Anyone know profit margins re: high end audio?

[Climbfourteener]

I'm in negotiations with a high end audio/hifi dealer and the ball park for the amp 3K, pre amp 3K, cd player 6K, tuner 900, speakers 6K, dvd player and plasma tv2500 plus extras is approaching approx 25K.

I need to make him a counter offer and definitely don't want to 'insult' him.

I was thinking of offering to pay retail less 15% for the audio gear.

Any suggestions or knowledge of the profit margins on high end hifi gear?

[Russ L]

From my experience and looking over salesperson's shoulder at their cost on store computer monitor I'd say about 110% markup. Thats why they will always give you at least 10% off if you push them slightly. Push harder and you'll get more. I know others will disagree with me. Whereas computer's markup is very small so they make money on accessories. But, if you are spending 25K you should try for 25% off. I've gotten that for amps and Cd players in the $2-$3000 depending on the brand but for speakers only about 15% tops. Of course I live in Canada. Prices are lower in States where theres more competition and selection because bigger market. But wholesale prices to the retailer may be lower too and thus retail markup strategies are probably the same in both countries. -Russ

[Kevin D]

110% markup?? I would be rolling in money if my boss's made 110% markup (Or at least they would).

Generally for a protected line you're going to see around a 60% markup over cost. Less if purchased distributed. This minus shipping costs, plus any term discounts (maybe 1-2%).

Now, a 10% discount can generally be had if purchasing a lot of equipment or if you are a long time customer. If you're installing the equipment yourself and haven't taken a lot of the company's time in deciding what you want, you could probably get more. If you want delivery, setup, a lot of advice, a helpful dealer for issues, etc your potential savings goes down. It takes a lot of money to have a store, employees, insurance, demo equipment, etc..

Kevin D.

[Climbfourteener]

Generally for a protected line you're going to see around a 60% markup over cost. Less if purchased distributed. This minus shipping costs, plus any term discounts (maybe 1-2%).

Now, a 10% discount can generally be had if purchasing a lot of equipment or if you are a long time customer. If you're installing the equipment yourself and haven't taken a lot of the company's time in deciding what you want, you could probably get more. If you want delivery, setup, a lot of advice, a helpful dealer for issues, etc your potential savings goes down. It takes a lot of money to have a store, employees, insurance, demo equipment, etc..
Kevin D.

Good points!

I've not taken up a lot of their time, have made decisions quickly, have not bugged them in the least and am professional in my dealings.

Will be paying them approx $1000 for the install, wire, cabling. There's one additional on site visit after the install included in the price.

Initially I was 'shown' the $3000 CD player which is more than adequate. The $6000 player is a marvel and decided to upgrade to this model.

I'll not ask for any discounts on the DVD player ($799), the Plasma TV, the labor/install/wiring. Just the audio/speakers.

Is 15% reasonable or should I ask for more, on say the speakers/audio gear?

With install and tax, the package is approaching 25K.

[Kevin D]

Not unreasonable for the audio side. The TV will definitely have a low margin, we're lucky to get 20-30% markup, unless it's an exotic brand. The DVD player will depend on the brand.

Good call not asking any on the labor, that tends to come across as our time not being worth as much. If they are as busy as we are, we would rather do the other jobs where people are willing to pay in full for our time.

With a lot of high dollar equipment, the chances of a discount go up. It should be easier to get 20% off a $6k CD player rather then a $3k one, as it's still one piece to install just with more profit.

Kevin D.