What is the average dealer mark up?

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?

@badger_erich... you are clearly an idiot and a troll!!

Well done alll... discussing margins and what Dealers can or do make on a sale. This should be taken down immediately.

Just another clear example of how unprofessional the Hi-Fi Industry really is. For those of you who work in the business or have worked in the business, shame on you to even disclose margins, Again, just goes to show how unprofessional you are and the business as a whole. To think you are somehow being clever discussing it is even more embarrassing and ignorant.

Margins should never be disclosed as selling Hi-Fi as a retailer is hard enough as it is.

Another example of why forums like this do nothing good.

Whoa! I asked a simple question, not like it is national security.

You sir, are a Cactus.

BR3098 you are correct that a B&M store has to be extremely challenging which I get. That said can you blame a customer for attempting to secure a better price? That customer has also worked hard allowing him/her to come into the store in the first place. Your job is to be patient and endeavor to show the customer added value by purchasing from you. You have to figure out what works best for your operation. Isn’t the choice volume vs selling at retail? Many audiophiles have the weird misconception that audio dealers are public servants in some way different from any other businesses. Only a fool would begrudge a dealer for trying to sell at the highest price that he can while the customer’s job is to secure the best price he/she can. That’s the American system which has served us well for a few hundred years. I wish every audio dealer great success . I really do. Customers wanting better than retail pricing are in no way scum. They’re just customers that you don’t have to sell to without malice. FWIW

Guys,
I appreciate the insight into what it takes to open and run a business. I also appreciate the insight on running a HiFi shop et.al. and it certainly doesn't sound like something I would ever be successful at.

My question was legit. I meant no harm in asking, but I did feel that it might create some discussion...good and bad. During these surreal times of a pandemic, some of the discussion has been regarding reduced prices etc. I personally have not seen it and some of the private sales here border on the ridiculous. My opinion is all in that regard. Small shops have to reduce staffing during these times, which may or may not provide some relief for the owner/manager which I would think might benefit the consumer if the savings are passed on. Apparently in this industry it doesn't happen very often unless you're someone with an inside track.
Again, I appreciate the response (with the exception of one post) and will hope to hear more.