commodity you apparently have no issue with taking without any intent to compensate him for. It is no different than walking into a store which sells tomatos, and consuming without paying for. That you have no regard for other's peoples' time and investment, it appears, means there is little point.

Hmmm... it started with me being simply unethical. Now, I'm a thief. I wonder at which point will I get promoted to an axe murderer?

How about this: I'll just walk over to a dealer, plop a wad of cash on their table and thank them for being such stand up guys. How's that? Is that ethical? Do I repent for my sins?

Jan Vigne
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Re: Profit margins


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You seem to get a lot of mileage from your guesses and assumptions.

LOL


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Since dealers don't have to compete on price, they don't feel the pressure to discount.

ROTFL


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Hmmm... it started with me being simply unethical. Now, I'm a thief.

Have you ever met an ethical thief? You seem to be missing the point.

Buddha
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Re: Profit margins


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It's not a conspiracy, it's a protected market. The manufacturers ensure that the dealers don't have to compete on price. They do that by writing contracts that set up zones in which a dealer can sell their stuff. This is why you don't see many high end dealers selling over the Internet - they're prevented from doing so by the contracts. Since dealers don't have to compete on price, they don't feel the pressure to discount.

So, why do you think this is the predominant practice?

If it weren't good economics, then why does this persist?

Even Sony and big box electronic manufacturers try to use this sort of model

bifcake
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Re: Profit margins

Isn't there honor among thieves? Hence, all thieves are ethical. :P

rvance
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Re: Profit margins

This won't address any of the more profound issues discussed, but perhaps a non sequitur will let us catch our breath. In Retail Math World (or at least my previous past experience in discount grocery and convenience stores) markup is computed backwards from the retail price. Therefore, charging $2 for a $1 wholesale item is called a 50% markup, $1.50 for same would be a 33% markup, etc.

Additionally, large discount grocers talk about a 2%-3% profit margin after overhead and salaries are paid. I bet high end brick and mortar audio dealers can claim as little as 10%-20% margin with their much lower sales volume.

bifcake
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Re: Profit margins

I think a more accurate measure would be to say that if you buy something for a $1 and sell it for $2, that's a 100% markup. Your cost is 50% of the purchase price, but the markup is 100%.

Jan Vigne
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Re: Profit margins


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Isn't there honor among thieves? Hence, all thieves are ethical.

Actually, I don't believe there is as you seem to continue to prove. But you keep reading them there comic books, Alex. And grind the drugstore down on those prices too.

Personally, I would prefer not to be dealing with a thief if his only ethics were when he dealt with other thiefs. Furthermore, I would prefer not to deal with any thief who has no qualms about their unethical behavior.


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I am a corporate paper pusher.

Obviously not an accountant.


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Therefore, charging $2 for a $1 wholesale item is called a 50% markup, $1.50 for same would be a 33% markup, etc.


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I think a more accurate measure would be to say that if you buy something for a $1 and sell it for $2, that's a 100% markup. Your cost is 50% of the purchase price, but the markup is 100%.


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You seem to get a lot of mileage from your guesses and assumptions.


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Besides, I know what I saw.


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And, BTW, I don't think you know what you saw.

If you buy something for $1 and sell it for $2, 50% of your selling price covers your cost of buying the product. If you remove 50% of your selling price to cover cost, you have how much of your selling price left as profit?

All together now ...

FIFTY PER CENT!!!

Your margin of profit on that $2 sale is 50%. If you buy a product for $10k and sell it for $20k, your profit margin is still only 50%. But, if you're a brick and mortar dealership, you'll have to have at least one extra of those $20k products in your inventory in order to demo it to a prospective client. While it sits on the floor it is not making you any profit margin. It is a cost.

Don't believe me?

Gross Profit

Jan Vigne
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Re: Profit margins

Sorry, Buddha, your posts have become rather lost in this thread. If you can repost a succint version of your questions, I'll see I can offer some explanations. Though some of the agreements between retailers and manufacturers are more "gentlemen's agreements" than legally binding contracts. Many are meant to minimize the unethical behavior so many people seem to have no qualms about.

bifcake
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Re: Profit margins

Ok, I'll make it easier for all of you rocket scientists who insist on confusing the issue. I will not use percentages to express markup. I will use multipliers. What I saw was a dealer charging twice as much for a product that what it cost him. Is everyone happy now? Can we stick to the topic please?

I've majored in accounting in school. Although that was a long time ago, I am quite familiar with accounting practices and I'm quite familiar with ways to use accounting to argue whether or not a company made a profit, or how much of a profit it made. You can use the same numbers and apply them differently based on type of amortization, tax deferments, etc. I'm really not interested in arguing these points. I have no desire to enter into a debate as to whether or not a dealership makes a profit by charging twice as much for a product. I have a feeling they do and I have a feeling they do quite well.

Furthermore, everyone incurs costs of doing business. The high end dealerships are not alone in this. So, what I suggest is that high end dealers compete on price AND service AND support. I am not here to cry crocodile tears for dealers who can't stay in business. I'm also not here to subsidize dealers by paying full retail, which I think is outrageous. It is not my prerogative to worry about the dealer's costs. That's his job. It's up to the dealer to know if and how much he can discount a product. My job is to cut the best deal for myself. If a dealer can meet my demands, we make a deal. If they don't, we won't. It's that simple. There is no need for complications such as philosophizing over the ethics of negotiation, accounting practices and the like. During these negotiations, I will use whatever leverage I have and the dealer will use whatever leverage he has. A product, any product has no value if it sits on a dealer's shelf. The dealer has to move the product. I want him to make some money, rather than no money at all, but I don't want him to make as much money as he wants to make. Really, this a pretty simple thing. There's no need to recite Plato here.

Editor
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Re: Profit margins


Quote:
Look at the above list of overhead costs for the brick and mortar dealership and consider those expenses as dollars taken away from even the most generous profit margin of 40-50% (which I assure you, no high end retailer manages on a consistent product to product basis - go back and look at my original post in this thread for a better idea of how profit margins are distributed across product lines) and you should be able to figure out that even 30% profit margin on the final tally sheet would be a wonderful sight to most small, independent high end dealers.

An excellent tutorial, Jan. Thank you for taking the time to post it.

There are other hidden costs. For example, the capital the dealer has tied up in stock could have been earning interest if invested in the money market. So the longer it sits unsold, it doens't represent 0% profit, it actually creates a loss in real terms.

And unlike the tomato sale, which may well be cash, the audio sale will most likely be paid for with a credit card, resulting in a payment from the retailer to the credit card company of 4-8% of the retail price. (I have fallen foul of _that_ hidden cost with one of my ventures.)

Someone commented recently, in another thread, on the value of this website's archives. We published an article by ex-retailer Barry Willis on this entire subject in 1996; see www.stereophile.com/thinkpieces/64.

I wrote about it in 1993, based on the text of a speech I gave at a PARA Conference; see www.stereophile.com//thinkpieces/59 .

John Marks also discussed this subject in 2002; see "The Tragedy of the Commons," www.stereophile.com/asweseeit/547 .

John Atkinson
Editor, Stereophile

bifcake
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Re: Profit margins

John,

Everyone who stays in business has hidden costs. Everyone who takes credit cards has to pay a percentage to the credit card company, which is in the 1-3% range. Everyone has to deal with inventory and everyone has to deal with the used market.

I read the articles to which you point and it makes me fume that everyone tries to go out of their way to price protect and it is the consumer who shops around or buys on the used market who's labeled "unethical".

Another thing that really blew my mind is that dealers consider the open used market as unfair competition. What do they propose - screwing their customers twice? The first time by charging them full retail and the second time by buying back their rigs at 30% of the purchase price so that they can turn around and sell it at 60% of the purchase price? That's real fair and ethical.

All of these articles point to the same thing that I've been saying throughout this thread: NOBODY WANTS TO COMPETE ON PRICE. Once you take away price competition, once you set up protected zones, you also set up an environment where consumers are trapped, opening them up to dealers who are nasty, don't really give a shit and who know that if you really want that piece of equipment, you have no place to go because they got the "zone". In fact, zoning encourages that.

In as far as requiring to maintain the markups to stay in business, my answer to that is: make it up in volume. Sell it for less, sell more of it.

With regard to the second article, it seems that Stereophile is committed to supporting the dealers/manufacturers/industry by ensuring that there are no negative review. By cherry picking the review components, you try to minimize negative reviews so as not to adversely affect the market. Yes, I know, you've told me that the reason you don't have negative reviews is because the readers don't want them and yes, I know that you publish whatever you hear. I don't doubt that you publish whatever you hear, and I don't doubt your honesty within your reviews, but I do see an effort to minimize exposure of a bad review.

So, all three articles argue the matter from the side of the suppliers. No one really looks at things from the side of the consumer. In fact, everyone goes out of their way to label a consumer trying to get the best price for a given component as someone unethical or worse yet an evil thief.

I guess that attitude in and of itself says something about the high end industry.

Jan Vigne
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Re: Profit margins


Quote:
Ok, I'll make it easier for all of you rocket scientists who insist on confusing the issue. I will not use percentages to express markup. I will use multipliers. What I saw was a dealer charging twice as much for a product that what it cost him. Is everyone happy now? Can we stick to the topic please?

Profit is the topic. Profit and unethical behavior. You still don't seem to get the idea the dealer pays his bills and runs her business on profit, not mark up.

What you saw was, first; the manufacturer's suggested retail which is set by the manufacturer - not the dealer. The cost to the dealer and the suggested retail pricing are determined by someone other than the dealer. You saw the profit margin the maufacturer feels is fair. Got it? The dealer can discount from the suggested retail if they wish. But who begins negotiations by giving away profit? A car dealer negotiates from the Maronni sticker price. Why should a high end audio dealer not do the same? A real estate agent negotiates from the highest price allowed. Why should a high end audio dealer be any different? The grocer starts with the suggested retail and puts a little sticker on the shelf that says you'll save fifty cents if you buy this box of cereal today instead of tomorrow. I am completely baffled why you are upset a dealer uses prices and costs that are determined by someone else when they begin negotiation. The only rationale I can think of is you are truly stretching to CYA on this whole affair. You don't know what you saw and you don't understand pricing. If you'd like, we can make that the topic - but it still comes down to profit and unethical behavior.

Second, what you saw was the manufacturer sugegsting the dealer operate on a 50% profit margin with their product. Once again, from twenty five years of experience in this business, I can assure you mark up isn't what the bankers look at. Furthermore, you have not said the dealer actually sold the amplifier to some unsuspecting sop for full retail and then turned around and gave you a deal on this amplifier. You only saw a suggested retail set by the manufacturer and the probable book cost to the dealer for that item. Book cost doesn't even include shipping which on a heavy two hundred watt amplifier can be a substantial additional cost incurred by the dealer before the unit even gets in the door. Now you wish to base your entire argument that dealers are unethical S.O.B.'s who gouge the buyer on those two numbers while you ignore all the other factors that are relevant to the dealer's actual cost of doing business. This is Olympic grade CYA!


Quote:
I've majored in accounting in school. Although that was a long time ago, I am quite familiar with accounting practices and I'm quite familiar with ways to use accounting to argue whether or not a company made a profit, or how much of a profit it made. You can use the same numbers and apply them differently based on type of amortization, tax deferments, etc. I'm really not interested in arguing these points. I have no desire to enter into a debate as to whether or not a dealership makes a profit by charging twice as much for a product. I have a feeling they do and I have a feeling they do quite well.

Alex! If you are familiar with accounting practices, why don't you know the difference between mark up and profit margin? "You can use the same numbers and apply them differently based on type of amortization, tax deferments, etc." Now you want to get into the particulars of how a dealer operates their business but it is of no consequence to you when we discuss "rent, advertising, salaries, health insurance for his or her employees, which are continually rising, various asundry taxes such as payroll taxes, property taxes, unemployment insurance, utilities, such as heat, electricity, water/sewer, telephone, including long distance, social security taxes, medicare taxes, likely some type of retirement contribution for employees, and for other professionals such as accountans, liability and property insurance, possibly disability insurance, etc."

Alex, any accountant knows you can balance the books in various ways to get different pictures of the operation. Any ethical accountant knows you can only have one bottom line and you only have so much profit to keep the company afloat.


Quote:
I have no desire to enter into a debate as to whether or not a dealership makes a profit by charging twice as much for a product.

Then why the hell did you start this thread?!

First you say, "You can use the same numbers and apply them differently based on type of amortization, tax deferments, etc. I'm really not interested in arguing these points."

Then in the next paragrpagh you say, "Furthermore, everyone incurs costs of doing business."

You are walking on both sides of the fence here, Alex. If one dealer has lower costs, they can sell product for lower prices and remain in business. If the dealer with higher costs offers better service; i.e. a demo room and in stock inventory to audition, a knowledegable sales staff, delivery services by trained installers, all the other things we mentioned throughout this thread and a clean toilet with lots of paper (everything goes on the bottom line - no pun intended) then that dealer must make higher profits in order to stay in business.

Now, ...


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So, what I suggest is that high end dealers compete on price AND service AND support.

But, ...


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I don't require dealer's help with installation, advice or opinion. I can do my own research and solicit opinions from disinterested parties. All that I require is a place to audition and a good price. To me, everything else is pure fluff.

Which is it, Alex?


Quote:
I'm also not here to subsidize dealers by paying full retail, which I think is outrageous.

Then don't frequent dealers who you know wish to charge full retail. If those "subsidized" dealers are the dealers who carry equipment you would like to purchase, you can either change you mind about what you wish to own or change your attitude about pricing. They are at best, making a 50% profit margin on some items, not the 110% you were certain they were making just a few posts ago. And that 50% profit margin is determined by the manufacturer, not the dealer. After you subtract the overhead we have shown them to incur, they will be lucky to clear your allowable 30% profit margin. That has been proven here in numerous posts from numerous individuals. You have merely chosen to ignore those facts because they don't fit your way of thinking. You and dup should have a mutual admiration society by the end of this thread.


Quote:
There is no need for complications such as philosophizing over the ethics of negotiation, accounting practices and the like.

Of course, there is!!! You made this thread about the ethics of the dealer but you refuse to discuss the ethics of your behavior - or you say you have no qualms about your unethical behavior while screaming bloody murder about some supposed unethical behavior committed by the dealer. And all along you don't understand what you saw that prompted this thread and you don't care what the actual costs are to the dealer and you have no desire to understand that what you saw are numbers not set by the dealer. Now, if none of that gives you pause in your argument, we are simply beating our heads against a brick wall that sees no conflict with unethical behavior in many areas. You told me not to get "high and mighty" after my first post, Alex. I think it's time to remind you of the same advice.


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It is not my prerogative to worry about the dealer's costs.

You keep using the word "prerogative". Why? Why would it even be your "right" to worry about the dealer's costs?

No one is asking you to worry about the dealer's costs. We are just saying you cannot compare the costs of a brick and mortar operation to one on Audiogon. If you wish to negotiate with the idea they are both the same, you can choose to be either unethical or stupid. We are encouraging you to be neither.


Quote:
I am not here to cry crocodile tears for dealers who can't stay in business.

But it appears you will blame the dealer for not using good business practices when the shop closes for lack of profit caused by competing against an unfair and unethical competition. Once again I can only speak from my personal view; but I would rather deal with an ethical dealer and pay a bit more than deal with an unethical retailer and have nothing but a box. If anyone believes they can get the exact same support and service from an on line retailer as they do from a brick and mortar shop, they need to show me that demo room on Audiogon. I still haven't seen the link to that one.

tom collins
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Re: Profit margins

jan: i noticed that this is your 1000th post. it is too bad you have had to waste it on this topic. i believe what we have here is an individual that enjoys winding people up for his own gratification. i am sorry to say that those types will say the sky is green just to get someone to argue with them.
you make very eloquent arguments, but this individual is not interested in that, only to wind you up (and he seems to be doing so). the only way to end this is to refuse to play. i hope post #1001 will get you back to the whys and wherefores of stereo, which you obviously enjoy and explain well.
best of luck.

tom

Jan Vigne
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Re: Profit margins


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I read the articles to which you point and it makes me fume that everyone tries to go out of their way to price protect and it is the consumer who shops around or buys on the used market who's labeled "unethical".

Alex, you have missed the point of seven pages worth of thread. What you did was unethical. Now, you either have no qualms about unethical behavior or you do. Which is it? There is no rationalization that they did it first. Do you have problems with all unethical behavior or just the behavior of certain individuals?


Quote:
Another thing that really blew my mind is that dealers consider the open used market as unfair competition. What do they propose - screwing their customers twice? The first time by charging them full retail and the second time by buying back their rigs at 30% of the purchase price so that they can turn around and sell it at 60% of the purchase price? That's real fair and ethical.

If you bought the used merchandise from a dealer and had problems with the merchandise, wouldn't you expect a guarantee of some sort from the retailer? The dealer has to consider this cost also. If the dealer has a service department, they will include the cost of a run through by a tech before they place the item on the shelf for resale. This is only CYA on their part. They are taking your word as a trusted client that the gear operates correctly and will continue to do so. Believe it or not, Alex, there are some unethical individuals out there who will use every bit of leverage they feel necessary to get a few extra dollars off the price. Once again I speak from the experience you feel is a grudge against the consumer, so you can ignore this also.

If you trade-in merchandise, the dealer is taking that trade-in value off their profit on the item you traded for. If you've received any sort of "deal" on the new merchandise, the dealer must now make up profit somewhere. While the trade-in sits on the shelf, it is a cost, not a profit. The dealer must sell the trade merchandise for "X" amount of profit to complete the final sale of your new merchandise. If it takes him 90 days to sell the trade, that's 90 days where the dealer cannot use the cash he would have had from a sale without a trade.

In many cases the trade-in is sold in place of another new item. This means the dealer might bring another soul into the hobby or make a trusted client happy with a trade-up by offering a reduced price on good merchandise but it also means the dealer did not make his full profit margin on another piece of equipment still sitting in his stock room.

All the while the dealer has saved you the headaches of selling the gear yourself. If you don't mind selling the gear yourself, then you'd be a fool to take the 30% of retail. I know this is all very complicated for someone who studied accounting, Alex, but this is the reason most dealers no longer take trade-in merchandise. Consider yourself lucky if you have a dealer willing to provide such a service. Most dealers who handle trade-ins also allow for consignment sales when new equipment is purchased. If you were selling the gear on consignment, would you price it to move in volume or would you price it to return the most cash to your pocket? Do the dealers on Audiogon or eBay accept any trade-in merchandise? The brick and mortar dealer offers yet another service - at the dealer's expense - unavailable to you at the discount outlet and you still bitch!

Does a car dealer offer you the resale price for your trade-in automobile? No, of course not. They offer low and sell high. OK, that, by your logic, is the cost of doing business and therefore can be dismissed. Everyone has costs that you get to ignore. Everyone who takes trades does the same thing with the pricing. You once again seem to be straddling both sides of the fence on this issue of profit and ethics.

Get real, Alex.


Quote:
Once you take away price competition, once you set up protected zones, you also set up an environment where consumers are trapped, opening them up to dealers who are nasty, don't really give a shit and who know that if you really want that piece of equipment, you have no place to go because they got the "zone". In fact, zoning encourages that.

So does unethical behavior by customers. I've told you, Alex, you get whatever treatment you've proven you deserve. If an audition and a good price are all that's important to you, what the hell do you care about the dealer's attitude? If he farts in your direction but gives you a good price, will you still buy from him?


Quote:
In as far as requiring to maintain the markups to stay in business, my answer to that is: make it up in volume. Sell it for less, sell more of it.

But you've said there are only a few hundred thousand readers of Stereophile and TAS that are willing to buy this stuff? Where's the volume in that? You really, really don't get this; do you? You want volume pricing? Shop Best Buy! Good Lord, Alex!

The rest of your post is just more CYA and the attitude that it's all about Alex.

Jan Vigne
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Re: Profit margins

Thanks, Tom. But Alex used his math and cut a deal, so for him this is only my 590th post.

bifcake
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Re: Profit margins

Jan,

I have a feeling that you don't fully read my posts. I think you just skim, find the parts you feel are inflammatory and then pounce on those paragraphs, taking them out of context and the whole point that I'm trying to convey.

I'll try this one last time and I'll try to be as succinct as I possibly can.

1. What you call 50% markup, I called 100% markup. In the end, we're talking doubling of the price. So, in effect we're talking about the same number. Don't come to me saying that it's really a 50% markup, rather than a 100% markup. It's doubling your cost as your sale price. That's it. So, when I said that a 30% markup is reasonable, that was taken from the 100% starting point. From your perspective, using the 50% markup as the base point, I would find reasonable a 15% markup. So, I hope that settles that.

2. You have issues with unethical consumers, fine. The difference between the ethics of the consumers and the industry ethics is that the consumer ethics are individual, but the industry ethics are institutionalized. Therefore, as a dealer, if you don't like a particular consumer, who you feel is unethical, you can simply discount that consumer. As a consumer, if I don't like a particular dealer, I DON'T HAVE ANY OTHER PLACE TO GO TO GET THAT PIECE OF EQUIPMENT because of THE PROTECTED ZONING! Is that concept so difficult to understand?

You mentioned that if I don't like a dealer, or if the dealer won't discount, then I should consider buying a different piece of equipment from a different dealer! That's an outrageous statement! I want to buy WHAT I want. I shouldn't have to settle for a different piece of equipment because I don't like a dealer.

3. Read the entire post where I mentioned that there are only 120,000 potential hi-fi buyers in the US. I am saying that if you discount and bring prices to a more reasonable level, you can make it up in volume because you won't be limited to 120,000 people out of 300 million. The stuff will be much more accessible and more people will be involved in purchasing hi-fi gear. Granted, it won't be 300 million, but it may be 2 or 3 million. Even 1 million would be a tremendous improvement.

4. When I say that dealers have to compete on PRICE and Service and Support, that's what I mean. They have to compete based on all these aspects. Two of these aspects are not important to ME, so I place a higher value on price. Others may feel differently, so dealers would have to accommodate both. However, you cannot discount the value of price competition and say that it's enough for dealers only to compete on service and support. Price has to factor in.

In fact, the deal that I may cut with a dealer is to say: give me the price I won't and I will not ask you for any support. I will deal with the manufacturer directly and the time you spend with me making this sale will be all the overhead you will ever incur with me. That's a legitimate offer.

5. Speaking of discounting, on one hand you're adamant about dealers not discounting because they can't afford to, on the other you're saying that the MSRP is set by the manufacturers and the dealers can discount as they see fit. I agree that the MSRP is set by the manufacturer and all that this is about is that I want dealers to discount.

6. As a high end consumer, I feel that when it comes to PRICING, things are stacked unfairly against me because of:

a) protective zones

b) manufacturers actively putting "gray marketers" out of business (as per JA's article)

c) Tactics such as labeling consumers as "unethical" in order to prevent discounting

d) Trying to kill the used market by making it just as protective as the new market

e) Importer exclusivity and importer zoning, etc.

f) Truly astronomical prices for components that are not entry level. In fact, even entry level components are very expensive compared the consumer electronics.

Facing these stacks, and these obstacles that I feel stand in the way of me getting what I feel is a good price for a particular component, I become much more aggressive when it comes to fighting for that price. When I'm faced with institutionalized price fixing, my 'ethical qualms' become much looser. My tolerance for bullshit is greatly diminished and I'm much more prone to play hardball.

If you, as a dealer don't wish to have an adversarial relationship with your customers, give them what they want. Some want price, some what service, some want support, some want hand holding and some want a combination. Determining the right combination is the key to making customers happy, having repeat business and making money. If you want to be a dealer that only competes on price, fine. If you want to be a dealer that only competes on service and support that's fine too, but as a consumer, I want to have that choice. As a dealer competing on support alone, you don't have to service components not purchased from you. If there is no protective market or zoning, you're under no obligation to take someone else's problem in. The consumers who bought from a price only dealer can contact the manufacturer directly for support.

I hope this clarifies things. If it doesn't, I am not sure what else I can do to help you understand other than shock therapy.

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Re: Profit margins


Quote:
Everyone who stays in business has hidden costs. Everyone who takes credit cards has to pay a percentage to the credit card company, which is in the 1-3% range. Everyone has to deal with inventory and everyone has to deal with the used market.

Of course (though your credit-card percentages are lower than I have been told we pay, particularly so in the case of Amex, which is why we no longer accept that card on our ecommerce page). But with high-priced, low-turn goods like high-end audio, such factors play a higher role compared with the mass-market, high-turn goods to which you are referring.


Quote:
I read the articles to which you point and it makes me fume that everyone tries to go out of their way to price protect and it is the consumer who shops around or buys on the used market who's labeled "unethical".

No-one has said that. What we have said is that consumers who make use of a dealer's facilities and expertise but then buy from someone else in order to save money are in effect guilty of theft. If you want the lowest price, shop on-line, but don't steal other's time and help and don't complain when you don't get after-sales service, or even a product that meets your needs at all in return.


Quote:
In as far as requiring to maintain the markups to stay in business, my answer to that is: make it up in volume. Sell it for less, sell more of it.

With respect, you really don't understand manufacturing. You can't mass-produce, say, an Audio Research Reference 3 preamp, without exposing its manufacturer to unacceptable financial risk. Yes, the unit price would drop, but not so much that it would outweigh the extra upfront investment in parts and inventory and not to the point that the extra sales would compensate for the lower return on each sale.


Quote:
With regard to the second article, it seems that Stereophile is committed to supporting the dealers/manufacturers/industry by ensuring that there are no negative review. By cherry picking the review components, you try to minimize negative reviews so as not to adversely affect the market. Yes, I know, you've told me that the reason you don't have negative reviews is because the readers don't want them and yes, I know that you publish whatever you hear. I don't doubt that you publish whatever you hear, and I don't doubt your honesty within your reviews, but I do see an effort to minimize exposure of a bad review.

I really dn't understand why you read the magazine at all then, AlexO. You gripe and whine and complain, revealing both a disturbing level of cynicism and a woeful lack of knowledge on how small businesses operate, in my opinion. (As a one-time small business owner myself, perhaps I have too much knowledge.)


Quote:
So, all three articles argue the matter from the side of the suppliers. No one really looks at things from the side of the consumer.

I really don't think you comprehended what you read. As others have already told you, if you want the lowest price, you will not get anything else other than a box. If you want dem facilities and advice and after-sales support and perhaps a trade-in allowance, then you have to accept that those benefits impose an additional cost-of-doing-business on the retailer that he has to include in his pricing. He is not being unethical or immoral or crooked in refusing to sell to you at the price you want, but merely doing what he needs to do to stay in business at all. You are the one making this a moral issue and by doing so, you are revealing rather more about yourself than I wished to learn.

I don't know if you have management experience, but I do, and let me tell you that money is not the highest-ranked benefit of employment. It isn't even the second or third. Your insistence on price alone as the defining factor is not as common as you might think.


Quote:
In fact, everyone goes out of their way to label a consumer trying to get the best price for a given component as someone unethical or worse yet an evil thief.

No-one has said that. Of course a consumer can ask for a discount and shop around. But the retailer also has every right to refuse to sell a product at a price that endangers his ability to meet payroll and pay his bills. It is not the moral issue that you have been repeatedly stating in this thread, but one of simple economics.


Quote:
I guess that attitude in and of itself says something about the high end industry.

Sigh. High-end audio is littered with the corpses of both manufacturers and dealers who cut their margins to the point where they folded. Do you remember Audio Alchemy?

John Atkinson
Editor, Stereophile

Buddha
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Re: Profit margins

Is that what happened to Audio Alchemy?

I loved those guys, and still have a pile of their gear.

Talk about "greedy" businessmen...one time, Mark Schifter attended one of our Bay Area Audiophile Society meetings and left us several Audio Alchemy components to take home and audition. He trusted us as a group, and we rotated possession of the units until everyone had a chance to give them a home audition.

He was amazingly great.

Your post moved me to go Google him and I just came across AV123...have I had my head up my butt? Never heard of it until today.

Time to catch up with a great name in Hi Fi.

johnmarks
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I willingly pay a 400% markup about once a week.

Dear Alex,

I have followed this thread for some time. I now want to make what I hope will be viewed by all as a positive, non-argumentative contribution.

For ease of discussion, I will number my points.

(1) 100% markup equals 50% gross profit. I am not offended by that. I am not offended by a certain 400% markup. I pay a 400% markup at least once a week.

(a) In a service-based retail business as opposed to a commodity-based retail business, this is arguably a lower than average profit. Look at engagement rings, e.g. There are A/V lines with even higher markups, but those are usually things like in-wall or in-ceiling HT speakers from non-high-end companies that do not make standalone speakers, and, those list prices are high so that people who need a discount can get one.

I have previously given the example of a mass-produced guitar from China with a supposed

Jan Vigne
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Re: Profit margins


Quote:
I have a feeling that you don't fully read my posts. I think you just skim, find the parts you feel are inflammatory and then pounce on those paragraphs, taking them out of context and the whole point that I'm trying to convey.

Funny, I have the feeling you don't pay attention to what I post.

I don't know how you can make that statement, Alex. The last few posts I have made have included almost 75% of your post to which I am replying. None the less, they are your words.


Quote:
I'll try this one last time and I'll try to be as succinct as I possibly can.

So shall I. We have reached an impass of two opinions which differ and shall not be resolved by talking past one another. We might as well be talking presidential candidates or French pastry recipes.

Succintly, I find your behavior unethical and your argument two faced with both sides all about Alex.


Quote:
1. What you call 50% markup, I called 100% markup. In the end, we're talking doubling of the price. So, in effect we're talking about the same number. Don't come to me saying that it's really a 50% markup, rather than a 100% markup. It's doubling your cost as your sale price. That's it. So, when I said that a 30% markup is reasonable, that was taken from the 100% starting point. From your perspective, using the 50% markup as the base point, I would find reasonable a 15% markup. So, I hope that settles that.

To believe that amount of margin works for even an on line retailer is foolish. You need to shop at Best Buy or start your own shop.


Quote:
2. You have issues with unethical consumers, fine. The difference between the ethics of the consumers and the industry ethics is that the consumer ethics are individual, but the industry ethics are institutionalized. Therefore, as a dealer, if you don't like a particular consumer, who you feel is unethical, you can simply discount that consumer. As a consumer, if I don't like a particular dealer, I DON'T HAVE ANY OTHER PLACE TO GO TO GET THAT PIECE OF EQUIPMENT because of THE PROTECTED ZONING! Is that concept so difficult to understand?

I didn't think so but you've managed to get it all screwed up. The ethics of the industry are not institutionalized. Each dealer is a free and independent retailer. There are retailers with ethics and there are retailers with fewer ethics. There are retailers who prefer to deal with clients who share their ethics and retailers who don't care about ethics as long as they move a box. You get to pick which type of dealer you prefer but don't expect one to change course in mid stride.

"As a consumer, if I don't like a particular dealer, I DON'T HAVE ANY OTHER PLACE TO GO TO GET THAT PIECE OF EQUIPMENT because of THE PROTECTED ZONING!"

First, you bounce around this issue as if all things are the fault of the dealer and you have prerogatives which clearly do not exist in the real world. Why would you do business with someone you do not like? Price alone? If that's the case, don't complain about dealer attitude. He farts - you buy.

You do have other places to go. Other dealers carry what you want. Stereophile insists a product have a minimum number of dealers before they will review a product. Find one. Go there and audition the equipment at another dealer and buy from them. This has nothing to do with price. Oh, but it does; doesn't it? You'd have to spend money and time going to another dealer in another city. Huh! Makes dealing with the local reatiler who farts at you seem more attractive. Alex, if you want something and the local dealer has set polices, you can either live with those poilicies or buy something else. You do not get to kick and scream and throw a fit because the dealer has policies you do not prefer. Surely, in this big, wide world of audio there cannot be only one component that will satisfy your tastes.


Quote:
You mentioned that if I don't like a dealer, or if the dealer won't discount, then I should consider buying a different piece of equipment from a different dealer! That's an outrageous statement! I want to buy WHAT I want. I shouldn't have to settle for a different piece of equipment because I don't like a dealer.

If you want what you want from a dealer, you should settle for that dealer's policies. If the dealer wishes to discount, that's fine. If the dealer wishes not to discount, then you will really have to live with those policies. They are apparently no mystery to you. This idea that you get everything you want while the dealer bows and scrapes to your whims is absurd! The dealer has the right to refuse to sell you anything, just as the restaurant has the right to refuse entry to someone with no shoes or shirt. What part of that logic do you not grasp?


Quote:
3. Read the entire post where I mentioned that there are only 120,000 potential hi-fi buyers in the US. I am saying that if you discount and bring prices to a more reasonable level, you can make it up in volume because you won't be limited to 120,000 people out of 300 million. The stuff will be much more accessible and more people will be involved in purchasing hi-fi gear. Granted, it won't be 300 million, but it may be 2 or 3 million. Even 1 million would be a tremendous improvement.

I'm sorry, what business do you push paper for?

You do not understand how this industry works; do you? If only the high end yacht dealers would lower their prices and increase their volume, we would all be riding around in 30 footers. Just how many Audio Research amplifiers do you believe will be purchased if the cost drops by 5% by having the products assembled on a production line in China? Do you really, really believe a person who buys Audio Research or McIntosh or any other high end line isn't looking at the hand built craftsmanship of the product? Do you really believe a McIntosh is a McIntosh when it's made any other way? Just because you don't care doesn't mean someone else won't. This is not all about Alex! Some people own Picassos. Get that through your head! If you don't want to pay for the craftsmanship, buy something else. But you cannot expect a manufacturer or a dealer to lower their standards just to save you a few pennies. You cannot walk into a Mercedes dealeship and ask them to sell you a car with cloth seats.


Quote:
4. When I say that dealers have to compete on PRICE and Service and Support, that's what I mean. They have to compete based on all these aspects. Two of these aspects are not important to ME, so I place a higher value on price. Others may feel differently, so dealers would have to accommodate both. However, you cannot discount the value of price competition and say that it's enough for dealers only to compete on service and support. Price has to factor in.

Yes, it does. And that's where on line and discount dealerships come into play. They only offer price - no service. But do not use the facilites of a full service dealer for auditions or information and then expect that dealer to become a discount warehouse. It is tantamount to theft and it is unethical. Why is that so hard to understand?


Quote:
In fact, the deal that I may cut with a dealer is to say: give me the price I won't and I will not ask you for any support. I will deal with the manufacturer directly and the time you spend with me making this sale will be all the overhead you will ever incur with me. That's a legitimate offer

No, it is not. A dealer might make that deal once. Then they learn there is never such a deal. Once again, I speak from experience which you find unbelievable.

A local dealer did not do repairs on the equipment a new to town customer owned. The customer insisted the dealer offer some assistance since they need the gear for a party. The dealer suggested a shop the customer might try. The suggested shop screwed up a piece of equipment in the rush to get the gear out for the party. The first shop is now being sued for being complicit in defrauding the customer. True story.


Quote:
6. As a high end consumer, I feel that when it comes to PRICING, things are stacked unfairly against me because of:

a) protective zones

b) manufacturers actively putting "gray marketers" out of business (as per JA's article)

c) Tactics such as labeling consumers as "unethical" in order to prevent discounting

d) Trying to kill the used market by making it just as protective as the new market

e) Importer exclusivity and importer zoning, etc.

f) Truly astronomical prices for components that are not entry level. In fact, even entry level components are very expensive compared the consumer electronics.

a) We've covered that topic.

b) "Gray marketers" are a plague. They screw the consumer even more than they screw the local retailer. If you don't get that, Alex, pull your head out of your backside.

c) Retailers don't "label consumers as 'unethical' in order to prevent discounting". They label consumers unethical when the consumer proves themself to be unethical. Again this seems to be a point you have repeatedly either missed or ignored.

d) You are out of your friggin' skull; aren't you? Have you not been on the Audiogon pre owned pages? What dealer controls those ads? Please, Alex, try to stay within the boundaries of common sense.

e) What the hell does "Importer exclusivity and importer zoning, etc." mean? A manufacturer or an importer gets to deal with who they wish. Just because you want a product in your local shop (who you hate), doesn't mean the importer is under any obligation to anyone, let alone Alex, to sell to that dealer.

f) For Christsakes, Alex. If something is more than you can afford, the way to make it affordable is not to screw the dealer!!! When I sold I was under the impression I should never ask for a raise. If I wanted to make more money, I should work harder and longer and sell more at a higher profit to make higher commissions. Figure it out, I bet the same theory works for paper pushers too.


Quote:
Facing these stacks, and these obstacles that I feel stand in the way of me getting what I feel is a good price for a particular component, I become much more aggressive when it comes to fighting for that price. When I'm faced with institutionalized price fixing, my 'ethical qualms' become much looser. My tolerance for bullshit is greatly diminished and I'm much more prone to play hardball.

Gimme a break! There are no real obstacles to you getting a decent system. You have provided a "they did it first" offense. What you have allowed is the rationalization of your own unethical behavior. Period!


Quote:
If you, as a dealer don't wish to have an adversarial relationship with your customers, give them what they want.

I've never worked for a dealership or been in a dealership that had an adversarial relationship that wasn't started by the customer. If you find one, I suggest you walk back out if the attitude is not to your liking. A shop wants to sell you stuff. That's how they stay in business. They do not wish to be abused in order to do so. Once again, why would you buy anything from a shop that treated you as an adversary? Price? They fart - you buy.


Quote:
Some want price, some what service, some want support, some want hand holding and some want a combination. Determining the right combination is the key to making customers happy, having repeat business and making money. If you want to be a dealer that only competes on price, fine. If you want to be a dealer that only competes on service and support that's fine too, but as a consumer, I want to have that choice.

No problem. Just don't expect one to be the other and don't steal the service from one to buy from the other. I think this is where we were six pages ago.


Quote:
As a dealer competing on support alone, you don't have to service components not purchased from you.

Most dealers don't service what they do not sell. If they do, it is as a courtesy in the desire to build a good client base. As often as not this comes back to bite the ethical dealer in the butt - read the above story about the local dealer who suggested a shop. This is why many dealers do not service what they do not sell.

You, however, are talking about the dealer providing service before the sale and then you get to go to a dealer who will not/cannot offer the same service. Why can't you see the difference here? What little ethical black hole keeps you from understanding this?


Quote:
The consumers who bought from a price only dealer can contact the manufacturer directly for support.

Once again, OK. But you'll have to go to the manufacturer's location or attend a trade show to audition products. If you wish to audition product before you buy and hopefully at home with your own components, you'll most likely end up at a brick and mortar shop unless you wish to spend the money for the trip to the shows and don't care how things sound in your system.


Quote:
I hope this clarifies things. If it doesn't, I am not sure what else I can do to help you understand other than shock therapy.

Not quite exactly my feelings since I'm kind of hoping you get run over by a dealer's truck. But we all know where that would end up. So, yes, my feelings exactly. And I hope you noticed I responded to almost every sentence in your post. Alex, either you get ethics or you don't. You seem not to get ethics or profitability or the right of the retailer to determine how they operate their own business. As I said before; you want something different, start your own business. Draw up the plans since this all seems so simple to you. I'd like to see the bankers' face when you tell them you are going to be running on 15% profit margin.

bifcake
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Re: Profit margins

Hi John,


Quote:

No-one has said that. What we have said is that consumers who make use of a dealer's facilities and expertise but then buy from someone else in order to save money are in effect guilty of theft. If you want the lowest price, shop on-line, but don't steal other's time and help and don't complain when you don't get after-sales service, or even a product that meets your needs at all in return.

I don't see it that way. The way I see it, is that I'm giving a dealer an opportunity to make a sale by auditioning a product.


Quote:

I really dn't understand why you read the magazine at all then, AlexO. You gripe and whine and complain, revealing both a disturbing level of cynicism and a woeful lack of knowledge on how small businesses operate, in my opinion. (As a one-time small business owner myself, perhaps I have too much knowledge.)

I read the magazine because I like it. Yes, I know that I gripe and whine about all the things that I think can and should be done better. Where I have failed is to point out things that I think you guys do really well. I'm really sorry that I gave the impression that I don't like the magazine. I tend to focus on the things that I think need improvement and I don't talk about things that I think are done well assuming that's understood. This is my failing. There are many things you do as a group do really well and there many things that you personally do well. Perhaps I don't say that enough, perhaps I don't say it at all and I should. I like Stereophile better than TAS even though there are certain aspects of TAS that I think should be incorporated into Stereophile, there are many more things that TAS should incorporate FROM Stereophile.


Quote:

I really don't think you comprehended what you read. As others have already told you, if you want the lowest price, you will not get anything else other than a box. If you want dem facilities and advice and after-sales support and perhaps a trade-in allowance, then you have to accept that those benefits impose an additional cost-of-doing-business on the retailer that he has to include in his pricing. He is not being unethical or immoral or crooked in refusing to sell to you at the price you want, but merely doing what he needs to do to stay in business at all. You are the one making this a moral issue and by doing so, you are revealing rather more about yourself than I wished to learn.

I don't know if you have management experience, but I do, and let me tell you that money is not the highest-ranked benefit of employment. It isn't even the second or third. Your insistence on price alone as the defining factor is not as common as you might think.

As I said in an earlier post, all I want is a box. I am not looking for post sales support. In exchange, I would like the lowest price. My gauge as to the lowest price is what I can get on the Internet (if I can get the product on the Internet). Other than that, my gauge is the whole sale price of the product. The only thing I require from a dealer in terms of his overhead is the place and the time to listen. I don't require him to be there with me, talking. I don't require his time, explanation or help. All I want is to listen, get the box and that's it. If there is a problem with the box after the sale, I can deal with the manufacturer directly via warranty repair. If I don't like what I hear when I take the component back, I will do my research to find out what is the problem and fix it myself. I do not run to the dealer for after sale support. This is the bargain that I'm willing to make with the dealer. My end - I will minimize my footprint on your time. Dealer's end - give me the price that's as close to the wholesale price as I'm willing to pay. I think the issues only arise if the dealer is unwilling to meet me on the price and then I wind up going to the Internet or used market to get what I want. Then, the perception develops that I somehow used the dealer. I don't see it as me using the dealer. I see it as me offering an opportunity to the dealer to move his inventory with minimal overhead, making less of a profit than he would normally make.

Price does not have to be a defining factor for other people, but it is for me. I want to have a choice of paying more for all the advice, support and so on or paying less just for a box, foregoing the extra overhead. I feel I'm not given this choice due to what I see as price fixing (or at least setting up a structure where nobody has to compete on price).

johnmarks
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Yes, you can get cloth seats on a Mercedes by special order

Mercedes offers a high-quality extra cost velour upholstery for the Subcontinental Indian market, where some people don't want to sit on leather.

JM

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Re: I willingly pay a 400% markup about once a week.

Hi JM,

That was a really good post. It brought some sanity to the discussion. Thank you for that.


Quote:

(2) I admit the high-end audio industry is structured to avoid price competition and foster service competition. I also admit that many dealers are interested only in the price and not the service.

Amen to that.


Quote:

(b) In an ideal world, an audio dealer should be more like an interior decorator than a hardware store. An audio dealer should find out where you are on the learning curve, both in terms of hardware and of music, what your room is like (for a system purchase, a brief visit should be offered), and what kind of sound you want, and only then think about recommendations.

And, just like a great interior decorator (or a great haberdasher), a great audio dealer sometimes proves his worth by gently overruling the client

rvance
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Re: Yes, you can get cloth seats on a Mercedes by special order

Now you want to gouge me for velour and make me go to a "protected import zone" to buy it? Sheesh! I want the velour at a major discount, the Mercedes at a major discount and I won't be needing any warranty service at your high-priced dealership, either! What? You're telling me I can buy a Kia and cover the seats with swap meet Elvis paintings? Another unethical dealer ruining my day...

Jan Vigne
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Re: Profit margins


Quote:
The way I see it, is that I'm giving a dealer an opportunity to make a sale by auditioning a product.

LOL! That's very big of you, Alex. But don't you suppose all the other clients who make use of the dealer's facilities are offering the same opportunity? What sets you apart is you don't want to pay for those facilities.


Quote:
My gauge as to the lowest price is what I can get on the Internet (if I can get the product on the Internet). Other than that, my gauge is the whole sale price of the product. The only thing I require from a dealer in terms of his overhead is the place and the time to listen. I don't require him to be there with me, talking. I don't require his time, explanation or help. All I want is to listen, get the box and that's it.

Alex, you still seem to be missing the point that you are asking a brick and mortar dealer to provide a service - the audition space and equipment - that you cannot get from the internet dealer. That service comes with costs attached to the dealer that the internet retailer does not incur.

You do understand that, right?

The internet dealer can afford to sell for less when their overhead is zip compared to the b&m dealer. Therefore, your guage of lowest price on the internet is not relevant to a b&m dealer who must sell for a higher profit margin to pay for all the additional costs of a real shop where you can audition products. I'm very afraid of what you will assume is "wholesale" cost of the product when you have such difficulties understanding the difference between mark up and profit margin and no concept of what sort of profit margin a dealer requires to stay open.


Quote:
I think the issues only arise if the dealer is unwilling to meet me on the price and then I wind up going to the Internet or used market to get what I want. Then, the perception develops that I somehow used the dealer. I don't see it as me using the dealer. I see it as me offering an opportunity to the dealer to move his inventory with minimal overhead, making less of a profit than he would normally make.

No, Alex, the dealer's overhead does not stop when you walk in the store. How can you not understand that? The dealer doesn't call his insurance agent and tell him to not charge the shop for insurance coverage while Alex is in the store. He doesn't turn the power and water off while Alex is in the store. He doesn't return all of his demo gear while Alex is in the store. And he doesn't tell the salesperson they will not be getting commission because Alex is buying something - hopefully.

Now, once again, I have to ask; why don't you understand this?


Quote:
Price does not have to be a defining factor for other people, but it is for me. I want to have a choice of paying more for all the advice, support and so on or paying less just for a box, foregoing the extra overhead.

Then shop where price is the only consideration. That doesn't include the service of an audition since where price is the only concern there are no audition facilities. That doesn't include getting the product from inventory that day. It doesn't include getting another unit the same day if the first unit is damaged - as it might be when shipped from a dealer where price is the only consideration. There are no loaners from the internet dealer while you wait for your new gear to come in stock. There are no trade-ins on the internet. That doesn't include heat and lights and water and toilet paper. The lowest price comes when there is the lowest overhead. If you want something that only a dealer with higher overhead can provide, you cannot expect the b&m dealer to compete only on price.

Now, Alex, several of us have explained this to you repeatedly. What you want is unrealistic. What you prefer to do is unethical. If you continue to simply say, "No, this is what I want", you are being a child. A spoiled brat of a child.

What part of our explanation do you not understand?

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Re: Profit margins

Jan,

I think we'll just have to agree to disagree. There is really nothing more that I can add to this that hasn't been said. I understand the points you make, I just don't agree with you that it's a matter of either paying full retail or the rock bottom internet price. I believe there's enough room in between to make a deal. I prefer to make a deal closer to the rock bottom internet price, but it doesn't have to be THAT price. It can be a bit higher to account for extra overhead. But it does have to be in the ball park. If that can't be done, then that can't be done, and then I'll shop online.

One more thing of a personal nature. Throughout this entire discussion, I have never called you names, been abusive to you or in any way degrade you. I expect the same courtesy. I don't mind discussing any topic, I don't mind heated exchanges, I don't mind ribbing or sarcasm. However, once you stoop to name calling, it becomes impossible to have an adult conversation. You may want to consider that before you call someone else a spoiled brat.

quadlover
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Re: I willingly pay a 400% markup about once a week.

i said that i would not add anything more to this rant but john mark's reply was an outstanding post! way to go john!! by the alexo, just one last jab...how much discount do you get on your starbuck's coffee in the morning?

bifcake
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Re: I willingly pay a 400% markup about once a week.

I don't shop Starbucks. I don't believe in paying for a "coffee experience". A simple cup of coffee will do just fine.

quadlover
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Re: I willingly pay a 400% markup about once a week.

alex,
ok i give up, you finally made me laugh and i agree 100% with that comment!!

jamesgarvin
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Re: I willingly pay a 400% markup about once a week.

"The only thing I require from a dealer in terms of his overhead is the place and the time to listen."

And maybe the equipment which you are "borrowing" and for which he has paid. Of course, his place is not a good place to listen if it is not well organized, heated, air conditioned, and lighted. And powered by electricity. All of which he or she pays for, and you use, and admit to having no qualms about consuming knowing that you will not purchase (pay for) unless the dealer can meet your take it or leave it price that you arbitrarily concoct. But hey, you are not a thief. Or unethical.

The free market runs both ways. You are certainly free to shop how and where you like, and purchase over the net. The dealer is free to charge what he needs to run his business. And the manufacturer is free to decide who can sell his products, and from those dealers that he will honor his warranty. The free market is a package. With number one comes numbers two and three. So stop bitching about two and three, and buy your box.

And did you ever stop to consider that those of us who purchase from dealers also pay for the dealer's time and resource that you waste? Maybe if more people like you did not steal the dealer's time and resources, your so-called markup would be lower. Maybe you missed that day in economics class, about costs and all being passed to the consumer. You are certainly aware that you pay your portion of your grocery store's losses from thefts? You do know they factor in those costs when deciding how much to charge you for your fruit? The markup you complain about is, in part, because of people like you who use the dealer's time and resources without any intent to pay for them. Ironic.

bobedaone
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Re: I willingly pay a 400% markup about once a week.

So that's what that "AlexO insurance" surcharge on my last receipt was for.

Jan Vigne
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Re: Profit margins

Sorry, Alex, I don't know what else to call someone who wants what they want merely because they want it in spite of everyone telling them it is unrealistic and/or unethical. Anyone who has no qualms about their unethical behavior has some growing up to do IMO.

I do not hold anything that transpires in one thread against anyone in another thread. While I sincerely disagree with your approach and your attitude toward this issue, I have no problems discussing hifi with you again on some other ocassion.

Good luck. Please, try to see the dealer as an ally and not as an adversary. The experience is far more pleasant and both of you can benefit from a not so costly relationship. Read again the comments from those who find their dealer to be an asset. This really can work out for both parties and the dealer will stop farting in your direction.

One last question. OK, you don't go to Starbucks, neither do I most of the time. But how do you grind the guy behind the glass down on a gallon of gasoline? Do you refuse to pay for anything other than generic drug prices no matter what the doctor prescribes? With all the places you could vent your anger at greedy business practices, high end audio dealers seems like very small potatoes.

bifcake
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Re: Profit margins


Quote:

One last question. OK, you don't go to Starbucks, neither do I most of the time. But how do you grind the guy behind the glass down on a gallon of gasoline? Do you refuse to pay for anything other than generic drug prices no matter what the doctor prescribes? With all the places you could vent your anger at greedy business practices, high end audio dealers seems like very small potatoes.

There are limits to what we can do as consumers. Most of the time, consumers get squeezed. Some industries are price competitive and some are not. So, we take our knocks and we roll with the punches.

You are right in that when considering all the things that are "wrong" with the world, the hi-fi industry is not even a blip on a radar. However, given that these are hi-fi forums, and this is the "Rants and Rave" section, I felt this was an appropriate place to bitch and moan about hi-fi.

As far as other things are concerned, you try to maneuver the best you can. As far as the drug prices are concerned, I'm insured, so my insurance squeezes the drug companies. They offer their own mail order pharmacies that cost me less in terms of my copayments. As far as generics vs. name brand drugs, I have a friend who's a pharmacist and he gives me a good feed when it's ok to ask for a generic and when it's not. So, this is how I cope with the cost of medicine.

You do the best you can with what you have to work with. Sometimes you squeeze the merchant and sometimes they squeeze you. If there is an expensive grocer by me, then I will drive a mile or two to find a cheaper one with comparable quality fruits and veggies. I shop for music mostly at BMG, where I pick up CD's for an average of $6-$8 a piece. They don't have all the things I want, but they have 70-80% and then I shop other online retailers for the CDs BMG doesn't have.

I bought my headphones online and I got a really good deal on them. I auditioned them at a show. I got my CD player and preamp on Audiogon having auditioned them at the show as well. So, this is how I operate. I look for the stuff that I like and I look for what I think constitutes the best bang for the buck.

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Re: Profit margins

I admit to having much "local bias" when I shop. Even beyond my fondness for good local Hi Fi dealers.

I try to shop where employees make a living wage and get benefits...so, no WalMart for me.

Costco is known for its hospitable work practices, so we go there instead of Sam's Club.

For groceries, we try to shop local stores when we can, but it's getting difficult.

For CD's and many LP's we go to a locally owned shop. The owners sponsor free music nights and a yearly music festival.

We also try to eat at local owner/operator restaurants.

Same with book stores.

For me, the bottom line is living in a community that doesn't consist of Walmart, Golden Arches, Blockbuster....two miles of road...WalMart, Golden Arches, Blockbuster...repeat.

If we spend a little more, we are buying in ways to try and keep our money from racing back to corporate headquarters.

It's getting harder and harder to do, I think to our detriment.

(We've seen the wave of outsourcing hit. We are just getting started on "insourcing." Don't get me started... ...)

As an audiophile, I don't think I've bought specifically Chinese sourced audio, but it can be hard to tell.

Here in Las Vegas, we have no local dealers left, so I shop online at Music Direct, who offer as good a range of service and support as an internet shop can deliver. If I ever live near another good local dealer, my money will go there.

If I were in the price market, I'd rather have my money go to Wilson Audio, who builds nearby, than off to some factory where the workers are required to live on site.

There is so much more to me than the immediate bottom line that almost all of the rationalizations I've seen on this thread strike me as foreign. I'm feeling like I should climb up on top of some dealer's store and refuse to allow it to be torn down.

Jan Vigne
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Re: Profit margins

I do find some perverse pleasure in buying my pharmaceuticals at WalMart since all the drugstores in my area are big box operations. Otherwise, WalMart = bad joojoo - not to mention I have to drive past a McDonalds, a Starbucks, a Bank of America, a Lowe's and a Best Buy to get there.

bobedaone
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Re: Profit margins

*vigorous applause*

Would you consider moving to Ann Arbor?

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Re: Profit margins

I completely agree Buddha-

I'd ALWAYS rather spend more on local "real" stores than Alex's approach to look for the "best" price, especially when it's from the big box companies or internet. Call it good karma, or just being smart by keeping your pond healthy and clean- whatever.

Fundamentally Alex is positing the outlook of "the world will always be one of cut throat competition and the little guy usually loses"- hence his feeling of getting screwed by his audio retailer and the need to "fight" back to get what he feels he deserves. I don't see the world that way at all. There is in fact more than enough to go around and the best way to insure that reality is to contribute to it.

Every time I go out of my way to be a partner to my local retailer (audio store, hardware store, grocer, whatever) I easily get back what I put in. Interestingly enough, the more you take this approach the more often you DO get discounts because they see you as a friend and WANT to help you out when they can. Something to think about Alex.

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Re: Profit margins


Quote:
Every time I go out of my way to be a partner to my local retailer (audio store, hardware store, grocer, whatever) I easily get back what I put in.


And you get to walk away feeling much happier and not worrying about whether you could have obtained a better deal elsewhere.

dcstep
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Re: Profit margins

Just so we're dealing with current data, Wal-Mart now has a world class benefits program for all its associates.

Dave

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