What is the average dealer mark up?

Average mark-up information is nice to know - not sure how you utilize it for negotiating your price unless you are able to clearly define the audio store's fixed and variable costs.

• fixed costs will include the store, its fixtures, infrastructure, overhead and inventory
• variable costs will include inventory costs, labor costs and such
• Additionally, there will be advertising costs and other overhead that may be variable

It's not uncommon for a retailer to require a 100% mark-up based on the velocity of product moving off of their shelf.  Many luxury items are only purchased after folks get an opportunity to experience it with their sense.

Manufacturers will have different programs for 'authorized dealers' and may offer tiered discount or rebate based on volume for a period (often yearly) or other promotions. 

There are some manufacturers that protect their authorized dealers and some who don't -they will definitely have different mark-ups.

I expect mark-ups to vary significantly between manufacturers (brand reputation and placement) and within their product lines (good, better, best options) because of the size of the market and recent trends in market growth.

In looking for the best deal, I think it might be worth develop a relationship as a customer of choice and exploring purchasing demo models and close-outs where special programs enable a store to 'move product'.

As a former dealer of high-end audio equipment, I have to laugh at most of this.  It is such bull.

FIRST, open a store.  That only costs about $3.00, right?  Then, stock it with, oh, maybe $200,000 worth of stuff.  That is all free, of course.

THEN, pay your employees, who work for free and you never have to pay social security, workman's comp, taxes, insurance, shipping, floor plan costs (CAR DEALERS ANYONE???) or anything for that, of course.

SO, EVERY PENNY you take in goes straight into YOUR pocket and you laugh hilariously at your dumb customers while sitting with a cocktail and 5 Playboy bunnies on the poopdeck of your billion dollar yacht.

You people are dumber than fire hydrants, and that is insulting to the fire hydrants.

I would hate to have had most of you for customers, but I am SURE your current dealers just LOVE it when you enter their establishments with your big mouths and know-it-all attitudes.

Good grief!  It is a wonder to me that most of you every buy anything at all.

I’ve spent my life working in Audio, and some of the posts above are substantially correct. The real issue is so what does this tell you?  B&M retail is in decline for many reasons. The vast variety of products that can be found on the internet, many now “direct to consumer”, skew the perception of value, and what is possible for a dealer to support. Face to face discussions with experienced pros and live demos can be very valuable to the audio buyer, and they take time and care to set up. Most dealers pay a bonus for sales at retail (no discounts guys) and that salesman has mouths to feed too. Sure, I can save you some $$ on that, but it’s going to cost me a lot to do so. Audio retail does not pay all that well. Our customer typically has a much higher income. Those of us who still do this love the work, love to help customers enjoy music and sound, but our market is aging out (we too), and CV is going to take a big toll as well. 

Just to make sure we're talking the same language, the business term of art is "Gross Margin." That is the percentage of gross markup you receive on the sales price. In audio as well as many other businesses it is common to have a Gross Margin around 50% (sales price is double the wholesale cost to the dealer).

If you think the gross margin is too high (in any business) then you should open your own store. Then you can buy all your stuff at wholesale! As you put together your business plan you will quickly find out that a 50% gross margin in most businesses barely covers your expenses on a good day.

It's sad that audio buyers get preoccupied with the margins of the dealers and the manufacturers. 95% of buyers have absolutely no concept of what it takes to run a business and even fewer understand the difficulty of running a low volume boutique business like high end stereo.

There is one corner of the high end audio market that seems to be doing extremely well - ultra high end speakers. We know this because new models seem to be entering the market every week. I haven't tried to count them but I'm guessing that you can buy at least 50 different models of speakers that retail for over $100,000 per pair. To have this part of the market so saturated indicates two things: 1) The margins in this niche are extraordinary, and 2) People must buy a lot more expensive speakers than I can imagine.

If you are a high end retailer in a wealthy urban/suburban market (say Seattle or San Jose) you are probably doing OK. You can make pretty good scratch selling six figure speakers and components. Other dealers who are selling real world gear like home theater have a harder time. I don't begrudge any retailer the gross margins they capture. If the product/service package meets my needs and I can afford it I appreciate their hard work to be there for my benefit.

richopp, crustycoot and 8th-note are spot on. With all due respect, most of you guys have no idea of what it takes to open, run and maintain a B&M audio business. To paraphrase an old saying, the best way to make a small fortune in the audio business is to start with a large fortune.

Just a thought: when you audiophiles shop for other gear, do you ask what it costs to manufacture or what the retailer paid for the product? You might just try that the next time you buy a case of Budweiser. Or a piece of furniture. Or a car...

Maybe we should start a support group for recovering audio dealers?