There are, I think certain rules to follow in dealing with dealers.
1) No requests for dems if you have no intention of buying from the shop. A dealer friend says that there is a special place in hell for guys spending hours deming an item, then driving 50miles to a discount store to save 5 bucks.
2) A dem does'nt mean you will buy, you may want to look elsewhere too, but you should have the intention of buying at a retail price, at some point.
3) If you make a decision, bargaining over a discount is fair, if your expectation is fair. If you have taken 30 minutes of his time, it may be more than a 3 hour trawl through different gear. He has to make a living, but your cash did'nt grow on trees, its what is known as a free market.
4) Be open about what you are after, he can't advise if he does'nt know. Many dealers I know are frustrated by guys bringing in a HiFi mag demanding product X, not interested or suspicious of advise. assume these guys know a bit about HiFi and have your interests at heart. A happy customer will come back. If in doubt about this or you feel pressured to a product or price that is not for you, walk away.
Following these rules is a problem for me. most of my gear is 2nd user, so I don't feel I can seek dealer dems, I feel you must follow the rule to be fair. Unless you have a relationship with a dealer and are upfront about the reason for the dem, he may accomodate you to build up a relationship with you.
This seems common sense to me |
It was difficult to wade through all of what has been said, but there are different philosophies that store owners employ. They do on average getabout 40% mark up on High end speakers take from that the operating which is extremely variable depending on the size of the store their inventory debt etc. and they obviously don't have a lot of room to move. That said if you can manage to find a small operation that carries or can order them for you it's still a considerable chunk of change approx 5000 bucks I am sure that a quick $2000 profit would work, they can manage with that.
In response to the general retail question of course if your selling $20 shirts you only make $10. You can't pay the rent with $3. The store can either hope to keep volumes high enough and importantly customer loyalty so you keep going back to the guy who will give you the dscount or try and make a single killing on those who don't care. |
Forget markup, forget profit margin. Just ask yourself this
"Do these speakers give me the best possible sound for the money ?
Am I prepared to spend this much on a pair of speakers ?"
If you answer yes to both then buy them. If no to either then don't buy them.
In summary buy the best speakers you hear within a budget that is acceptable to you.
In all lines of business you can ask for a discount and the retailer or manufacturer can offer a discount. There's no point getting upset if the offered discount isn't what you expect. Just walk away and explore other avenues. |
In response to Macrojack, could people chime in with their knowledge of which manufacturers offer direct home trial? So far, I'm only aware of Soundlabs and CAT. In each case, freight is the responsibility of the customer of course. I believe CAT also asks a 4% restocking charge in the event of return. I'm sure there are others I don't know about. |
There are a number of them, Ubglub. On the speaker front: Tyler Acoustics, Ohm, Decware, Zu Audio, and I'm sure others still. As far as other components are concerned, there are MANY companies who offer a trial period, some with (and some without) a restocking fee. Decware, Wright Sound, Portal, Channel Islands, and so on. Most of the cable companies offer a trial period of 15-45 days. In addition, there are often dealers who themselves offer trial periods with no restocking fees. |
And don't forget direct importers. AV 123 sells what I personally feel is the best deal in the audio universe, the Onix SP-3. |
Bignerd100,
ML can't tell a retailer how much to sell their product for. It's called price-fixing.
What they can do is not allow a particular retailer to sell their product at all. But to tell a retailer how much they have to sell their product for is against the law! |
Discounting is a disease. I dont know where you guys get the idea that there is 50% mark up.
All you guys need to go to accounting school if you seriously believe in this crap.
A typical senerio.
A store in Los Angeles Ca.
3000 sq ft. rent 5000.00
Electrical & other expences 1000.00
Salary to a sales person 3500.00
Misc expences & bank payments 1500.00
Insurances & other expences 5000.00 { accountant, Computer lease, Software payments, Corporate taxes, Theft insurance, & many others }
10,000.00 is spent before making a penny.
If the person sells 100,000.00 in audio he makes 32% in gross profit.
32000.00
His expences are 15,000.
Store owners salary is 5000
the rest is invested in purchasing newer product.
He makes 7000.00if he's lucky & had a perfect month.....
We have not added gas expences & return freight charges on equipment that has to go back because it failed or you guys brought back...
Do you guys still want discounts or are you going to pay full price ? |
Fiddler,
Well, technically marijuana is not illegal. You simply have to have the appropriate stamp from the government in order to posses it legally. THe thing is that there are no such stamps in existance therefore... marijuana is illegal.
Semantics.
Some manufacturers protect the dealers that Smer319 speaks of. These dealers do have to turn a profit to stay in business. They are also protecting their products "good name" if you will by discouraging discounting. |
Bignerd100,
It is not semantics. Price-fixing is illegal anyway you cut it. Do a little research.
And BTW, Federal Law says marijuana is illegal, period. |
It is not price fixing. They are not controlling what ALL speakers sell for, just thiers. It is called protecting your products value and protecting dealers in your network. If you want to be a ML dealer you are limited to the amount of discount you can give period. Lots of other brands do this as well, if it was illegal they would have been busted long ago. |
No Manufacturer can tell a dealer what to sell the product for ...period...if they do they are breaking the law, in fact I do believe it was the hifi bus that made this so, I think both B&0 and Pioneer were charged with this in the 70s....anyway If a ML dealer says he "cant discount" because the manufacturer said so...is in stric violationof the law....sure you can ask for a discount and you will probably get one...the more you buy from a store, probably the more they will take care of you on both price and service....BUT they need to make a profit to stay in business and 10-20 percent over cost doesn't cut it...my guess is on any speaker line you can get 10-15% off and everybody is happy |
Fiddler, They are not colluding with other manufacturers to fix prices; they are establishing what their dealers can charge. Two completely different things. If they want to be a dealer for that product they agree not to discount. A very common practice in many high end products, not just audio. And yes, if I did buy retail I would want a discount. |
Lets take off the pretend-law-expert hat and put on our propeller hat instead. We are audiofools afterall.
Happy scrounging.
:) |
has anyone paid list price for a speaker nad considered it money well spent or a fair price ??
there may be a few speakers which are priced fairly where paying list price is not a problem.
i'm think of one which i may buy and i am having difficulty getting a discount. it's the magnepan 1.6 . |
You are mixed up. The manufacturer has the right to pull the line from any dealer who breaks the rules of the ML dealer contract. The rules can include discounting. Dealers can choose to bend this rules (and discount) and in most cases the manufacuter will look the other way as long as no other dealers are complaining. This is common practice in all segments of retail. |
No_Money and Herman, you guys simply don't know what you are talking about.
Superhonestben is EXACTLY right!
The Sherman Act first addressed price fixing in 1890 and many cases have been adjudicated since. Case law is very clear and explicit. Do ten minutes of research and you will see how wrong you are.
ML or any other manufacturer CANNOT tell a retailer what they can sell their product for. It is illegal period!
What they can do is give the retailer a "suggested" retail price. If the retailer does not comply with the "suggested" price, then ML can choose to terminate the retailer.
As a PRACTICAL matter however, ML can get away with setting a retail price to dealers as long as dealers are willing to put up with the price-fixing. But that doesn't mean it's legal. |
This is not price fixing. "Price fixing is an informal agreement between direct business competitors selling the same product regarding that product's pricing". A method of "price fixing" is for direct competitors to agree to set minimum price contracts from supplier to dealer for similar products. As such dealers such as ML can set minimum price limits for their products and it is not "price fixing". It WOULD be "price fixing" if ML and other companies with similar products got together and had an agreement to set a minimum price level for their similar products. |
If I understood your explanation, then we could surmise that gasoline prices at present are the result of industry price fixing whereas the cable TV situation is the result of nothing more than a monopoly having its way. And if these things are illegal, where is the government? |
Csmithbarc,
Geez, you guys are hard-headead. Please spend a little time doing research other than reading a simple definition from an online dictionary. There is tons of case law describing exactly what were are talking about here.
What ML is doing is price fixing by Federal Law if they are requiring dealers to sell their product at a certain price. It has nothing to do with any other speaker manufacturer's price. And some of you are confusing "vertical" price fixing with "horizontal" price fixing.
I could care less what ML prices their speakers at because I have no interest in purchasing their speakers. And the government could care less about ML's pricing also until someone starts screaming about it. As long as dealers or consumers aren't complaining long and hard about ML's pricing, the government has much bigger fish to fry.
But the fact remains, several of you here need to do some homework and stop spewing incorrect information until you have done some research. |
Fiddler, maybe you could give us a link? |
No_money, let me know if you need more.
------------------------------
I. FEDERAL CASES
Nintendo of America Inc., 114 F.T.C. 702 (1991) (consent order).
The Commission prohibited Nintendo, for five years, from terminating
dealers on the basis of the resale price they charge. Although I was not at
the Commission when it considered the Nintendo matter, I do not think it
is merely a coincidence that the complaint also alleged that Nintendo
accounted for more than 80% of all home video game equipment sales.
The presence of market power makes vertical restraints far more suspect
because of the potential for even nonprice restraints to have
anticompetitive effects. Nintendo-like relief also may be appropriate in
egregious situations where a manufacturer demonstrates a willful
disregard of the law on per se vertical price restraints for example, if a
manufacturer continues to engage in unlawful RPM after repeated
enforcement warnings.
Kreepy Krauly, 114 F.T.C. 777 (1991) (consent order).
The Commission alleged that a Florida manufacturer of swimming pool
cleaning equipment entered into written agreements with dealers to
maintain resale prices. Kreepy Krauly settled with Commission and
agreed to rescind the paragraph of its dealer agreements that required
dealers to agree to maintain resale prices, and to cease including that
paragraph in dealer agreements. The consent order also prohibited Kreepy
Krauly from entering into agreements with dealers to maintain resale
prices.
United States v. California SunCare, Inc., 1994-2 Trade Cas. (CCH) ¶ 70,843
(C.D. Cal. 1994) (final judgment).
DOJ brought charges against California SunCare, an indoor tanning
products manufacturer, alleging that, from November 1992 through April
1994, the defendant entered into agreements with certain dealers to fix and
maintain the resale prices of its products. California SunCare settled with
DOJ and agreed to refrain from price-fixing, announcing a pricing policy,
or threatening to terminate or actually terminating for non-compliance
with suggested retail prices for a period of five years.
Keds Corporation, 117 F.T.C. 389 (1994) (consent order).
The Commission settled charges that Keds Corporation allegedly had
agreed with some dealers to maintain resale prices on certain types of
athletic and casual shoes, solicited commitments from dealers regarding
pricing, and encouraged dealers to report noncomplying dealers. The
consent order required Keds to refrain from: fixing the prices at which any
dealer may advertise or sell the product; coercing any dealer to adopt or
adhere to any resale price; attempting to secure commitments from dealers about the prices at which they would advertise or sell the products; or
requiring or even suggesting that dealers report other dealers who
advertise or sell any Keds products below a suggested resale price. The
order also required Keds to inform its dealers that they were free to
advertise and sell Keds products at prices of their own choosing. For five
years, the order required Keds to incorporate a similar statement in any
materials sent to dealers suggesting resale prices.
Reebok International, 120 F.T.C. 20 (1995) (consent order).
The FTC alleged that Reebok and Rockport fixed the resale prices of their
products. The settlement prohibited both companies from fixing the
prices at which dealers advertised or sold athletic or casual footwear
products to consumers. The settlement also prohibited the companies from
coercing or pressuring any dealer to maintain or adopt any resale price, or
from attempting to secure their commitment to any resale price. The order
required Reebok and Rockport to inform their dealers in writing that
dealers were free to advertise and sell Reebok and Rockport products at
any price they chose, despite any suggested retail price established by the
companies.
United States v. Playmobil USA, Inc., 1995-1 Trade Cas. (CCH) ¶ 71,000
(D.D.C. 1995) (final judgment).
Playmobil USA had maintained a Retailer Discount Policy that provided
for the termination of any Playmobil dealer that failed to adhere to certain
Playmobil suggested price ranges. In January 1995, DOJ filed a civil suit
that alleged that Playmobil enforced this policy in a manner that violated
the antitrust laws by reaching agreements with some of its retailers about
what their retail prices would be. DOJ and Playmobil entered a settlement decree prohibiting Playmobil from reaching agreements with its dealers
on retail price levels, and also from threatening dealers with termination
for discounting off the retail price.
Onkyo U.S.A. Corporation, 1995-2 Trade Cas. (CCH) ¶ 71,111 (D.D.C. 1995)
(final judgment).
Onkyo U.S.A. Corporation, a manufacturer of audio components, agreed
to settle FTC charges that it violated a 1982 FTC order under which it
agreed not to fix prices or engage in unlawful resale price maintenance.
The complaint alleged that Onkyo sales representatives violated the terms
of the order by: agreeing with a dealer to establish resale prices for the
Onkyo products the dealer outlets sold to consumers; requesting that the
dealer adhere to specified resale prices or price levels, informing the
dealer that its prices were too low; directing the dealer to raise those
prices, asking retailers to report other dealers who deviated from Onkyo's
pricing policy; and responding to such deviations with threats and
intimidation. Under the settlement, Onkyo paid $225,000 in civil
penalties for violation of the original order.
New Balance Athletic Shoe, Inc., 122 F.T.C. 137 (1996) (consent order).
The Commission charged that New Balance entered into RPM agreements
with some of its retailers, in which such dealers agreed to raise retail
prices on New Balances products, maintain certain prices or price levels set by New Balance, or refrain from discounting New Balances products
for a certain period of time. New Balance induced dealers to enter into
these agreements by monitoring retailer prices, threatening to terminate or
suspend shipments to discounting retailers, and demanding that retailers
raise their prices. New Balance also assured retailers that New Balance
would secure similar price agreements from other competing retailers or
otherwise prevent unapproved discounting of New Balance athletic shoes.
The settlement prohibited New Balance from fixing or controlling the
prices at which retailers could sell the companys athletic footwear.
American Cyanamid Corp., 123 F.T.C. 1257 (1997) (consent order).
The Commission alleged that, between 1989 and 1995, American
Cyanamid entered into written agreements with its retail dealers under its
rebate programs, pursuant to which American Cyanamid offered to pay its
dealers substantial rebates on each sale of its crop protection chemicals
that was made at or above specified minimum resale prices. This
conditioning of financial payments on dealers' charging a specified
minimum price amounted to an agreement on resale prices. The consent
decree enjoined the defendant from seeking agreements by retailers to fix
prices.
Fair Allocation System, Inc., 126 F.T.C. 626 (1998) (consent order).
An association of auto dealers settled charges that it threatened to boycott
Chrysler if the manufacturer did not agree to change its vehicle allocation
system to restrict vehicle supply to discounters engaged in Internet sales.
Nine West Group, Inc., 65 Fed. Reg. 13386 (March 13, 2000) (proposed consent agreement).
The Commission ordered a manufacturer of womens shoes to cease
seeking agreements by retailers to fix, raise or stabilize shoe prices to
consumers.
|
Fiddler,
1) Given the large number of legal precedents, why is this not common knowlege?
2) Why is it that enforcement of this law (or statute, or rule, or regulation or order, or whatever it's called) is seemingly done on a complaint-driven basis?
3) Why are some of the compliance orders issued by the FTC given a five year time limit?
4) In the Chrysler case:
-----a) Was the dealer association the target of a complaint by Chrysler because of the threatened boycott, or were the dealers the plaintiffs?
-----b) What were the terms of that settlement?
-----c) Did Chrysler have to change its vehicle allocation restrictions or not? |
Mdhoover,
The answers to your questions are available online. I've wasted enough time on this already. |
Wow! You do sound just like a real live lawyer (no offense to any real live lawyers on this thread). Hope pre-law exams are going well. Study, study, study!
:) |
Bignerd,
Hey, don't be cursing me like that. Ain't no lawyer and couldn't be one. Have too many ethics! :-)
But as a business owner it pays to know what the law is when it pertains my business. |
Fiddler - as a sales manager for a manufacturer (not A/V related products), I also need to have a working knowledge of the legal aspects of pricing and agree with you completely. It's all about the "S" in M.S.R.P. - Manufacturer's SUGGESTED retail price. You can infer and suggest but can not demand that your distributors OR retailers use any specific price. From a legal standpoint, they're free to sell for whatever price they choose.
Also, there are numerous mentions of various business terms in this thread (and others) that seem to be taken as being synonymous that aren't. When people talk about "markups", "gross profit", "gross profit margins", etc., they need to understand what each of those terms mean and not use them randomly and arbitrarily.
Cost $100.00 sell for $150.00 = 50% markup
Cost $100.00 sell for $200.00 = 50% gross profit margin
Cost $100.00 sell for $200.00 = $100.00 gross profit dollars
Don't mean to "give a lesson" but way too many people use these terms without actually knowing what they represent.
Those who think that a 50% markup (33% gross profit) is "way too much" for a traditional bricks and mortar retailer to achieve aren't being realistic about what the actual costs of running a small business are. Most traditional small business owners that I've known would (at best) barely break even at a 50% markup.
As a consumer, I also want to get the "best deal" I can for my hard earned dollars ... but that doesn't always mean the "best price". As consumers we need to look for what we consider to be the "best value". Sometimes that is the "best price", other times the purchasing experience, the seller's product knowledge, warranty and service after the sale are what create the "best value". It's up to you to decide what comprises the "best value" for you. |
Northwoods_maine,
EXTREMELY well said, especially the concept of VALUE. |
I don't know where people are getting their information, but B&W is 40-45 at best depending on speaker. I have sold them. I agree with some in saying that discounting is great...online, but don't waste my time then buy it on line or expect me to service your piece once you have a problem. Most of us speciality retailers will no longer service anything unless bought at the store. Part of what you are paying for is a nice venue to hear the speakers, people to explain and educate you on the speakers and service after the sale. If none of the above is important then the internet in the place for you. |
OK, this is late but I auditioned a pair of speakers in a dealer's house (he works from home). These were in his listening room and are his demo/personal use pair which he is not selling. He does not keep a lot of stock other than what he displays and demos (two listening rooms, one TV room) in his house. He quoted me MSRP plus tax for a pair of speakers. I auditioned there for a couple of hours by appointment. When I asked if he could do better on price he offered a 5% discount if I paid up front when he ordered them from the manufacturer. He would cover delivery and set-up in my home. Fair or no? Does it matter if these are $5k or $20k speakers? |
Without knowing more, unless the set up takes substantial time, I would say that the answer is no. You should be able to do better. |
Oscar, buy from him at 5% off and be glad he helped you find what you are after. If it's not what you want, then don't agonize and move on.
You decide what is a good deal for you. That said, the above is my take.
Above all, enjoy. |
You can walk in any dealer and make just about any fair reasonable offer and he'll take it. The Inet is killing the dealers. Just make your final offer and walk. He'll be calling. |
