Thread: High End Audio Dealers

In a perfect world.... Every High End Audio dealer should expect every client to come in and spend six figures after a brief listen.

In reality, just like any other business, you get a few high end clients that will spend a ton of money over the years, some that may spend a little and some that will totally waste your time...

It takes all kinds. If you don't want to deal with the general public, make your business by appointment only and with a large deposit before entering the door LOL.

Common guys, high end audio carries one of the largest dealer markups out there. Car dealers work much harder for a measly few percentage points...

Originally Posted by Audiophilehi

I think most in market for high audio already know this. This is why I would never pay MSRP. I fully understand overhead and time spent with a customer is money but if a fair price is quoted then there is no reason to look elsewhere. IMHO

Notice I did not mention anything relating to price in my post above. I kept my comments relating to serving customers and investing dealer time into such activities only. Given the healthy profit margins, it should more than compensate for the law of averages when it comes to the retail business model.

Of course everyone always wants to pay the least amount possible. However, there were times when I paid full retail as there was no other option, there were times I got discounts and it was appreciated. There were times when I gladly paid full retail because I was given vertical trade up opportunities from my local dealer making upgrades a no brainer while getting full trade in value of what I paid for the last pair of speakers. That only becomes possible when working within the healthy profit margin... It was a win win for a guy who enjoyed the constant upgrades, myself and the guy who was glad to supply the thrill, my dealer...

At the end of the day, if you enjoy this hobby and want to upgrade often, do try to be fair to your local dealer and develop a relationship that would be fair and pleasant for both parties involved.

Originally Posted by TheOctopus

Common guys, high end audio carries one of the largest dealer markups out there. Car dealers work much harder for a measly few percentage points...

That is completely incorrect, a high margin product would run in the 300-900% region. Audio is nowhere near this.

Originally Posted by dznutz

That is completely incorrect, a high margin product would run in the 300-900% region. Audio is nowhere near this.

Why don't we also throw pharmaceuticals in there and evoke Martin Shkreli and his life saving drug that went from $13.50 to $750 overnight... Or 1400% profit margins of Big Pharma. He is in jail now, Big Pharma is not but thanks for pointing out that there are even higher margin products out there. Makes me feel better that speakers costing as much as a luxury automobile are ONLY marked up 50%....

Again, many things wrong with your statement, but more importantly… why are you here then? Stop paying these insane prices and move on to another hobby?

Originally Posted by dznutz

Again, many things wrong with your statement, but more importantly… why are you here then? Stop paying these insane prices and move on to another hobby?

Read my posts above where I mentioned paying full retail myself and building a relationship with dealers. Don’t tell me what to do and don’t be rude, you wouldn’t do it to my face. Ok MR. dizzy nuts?

Indeed very interesting and forthright article --thank you for posting Mike. But we all know this subject will never be resolved

--hell its been around since the 70's--anyone trust Shelley's?-- The paragraph on "Bad Eggs" yes they are in EVERY game in this world just we kick on with the rollers in the Hi Fi idiom however thankfully Cream rises to the top like your good self!

--the Good Hi End Guys will be rewarded -their passion will rub off on the buyer and hopeful synergy for both in an outcome will eventuate.

Cavet Emptor

From the Article--

“Consulting is the territory of a high-end audio dealer. Not us.” Yes Eric, you’re absolutely right."

Incidentally I notice your good friend Jay is offering a Consulting service on his site
Will you be schooling him in "pitfalls" with becoming a Hi End dealer?

Good listening,

Bruce

Originally Posted by Randy Myers

Audio, from my experience is in the 30% to 40% region. However the brick and mortar stores have a lot of overhead... rent/mortgage, staff, insurance, electric bills, etc., etc. Yes online has some of this, but it is a whole lot less since you are basically answering the phone or reply to e-mail. They do not have to maintain show rooms, staff to explain how it all works, etc.

Therefore I would say that audio does not have a high margin. It actually has a pretty minimal margin at best... and then when you start considering returns, etc. it is amazing that most B&M stores can survive... probably why there are a very small percentage now than there used to be.

I totally understand that presenting a nice experience for potential customers is an absolute must, but I can also get that sometimes it might be hard when some jackass took up several hours of your time and then went and purchased an item that you showed them from an online dealer, who had no skin in the game so to speak, just because the online dealer was willing to sell it for $5 less. And yes, this happens. Some customers are really that big of assholes.

So if a dealer is not the nicest, sometimes it could be because some ass wipe just screwed him. I know you don't deserve this, but dealers are also humans too.

I happen to know quite a few examples of AUDIO DEALERS that are doing quite well in life... There are smart business owners that know how to cater to and retain clients and sell them luxury items such as six figure speakers and mid to high five digit gear and then there are dealers that run their business into the ground, typically by not being able to deal with clients. Porsche, Ferrari, Lamborghini and boat purchases do not signal a poor audio dealer lifestyle to me.

Originally Posted by Mike

Some dealers had very successful businesses in a previous life.


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Repeated many times for different business / investment ventures…

How to make a small fortune in the hi-end audio business — start with a large one!

Originally Posted by Mike

Some dealers had very successful businesses in a previous life.


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Absolutely. I do know at least a few! But not one is running a high end audio business to lose money either. Veni, Vidi, Vici...

Nothing wrong with making a healthy profit and enjoying the fruits of your labor and passion Mike, it is the beauty of capitalism and no one can or should hold that against you.

People come into an audio salon with their wallets willingly after all.

Originally Posted by Randy Myers

No one said that an audio dealer can't do well. Where did you get that out of my post? I basically said that the mark up is not as high as some tend to think. And also, this day and age the only place you find high end audio dealers are large cities. Without those numbers of potential clients they really cannot survive. Back in the day there were dealers in many smaller mid-size towns, that is rare now. I have to drive to either LA or SF to find a dealer to actually look at or listen to gear.

So for many of us, there really is almost no opportunity to actually listen and compare without going on a road trip. Do you really think a dealer would consider an in home audition to a potential customer who lives 5 hours away? Unless they have a very established relationship there is no way that would even be considered.

High End Audio is a very niche market. Very small segment of the population has the disposable income or the understanding and passion for music and shiny audio gear to spend as much as a luxury automobile or even a starter home in some cases.

Profit margins are a very tricky concept. One can look at a supermarket and think man, they must have a crazy profit margin keeping a large retail store with all the shelves, refrigerators, lights, employees, stock, constant turnover and deliveries that need to be placed back on shelves... NOPE. Supermarkets are running at 3%... VOLUME business.

Car dealers are running at a slightly larger profit margin but they have to also keep a large retail building and a lot operating with all the staff and service, mechanics, sales, managers, etc... Also volume... They need to move a ton of cars each month.

Then there is audio. Audio does not sell in VOLUME unless perhaps you are running a company like SCHIIT AUDIO and selling components starting at $100 and up to a few grand. VOLUME again. SCHIIT AUDIO also sells direct and cut out the dealer all together.

A typical audio salon has to sell enough of the items to keep the lights on and stay above water at the end of the month. That is not difficult to achieve if you are selling speakers and components costing five digits and are enjoying a 40 to 50% markup.

I am very familiar with retail businesses as I have friends who have done many and have participated in many a business myself. Except that I focused on payment from health insurance companies and not the pocket of the customer. Very different model and I was told I would not succeed due to competition from large entities like hospital based systems. WRONG, I exceled at it. Smoked them all is a better word... All boils down to the same old concept, if you have a head on your shoulders and know how to use it, you will find a way to attract and retain a client so they come to you willingly and with a smile, because you have provided a great service.

Audio is a luxury product, it is a fun product, not some necessity item. It should be easy and fun to do business as generally people are looking to purchase a hobby related item, not a medical device or service when they are not feeling well....

If a dealer can't focus on the fact that every customer that walks through the door is a potential long term client and deserves a bit of your attention, make it by appointment only for clients that have already made purchases. I have friends who run their businesses by appointment only and are also making a living.

It is not rocket science... Some people just can't do business no matter what... Times are changing, concepts and business models change all the time. Adapt or fail... Online retail is much more popular these days for many reasons. Brick and mortar audio will go on but it is not surprising to see less and less of them around.

As long as those holding the most discretionary budget in their hands are buying speakers, amps, cables and power conditioners, those would largely be BABY BOOMERS and Gen X's, there is a good chance to succeed with the brick and mortar business model but I don't see that lasting forever. Things are changing fast and away from that model.

Now is the time like no other to be good to your elderly clients.


The obvious health toll notwithstanding, older Americans have largely prospered from government efforts to salve the economic pain Covid has caused. Boomers (born in 1946-64) accumulated more than $1.6 trillion in excess savings in the past two years, almost double what Generation X (born in 1965-80) put away, according to Federal Reserve data. Boomers also saw the biggest overall gain in wealth during the pandemic, with their combined wealth growing by $12.8 trillion, or about 23%. They edged out Generation X by about $100 billion, Fed figures show, but because that younger set has fewer people overall, it realized a larger per-capita wealth gain.



A Covid-induced boom in early retirements is exacerbating America’s inequalities, especially along this stretch of the Gulf Coast. Sarasota and its environs are seeing an influx of cash-rich baby boomers and work-from-home professionals.


That good fortune is evident in the St. Armands Circle shopping district in Sarasota, Fla., where visitors stroll past statues of Venus and Dionysus and lunch on Cuban sandwiches and sangria. The number of homes in the area selling for $3 million or more has shot up to 355 so far this year from a pre-pandemic 81 in 2019. And many of the buyers are of retirement age, says Drayton Saunders, president of Michael Saunders & Co., a real estate broker specializing in luxury properties.

Three strikes law? Or we’re way past that point?

What politics? It was a post about wealth

Originally Posted by Mike

I’ve had the pleasure of meeting some incredible people in this business. The folks on this forum, may only represent 5% of customers I’ve worked with (yes, it’s about 5%), but for the most part, all have been excellent and very professional.

The challenge for most dealers are not the genuine members here, it’s the time wasters. The guy who asks you for 35 quotes because he changes his mind like the wind and then buys nothing. The calls that start out, “uhhh….what’s your best price on a Hegel 390?” Or those who are not genuine. They call and talk like they are genuine and sincere, waste lots of your time talking about the same nonsense, “oh, so you would say that the Pass is the most natural sounding of the two amps, but what about how it does with strings?” Meanwhile, you’re thinking, “we’ve had this same conversation 900 times.” Then he buys nothing. Ever.

Don’t call from Canada to a US dealer and expect they will sell you anything or waste time.

Don’t call a dealer if you’re just looking for the best price. Most today won’t play that game. Work with your local dealer or one you trust and pay them for their expertise and time. Remember, this is a journey, not a sprint and building a long term relationship with a dealer is key.

Dealers love to work with people as consultants, not clerks. We love calls like “I’m downsizing my system and thinking about going with an integrated. What do you recommend?” We can then engage about their room, speakers, budget, etc. Much better than picking up the phone and the guy says “yeah, what’s your best price on a Hegel 390?”

Don’t block your number and call a dealer. We won’t answer. We know what you’re doing.

I could write a novel on the time wasters (NONE HERE). We had one guy who called and said “I have an Emotiva amp and if I bring it to your store and one of your amps beats it, I will buy it.” So, he brought it, we put it up against the 2160 and him and his buddy couldn’t believe how the Boulder crushed the Emotiva. He then reneged on buying it and left with his tail between the legs. I lost an hour and a half.

If you spend time with a dealer and they recommend a particular product, don’t call them back 3 months later and tell them you bought it from someone else thinking that it’s a win because all dealers are on the same team right? No. We aren’t.

Be honest, if you’re not buying and just want to listen, THAT’S OK!!! JUST TELL US!! Come on in, let’s have a coffee, listen and talk about music. We love the hobby too! Then if I need to attend to something else, I can hand you the iPad and you can keep rocking.

Don’t borrow something unless you’re 100% sincere in purchasing it. Too many times, it’s been a bored person who just wants to play. We have banned two people from the store for doing just this over and over and over again. One was a young man in Orlando who kept borrowing stuff, so he could act like Mr. Big Shot on the Audiogon forums and he had no intent on buying anything. The other was a friend of a dear friend of mine (who has passed away), that acted like he knew everything about audio because he was a roadie in the 70’s for some band. He lives here in Sarasota, borrowed so much stuff from us, I lost track and then one day, borrows and MSB DAC from us and then tried to buy it from another dealer in Texas. That dealer called me and right then, he was banned. He lost the ability to borrow anything else in the future.

As the folks who live here locally will tell you, I will happily loan anything to any of our customers - as long as they sincerely are interested in trying and maybe buying something. I’m willing to accept the opportunity cost (not having that product on the floor while someone else is using it) - if they are sincere. GOOD NEWS: MOST ARE SINCERE! Even if they don’t buy it, as long as they were sincere in their actions, I’m ok with it!

I won’t give you the hard sell, because these are big ticket items. In return, I want people to just be honest, from “not buying, just looking” to “maybe next year” to “I’m ready to buy now, just need to decide on A vs B.” We can handle the truth! Don’t get a dealers hopes up, waste their time, waste their time doing 97 quotes and then buy nothing.

It would shock people to realize how busy we are during the day. We aren’t sitting around listening. We are returning calls, emails, following up on orders, talking to manufacturers, meeting with customers, doing installs, doing marketing, dealing with problems/product issues and so much more. So for us, time is a precious commodity. We love to invest it with folks, but just let us know what your intentions are, even if they are subject to change.

Once again, the folks I’ve met and worked with on this forum have, for the most part, been exceptionally great and I would consider most of those and others to be friends. I really believe that most of the folks on this forum are the good guys and not the tire kickers/time wasters.

In closing, I love what I’m doing now. After 22 years, I was burned out in Large Enterprise IT Projects. The industry had gone from Mainframes to Client/Server to the Y2K craze to system integration to BW/BI to the cloud. I was exhausted. B2B is not as much fun as B2C. I’m staying super busy and having fun at it. I still love the hobby and enjoy meeting people and hearing about their successes every day.


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Great post! It lets us get a peek into your business, Mike. I have no idea. I can’t imagine loaning a gear that I don’t intend to buy. The hassle of the returns, or worse, what if I forget. Yes, my wife says I’m very forgetful.

Back in the day there were more dealers around my area and it was very common for a few to loan out the various preowned pieces for home auditions. Preowned gear was a big part of their business and the resale value was stronger on Mark Levinson, Krell, Audio Research, etc. There was always something to play with on the weekends and an occasional purchase as well of course.

Originally Posted by Randy Myers

Please do not go down the political road again. Really, this type of thread and you start moving it into politics... really?

Relax, you sound like you are about to have a coronary. There was nothing political about a post of baby boomers acquiring wealth through a strong market. It’s a fact and good for all that gained. More money to spend on hobbies in retirement

Originally Posted by Mike

...Be honest, if you’re not buying and just want to listen, THAT’S OK!!! JUST TELL US!! Come on in, let’s have a coffee, listen and talk about music. We love the hobby too! Then if I need to attend to something else, I can hand you the iPad and you can keep rocking...

Great post! this comment in particular would save a lot of awkwardness and potential resentment/bad vibes. When I first met a new dealer that opened two blocks from my office I made it clear on the first visit I wasn't a going to be his best customer. I let him know I loved the hobby and esp vinyl, we became fast friends from that point onward. I'm always welcome to sit and hear new set-ups and there's never an expectation he owes me his precious time; just do the decent thing and leave your listening session when his appointments do show up. In exchange I purchase as much new vinyl from him as I can and make every effort to do so.

Originally Posted by TheOctopus

Relax, you sound like you are about to have a coronary. There was nothing political about a post of baby boomers acquiring wealth through a strong market. It’s a fact and good for all that gained. More money to spend on hobbies in retirement

Have you moved back to the mother land?

High End Audio is a very niche market.

Why are you preaching to the choir Serge? You used to be a very cool guy that was prevalent with the times. What's changed???

Originally Posted by Mike

I’ve had the pleasure of meeting some incredible people in this business. The folks on this forum, may only represent 5% of customers I’ve worked with (yes, it’s about 5%), but for the most part, all have been excellent and very professional.

The challenge for most dealers are not the genuine members here, it’s the time wasters. The guy who asks you for 35 quotes because he changes his mind like the wind and then buys nothing. The calls that start out, “uhhh….what’s your best price on a Hegel 390?” Or those who are not genuine. They call and talk like they are genuine and sincere, waste lots of your time talking about the same nonsense, “oh, so you would say that the Pass is the most natural sounding of the two amps, but what about how it does with strings?” Meanwhile, you’re thinking, “we’ve had this same conversation 900 times.” Then he buys nothing. Ever.

Don’t call from Canada to a US dealer and expect they will sell you anything or waste time.

Don’t call a dealer if you’re just looking for the best price. Most today won’t play that game. Work with your local dealer or one you trust and pay them for their expertise and time. Remember, this is a journey, not a sprint and building a long term relationship with a dealer is key.

Dealers love to work with people as consultants, not clerks. We love calls like “I’m downsizing my system and thinking about going with an integrated. What do you recommend?” We can then engage about their room, speakers, budget, etc. Much better than picking up the phone and the guy says “yeah, what’s your best price on a Hegel 390?”

Don’t block your number and call a dealer. We won’t answer. We know what you’re doing.

I could write a novel on the time wasters (NONE HERE). We had one guy who called and said “I have an Emotiva amp and if I bring it to your store and one of your amps beats it, I will buy it.” So, he brought it, we put it up against the 2160 and him and his buddy couldn’t believe how the Boulder crushed the Emotiva. He then reneged on buying it and left with his tail between the legs. I lost an hour and a half.

If you spend time with a dealer and they recommend a particular product, don’t call them back 3 months later and tell them you bought it from someone else thinking that it’s a win because all dealers are on the same team right? No. We aren’t.

Be honest, if you’re not buying and just want to listen, THAT’S OK!!! JUST TELL US!! Come on in, let’s have a coffee, listen and talk about music. We love the hobby too! Then if I need to attend to something else, I can hand you the iPad and you can keep rocking.

Don’t borrow something unless you’re 100% sincere in purchasing it. Too many times, it’s been a bored person who just wants to play. We have banned two people from the store for doing just this over and over and over again. One was a young man in Orlando who kept borrowing stuff, so he could act like Mr. Big Shot on the Audiogon forums and he had no intent on buying anything. The other was a friend of a dear friend of mine (who has passed away), that acted like he knew everything about audio because he was a roadie in the 70’s for some band. He lives here in Sarasota, borrowed so much stuff from us, I lost track and then one day, borrows and MSB DAC from us and then tried to buy it from another dealer in Texas. That dealer called me and right then, he was banned. He lost the ability to borrow anything else in the future.

As the folks who live here locally will tell you, I will happily loan anything to any of our customers - as long as they sincerely are interested in trying and maybe buying something. I’m willing to accept the opportunity cost (not having that product on the floor while someone else is using it) - if they are sincere. GOOD NEWS: MOST ARE SINCERE! Even if they don’t buy it, as long as they were sincere in their actions, I’m ok with it!

I won’t give you the hard sell, because these are big ticket items. In return, I want people to just be honest, from “not buying, just looking” to “maybe next year” to “I’m ready to buy now, just need to decide on A vs B.” We can handle the truth! Don’t get a dealers hopes up, waste their time, waste their time doing 97 quotes and then buy nothing.

It would shock people to realize how busy we are during the day. We aren’t sitting around listening. We are returning calls, emails, following up on orders, talking to manufacturers, meeting with customers, doing installs, doing marketing, dealing with problems/product issues and so much more. So for us, time is a precious commodity. We love to invest it with folks, but just let us know what your intentions are, even if they are subject to change.

Once again, the folks I’ve met and worked with on this forum have, for the most part, been exceptionally great and I would consider most of those and others to be friends. I really believe that most of the folks on this forum are the good guys and not the tire kickers/time wasters.

In closing, I love what I’m doing now. After 22 years, I was burned out in Large Enterprise IT Projects. The industry had gone from Mainframes to Client/Server to the Y2K craze to system integration to BW/BI to the cloud. I was exhausted. B2B is not as much fun as B2C. I’m staying super busy and having fun at it. I still love the hobby and enjoy meeting people and hearing about their successes every day.


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Thank-you Mike. Not often someone delivers a rant in such a thoughtful insight with intelligence...

Originally Posted by bzr

Have you moved back to the mother land?

Nope, the motherland never left me. I grew up around people that had integrity, solidarity as well as a healthy amount of respect for each other. Complainers and whinners were not tolerated from early childhood. Not sure what satisfaction one derives from complaining about posts that have nothing to do with themselves at all just to get satisfaction of whining to whomever is moderating and with virtually zero posts of value to contribute themselves. But I get it, it is the norm for many these days, people don't have the wits or the courage to offer a valid counterpoint, because complaining accomplishes everything they can ever possibly aspire to from the comfort of their keyboard.