Hi all. Just curious - how much is a "reasonable" discount to expect from a local dealer on new, low mid-level audio equipment (say amp in $2500 range or turntable around $1500)? I'm a bit surprised that most, in my area, offer no more than 10% with some refusing to discount at all.
To make the decision to discount by the store a little more real.....
Assume a store has sales of $750k per year... or $300k net to the store assuming a 40% gross margin overall. From the $300k comes store rent, wages, advertising, returns, financing costs, business taxes, state and federal taxes, etc...maybe resulting in $75k leftover for the owner.
How how many of us would put up to $1M at risk to earn $100-150k per year?
Personally... I want three things... a store or an internet direct seller that has staying power....second, that they treat me reasonably.... third, that their price to me is in the ballpark of what they sell to others for.
At the end of the day, this is value which is more important than price.
If you are a good customer dealers will surely support you. Some accommodate trade ins to make your upgrade easier, some give bigger discounts, some give you equipment to try out etc.
@teo_audio, Someone needs to tell BMW to stop producing the 3 Series cars, so that it will spare their dealers a lot of headache :-) And then they should rely on only 7 and 8 series customer for their bread and butter. I don't know which BMW dealer you talk to. But 3 Series is their bread and butter.
Disclaimer - I don't own a single BMW. And even though I can, I would rather invest it in my audio system :-)
A good friend of mine was the Florida sales rep for a few high end companies. He showed me his invoices. The dealers paid 50% of retail, plus 10% shipping on small orders. I sold my system and bought his demo pieces. The 38 year old collection is still working perfectly on my television system. He did make me go pay retail from one of his store for a cartridge, pre-amp, and head amp. My buddy got great in store discounts on SAE. None of it survived 10 years. I was lucky, but i quickly learned that the generally non-discounted stuff is much better. What I always wanted to know is why some very wealthy people insist on the power play of being a dick to dealers who are bothering to even talk to them. If you have a lot of disposable income, don't be a dick. I was in retail. Not one person with a Titanium AMX card ever gave us any argument about price. Many Lambo drivers did.
Ask any BMW dealer, they will tale you that the worst unwanted customers on the planet are 3 series customers.
They can’t afford the cars but want to look like they can and do.
so they treat the dealers ans staff like crap, demand far more than they are entitled and on and on and on.
The best customers, the BMW dealers say...are the 7 and 8 series buyers.
They can actually afford the cars and tend to be excellent non difficult human beings. ~~~~~~~~~~
Audio is an enthusiast market. Which means it is an ’audio crack head’ market’
In reality, no one can afford crack, it is all about the high.
Audio is about the musical high.
Teo, on in this case, me (Ken Hotte) wanted to call the Teo GC Ultra Cable, for the humor of it alone.....The ’43’. I’ll explain why.
In audio, you end up with people who constantly ask for the most amount of audio crack they can get for the amount of money in their pocket. Or some version of that story.
So someone comes up to us and asks for how much cable can they get for the $43 worth of wadded up bills they throw on the counter in front of us. "How much audio crack will this get me?" is the actual question at hand.
This is so prevalent that some companies make their fortunes off of it. Art Dudley complained about it once, re cables. He was talking about a company that had so many cable lines, like seven or eight (each with speaker, balanced, digital, and RCA cables) that they could fit to any audio crack customer and vacuum every dollar available off the table.
Art hated this (for the right reasons IMO), as it was for filling in the holes to take all the money and also to serve as a form of market denial for other cable companies and to make sure that the dealers could get to vacuuming up every last cent that was up for grabs, simply by being a dealer for this brand. In the end, it has nothing to do with the value or the quality of the given cable product..
Part of this ugly scenario, was all about servicing the audio crack needs.
the other part is the one about wanting discounts left and right. that is the other kind of response in the audio biz and then the idea of overpricing so that discounts can be given and the deal looks good on paper, and the dealer makes tons of cash, but in reality it is overpriced lower quality audio gear or cables. The deal is paper only. paper only. And the buyer got ripped off.
This is going on right now, with one particular cable brand of renown. Dealers love that cable brand as the margins are huge. this huge margin also conditions the customer to the idea of huge discounts on cables, cables not made by the given ’huge dealer margin’ brand’. It also helps pay for constant full page advertising. So the reviews are flowing, etc and the customer of the sub par cables..pay for it all.
Your best cable value comes from the smaller companies, NOT the established giants, ok? NOT the established giants. The eventual millions in advertising to keep the hype up...was pulled out of the customers and did not go into the product.
The customer does not understand this and the dealer sure as hell ain’t going to tell them about it! the net effect is the huge margin causes the dealers to congregate around the one brand that is nothing special in audio quality, outside of that huge margin.
This denies market share to companies with REALISTIC dealer margins, and additionally denies market via the customers who won’t buy the other quality brand..as they are expecting huge discounts on the cables that don’t have huge (unrealistic) margin built into the pricing.
An example of discounts for less service is Cary Audio. Go to their web site and check out how much the price of a 5K piece goes down if you accept lower warranty and replacement options. I know they are not retailers but just an example of how businesses work.
@glupsonI hear you. I was in a shop yesterday that used to be next to my shop in the '70's. They sell lighting--lamps and shades and stuff like that. Some is very expensive, some regular. The owner is still the same person--out of town right now--but the lady there and I had a great talk about the old days. She said some of the other shop owners from that small center still drop by every now and then.
THEN, she told me she had to call the cops 3 TIMES last week due to a-hole customers who broke merchandise, cursed, yelled, went nuts in their store.
I reminded her that yes, they moved to the next town (Delray Beach) north of Boca, but many of their customers were BOCA people. I laugh at them now since I am not in business, but the reality is that SOME of them are so amazingly nuts that they believe they are entitled to anything they want anytime they want at any price they want.
Imagine owning a LIGHTING store--not really very controversial, right??--and having crazy people for customers that make you have them arrested for shopping!!
My take is that their belief is that God put them on this planet to get ALL THE MONEY and then make everyone else bow down to them. I don't know--but I do know I am moving an hour north as soon as my house sells.This town went from a small, quiet resort/vacation town to something I don't recognize, and I lived on the island of Palm Beach for a number of years, where people really ARE wealthy. Most there do NOT behave like Boca people...I have no idea why.
Keep working with your dealer and I am sure you will get the better prices as time goes on. If your dealer is a high-end one, he or she probably has your best interests at heart and will do whatever is possible to keep your business and have to talk t others about it. We NEVER advertised--did not have to due to word-of-mouth. Funny how that works!
Thanks. It is interesting to see how things work on the other side. I am just not sure why a manufacturer thought it was fine to call people home (I assume it was before cell phones) and ask how much they paid for what. Or someone calling you at night to ask what is going on with their equipment. Different times, I guess.
I was prompted to ask what you would do if someone walked in, the way I would, by benjie's statement a few posts above. He thought the salesperson would not take me seriously and would say anything to get rid of me. I think I also became a jerk somewhere in that statement because I would ask straight forward and not negotiate afterwards. Maybe the most important aspect for me is skipping any further discussion and surprise about price. MSRP is fine with me, but further push-pull games are not. Which is what this thread really started about. In reality, I never thought of asking for discount on electronics or expected it existed.
Of course, a good advice is always welcome but these days that is lacking wherever you go. Some of the experiences in audio stores are baffling although it is not limited to audio stores.
@glupson Thank you for your reply. If you walked in, and many did in those days as I was the only Audio Research/Magnepan/Nakamichi/Sequerra/Linn/B&O dealer around back then (Mc was handled by Jimmy Ryder of Ryder Truck fame if you remember them) down in Miami at HiFi Buys (no longer there).
If the item you wanted was NOT a fair trade item--remember those rules from my first post about this--I would have spoken to you about the rest of your system first. Remember, I was dumb/naive enough to believe that customers actually WANTED advice and counsel about their total system, and we would have discussed WHY you wanted that item. Once we had established some sort of dialogue, I might have sold you the item for a good price if I could. I did it sometimes, of course, but usually on a Marantz or Scott or Tandberg item--what we called semi-high-end back then, and they were.
If it happened to be an Audio Research item, probably not as they were in very short supply back then and the margins were not great. A popular pre-amp back then--SP3 and SP3-A1 were 595 then 695 then 795 all in the space of less than a year. What I MIGHT have done had you purchased the pre-amp and maybe another item is throw in the wood case, which was not cheap either. We paid about 70% for that brand once shipping was included.
Most manufacturers had a NET 10/15/30 price break on shipping, but some did not. Example: my highly-anticipated first D-150 (STILL one of the best amps ever made and I would buy one today if I needed it) came in DOA. It happens. Cost me 130 to send it back and they would not pay. How does a dealer combat that? You lose money.
Plus, back then, Audio Research wanted copies of the sales tickets and sometimes called the buyer--Mr. Johnson himself did sometimes, I was told--and the price paid was discussed. SO, some brands, yes, and some brands, probably not and definitely NO if it was a fair trade item like AR and B&O and SONY and so many others.
We gave GREAT service for no cost--delivered, set-up, made sure you were happy, answered my personal phone at 2AM because you had people over and your system did not play (push TAPE MONITOR, you dummy) but of course did not put it that way. My customers sometimes spent close to 6 figures even back then as we sold handbuilt hardwood cabinets (I had a wood shop across town) to go with your system. Today, if you have a Sound &Sight/Sound+Wood cabinet, you have a Bentley as we only made a few of them--fewer than 150, I think--and it was designed, created, and installed by us for you and was one-of-a-kind from walnut, teak (UGH--hard on equipment!), red or white oak, Honduras mahogany--not available any more--or, if you were really into it, rosewood.
We also contracted with Mark Levinson to make his HQD system stuff. He was a VERY slow-pay, as we say.
So, yes,a discount was possible, and one thing gone was good, but I was after forming relationships with customers, many of whom back then were audio hobbyists who were classical music lovers. Even Mr. Johnson did not like that we played rock on his stuff...wanted us to demo classical ONLY. Much different times.
BTW, I sold MANY pair of Magneplanars with Audio Research gear (they had a marketing relationship back then...Wendell was at Audio Research in those days)...to customers who loved "Money" and "Midnight at the Oasis" and ANY Linda Ronstadt played on that system using various sources from TT with expensive arms and cartridges--SUPEX and SATIN and DECCA and so forth were big then, and low-output versions were just coming online for the masses--to Nakamichi decks (all broke within a couple of weeks but they sounded pretty good!) to even the Sequerra tuners.
It was a great time to be in this business--before a lot of the silliness entered--and had I been less naive I might have stayed. Turns out dear old dad was right, as he often was. Funny how that works out, huh?
This basically depends on the dealer and to brand he is discounting for. Some brands have better margin for a dealer and some not that good. For high end equipment 10% is low in my opinion
That was an interesting look back. In particular that part about a locksmith. I did witness once a man driving off a BMW through the window of the dealership after he had come in a few times and established some "relationship" with salespeople. I also sat in the car at the red light when a person crossing the street tried to take the emblem off of it. I honked and he walked away. Very strange.
Now, I am curious. You have some experience in sales, even if it was long ago. In case a person, me although really just a person from the street, walked in your store and said he was interested in some item, clearly stating the model etc., and asked what would be the lowest price you would sell it to him what would you have thought or done? Would you consider it a potential sale and quickly figure out what you would sell it for, even if it is MSRP? Would you consider a person not being serious at all and maybe try to get rid of him? Is there anything else you would do or think in that situation?
@glupson2The harsh stuff you did not care for did not come until AFTER the business was up and running.
MY education, which my dad said I needed since he had been in retail all his life, was provided by customers I still don’t believe sometimes.
I was totally astounded by this behavior, and HAD to come up with ways to combat it. One day, a guy walked in, picked up an item from the shelf, and ran out. Good grief! I was so amazed I barely had the sense to call the police.
Another time, the locksmith next door who put new locks on my door for me hired a criminal from NJ to drive down and rob the shop. Cops stopped him at 3am driving a van full of my stuff cause in Boca in those days NO ONE drove around at 3am. I was lucky as they thought it was an inside job. Good news was I had not even had time to get insurance yet, so they realized what happened eventually, but I WAS THEIR PRIME SUSPECT!!
I was a kid trying to open a business with great intentions to bring wonderful music to as many people as I could. HAH! As my dear dad tried to explain to me, retail is a nutty business.
SO, the harsh stuff above was simply a necessary REACTION to the behavior I experienced from nutty customers.
That is why I sold the business--could not believe people were such dorks when all I wanted to do was HELP them. Naive? You betcha!
Went back to school, got a couple more degrees, and spent my career at a major computer company while the PC was being invented. Exciting times, and most customers were thrilled to see and use this new technology. Sure, there were nutty ones, but mostly it was a very professional environment that was what I THOUGHT I would have with the shop.
Groceries were not my analogy but gnoworyta's (OP's) although I do approach any shopping in the same way.
What is so "sacred" about high end audio equipment that it should be exempt from a break in price? Televisions, computers, appliances, cars, lawn equipment, clothing - even groceries: I look for and expect to get some kind of deal.
I may not have negotiating skills but I spare you from whining about squeezing a few percent from some sale. If goal when shopping is to be taken seriously, I may fail sometimes according to you although I do not recall anybody trying to get rid of me. Quite the opposite.
clearthink,
I understand the nature of business relationships relatively well. I focus on the side of not wasting energy by negotiating. I simply do not get my kicks out of outsmarting the other guy. I pay if I like it, I do not pay if I don’t like it. You are right, it is not negotiation but action and behavior. I do not know if it would qualify as technique. Salesperson knows how much is a certain item worth to her/him. If that is more than what it is worth to me, the item would be better served by staying with her/him. No hard feelings. Saves everyone's time.
This whole thread shows that many are obsessed about getting a discount for things that are so non-essential that they could exercise a little bit of dignity instead of bad-mouthing some struggling salesperson trying to make a living. Buy lesser model if you cannot afford more expensive one. Then change fuses and it will be even better than what you wanted in the first place. So the legend says.
glupson"Walk in, ask for final price making sure the dealer is aware there will be no negotiations afterwards, if for whatever reason it is not acceptable...walk out."
That is not discussion, negotiation, or reasoning it is the actions, behavior, and technique of someone who does not understand nor does he seek to understand the nature of business and business relationships.
It’s pretty obvious you have no negotiating skills. Walk in and demand their best price, they’re not going to take you serious. They will tell you anything just to get rid of you. It would be obvious to them that you are not a serious buyer.
"So I guess when you guys go to buy a car you pay sticker price for it, no negotiation just pay the price."
Walk in, ask for final price making sure the dealer is aware there will be no negotiations afterwards, if for whatever reason it is not acceptable...walk out. It makes it simpler.
I think I covered all this in my post. Dealers DO NOT have 50% in MOST items, and probably not in any unless they "fell off the truck."
I am amazed at the lack of business intelligence so far in this thread. Several point out that stores actually cost money to open and run. A typical high-end store in 1973 cost $100,000 to open and stock. And that was when $100,000 was actually money, not lunch money for the 1%.
Where does that $$ come from? The BANK. They don't charge anything to borrow money, right?, so why should YOU have to pay full price? Interest rates in 1973 were about 9%+, and MORE if you wanted to open a business. I paid them, so I kinda know.
Go to business school before you walk in and demand a 40% discount. If you did that in my shop, you would be standing by yourself as I would have laughed at you and walked away.
If you buy online, don't expect service, but you MAY get it. If you buy brick and mortar, shop around and find a dealer you like and form a relationship. For those who postulate relationships are useless, like to see you at the MB dealer walking in and demanding a huge discount. You would be WALKING out soon.
GOOD businesses want to build a loyal customer base and will pretty much do whatever it takes to do so. BUT, as Bon Qui Qui says, "Don't get crazy!"
Go to eat at Peter Luger's or Katz's and walk out if the wait staff doesn't kiss your butt. You will go hungry, I promise. Sure, these are classic places that promote their bad behavior as part of their "schtick."
YOUR bad behavior in my shop would have resulted in you leaving with nothing. Happened a lot more than I thought, which is one reason I sold the shop. I was there to HELP you find the best at your budget. What YOU want for free meant nothing to me. We "fired" customers every year at xmas--idiots who thought they were "entitled" to whatever because they--wait for it--were RICH! (Gee, in Boca Raton a RICH person is so rare. They might be driving a Boca Chevy (MB) or a Boca Ford (BMW). WOW! Impressive!
We simply called them and suggested they call Mr. X at another shop who could "better meet their needs."
Saved a LOT of my sanity and sometimes they would come back being more professional and appropriate in their behavior. If not, we simply worked to attract more customers who wanted high-end audio products. There were plenty of shops for medium and low-end stuff back then that took care of that market segment. That is what we wanted, so that is the business plan we executed.
Your dealer may be a jerk. I can't help that, but check out your own behavior as well. Also, dealers hire people who may have a bad day--unfortunate, but it happens. Ask to see the owner or another sales person. After all, YOU may be the jerk in all this without realizing it.
Hey, dude, most audiophile fuses are $50 or less. Quite a few are $20. Check it out on The Cable Company’s list of fuses. If you’re on welfare you shouldn’t be in this hobby. HVe you considered collecting stamps?
Let’s continue on, how about the record clamp made out of wood that cost $4800 or the MIT speaker cables that cost $60,000 or the amp stand made out of wood with brass footers that sells for $4500. Don’t ask for a discount, these guys are barely scratching out a living selling these items.
Pretty simple in that case, you don't like the idea of boutique fuses then do not buy them. Its only YOUR opinion that they cost 20 cents to make remember.
How about a .20 cent fuse that sells for $150. Don't ask for a discount, remember they have rent, taxes, insurance, wages and a family to feed. It's justified, just say'in.
Can a discount be expected? Possibly, when you consider a product that will enlarge a hole on a LP, and is nothing more than a plastic handle with a drill bit glued into it, and sells for $60. Just say'in.
What is so "sacred" about high end audio equipment that it should be exempt from a break in price? Televisions, computers, appliances, cars, lawn equipment, clothing - even groceries: I look for and expect to get some kind of deal.
Nothing is sacred, but who has ever walked in the grocery store and asked a cashier 10% off lettuce or milk? I doubt it would fly at my local farmer’s market although I never thought of trying.
Why does it seem that asking for discount is expected? Why not just ask what the price is and accept, or not? What the heck, just buy the lesser model and no time or energy is wasted. That may be worth 10% right there. Does everyone really enjoy negotiations?
Not when you consider the dealer has a LARGE overhead, pays taxes , has a family to support and likes to eat himself etc , etc . Did your brother work for free ?
Dealer markup on an item is anywhere from 40 to 50 percent. So think about it, you buy a $20 k pair of speakers, the dealer is making about $10 k profit. That's ridiculous!
And how do I know this, my brother worked for a dealer for many years.
Depends - Is this a one off purchase? Have you purchased from them before? Will you purchase from the dealer again? Given all that 10% to 20% is likely the best one can ask for.
It also depends on how much product the dealer pushes out the door. If there are a bunch of high end clients paying full prices, then they can afford to work with you. I know dealers don't like folks that try to banter over prices like they are bargaining for bongos in Tijuana.
Having other hobbies where the manufacturer is placing limits on what a dealer can or cannot sell for...I get it. I also understand the part of smaller shops not being able to flex their margin much as a cost of doing business. But, being new in the hobby I cannot help but feel that higher quality, higher priced equipment is going to be the MSRP regardless...just because it can.
Magnolia at Best Buy has plenty of high end product and being part of the Best Buy "machine" the margins could be spread out over the country. I wouldn't think that for them to knock off a 20% savings every now and then is going to hurt them, but they will not offer up better pricing for McIntosh or B&W unless it is open box, return or product being phased out with a new model. I'm in the process of saving for my "retirement gift" and this forum as well as this topic is invaluable.
To use the example of the OP (“mid level audio equipment”)
most/many electronics lines will have a 40% margin to the dealer. A well
run/efficient dealer will probably have a COB (cost of doing business) of at
least 25%. So, when you walk in and ask for a 10% off the dealer is left with
+/-5% profit…
As pointed out prior, a relationship with the dealer is
important. If you walk in and state that you know exactly what you want and the
dealer/salesperson doesn’t have to burn any time with you then 10% might be
realistic. A turntable/cartridge properly set up by the dealer probably would
not qualify. If you require a protracted demo(s), hand holding, couch time (analysis),
then maybe asking for 10% is too much…
If you're concerned how much you have to open your wallet-most of us, it's all about how YOU interact with a dealer. Your own skills at selling yourself as a person who deserves the better price.
That said, I've had some exposure to what actual cost of audio equipment is, and it's painful to imagine paying anything near MSRP. A dealer has a business to operate, so I get it.
Cash, as mentioned, helps in the negotiation game.
I bought several pieces from a dealer decades ago that had a very rational discount policy. If you paid full price you got a 30 day return privilege and full credit if you traded up to more expensive piece of gear. There was a second level of 10% if I remember correctly, and then there was a 20% discount if you essentially wanted no service, no refund, no trade-in, no dealer setup, and you had to pay with cash (no credit card).
The point here is that if getting a discount is really important to you then you can negotiate a service/discount trade off with the dealer if the dealer has a standard service policy (return privilege etc.). If you just want to buy the piece of gear, walk out the door, and never ask the dealer for any kind of service then you should at least get a 10% discount. If you come in with cash or the dealer will accept the check you should be able to get another 2% by avoiding a credit card.
I live in the rare town that has a half dozen high end audio shops. Which means people like audio to support so many dealers in our mid-sized city. There’s variety in discounts and willingness among the dealers. One store really turned me off though. I had found the speakers I wanted—brand new—at 40% off on line. I called the local place that stocked them and spoke with the manager. I said, “I dont know if you can match this, or if its worth it for you, but I believe in supporting local and at least wanted to give you the opportunity “ He lectured and harangued me and was really unpleasant. In the end I paid MORE than the reputable place on line but still around 35% under because I DO want my local places to be there. BUT, he was so unpleasant about it that I have never purchased anything else from them, though I have tried to give them a chance. Let me add they had done service work for me and I had purchased other speakers from them. I now have a favorite shop. If a discount is available, they work with me. Some items there isn't and they explain it. But their service is extremely good, they are knowledgeable and a bunch of good guys.
Since the first day I purchased from my dealer a year ago, I've always received 10 percent. I have also received 20 percent on another purchase and it was not a discontinued item. Very happy.
If the dealer allows me to take the item home to try out I don’t mind paying list price. If not ,10% is fine with me! If the dealer does both, that's the icing on the cake!
Thanks for all the comments thus far. I tend to be in agreement with rbstehno. What is so "sacred" about high end audio equipment that it should be exempt from a break in price? Televisions, computers, appliances, cars, lawn equipment, clothing - even groceries: I look for and expect to get some kind of deal. I am in no way suggesting an exorbitant amount - I realize a dealer needs to make money to remain viable. And as far as "service after that sale", I'm not sure what that means. I have purchased a number of items over the years with the same establishment and the one time I did have an issue (with blown speaker tweeters), the dealer charged me full price for the replacements and the time/labor to install them. So what was gained by my so called relationship? Again, thanks for the replies. Interesting to see other's perspective on this issue. Keep em' coming!
Relationships should have zero to do with at least getting 10% off, unless it’s an extremely hot selling commodity, then the law of supply and demand kicks in and you should expect to pay retail, and in some cases, over retail. But your average everyday “dealer can get as much inventory the want” stuff, I’d walk if not getting 10% off. Who cares if they know you, sorry Elizabeth, these days it does not matter, if someone wants to remain in the brick and mortar business they’ll give the average Joe off the street that deal, or get ready for bankruptcy court.
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