Dealer Prices ?

[stevelgbch]

Hope this is OK to ask...Just wondering, what do dealers pay for equipment/speakers. I've heard it's around 50% or no more than 70%. Is that right?

 

[JackD201]

50% x-factory is what is usually paid to the manufacturer. Just add all other expenses after that to get the actual CoGS*.

*freight, applicable taxes, insurance, bank transfer fees, administrative expenses, foreign exchange gains or losses etc.

Then there's overhead.

All in all you don't become rich being a dealer. When all is going well you get about 10 cents on the dollar after income tax. You do get to spend time with your favorite things though and THAT is priceless

 

[Johnny Vinyl]

50% x-factory is what is usually paid to the manufacturer. Just add all other expenses after that to get the actual CoGS*.

*freight, applicable taxes, insurance, bank transfer fees, administrative expenses, foreign exchange gains or losses etc.

Then there's overhead.

All in all you don't become rich being a dealer. When all is going well you get about 10 cents on the dollar after income tax. You do get to spend time with your favorite things though and THAT is priceless

Excellent post Jack! This is what the consumer refuses to or doesn't understand.

 

[caesar]

50% x-factory is what is usually paid to the manufacturer. Just add all other expenses after that to get the actual CoGS*.

*freight, applicable taxes, insurance, bank transfer fees, administrative expenses, foreign exchange gains or losses etc.

Then there's overhead.

All in all you don't become rich being a dealer. When all is going well you get about 10 cents on the dollar after income tax. You do get to spend time with your favorite things though and THAT is priceless

Thanks for being candid, Jack. Is there variation among brands? Do some have more bargaining power than others, based on brand value?

 

[JackD201]

Aw shucks, thanks John and Caesar

50% pretty much standard for companies with healthy network and healthy production line going. Smaller ones might give smaller margins. Sometimes yo get lucky with products that are about to be phased out. Not THAT lucky in terms of returns because you have to disclose the same to your customer. Still both you and the customer pay less. Once in a blue moon there are special models (aesthetics) that manufacturers will come out with. One time Valvet came out with a red anodized Soulshine8 with matching Monos. One time VS came out with only 6 pairs of tiger striped ebony VR-4 SRs. Unique pieces without having to pay more than the normal models. It's stuff like this distributors get first dibs at. Beta testing is pretty fun too particularly when it comes to ergonomic features like where some things should go or be arranged for best ease of use.

 

[stevelgbch]

Jack, thanks. Yes, i was in a local business before i retired and I realize all the necessary costs doing your business. Every once in a while a customer would look at base costs of a product and wonder why he was paying so much more. We had to just stay in business and pay our bills.

 

[Brian Walsh]

Not for cartridges & cables

That's a very broad brush comment which is incorrect for many. If you are going to make such remarks give examples, otherwise it's an empty assertion.

Back on topic, for example there are cables that are marked up similarly to components, while a few (I can think of oNe) give the dealer as many as 70 points. When such a cable appears to be deep discounted the dealer is still making a killing.

 

[MylesBAstor]

Thanks for being candid, Jack. Is there variation among brands? Do some have more bargaining power than others, based on brand value?

Very slight. The numbers Jack gives you applies probably to 97% of products. Once I ran into one product that was 60% but more often were those lower than the average eg. 40%.

 

[KeithR]

Ive always heard sround 40 points to the dealer for domestic components.

 

[JackD201]

Between 40 and 30 for dealers, 50 for the distributors sounds right.

 

[thedudeabides]

+1

 

[rrr]

Dealers do not often disclose their true markups. 50% is often a starting point, generally additional discounts are available to some dealers. Cables can have a greater MUGP than 50%, much more.

No, it's not fair to disclose specific prices and dealers here but if one is negotiating with a dealer it would be better to do so without being locked in to an invalid assumption about actual cost and discounts.