Paradigm price fixing (1 Viewer)

[Susana Anderton]

That is Paradigm's way of supporting it's dealer network and it is your right to choose another speaker line to show your dissatisfaction just like many Hi-fi dealers show their dissatisfaction for manufacturers that don't shut down grey-marketing, the retailers drop that line. This discussion will continue as more retailers seek protected lines so they don't feel they are being used for audio demonstrations by people who WILL NEVER pay the price they have listed on the signs. As has been said before, "It's AUDIO ,YOU HAVE TO HEAR IT!"

Dealer Matt,

So other dealers without this policy do not support their dealers, huh? Why would dealers sell anything other than Paradigm??? Isn't there another way to support dealers that don't hurt the consumer? I understand internet sales would hurt dealers because customers may listen to speakers at a local dealer and then buy online. Paradigm could keep the ban on internet and mail-order sales. But there is NO EXCUSE for limiting sales geographically. This ONLY reason for doing this is to keep the prices AS HIGH AS POSSIBLE.

 

[Jeff Ery]

list some brands that are "protecting" against e-tailing/greymarketing and list another group that protects geographicaly and another list for those who terminate dealers for selling below msrp (yes, some do)...

 

[Bill Lucas]

Mike,

Thank you for the compliment.

I agree with you. Our philosophy is that if we make a mistake we correct it (at our expense) and that we don't cut corners. If we have to eat some of the profit on the job to make it right, we do it.

Here's a question to all of you bargain hunters. When you show off your gear do you brag about how much you got off of MSRP or do you REALLY showoff your system? To me, my system is about what it does, not what it cost. It would seem that there are many people who put cost ahead of performance and enjoyment. I'm not saying that they don't enjoy what they have but to them the chase is more important than the end result. Perhaps that's why upgradeitis seems to be so prevalent.

 

[Shane Martin]

This part doesn't make sense to me and let me phrase it so that folk can understand.

Paradigm dealer A has a set of Studio 60's in the store for full retail($1,150 a pair). Some dude who has never bought anything from this dealer strolls in wearing jean shorts and a tea shirt and wants to buy them. He already knows what he wants, he just wants to buy them and take them home. Since he is used to negotiating for a car, he tells the dealer that he would like to purchase them for 20% off which would make the total $920 out the door plus tax.

The dealer whom sticks to the MSRP refuses and the guy walks. Thus he is out of a $920 sale. Let's go so far to say that the dealer would make a $200 profit even after the $920 meaning his cost was in the neighborhood of $720.

Isn't some money better than nothing? To flat out refuse a sale is just ludicrous to me because chances are that guy will be back to buy wire, cabling and other stuff. On top of this, he will get a favorable response from teh guy whom tells his buddies where he got his paradigm's and more $$ comes his way.

However based on the 2 dealers represented here so far, you would pass on this(Am I wrong?) and just wait for some guy to walk in and pay full MSRP for them.

Explain to me the logic in turning down a sale as opposed to taking the guys money and moving on with some profit. I'm not saying you should take a bath on the sale but some $$ is better than no money to me.

Or I could be wrong... It just doesn't make sense.

Bill,
I understand you are in the business but I think the custom business is much more different than the typical B&M store that we are mainly discussing here. I know Custom houses stick to MSRP and rightly do so and mainly because they can as their customers are usually after a certain level of service and support that is all to uncomman in the typical audio business.

When you show off your gear do you brag about how much you got off of MSRP or do you REALLY showoff your system?

I would hazard a guess that most of the folks who frequent this board will show off their system for the wow factor rather than the $$ factor. In passing I'm sure they'll mention they got x% off but I doubt that will make much difference when they are showing off their systems while watching LoTR.

 

[Mike OConnell]

Shane,

The real question here is not whether the salesman is losing a sale, it is how many customers fold when the salesman won't budge and will pay full retail?

The best response to a salesman who will not budge or won't meet the price your willing to pay is to hand them a business card with the maximum amount your willing to pay written on the back and tell them that you are going to look at other speakers and if he changes his mind to call you. However, if you say this, you should do just that - if you don't your word is no better than his. Never walk out without leaving the salesman a way to contact you. This will tell him (or her) that you are truly interested in their product, but not willing to pay the price that they have indicated.

If you are willing to walk and go to a different store or speaker line then you have the upper hand in any possible negotiations. If you are not willing to walk and stuck on just one speaker line, then you are at the mercy of the salesman and believe me, they can usually tell.

Mike

 

[Craig Morris]

I have run into this before... and it drives me crazy. A few years ago, a friend put together a group purchase for Paradigm. We called several dealers, all within 2 hours drive, and asked for their best price. One dealer told the regional rep, and the regional rep threatened to pull the Paradigm line from any store who sold to us as a group.

During the same deal, I bought Rotel's first surround receiver (the 965). The dealer wrote up a bogus trade-in receipt because the Rotel rep checks his receipts to see how much he sells Rotel product for. If he goes too low... bye bye Rotel.

I think this practice is absurd. Once a dealer purchases equipment, he should be able to sell it for as little profit as he sees fit. Unfortunately, all is not fair and square in the audio retail world... I just don't get it. This type of artificial price maintenance should be illegal... in fact, I'm sure if I dug far enough into the Competition Act here in Canada, I would find that this kind of price 'fixing' is illegal.

 

[Daniel Martin]

Well let me throw another wrench into the equation...
I find it quite peculiar that Paradigm's speakers are sold in Canada for *about* the same US MSRP. It means that for some lucky individual, crossing the border provides an instant 30-40% discount.
When shopping for speakers, I did faced similar territory/Internet/phone rules. As a customer, I found this quite frustrating.
I was ready to buy a competing product when an opportunity to buy from Canada appeared. This made our purchase a no brainer. We saved over 1 000$ if memory serves, and got higher end speakers in the process.
There is no question in my mind that if local dealers were allowed/willing to compete and offered comparable price, they would have had my business.
As a more general point, the information age is slowly changing the audio/video food chain. Just look at the amount of knowledge (and non-knowledge ) being shared on boards like this one.
Outdated territorial restriction, no competing zone, no phone quotes... all this may go the way of the dinosaurs. Informed customers will know about prices, will know about margins and will know about a good deal. Locking them out is no longer an option.
Embrace change instead of fighting it.
D.
P.s. Hope this makes sense... I'm way overdue for some sleep

 

[Bill Lucas]

Shane,
You're right, custom is different. We are not in the black box business. When I spec a system and discuss it with a client I rarely (if ever) talk about specific brand names. They're buying an ATS system, not a Tag, Genelec, Stewart, Seleco, etc. system. And yes, if someone tries to get me to come down in price I do it one way and one way only, I lower the level of equipment (but I do draw a line in the sand at some point for performance' sake) or I eliminate rooms. No discounting, period.
If I were in retail I'd obviously have to look at my pricing model but even so I could still price a) with premium pricing and offer service and products that were exceptional, b) parity pricing with the industry and offer average service or c) be the low price leader and offer little to no service. To be the low price leader these days I'd have to adopt an Internet sales model and it just isn't me. It's too impersonal AND it does make it more difficult for the traditional businesses to survive. I don't know about you guys, but I've enjoyed being able to demo equipment in the past and I would be willing to pay more to have that option.
My reference to $$ versus use was because there seems to be a ton of people that are more worried about the price than what they actually purchased. This forum is littered with "did I get a good deal on X" posts or "what's the best price on X". JMHO, of course.

 

[Matt Jesty]

Explain to me the logic in turning down a sale as opposed to taking the guys money and moving on with some profit. I'm not saying you should take a bath on the sale but some $$ is better than no money to me.
++++++++++++++++++++++++++++++++++++++++++++++++++ ++++++++
when a certain amount of work goes into staffing, stocking, overhead of the building, wharehousing, etc...oftentimes a dealer will feel he should hold that piece of gear for a customer who will pay him enough to keep him in buisness...
the "hears my card" strategy proposed by another member here is a good one to use in the ma & pa shops 'cause often they will forgo the big picture when they need to eat or pay a bill ,because they have either already paid for the piece of gear your trying to purchase or have yet to pay the mnfgr for it.....the commission structure in some stores is based on margin and the drop in commision is significant enough that the salesman often feels like he isn't being paid adequately for his services (yes, I know many of you wouldn't have any use for his services anyway, but...)...Keep in mind that greymarketeers often go into ma& pa's in the slow seasons and work out a BULK buy for upfront cash that the dealer will get to use to pay bills right away while not having to pay mnfgrs for 3 or 4 months. Often the greymarketeering buyer pays LESS than what the legitimate dealer pays just because times are tough and he has cash.....so ,moral is deal with a desperate dealer and he will call you back!

 

[Rutledge]

What my dealer has done in the past is write up the sales receipt at full MSRP plus sales tax. This helps in case of theft or loss.

But I get my normal 15-20% discount. I have dealt with them for 23 years though.

I think Paradigm sales practice is borderline anti trust.

Does this practice have anything to do with co-op advertising?

I know manufacturer's have a low book that they will allow dealer's to advertise their products for.

 

[Rutledge]

Shane,

It may very well be that those are is only pair of Paradigms and it will take him 6 weeks to get another pair.
During that time he knows somebody will come in and pay full MSRP.
What would you do?
I would let him walk.

 

[James Zos]

I don't buy the whole "I provide good service and that justifies my high prices" brick-and-mortar store argument.
My local "high end" audio dealer, in fact the ONLY "high end" dealer in my area, LIED to me REPEATEDLY about things that were easily verifiable on the internet.
This shop, like a lot of such shops, is used to dealing with wealthy customers who don't know the first thing about home theater. They make easy marks.
In the end I bought most of my gear on the net - with zero hassles, at a savings of several hundred dollars off what I would have paid for the "high end service" at the brick-and-mortar store.
As much as I like Paradigm, the fact that I would have to buy from their sleazy dealer in my area, at the prices he wants to charge, means I'll never buy Paradigm.

 

[dpippel]

What's impersonal is walking into a "high end" audio dealer's showroom and being treated with indifference, disdain or even outright contempt because you're not going to spend 5 figures on gear. This has happened to me time and again. Is this the service that I'm paying extra for?

On the other hand, the two big audio purchasing experiences I've had with online manufacturers this year - AV123 (Rocket speakers) and SVS Subwoofers - have been nothing but a complete pleasure. These two companies DEFINE the words "customer service", and their products compete with anything in their price range that's on the market today. The brick and mortar store that lost their possible Rotel and B&W sale from me should take a few lessons from these people.

If this business model is successful, and I think it will be, traditional businesses will need to adapt or die. That's capitalism. I have a feeling that the days of lousy treatment at snotty high-end audio stores are numbered, and good riddance.

 

[TonyTone]

Here's a question to all of you bargain hunters. When you show off your gear do you brag about how much you got off of MSRP or do you REALLY showoff your system? To me, my system is about what it does, not what it cost. It would seem that there are many people who put cost ahead of performance and enjoyment. I'm not saying that they don't enjoy what they have but to them the chase is more important than the end result.

Sorta brings to mind this scenario: let's say a lady is wearing a diamond ring that was originally priced at $10K but was bought at $5K (somewhat improbable but provided for the sake of argument)--is she gonna show it off to others as a $5K ring or a $10K one?

 

[Susana Anderton]

My reference to $$ versus use was because there seems to be a ton of people that are more worried about the price than what they actually purchased. This forum is littered with "did I get a good deal on X" posts or "what's the best price on X". JMHO, of course.

We all don't own high-priced custom audio businesses. Some of us must watch every penny to get the most with our limited resources, so for some of us, price IS #1. If it weren't then all the Paradigm customers would all get Studio 100's instead of some getting Monitor 7's. Sometimes our preocupation with "did I get a good price" may mean the difference between being able to afford a pair of mains, or a pair of mains AND a center.

 

[TheLongshot]

Here's a question to all of you bargain hunters. When you show off your gear do you brag about how much you got off of MSRP or do you REALLY showoff your system? To me, my system is about what it does, not what it cost. It would seem that there are many people who put cost ahead of performance and enjoyment. I'm not saying that they don't enjoy what they have but to them the chase is more important than the end result. Perhaps that's why upgradeitis seems to be so prevalent.

I find the best prices so that I can build the best system I can for the amount of money I am able to spend on it. Getting the best price possible is nessicary to get the best system possible, at least for me.

I think I met you Bill at Philip Hamm's gathering and if so, I think you said yourself that your business model isn't for us. You go for people who want the total solution, and not us hobbyists who build our systems peacemeal. It is why I don't think you should get too upset about this thread, since it really has nothing to do with your business model.

Jason

 

[Dan Hine]

Well, I know this thread started about Paradigm, but let me mention a few others.

In my dealings with Polk I came across their MRP (Minimum Retail Price). If you sold Polk products for less then the MRP they could (and did) revoke your dealership. Some people have scoffed at the "dedication to the dealer." Well, it's true. If I, as a small business owner, am having a hard time selling Polk because a chain retailer in town can undercut my prices by $100-$200 then that is no good for me. I provide better service than that chain store but that won't matter if I go out of business.

Another company that enforces its prices is Adire Audio. I absolutely CANNOT sell their items for less then they or any other Adire dealer does. Fortunately, Adire products are already a tremendous value so their prices are more than justified. Add to that the fact that I could still charge as much as I wanted for my cabinet building.

If you don't like the way a particular company handles their pricing then that is your decision. I have no problems with that. But as Bill and a few others have mentioned, with a quality company you are not paying only for the product. You are also paying for:

1) the service that comes from a good company (in some cases as long as you own the item)

2)for their continued training as new technology comes out

3)for well set up and calibrated demo rooms to view/listen to the gear you are considering to purchase

4)for a good relationship with a quality dealer that cares about you, your system, your enjoyment, and your continued business.


I never focused too much on how much I was paying as long as I felt I was getting my moneys worth. If I went into a store and was treated poorly and who's policies were ridiculous then I wouldn't care how cheap the product was, I wouldn't buy it. But if I went to a store that took time to understand what my goals were, what my budget was, my tastes, etc... then I would gladly buy from them, even if they were more expensive. To each their own I suppose.


Regards,

Dan Hine

 

[Mark Zimmer]

There are a couple of different concepts rolling around here, and legally they're not the same beast at all.

If Paradigm is dictating the prices at which dealers (not owned by Paradigm) can sell their product at retail, that's price fixing, and it's illegal in the US (though since the Chicago School of Economics took over the court system, good luck enforcing such a claim).

But if the dealer just says, this is the MSRP and I'm not budging, that's perfectly legal. This is just how he's dealing with the competitive situation; if he can make it stick, good for him, and if not, he'll be out of business shortly.

Basically, the issue is whether there is action taken to make someone else charge a certain price (note the word used is 'make', not 'encourage', as in MSRP) for something. But a unilateral refusal to discount is perfectly acceptable.

 

[Bill Lucas]

Jason,
Yes we did meet at Phils home. I enjoyed meeting the guys and hope I'm invited to future get togethers.
You are correct about my business model. I'm not upset about this thread one bit. I'm simply trying to present a viewpoint from the other side. I understand the consumers views but when I see that people are equating margin with net profit I cringe. It does bother me to some degree when Susana insinuates that owners make too much money. Small business owners take huge risks. If they are successful shouldn't they be rewarded for the risk they took?
Please note that I've stated several times in this thread that no manufacturer tells me at what price I must sell their product. This fact has been glossed over several times and there are still cries of price fixing going on in this thread. Mark Zimmer has accurately summed it up.
Tonytone also hit the nail on the head. How many bargain hunters will state that they have a $2500 system when the list prices added up to $4000? I suspect very few. The likely answer is "I got $4000 worth of equipment for $2500!" Well, is it $4000 worth of equipment or isn't it? If it is after you bought it then why wasn't it before you bought it?
To me it's about the movies. I want a system that will faithfully reproduce films and soundtracks. That's it. No compromises. I've never walked away from a product that I wanted because I didn't get a discount. If I got a discount it was a bonus but I would not let that item keep me from my goal.

 

[ChrisWiggles]

Dealers can be quite frustrating. For instance, here i am looking between the paradigm minis and the 5's, and the 5's being considerably more in price. Apparently, the dealer hasn't ever sold 5's, so he couldn't(or wouldn't) tell me the price of the 5s. I asked if there would be any way that I could listen to them, because the 5s are perfect for my needs, but the 7s are too expensive, and the 3s, are as i've read, a little strange. He all but refused to let me hear the 5s. "We've never even possessed a pair of 5s, nobody ever sells them, and only if the Paradigm rep was driving around with a pair of 5s would you be able to hear them." ??? How about THAT for all but refusing even to try to sell me the 5s. Not even an "i can order in a pair for you to compare, or, sure I'll try to contact the rep to see if we can get in a pair of fives." Nothing. And I'm on a long time frame here, so it's no problem to wait 6 weeks for them to arrive. But nope. Nothing. I'd hate to have to take my business to canada where i can listen and get a great bargain. And here I was willing to pay full retail because of a good trade-in policy and great service right down the street.:frowning: Maybe I'll bring my dad with me, and he'll just tell them to order in a pair. They seem to listen to the middle-aged folks rather than us young guys. My money is just as valuable as anyone elses. It's almost like they make it hard for you to give them your money, strange.