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Reseller Margins

post #1 of 27
Thread Starter 
Hi Everyone,

This is my first post. I'm doing research on the headphone market. Anyone know how much margin does resellers (i.e. Amazon) or smaller online stores make selling headphones?

Any help is appreciated! I need your expertise!
post #2 of 27
If you mean retailers (i.e. people who aren't the manufacturer), it's about a 100% markup. I remember someone posting about how the HD800 cost his store just $700 each.
post #3 of 27
Thread Starter 
wow, that's a huge margin. Wonder why there isn't more Large retailers out there with cheap prices.
post #4 of 27
Because Senne has strict rules about the sale prices. If you obey it, you will not get the authority.
Don't worry about the huge margin, there is huge margins everywhere. Market will determine the price.
post #5 of 27
A lot of it depends on the contract between the manufacturer and the seller.

Some contracts spell out a "minimum advertised price," where the seller cannot advertise a price below list, but can sell for less than that. This is why you'll see those "add to cart to see discount" offers at various sites.

Other contracts (like those for Grado and the HD-800) forbids the discounting of headphones and enforce sales territories and regions.

And other manufacturers don't care what a retailer's margin is as long as they buy units from the factory.

So there isn't an easy answer to this question. It depends a lot on the contract between the manufacturer and retailer. You can find some headphones with very thin margins and others with an enforced MSRP.
post #6 of 27
Please don't tell me only cost $350 to make HD800 next......
post #7 of 27
Darn, that's a lot of margin. Good to know...
post #8 of 27
Originally Posted by Seamaster View Post
Please don't tell me only cost $350 to make HD800 next......
$350? In materials and manufacturing, I'm sure that it was much less. R&D is another story, though.
post #9 of 27
Originally Posted by logwed View Post
$350? In materials and manufacturing, I'm sure that it was much less. R&D is another story, though.
You're probably right.

And I don't think anyone wants to know how little other headphones cost, either.

It isn't so much how much the parts cost, but how much it costs to engineer something in the first place. Amortizing that can be rather pricey.

Which is why something like the HD-600 stays in production as long as it has. It took years (most likely) to recoup the total cost in enginerimg and tooling. That it still sells after that is where Sennheiser keeps its head above water.
post #10 of 27
A lot of headphone companies don't sell directly and so, need a wide range of resellers and sufficient incentive for the resellers so that headphone companies to be able to sell their goods widely.
post #11 of 27
Sennheiser had a team of 12 people constantly working only on the HD800. Adding additional cost for the labs, devices, materials... You end up way beyond 3,000,000€. They sold 5000 pieces till now, let's say they want ROI before 2012 and sell 15000 pieces, R&D costs 200€ each.
Another reason why most so-called Hifi-manufacturers don't have serious R&D - only voodoo, nice casings and marketing...
post #12 of 27
Is it correct that Sennheiser and Grado enforce the selling price so that small companies with good customer service will have a fair shot at selling them? Because otherwise, as someone else said, amazon and others woud sell them for way less and small vendors with a better buying experience wouldn't be able to carry them.

I bet the HD800 only costs 10-20 $ to make. But R&D and tooling, advertising, networking, etc must cost a lot.
post #13 of 27
I think 10-20 is underestimating it a bit. I'll say under 100, or maybe 50.
post #14 of 27
I forgot to write that this team worked for 2 years on it (12 people x 2 years x 100,000€/year wage = 2.4 mio. €)

We had this discussion before regarding the HD800. Final assembly takes 45min, that are about 50-150€ alone.
post #15 of 27
I wouldn't be surprised if the HD800 cost around $60 in materials to make but labor etc costs a LOT. Employees etc need to get paid and imagine the team who had to design the HD800, what they wanted it to sound like, look like, what audience to target etc, fun fun
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