Given the turnover of equipment, maybe it would make sense for manufacturers or dealers to (profitably) lease speakers (or other components for that matter) with an option to buy? I certainly would be willing to pay to live with something (espescially something expensive) for a year or so knowing I could return it without the hassle of selling.
There are planty of dealers that will repurchase your speakers from you, no hassle. Sure they only give you about 25% of retail. But I would expect the same from a lease (i.e., $10k speakers, $209/mo +tax for 36 mos, not $139/mo).
generally lease terms are dictated by the bank. Sure leasing is great if you can't haggle. But sheesh! What a ripoff. I'm time is valuable, but not that valuable.
But IN regards to westborn's idea, the buy out would make the speakers 10 to 15% over value....who wants that? Plus if the dealer in turn sells the speakers then he made alot of extra money on an already inflated price....I see no good out of this idea....but I am poor and cheap. Also with so many cases of upgraditis I think a very small section of the Audio comunity would be happy with that buy out.
Sure. Rough example - Just charge enough in the 'up front' payment to cover most of his initial/purchase/dealer cost. For example - dealer cost on a pair of 10K speakers = 5k. The dealer could charge 4k up front, then charge the $100/month for a 3 year lease. His revenue = 7600 after 3 years, whereupon he gets the speakers back (sells them for 4-5K used/demo) or offers them to the lessee for around the same amount.
I don't think it is the financial economics that RGS92 is concerned with, it is having a low hassle avenue to swap out to a new model. If anybody wants a lease, just get the best monthly financing you can find, credit card, home equity, etc. Make your monthly payments and when your sick of your speakers, sell them on Audiogon (residual value), pay off as much as you can, and start over.
Don't forget the negative cash flow that the manufacturer has to withstand as the program is started up.
For example, a pair of speakers that retails for $6000 might be rented for $100 per month (for "full payout" in 5 years). It might have cost the manufacturer $3000 to make the speakers, but he won't recover this initial cash layout for 30 months. At the end of year one, he will have spent $3000 but collected only $1200, so he's out of pocket by $1800 even after collecting 12 payments.
Now, multiply this by perhaps hundreds of pairs of speakers that he might lease in the first year of a leasing program, and it becomes clear that most high end speaker manufacturers can't do leasing. I believe most high end manufacturers are not known to be particularly highly capitalized, and the cash flow burden of having to purchase materials weeks and months before making a sale is by itself already a stretch, let alone supporting a lease program.
Of course, they could always make a deal with a bank that would do the leasing program, kind of like an auto dealer that introduces you to a local bank for a car loan or lease. Maybe this would be more appropriately performed by the high end hifi dealer instead of the manufacturer. At that point, you might as well just get a personal loan or lease from a bank all by yourself, which you could do now.
Sounds good at first blush, but I think here's a good reason they won't do it. What happens when you don't make your lease payment? The manufacturer would have to be able to get their property back and that is going to be a problem when it's locked away in your home. With a car, they just come and repo it during the night, with Rent-a-center places, they are usually local to the leased goods so they will deal with you in local court, but a high end manufacturer simply can't go all over the country trying to get there goods back when you don't pay, it just wouldn't be profitable.
Unfortunately, leases are based on the depreciation value VS residual value. That is, a $10,000 pair of speakers leased for say three years will have a residual price (what the lessor can sell it for when you return it) of about $5000. This assumes a stable technology paradigm (i.e., nobody invents something that makes the speakers obsolete). So you're going to pay $150 - $175 per month for three years (figure shipping, "processing fees", interest, etc.).
Now the builder COULD do it for half of this amount (you do know about the typical 100% markup at retail right?) IF they want to risk alienating their dealers.
Getting messy? Another thing, IF there were money in this, someone would be doing it already, no?
Oh well, still a good idea. Play with the numbers and let us know when you can make it work!
Some speaker dealers offer trade-in allowances towards more expensive speakers. The amount of the allowance decays over time (with the re-sale value). If you do the math and there is a liquid market for your model, it should be very worthwhile to deal with the hassle rather then finance through a lease type arrangement. Of course, you could just sell your speaker at the right price and have the purchaser bear the hassle of picking up themselves.
High end audio is a purely discretionary, luxury oriented market. If you have to lease or otherwise finance your purchases, then you might want to consider that you cannot actually afford what you lust after. Also, why should the manufacturer gamble on what the depreciated value of their product will be a year or two after purchase?
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