[LawnGnome]

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Originally Posted by markl /img/forum/go_quote.gif With all due respect IpodPJ, why is it seemingly every single youngster who posts here labors under the idea that a product's cost is simply the cost of materials to build it? What about paying all your employees? What about paying for all the equipment? What about paying for your facilities? What about paying for product development? What about the cost of taking it to market? What about advertising costs? And on and on... You need to know that standard industry practice when you buy any component, is that the distributor is taking roughly 100% margin on everything you buy. If you buy a $1000 amp, generally speaking it cost the distributor $500 to buy it. A rip-off? Well, what about the distributors employees, overhead, facilities, etc.? You have to pay for all that stuff and it is figured into the cost of everything you buy. If you were a business and you charged materials cost plus 10% on everything you sold, gues what, you'd be bankrupt almost immediately. VD has distributors, they can't undercut, so if we make some logical assumptions, they set their own direct list price at double the cost of the distributor's wholesale cost. So when they have a half-off sale, they are likely selling at roughly their distributor's cost. But why would they do that? To prove their products cost much less than they sell for? No! It's called *marketing* and confidence in what you sell. It's called a "loss leader". Some VD noob decides to take a chance on one of their cables now that it's half off. He gets it home, flips out and loves it, and guess what-- he goes back to buy a bunch more after the sale is over. Now he's a lifetime VD buyer, upgrading with every revision. And you think you'd call it "great customer service" when VD offers you FULL TRADE-IN VALUE on every cable of theirs you buy from them if you want to upgrade in the future. What a deal! Why aren't you applauding that? Who else does something like that? But why do they do it? Marketing. rather than have their customers go out and sell their old VD cord on Audiogon at a loss, give them full retail value so they are compelled to come back to VD and stay in the VD family. Smart, smart, smart.... When you go to the grocercy store and see "buy one box of Cheerios, get one free", where's your outrage at General Mills? After all, they've been "ripping you off" for each single box you bought before the sale...

You didn't understand his point at all.

Also, research and development are next to nil on these things. Since they often just buy from a manufacturer and put their logo on it.

If you think these companies have facilities to actually produce their own cables, especially with their claims of how they are special made, your delusional.

 

[markl]

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If you think these companies have facilities to actually produce their own cables, especially with their claims of how they are special made, your delusional.

It's amazing how almost everything you type is wrong. I half suspect you are a hoax.

 

[markl]

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Mark dealer profits are far less than 50%, usually in the range of 20-30, also consider that they are selling online, not by dealers,

That may be your particular arrangement with your people, but I've been told time and time again by people in the business, mark up is typically 100%.

And VD sell both on-line and through dealers, here are their dealers:

https://www.virtualdynamics.ca/content.php?id=131

 

[LawnGnome]

Quote:

Originally Posted by markl /img/forum/go_quote.gif That may be your particular arrangement with your people, but I've been told time and time again by people in the business, mark up is typically 100%. And VD sell both on-line and through dealers, here are their dealers: https://www.virtualdynamics.ca/content.php?id=131

50% dealer profit IS a 100% markup.

 

[philodox]

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Originally Posted by LawnGnome /img/forum/go_quote.gif 50% dealer profit IS a 100% markup.

Did you read what Sovkiller wrote? He is suggesting that it is not 50% profit and is more like 20-30%. Reading comprehension is just as important as basic math.

 

[viggen]

Cables are generally priced the same as accessories in dealers, 100% mark up.

 

[IPodPJ]

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Originally Posted by vcoheda /img/forum/go_quote.gif if you're not acting like a know it all, then i guess you are just being a **** - no "offense" though. for every product - source, amp, phones, cables -, some people will say it is not worth the price, no matter how much it is. i'm sure some people think the odins are worth their price or the VD cords. would i personally spend a few thousand on a cable. no. but that's because it doesn't fit in my budget. if i had matching components at that price, i may. can i categorically state that expensive cables are not worth it. no. because i haven't heard them.

Agreed. And I never said that cables weren't "worth" their asking price to many rich consumers out there. Obviously, worth is a relative term and that extra 0.0001% of sonic difference may be worth the extra $13,000 to those who have the budget to dump that kind of money into a hobby. What I said is that Virtual Dynamics is a fraud in my opinion based on their sales verbage. I never said their cables were garbage.

Like someone mentioned, there are more electronics that go into a $200 cell phone than high-end audio components.

 

[Sovkiller]

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That may be your particular arrangement with your people, but I've been told time and time again by people in the business, mark up is typically 100%. And VD sell both on-line and through dealers, here are their dealers: https://www.virtualdynamics.ca/content.php?id=131

I do not know of any item in high-end audio that can give you one dollar per dollar invested, unless gotten in special sales or arrangement, factory closings, etc...sorry but that is not true at all...not sure who told you that, but whomever was, was bluffing big time, not even the big stores...get that much...about the dealers, I know they sell also by dealers, but we were talking of the online prices, I have no clue how much a dealer is willing to make, and maybe their prices are a little lower, see the case of NSL and Edition 9, they were willing to make only a few bux on the UE9, just to promote other items...

 

[yotacowboy]

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Originally Posted by Sovkiller /img/forum/go_quote.gif I do not know of any item in high-end audio that can give you one dollar per dollar invested, unless gotten in special sales or arrangement, factory closings, etc...sorry but that is not true at all...not sure who told you that, but whomever was, was bluffing big time, not even the big stores...get that much...about the dealers, I know they sell also by dealers, but we were talking of the online prices, I have no clue how much a dealer is willing to make, and maybe their prices are a little lower, see the case of NSL and Edition 9, they were willing to make only a few bux on the UE9, just to promote other items...

50 points on just about any electronic device is NORMAL. That is, 1 dollar at the wholesale = 2 dollars retail. You're not taking into consideration absolute price points, product sturtures and the much larger markets of low to mid level consumer electronics. your beloved edition 9's are a niche within a niche, and by no means representative of a standard retail consumer electronics pricing structure.

 

[Sovkiller]

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Originally Posted by yotacowboy /img/forum/go_quote.gif 50 points on just about any electronic device is NORMAL. That is, 1 dollar at the wholesale = 2 dollars retail. You're not taking into consideration absolute price points, product sturtures and the much larger markets of low to mid level consumer electronics. your beloved edition 9's are a niche within a niche, and by no means representative of a standard retail consumer electronics pricing structure.

Did you read my post completelly, before jumping and posting, I wrote high- end audio, not general electronic devices, a shaver maybe can give you 1 dollar per dollar, a vacum cleaner maybe, a toaster, but high-end audio markup is not that high, and if you want to beleive so, that is Ok with me, and so be it...But I know a few store owners, and a few guys in other stores of high end audio, non of them get that much...I'm 100% convinced of that, believe what you want...man...

 

[yotacowboy]

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Originally Posted by Sovkiller /img/forum/go_quote.gif Did you read my post completelly, before jumping and posting, I wrote high- end audio, not general electronic devices, a shaver maybe can give you 1 dollar per dollar, a vacum cleaner maybe, a toaster, but high-end audio markup is not that high, and if you want to beleive so, that is Ok with me, and so be it...But I know a few store owners, and a few guys in other stores of high end audio, non of them get that much...I'm 100% convinced of that, believe what you want...man...

Nor am I speaking of electric razors. 20-30 points on a $5000 CDP is high in some shops. 50 points on a $10,000 CDP is low for others. There is no absolute, but 50 points is a typical starting point for establishing a manufacturer's suggested markup. Markups have more to do with volume, overhead and pricing structures than whether a specific manufacturer is scamming anyone because copper or a specific plug (by your estimation) is so cheap.

 

[IPodPJ]

Quote:

Originally Posted by markl /img/forum/go_quote.gif With all due respect IpodPJ, why is it seemingly every single youngster who posts here labors under the idea that a product's cost is simply the cost of materials to build it? What about paying all your employees? What about paying for all the equipment? What about paying for your facilities? What about paying for product development? What about the cost of taking it to market? What about advertising costs? And on and on...

Mark, you know I respect you and your opinions. We have conversed on a few threads already. But I have to disagree with you here, and it isn't a matter of being a "youngster" (although I wish I still felt like one). I've been in business for myself for some time now (and in the past with a partner) so I know all about the operational expenses of a business.

The fact is that no amount of overhead (unless you do your manufacturing in the Taj Mahal) will ever justify a $13,000 cable. It is purely a boutique item. If what you said were true, why isn't Monster Cable charging several thousand per meter?

Quote:

You need to know that standard industry practice when you buy any component, is that the distributor is taking roughly 100% margin on everything you buy. If you buy a $1000 amp, generally speaking it cost the distributor $500 to buy it. A rip-off? Well, what about the distributors employees, overhead, facilities, etc.? You have to pay for all that stuff and it is figured into the cost of everything you buy.

Actually, I'd agree with you there. But in some cases, they might even be paying less. It came as a shock to me that when I received my Corda Opera it was only insured for 150 Euros. So either he is making a 400% - 500% markup on the amps or he just figures they rarely get lost in the mail so why spend the extra. Regardless, the amp is certainly worth the $1100 I paid for it. But I wasn't referring to "worth." Obviously these cables are worth $13,000 to the rich people who can afford them. (See my post prior to this one.)

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If you were a business and you charged materials cost plus 10% on everything you sold, gues what, you'd be bankrupt almost immediately.

In the printing business, often we can only make 10% on a job because the industry has been over run by gang-run shops who would sell their mothers for a nickel. It's sad really, because it has hurt the entire industry and consequently decreased our income.

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VD has distributors, they can't undercut, so if we make some logical assumptions, they set their own direct list price at double the cost of the distributor's wholesale cost. So when they have a half-off sale, they are likely selling at roughly their distributor's cost.

Okay. Could be. Then their distributors are getting the shaft, too, in my opinion. How many $13,000 cables do you think they are going to sell on an annual basis? I'd almost guarantee you that these companies don't pay VD upfront for their cables. Who can afford to let a $13,000 cable sit on a shelf?

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But why would they do that? To prove their products cost much less than they sell for? No! It's called *marketing* and confidence in what you sell. It's called a "loss leader". Some VD noob decides to take a chance on one of their cables now that it's half off. He gets it home, flips out and loves it, and guess what-- he goes back to buy a bunch more after the sale is over. Now he's a lifetime VD buyer, upgrading with every revision.

Yes, I suppose I could eventually find someone who would pay me $2,000 for my used toilet paper. But would that be ethical? No. It would be tantamount to fraud.

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And you think you'd call it "great customer service" when VD offers you FULL TRADE-IN VALUE on every cable of theirs you buy from them if you want to upgrade in the future. What a deal! Why aren't you applauding that? Who else does something like that? But why do they do it? Marketing. rather than have their customers go out and sell their old VD cord on Audiogon at a loss, give them full retail value so they are compelled to come back to VD and stay in the VD family. Smart, smart, smart....

Ok, good point. I guess I just don't see too many customers buying several $13,000 cables in their lifetime. But what do I know.

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When you go to the grocercy store and see "buy one box of Cheerios, get one free", where's your outrage at General Mills? After all, they've been "ripping you off" for each single box you bought before the sale...

I never said things like that don't bother me. The difference is that I need fiber in my diet. I don't need fiber optics.

 

[LawnGnome]

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Originally Posted by markl /img/forum/go_quote.gif It's amazing how almost everything you type is wrong. I half suspect you are a hoax.

So you actually beleive these companies have the facilities to actually produce wire, jacket it, produce the different connectors, and assemble it?

You are more naive that I thought. Do you even know what sort of financial start up that would require?

They buy the wire/cable and connectors from manufacturers, and pay to have their brand put on it.

There is NOTHING special about it at all.

I hope you realize that many fancy RCA connectors and the likes, you can actually find the unbranded versions from the manufacturers.

 

[Sovkiller]

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Originally Posted by yotacowboy /img/forum/go_quote.gif Nor am I speaking of electric razors. 20-30 points on a $5000 CDP is high in some shops. 50 points on a $10,000 CDP is low for others. There is no absolute, but 50 points is a typical starting point for establishing a manufacturer's suggested markup. Markups have more to do with volume, overhead and pricing structures than whether a specific manufacturer is scamming anyone because copper or a specific plug (by your estimation) is so cheap.

What kind of volume do you think a dealer can afford to order from a 10,000 or a 50,000 CDP player, maybe one or two, and period, what kind of discount they can receive based on two units??? BTW high end audio usually do not have too middlemen involved in the process, and it is usually a manufacturer/dealer relationship and period...maybe a distributor if in another country, and that's it...

 

[IPodPJ]

What I find amazing is how many of these companies won't provide test specs of their cable. They all say "This one is better than that one" when what they mean to say is "this one colors the sound in a different way than that one." Show me some signal tests taken from the output jack of the source and then again at the end of the cable length. The company that yields nearly identical results from both tests is the one I'd buy from.

And if you think you're going to get higher accuracy from a boutique $13,000 cable than a well built, well shielded $100 cable from a reliable, honest company, you're fooling yourself. What you will get for $13,000 is different sonic coloration, though.

But hey, if Eric Estrada can sell you a piece of land on Mars, I'm sure Joe V.D. can convince you to buy a $13,000 cable.