Anyone know in-store Klipsch mark up?

Discussion in 'Speakers' started by MikeWHA, Feb 12, 2005.

  1. MikeWHA

    MikeWHA Extra

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    Have had my eye on the Klipsch RF35 floors, RC35 center, and the RB35s. American Furniture sent me a flyer offering the following sale: "Pay only half our mark-up." Before I go in to negotiate, I would love to know approximately how much mark-up there is in these Klispchs. I believe the RF35s retail around $500 each and the center is around the same. Anyway, can anyone give me some bargaining power? I want to know if they're insulting me when they tell me that their markup is only something like 25% so they'll give me 12.5% off. Sale ends tomorrow - thanks all.
     
  2. Kenneth Harden

    Kenneth Harden Screenwriter

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    I would say their markup is probably about 40%, could be more, could be less.

    I would think taking 20% off would be reasonable.
     
  3. David Bikeman

    David Bikeman Stunt Coordinator

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    If the mark-up is 40% and you take 20% off that, might as well close the doors and save the aggravation. You're well below the break even point for a B&M.

    David
     
  4. Kenneth Harden

    Kenneth Harden Screenwriter

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    David:

    The idea is they are having a 'sale' and they 'advertised' the fact they would 'meet you half-way'

    Seems clear to me. If they are willing, why not!

    Good Guys has 15% off Klipsch sales.
     
  5. MikeWHA

    MikeWHA Extra

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    Dave
    Please explain what you mean. I was thinking that 20% off MSRP would also be reasonable to ask. I can see the B&Ms making 50 to 60% profit on electronics. Look at Best Buy - they sell the Pioneer 1014 for $500 but it can be purchased for $399 ffom JR (an authorized dealer). You know JR is making at least 25% so their cost would be approx $320. So if Best Buy charges $500 and their cost is $320, then their mark up is 55%. Is my thinking flawed here?

    Any body in the business care to chime in on this?
     
  6. ScottCarr

    ScottCarr Second Unit

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    Cost $1000
    Mark up 40%
    Pricetag $1400
    discount 20% $-280
    out the door $1120
    net profit ~ 12%
     
  7. MikeWHA

    MikeWHA Extra

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    Scott
    I may have explained this wrong - they will take 50% off their mark-up so it would look more like this:

    Cost $1000
    Mark up 40%
    Pricetag $1400
    discount 50% off the mark up of $400 = $-200
    out the door $1200
    net profit ~ 20%
     
  8. ScottCarr

    ScottCarr Second Unit

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    Mike,
    Either if Intel had a 20% mark up on their product and services their net profit would be in the negatives.

    On the other hand the Cost of a product can be manipulated in many ways. For instance the cost for a pair of speakers might show up on the "screen" with a cost of $1000.
    What does this cost actually cover. I am sure these stores are not releasing the actual cost of every item to every employee, that is just not good business from any aspect. Now if corporate lists cost this could include what it costs to get it to the sales floor including all shipping and handling and other costs. Then anyway one wants to figure out "profit" the net is even more.

    When I was purchasing my Klipsch I went to some of the unauthorized dealers on the net, adding shipping and added 10%. What I paid was acutally about 13% above the unauthorized price.
     
  9. MikeWHA

    MikeWHA Extra

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    I ventured over to American Furniture to see what kind of prices they offered during their 1/2 off their mark-up sale. What I found really is amazing. Here's what I found:

    Klipsch RF35 floors - $750 pair
    Klipsch RC35 center - $314
    Klipsch RB35 books - $450 pair
    TOTAL - $1515

    Retail is $2000

    So the discount was just about 25% of retail. BUT:
    Since I saved $500 that means, according to their sale "half off their markup" that their mark-up is 2 X $500 or $1000 for the set. This equates to a cost of $1000 for the set along with a mark-up of 100%. That means that retail on these puppies is a 100% mark-up from cost.
    I went ahead and bought and now I am going to order the Onyx Rocket 550.2 5.1 package for $1699 and compare and pick the better.

    Here's the math for the Klipsch R35 series:

    Cost for American Furniture - $1000
    Mark up 100% - $1000
    Pricetag $2000
    discount 50% off mark-up $-500
    out the door $1500
    net profit ~ 50%
     
  10. Chu Gai

    Chu Gai Lead Actor

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    Just ask to see their invoice.
     
  11. Tom Grooms

    Tom Grooms Second Unit

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    Well Mike, you kinda got it. If the speakers cost $1000 and they're tagged at $2000, thats a 50% margin. Fairly standard in the industry.

    IMO, Thats the dumbest marketing I have ever seen. Lets go ahead and let the buying public know we are making $500 in margin on you after the 25% off sale price.
     
  12. Chris Quinn

    Chris Quinn Screenwriter

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    Go into Tweeter, BestBuy, etc. and know that to get a product stocked takes ~60 points. Figure at least half of list is profit or even more if this is a mark it up to mark down kind of sale.
     
  13. Tom Grooms

    Tom Grooms Second Unit

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    What are you trying to say? Profit has nothing to do with it.
     
  14. Chris Quinn

    Chris Quinn Screenwriter

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    If his is trying to figure out half of mark-up then mark-up is profit to me. And I agree 100% mark-up is nothing in retail.
     
  15. Tom Grooms

    Tom Grooms Second Unit

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    OK, 1 more time. If an item sells for $1.00 and it costs $0.50, that is 50% margin. It is not a 100% profit. If any of these stores could make even a 5% profit on gross sales, share holders would rejoice!
     
  16. gene c

    gene c Producer

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    Gene
    2-3 weeks ago I was at The Good Guys in Santa Clara and they had the SF-1's and SF-2's on sale at 1/2 off. $248 a pair for the 1's and $362 a pair for the 2's. I think the mark-up on Klipsh is pretty substantial. But remember, not all stores pay the same price for their products. Fry's apparently gets a huge discount from Polk on their speakers. Often selling them for up to 65% off retail. Example: R50 regular price $229 each ($269 at Circuit City) are frequently on sale for $79. That's 65.5% percent off retail. J&R also has the Klipsh SB-1 5 1/4" bookshelves in their current S&V ad for $99 a pair. That's more than 50% off b&m retail. 20% off retail wouldn't get me all that excited unless I really wanted that item.
     
  17. Chris Quinn

    Chris Quinn Screenwriter

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    You are correct. It generally takes ~28% just to turn the lights on so to speak in retail.
     
  18. MikeWHA

    MikeWHA Extra

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    Tom
    I'm on the other side of the river in Illinois. Can you recommend a good place to audition Paradigms, Energy Connoisseur and Boston in the StL area?

    Gene
    First off, being from LA and now living in the St Louis area, I can say that I miss my Frys desperately. You're right - 20% off retail wouldn't nornmally get me very excited as I buy most everything over the internet. Since I can't buy the Klipsch RF35 series over the net from an autorized dealer (Good Guys doesn't ship to Illinois), I'm pretty much stuck going to a B&M. Add to this the fact that American doesn't even have the RC 35 center in stock at any of its local stores so the supply here is limited. I'm still going to try to find some Paradigms, Bostons and Energys in the same range and I am going to buy some Oxix Rockets to compare. As a price comparison, I coulndn't even get Ultimate Electronics here to go below 10% off on the Klipschs.
     
  19. Tom Grooms

    Tom Grooms Second Unit

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    Hi Mike,
    For Paradigms and Energy, check out "The Sound Room". You may as well listen to Dynaudio while you over here at "Music For Pleasure". Stop on over at "Best Sound" for B&W. Im your guy for Klipsch, Kef, DefTech and Infinity. I got your RF35s IN STOCK. I am the UE connection. email me and we can go over the details. [​IMG]

    t o m g r o o m s @ c h a r t e r . n e t
     

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