Want to know a typical audio equipment sales margin?

Discussion in 'Playback Devices' started by Lee Scoggins, Jul 31, 2003.

  1. Lee Scoggins

    Lee Scoggins Producer

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    Then check here for a clue from Tag McLaren Audio which is ceasing business:

    http://www.highfidelityreview.com/ne...umber=18448214

    An improved sales margin of 41.5% will be applied...

    I worked about ten years ago at a prominent high end salon and we typically saw audio margins around 40% and around 20%-30% on video equipment.

    These margins are not uncommon on such electronic products but I thought people might want to know.

    [​IMG]
     
  2. John Kotches

    John Kotches Cinematographer

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    Lee,

    And out of that margin the dealer must pay for:
    • A showroom
    • All building expenses (ie utilities)
    • A staff
    • Himself

    and lots of other items I haven't even bothered to list here.

    Yes, that's a "high" margin -- except that there's substantial overhead.

    You're looking at the Gross profit at a transaction level, what do you suppose the retailer's Net profit is from that transaction? 5%? That could easily be since $4k and up processors don't exactly fly off the shelves.

    Regards,
     
  3. Lee Scoggins

    Lee Scoggins Producer

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  4. John Kotches

    John Kotches Cinematographer

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    Lee,

    Your subject and the post had a negative tone to it, whether you choose to believe so or not.


     
  5. Dustin_Taylor

    Dustin_Taylor Stunt Coordinator

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    40% margin for a B&M sounds about right to me. I know a person who runs an audio store and he certainly isn't rich, as his overhead eats most of his gross.

    As for CD's, I have much less of sympathy when it comes to paying 15-20 dollars for a CD. I agree, they are a horrible value for what you get. A DVD costs about the same, and for my money, they are a very good value. A 2-3hr movie, with lots of extra's usually makes for a good deal even if the movie isn't great. I can't say the same for a cd.

    I purchase my music these days on DVD-Audio and SACD. I'm planning on getting an iPod and using iTunes for just casual stuff. I hope Apple expands their catalog.

    DT
     
  6. Lee Scoggins

    Lee Scoggins Producer

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  7. Lee Scoggins

    Lee Scoggins Producer

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  8. RobWil

    RobWil Supporting Actor

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  9. Chu Gai

    Chu Gai Lead Actor

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    I liked hearing the information. Baby formulas from Similac and others have a profit margin to the manufacturer of over 90%, those cereal bars are around 40% or so. Interestingly McDonalds come close to breaking even (very slight profit) on their food. The profits are in the drinks.
    Yes margins can be tight especially in a difficult economy. 'Course the dealers can always sell wires. Now there's profits!
    Now scary would be if ML and TM merged.
     
  10. Lee Scoggins

    Lee Scoggins Producer

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  11. RobWil

    RobWil Supporting Actor

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    I'll tell you where the profits are......BEER!
    These bars and restaurants around here buy local microbrew in kegs. Their cost approx .60 a pint and sell for $4.00 -$4.75 a pint. What's that??? 700% markup?!?!
    Then they pay the waitresses minimum wage and expect us to make up the difference in tips so we end up paying $5-$6 a pint.....sheesh! [​IMG]
     
  12. CurtisC

    CurtisC Second Unit

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    Thanks for the info Lee,just something to think about.I didnt take it as a slam or sob story,just info.
     
  13. Chu Gai

    Chu Gai Lead Actor

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    I also didn't take it as a chop, just some food for digestion. It's good to know how industries operate and hopefully it allows for the consumer to do some knowledgeable bargaining. Kind of like knowing what a car dealer invoice, kickbacks, incentives are. I like the playing field leveled a bit.
     
  14. Kevin C Brown

    Kevin C Brown Producer

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    Coincidentally, I heard last night at a hockey game (!) that the difference in cost to the manufacturer vs what a unit sells for, is on the order of 2 to 3x. I can believe that too, because I heard once that the typical markup for diamonds (and jewelry) was 5x!

    40% seems about right, in that when I walk in the door to a retail place, I almost expect to be able to get 20% off without trying very hard.

    But I also have a suspicion that a higher retial price means more mark up too. I have heard of some very good deals for Lexicon's, and another data point is Revel F30 speakers that list for $3500 going for $2500 brand new.

    But I bet Frys/Best Buy/whatever actually *don't* make much money on those $99 Pioneer, Sony, & Panasonic DVD players...

    Pisses me off all the more when a dealer won't budge from the retail price. [​IMG]
     
  15. Lee Scoggins

    Lee Scoggins Producer

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  16. Cliff Olson

    Cliff Olson Stunt Coordinator

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    Thanks for the post, Lee. I like to hear about this kind of stuff. The more we know... And BTW, I'm having a great day [​IMG]
     
  17. Bill Will

    Bill Will Screenwriter

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    Lee, nice post it's always nice to know the markup on things. As for myself I was in the grocery business for years so don't get me started on profits & markeup's because the supermarket business is the REAL whore business [​IMG]
     
  18. Chu Gai

    Chu Gai Lead Actor

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  19. Lewis Besze

    Lewis Besze Producer

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  20. JeremyFr

    JeremyFr Supporting Actor

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    I can definately vouch for the high margin, when I purchased my gear I went through a friend who worked for Good Guys at anyrate he owed me a favor so he got all my stuff at store cost. Needless to say I got a Yamaha RX-V730 which at the time retailed for 599.99 for 317.00, and my Energy Take 5+1's which retailed for around 699.99 for 297.00, and lets not get into what I got my cabling for through him[​IMG] So I can definatelly attest to there being high margin, at the time I could have got an RX-V1 for $800 and a RX-Z1 for not much more it was insane. I wish he still worked there (no I'm not why he's no longer there he just moved on to better things) so I could get my Energy Connosiours.[​IMG]
     

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