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CanJam at RMAF October 2013 Impressions Thread - Page 15  

post #211 of 353
Quote:
Originally Posted by FraGGleR View Post
 

Margin for him.  As in the difference between what he pays Stax and what he charges customers.  He didn't say Stax wasn't making any money.

Ahh, ok. So I'm assuming he has to get them though staxusa.com or something like that. Now it makes sense. Personally I think staxusa taxes way too much for their warranties. I mean unless it has changed from when I last looked it was only a measly year. For the 1k they charge more for the 009, used to be 2k, I think I would rather take my chances with pricejapan considering both are new in box. Even warranty pushers like bestbuy, Wal-Mart and target don't skeez you that bad on a warranty and granted they are much bigger companies but still 1k for a 1 year warranty on only a 3k headphone just seems a bit on the high side to me.

post #212 of 353

Long ago, when I use to be in electronic sales we would regularly sell certain products at cost.  Why you ask?  Without going into the laws of economics, we sold things at cost because the MSRP was just about equal to our cost (before transportation and storage fees, which brought it up to exactly cost).  How we continued to make money was by selling other items (sometimes by the same manufacturer) that had tremendous mark-up.  I remember Monster cables would sell at like 10x cost (though this was almost 20 years ago).  Overall, the more a company spent on marketing (and creating a boutique image, say like Bose or Monster) the greater the markup.  Other items just had very little manufacturing costs (like less than a dollar) but could easily sell for $9.99 and be considered a reasonable cost by consumers.

 

I did find it curious of how little the mark-up may be on Audeze.  I always figured it was around 30%, a common markup for electronics.  Who knows what Audeze's costs are...

post #213 of 353
Quote:
Originally Posted by justin w. View Post
 

i end up w/ 17% overall. that doesnt include advertising, labor, fraud, demo units, shipping/insurance from manufacturer, accounting, etc...so probably around 8-12%

 

If this is true and not misleading, it certainly explains why high-end audio dealers are uninterested in headphones. No sane person could operate a storefront with these margins.

post #214 of 353
Quote:
Originally Posted by Greed View Post
 

 

And the fact that products bought from places like PJ don't have warranties and their return services aren't very customer friendly.

 

PS: I have used PJ for a few of my Japanese products so I definitely don't have an agenda. 

I asked about this in a different thread. PJ offers a 1 year warranty standard like everyone else. And it was reported that out of warranty repairs are

done through STAX. I fail to get how they're 'grey market.'

post #215 of 353
Quote:
Originally Posted by paradoxper View Post
 

I asked about this in a different thread. PJ offers a 1 year warranty standard like everyone else. And it was reported that out of warranty repairs are

done through STAX. I fail to get how they're 'grey market.'

 

Unless they changed their policies - last time I remember asking they told me they would only honor the warranty through the associated Japanese makers in Japan. Meaning if your STAX would ever need repairs you would have to deal with shipping back and forth. Technically you are correct, and I personally wouldn't consider PJ or the like "grey market" vendors, just wholesalers. There is still a warranty, but it just isn't very convenient. Luckily, I haven't had any trouble with any of the gear I've gotten off that site. 

post #216 of 353
Quote:
Originally Posted by Greed View Post
 

 

Unless they changed their policies - last time I remember asking they told me they would only honor the warranty through the associated Japanese makers in Japan. Meaning if your STAX would ever need repairs you would have to deal with shipping back and forth. Technically you are correct, and I personally wouldn't consider PJ or the like "grey market" vendors, just wholesalers. There is still a warranty, but it just isn't very convenient. Luckily, I haven't had any trouble with any of the gear I've gotten off that site. 

Not too long ago someone sent their PJ 009 back for repair in which they were in direct contact with STAX. I suppose there may be a convenience factor

if dealing with a US based repair, that is, if you can get ahold of them.

 

I get the 'grey market' because PJ isn't an authorized reseller, yet STAX still offered warranty/repair services. Confusing.


Edited by paradoxper - 10/23/13 at 1:36am
post #217 of 353
Quote:
Originally Posted by thune View Post

If this is true and not misleading, it certainly explains why high-end audio dealers are uninterested in headphones. No sane person could operate a storefront with these margins.

Video products work on an even slimmer margin. Sony standard line averages 10 gross points of profit at most retailers. Of course, that's why places like Circuit City went under. And yes, if retailers don't sell you a stand, cables and an extended warranty, they might as wel not bother with the TV.

High end Headphones are a different animal. They are still a relatively small niche with a cult following. That's the perfect recipe for online direct-to-consumer sales. Manufacturers tend to price themselves out of the option for retail. Bose, Beats, skullcandy etc go in with a retail strategy from day one...that's why Beats Solo has to be $199 rather than the $129 they ought to be. They are giving Best Buy etc a nice 40% margin to justify the shelf space. I'd wager Dre, Inc makes siginifcantly less per headphone than Best Buy, but they do well with the volume and corresponding economies of scale that come with that volume. Net result is that as consumers we get good value at the high end, while the retailer gets squeezed by the fact that the manufacturer didn't take into account the retailer's margin when the started out selling direct.

This is even more prevalent when it comes to headphone electronics...and even smaller and cult-ier niche.
post #218 of 353
Thread Starter 
Amazon, that doesn't have the storefront overhead, operates at around 4% profit. That's why we often find the best prices there.
post #219 of 353

The cost of doing business today is very high,. Many people forget these retailers are paying rent,utilities and Health Care benefits for their family. The cost is exceedingly high and the markups barely keep them floating. Thier will be less brick and mortar operations in the high end and more online selling. Even without the store they still have overhead cost and need to stock products. Much ff the inventory can sit around unsold  for a period of time.  I remember running my own practice in  Financial services and the expenses involved and my margins were higher on my products than what a dealer is making on selling headphones and the cost to do business was always going up and the margins stayed the same. Do the math and you can see why dealers need the margins to survive.

 

What many dont even realize what it cost to market the products is added into overheard and can be very expensive. I had marketing budgets every month in my practice  and it was not cheap.  Factor the overhead and marketing and benefits and you will see these guys are not getting rich.


Edited by Frank I - 10/23/13 at 6:26am
post #220 of 353
Thread Starter 
Quote:
Originally Posted by Frank I View Post

The cos tof doing business today is very high,. Many people forget these retailers ar spaying rent,utilities and Health Care benefits for their family. The cost is exceedingly high and the markups barely keep them floating. Thier will be les sbricj=k and mortar operations in the high end and more online selling. Even without the store they still have overhead cost and need to stock products. Much if the inventory can sit around unsold  for a period of time  I remember running my own practice in  Financial services and the expenses involved and my margins were higher on my products than what a dealer is making on selling headphones and the cost to do business was always going up and the margins stayed the same. Do the math and you can see why dealers need the margins to survive.

What many dint even realize what it cost to market the products is added into overheard and cna be very expensive. I had marketing budgets every month in my practice  and it was not cheap/.  Factor the overhead and marketing and benefits and you will see these guys are not getting rich.
Being a retailer, especially on a smaller scale, is extremely difficult. I feel for you guys!
post #221 of 353
Quote:
Originally Posted by ethan7000 View Post

Amazon, that doesn't have the storefront overhead, operates at around 4% profit. That's why we often find the best prices there.

 

Quote:
Originally Posted by ethan7000 View Post

Amazon, that doesn't have the storefront overhead, operates at around 4% profit. That's why we often find the best prices there.

Not even sure if Amazon making any money as a entity . 

post #222 of 353
Quote:
Originally Posted by Frank I View Post
 

The cost of doing business today is very high,. Many people forget these retailers are paying rent,utilities and Health Care benefits for their family. The cost is exceedingly high and the markups barely keep them floating. Thier will be less brick and mortar operations in the high end and more online selling. Even without the store they still have overhead cost and need to stock products. Much ff the inventory can sit around unsold  for a period of time.  I remember running my own practice in  Financial services and the expenses involved and my margins were higher on my products than what a dealer is making on selling headphones and the cost to do business was always going up and the margins stayed the same. Do the math and you can see why dealers need the margins to survive.

 

What many dont even realize what it cost to market the products is added into overheard and can be very expensive. I had marketing budgets every month in my practice  and it was not cheap.  Factor the overhead and marketing and benefits and you will see these guys are not getting rich.

Dont misunderstand me, I don't begrudge brick n mortar retailers their margin.  You're 100% correct about the costs involved.  I worked fir just such a company for 5 years i the early 90s just before he internet boom.  We averaged 36% gross profit on audio, 20% gross on video and about 50% on accessories.  Yet after expenses, the company averaged just 2% net profit.  Thats pretty slim.  

post #223 of 353
Is this not getting a little off topic? Any more reviews/previews from RMAF? Anyone listen to the Final Audio Pandora?
post #224 of 353

times have changed. in the 80´s and 90´s, the retailers made good Money and one person spent a lot of Money for good stuffs.

today, internet changed the game´s rules.

today we have the democratization of high-end

post #225 of 353
Quote:
Originally Posted by alota View Post

times have changed. in the 80´s and 90´s, the retailers made good Money and one person spent a lot of Money for good stuffs.
today, internet changed the game´s rules.
today we have the democratization of high-end

Perhaps. But the end result is that we have no place to go and listen to things before we buy them. So we read what others write and we look at the aesthetics but be rarely get to try before we buy...at least not in a setting conducive to critical decision making.
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