I am wondering - I have had many A/V stores quote prices anywhere from 100% of MSRP to 75% of MSRP. Why are some dealers able to sell almost everything they show at 80% of MSRP? I have walked into a few smallish stores and been quoted "20% off" on many brands of speakers and receivers without quibble. While others won't sell for much if anything off of MSRP?

I understand some dealers carry little to no inventory and some have lots of inventory they have to move. I'm very curious though....what is an average mark-up on speakers and receivers and the like? Does anyone know (pros? dealers?) what "in general" most A/V equipment costs dealers?

As a costom dealer 40% is the norm MSRP is the lowest price they can advertise.

You can't come up with a general formula really because it varies greatly with each line.

A VCR may have a Dealer cost of 75 and have a MSRP of 99 yet sell for 89. It's life. There can be more mark up in high end gear, but it's rarely what one may think. I've known guys that will sell a $1000 piece for $1050. I'd rather not sell it. It's a liability and I want to provide service before during and after the sale. But the point is You can't gauge the markup and work your mojo from that point.
And then there are the items with the double markup... Right?

For lots of equipment it seems the markup is 80%, or gross margin of 40%. Meaning an item costing $1000 retail has a list of around $550 to the dealer.

Welcome to the world of retail business. It's this simple:

Buyers want to pay as little as possible, and sellers want to charge as much as possible.

Larry

Spiky,

Your math is wrong. A $1,000 product stated by a manufacturer as having a gross margin of 40 "points" (the term used in the A/V world) would cost the dealer $600.00. There are some brands/models that have this much, a few more, but many less.

There are also hidden costs and/or savings. Many products do not include shipping, nor shipping back if there is a failure during warranty, etc. Others pay for these if you order certain quantities or dollar values. Some offer early pay discounts, some don't. Jay is correct...it changes from model to model in many brands and, in many cases it isn't worth the risk in selling it at little or no profit.

randy

Randy:

A 600$ item selling for 1000$ has a markup of 66.7%.
(1000-600)/600. The 40% would be correct in the respect that 40% of the retail price is profit. Maybe the AV industry has a convoluted way of looking at things.

Bill,
Randy and I said gross margin of 40%, not markup. These are inverse terms, one from cost accounting, the other from financial accounting. Margin (profit) = revenue - cost.

Randy,
I was estimating/averaging, obviously my numbers add up to 45% margin. I think the largest number of mid-fi products will fall in this region. btw, the added costs is why I said "gross" margin. :)

Ya know, it's not just electronics with what most people consider "high markups." For instance, take a look at the shirt that you are wearing. If you paid retail, that shirt would have a 100% markup. Chances are that you are not going to try to bargain for a lower price on clothing. If you purchase an exclusive brand line from a retail company.. ie: metropolitan view at Bloomingdales, markup is somewhere around 175%. Everything has a markup, you just don't realize these things because you find them to be "small ticket" items. You are more willing to part $50 for a shirt than for a $5000 sound processor. Yet the markup on the shirt would be higher on the shirt.

John

John: you're alive! Excellent.

Meantime, there are only a couple of items in North America that are "dickerable": home theater equipment and automobiles. And everybody hates it because it is seen as a field of rip-offs. You've probably heard that one of the number-one stress inducers is buying a car (beaten out by listening to "hold" music on the phone).

In Mexico (and other countries, but I'm familiar with Mexico), you dicker for just about everything. And I'm talking about the towns and villages, not the tourist areas. It's a way of life, but so ingrained that by the time you're five you already know what the best price should be, so it really becomes a form of social engagement. Rock-solid prices in that country cause stress... ! ... Mike

Actually, you dicker in the tourist areas, too.

Spiky: Yeah, but in the tourist areas of Mexico they call that "sucker-dicker" because the prices are 400 to 500 percent higher than outside those places. Along the beaches of the resorts, everything is priced sky-high. Go a few miles away, and you begin to see the real prices. Not that I begrudge anyone getting well-paid. A Gringo needs to learn the system... ... Mike