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Dealer Costs

Ever wonder if your purchase was a good deal or not? How much of a deal you had gotten? Or whether it was a good deal at all?

I always thought that electronics have a markup of up to 30%. After reading some posts from seasoned salespersons, this appears not to be the case at all.

Read below an eye-opening account by those in the know, those who have worked as sales reps for electronics stores. There is also a site listed below also that can provide you the dealer cost of brand name electronics from various manufacturers:

(Info from a thread at hometheaterforum.com)

Input from Robert Dutchman:

".... There seems to be a lot of speculation on what dealer costs are. First off let me qualify my information. Most chain stores use an A-cost/B-cost system. B-cost is what can be seen in the store level. Essentially it's the "store" cost. A-cost is what it really cost to buy that product from the vendor. Only the corporate buyers and higher ups know those numbers...but it's safe to assume that A-cost is generally 4-15% less than B-cost which is padded to compensate for some of the costs of doing business (shipping, warehousing, etc).

"So what really is the markup on this or that," is the next question I'll address now. Some folks think the store marks up 100-200% on EVERYTHING! That just ain't true!

The way it's refered to behind the counter is, "margin, or points." If a $90 accessory has a cost of $45, then it has a 50% profit margin...or 50 points. I'm not going to give specific model numbers, I'll just give general figures by catagories. This is also factored by using full store retail prices.

Here's video:

Direct View TV (Brand name) 20-30 points
Direct View TV (Loss leaders) 0-12 points
Projection TV (Most brands) 10-32 points
Digital Projection 30-40 points
Digital Direct View 20-30 points
VCRs (Brand name VHS) 15-27 points
VCRs (Loss leaders) 2-13 points
VCRs (SVHS) 15-25 points
DVD (over $350) 25-35 points
DVD (under $350) 5-10 points
TV/VCR combos 18-27 points
Camcorders (mini dv, Hi-8, D8) 25-30 points
Camcorders (VHS-C) 8-19 points
DSS systems 25-50 points

Here's audio:

Car audio head units 30-45 points
Car audio speakers 35-55 points
Car audio amps 45-60 points
Home audio speakers 44-57 points
Receivers (under $600) 25-35 points
Receivers (over $600) 35-45 points
Preamps/Amps 40-45 points
CD (under $300) 20-30 points
CD (over $300) 30-45 points
Rack systems 20-30 points (Like anyone buys those...)

Some other stuff:

Computers 5-15 points (That surprise anyone?)
Cables/Power conditioners 45-65 points
Furniture 45-60 points
PDAs 12-18 points
Remotes 40-55 points
Most other access. 50 points

I bet any corporate buys reading this would love to get a piece of me...and I welcome any challenge, like I said in my original post...I know all the angles. One of them is how to CYA legally, which is why I haven't specifically mentioned any particular product.

I saw another post or two about someone who works at the largest electronics retailer in Canada. No secrets there, I'm almost certain that it's Future Shop. They kinda failed in their attempt here in the states and my ex-company hired away some of their managers to replenish the management pool since Best Buy got a lot of the *GUYS* to defect to Smurf Village for more money and a blue shirt with khakis.

Here's the one I've been waiting to rip to shreds, the extended warranty. When they hire new associates they begin the brainwash. If the people selling it don't believe in it, then obviously won't sell it as hard as they can. For the most part it works. Just about every employee I saw who bought something always bought warranty with it.

Some things, maybe...like my 65" Mits, OK...I don't believe in it, but it's still too expensive to have a real repair person fix it if there's a problem. A walkman or something cheap...WHO CARES?!? Just buy a new one!

Is it worth bring it in, waiting a month to get it back only to have it break again in a month, or worse, it comes back and they say "no problems found." My first DVD player, I was weak, and succumbed to the pressure of the manager who has to approve an employee purchase and bought the 3-year coverage to shut him up so I could just get out of there. Turns out...I bought a new progressive 5109 less than a year later. Which means I still would have been in the manufacturer's warranty for the entire time I used the original Proscan I had. I'll probably buy the SD-9200 when it comes out, so no need to get any coverage on the 5109. I don't care how cheap it is...I would NEVER buy any coverage on a speaker. Most home audio speakers have five year coverage on their units. Know why? Unless you act very stupid, they hardly ever fail. Why get a five year warranty that doesn't cover any more than the manufacturer's five year covers?

OK, that's enough for now. I'm tired of typing."

Input from Sean M.

"....What's the markup like on RPTV's?

Well, to give you an example of what type of markup ranges we're talking here, I'll quote two sets The Toshiba TW65x81, which lists for $6500, can be had by me as an employee for $3776 or there about, which is five percent over dealer cost, putting cost around $3600.

That's on the higher end, where you'd expect the margins to be better to make up for lack of volume. The other set, the Sony KP43t70, which lists for $1700, can be had for a little over $1100, which puts dealer cost around $1045. That's an average markup of 45% from list to dealer cost. I'm sure that there is a little variance, but I don't think anyone is paying more than 65% of list for the sets they're selling, at least in the projection market. The margins are lower on direct-view sets, as there is volume to offset the lack of margin on a single piece. Speakers are about 50% markup, cost to list, +/- 5%. recievers are 40% - 50% on the high side for the pricey pieces 20%-30% for the budget stuff.

I think this is all moot though, as it's not what the dealer paid for the unit, but what he's willing to sell it at. And there have been valid points raised in the difference in service in places that charge higher margin. Some places have to do this in order to compensate for the lack of volume. If the rent is $10000 a month, then you had better make $10000 a month, whether you sell one thing or a hundred. Support your local dealers and you'll never have to complain that there's no place for you to audition a piece of equipment..."

Input from Derek1

"A quick word on Sony pricing policies.

The proper term for the pricing policy that Sony and other manufactures use is MAP (Minimum Advertised Price). This policy simply states that dealers should not advertise below a minium price. Take the DVP-S330 and DVP-S550D DVD players they carry a $299.99 and $399.99 MAP.

Sony and other companies subsidise advertising of their products. If a company violates the MAP policy they are no longer included in the advertising subsidies. There is no threat of revoking dealer status from Sony if you SELL a product below a predetermined price. You can sell an item for a nickle if you see fit to do so but you may not advertise (other than in store pricing) by way of print, video, etc. This is why many ads or internet sites state please call for pricing. Oade brothers is a perfect example of this, since they don't post pricing below MAP they are in complete compliance with the MAP regulations.

On to another type of price regulation. Bose mandates that all dealers must sell products at a price they (Bose) decide. If you are found to be in violation of this they simply will no longer sell to that dealer. Once in a while Bose will authorize a "Sale" and all dealers will reduce the price to the new figure set forth by Bose. Bose will also not allow price matching against other retailers (a very common practice in the competitive retail world). Now here is where it gets really strange.

Bose factory outlet stores (they sell new merchandise not refurb or scratch and dent, outlet just sounds better) sell some of the models cheaper than the price that they mandate to other retailers and remember you aren't allowed to price match. We all know that Bose products are of questionable quality so why would dealers care what bose says? A = Profit .... Huge barrels of it when a sales person sells a Lifestyle 25 system they make a ton of money in commission and Bose gives them points towards merchandise. This merchandise isn't only other bose products but here is what most sales people do. Save up points for a Bose Acoustimass 15 then turn around and sell the AM-15 for like $1000 (that's less than it can be bought for at any dealer). It is also very easy to sell Bose products most of the consumers that come in looking for Bose are already convinced that Bose is the very best money can buy. The marketing that Bose has done is unbeliveable (pun intended). I once had a customer that came in while I was showing some other speakers when I asked if he needed some help he informed me that he already owned some Bose (he pronounced it bow-say as if they had some European mystique) and he no longer bothered listening to all the lesser speakers. I had a hard time keeping a straight face.

If I remember correctly the dealer cost on a Lifestyle 25 is around $1200 it sells for $2499.99."

(Info from a thread at hometheaterforum.com)

Want a Printout of Dealer Costs for various Manufacturers?

Check out www.costsheets.com. Their mission statement at the site states that they aim to "provide access to complete dealer cost sheets, product information, and news, as well as providing tools and services you've never had, in order to allow you to make informed choices and select the right products.

Our corporate mission is to provide consumers and enthusiasts a COMPREHENSIVE and USER-FRIENDLY ability to RESEARCH, PRICE, SELECT and PURCHASE home entertainment equipment, in much the same way as today's internet merchants have empowered automobile buyers."

Sounds very interesting. The only thing I don't like about this site is that info is emailed to those asking for information which means you'd have to submit to them your email address. I looked throughout the site but there are not terms or conditions of not reselling or disclosure one's email to telemarketers or other advertising bodies. So, be wary.

Anonymous

I tend to agree with the author, Sean M. about RPTV pricing. When I was considering the Mitsu WS65905, the best price I was able to get was about $4200. I thought that was an awesome price considering the TV lists for about $6000! Well a few weeks later, I learned that someone else had gotten it for even less... $3700! At this price, the dealer most certainly wasn't making as much but he assuredly STILL made some money.

Please note that Mitsubishi has a dealer network system that requires all authorized dealers to comply to a very stringent set of rules. Breaking those rules will compromise, or worse yet, lose their dealer status. I learned this first hand when shopping for one. When a local dealer found out that I was planning on getting one from an online dealer at less than what he was selling it for, he was inflamed and was insistent that I divulge who that online vendor was. When I asked the online vendor what the deal was, he cautioned me that some brick and mortar dealers tend to be territorial and are very much threatened by online vendors who most of the time can offer a better deal to the consumer. He did tell me that if the other dealer complains loud enough that Mitsubishi could deny sale from a customer who happens to be in the other dealer's "territory". I don't know how the other companies' dealer networks work, but this one seems a bit rigid and harsh.

At any rate, for those who are in the market, above info are good to have which lets you know that there is plenty of wiggle room for negotiating with the dealer. The trick though is to find one who is willing to play a little. =)