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What's with Sennheiser's margins being so high?

post #1 of 7
Thread Starter 

Where I work I can see the margin of headphones that we carry.  I could get Sennheiser HD 598s the store gets them for ~55 dollars [They'd retail for 150-200 dollars] and the HD 558s are ~45 dollars [Retail for ~-$120-$180]

 

Even the margins on Beats aren't that high.  I was shocked by this.

post #2 of 7

Would that you could buy 598s in Australia for $150; they're more like $250 and up here. As for margins, that's been a source of controversy for years (there's one retailer here who constantly takes a dig at Sennheiser in his ads for their excessive pricing). Can we assume Sennheiser are just greedy, or are they really funnelling all the profits into orphaned children's homes around the world and we just haven't heard about it?


Edited by pp312 - 1/22/14 at 7:01pm
post #3 of 7
Need a little education , who keeps the profit ? The stores am guessing, right?
post #4 of 7

Sennheiser is a German company and in Germany engineering is a matter of national pride and that mentality I would say is certainly present within Sennheiser even at the upper management level.  The best engineers can command very high salaries so to keep good people a company must keep salaries competitive in the marketplace.  

 

Lets look at a couple of flagship headphones of the last 5 years.

 

1) The Grado PS1000.....an absolute turd of a headphone that from an engineers perspective should never have earned the flagship moniker, let alone commanded a near $2000 price tag.  It's the same basic design as the $60 SR60i, but with some metal on the outside of the cups, leather on the headband and bigger ear pads.  I'd be surprised if $10,000 was spent engineering it.

 

2) The Sennheiser HD800...considered by many to be the finest dynamic headphone ever, so far (Sony MDR-R10 gets that title from some, but it wasn't a production headphone, merely a limited edition engineering science project).  The level of performance the HD800 attains does not come by accident. Sennheiser probably spent in the tens of millions on R&D for this single product.  They most likely won't recoup all that money on HD800 sales, but the acknowledged bad-assedness has a trickle down effect to the more mainstream consumer products and boosts the companies sales overall.


Edited by cswann1 - 1/21/14 at 9:07pm
post #5 of 7
Thread Starter 

Not to answer my own question but I'm guessing Beats/Bose have so much advertising or since they know they will sell so they sell it to the stores for higher.

 

Profits go toward the store and to the person selling them (Primarily me)

 

Sort of wished we carried the really high end headphones so I could use my discount on them haha.

post #6 of 7
Very interesting and enlightening thread, Nick. I'm assuming you work for a larger retailer? If those are the types of prices Sennheiser (and I'm assuming other companies) have to charge for their products, I'm actually surprised they even bother at all since the manufacturer's margins seem to be so slim. Really, the thread title should be "What's with the retailer margins on Sennheisers being so high?"
Quote:
Originally Posted by TsukiNick View Post

Not to answer my own question but I'm guessing Beats/Bose have so much advertising or since they know they will sell so they sell it to the stores for higher.

Profits go toward the store and to the person selling them (Primarily me)

Sort of wished we carried the really high end headphones so I could use my discount on them haha.

I believe you're absolutely right about why the cost for Beats, Bose, etc. can be higher. There's less risk for retailers to carry their products since they're more likely to sell.
Seems to me to be one of the bigger hurdles for other headphone manufacturers getting attention and shelf space at retail.
post #7 of 7

The cost of running a retail operation is quite high. If you think consumer electronics have obscene markups, then you haven't seen the markups on fashion goods! People who buy designer clothes pay far more for the experience of going into the shop than they do for the goods. On the other hand, shops that sell iPods in the past (and probably at present), after everything is taken into account actually make a loss on them as their actual markup is quite low.

 

As people have already said in essence, the costs of R&D and setting up for a product are astronomical. It's quite amazing in many respects that Audeze and Hifiman can make headphones as good as their models are for what they cost. I can understand the grumbling about having to pay so much extra on top of the actual cost, but that is what it takes for it to be worthwhile for a company to invest in making such a product.

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