Margin on speaker sales by high end dealer


Many a times, you talk with a dealer and they order and deliver the product. So you spend 10k on a pair of speakers. Seems very simple to do by a high end dealer. And most often done without an Instore  visit.
So how much are they making?
emergingsoul
A normally calculated 40% gross retail margin is figured by multiplying the actual landed cost by 1.67. So a $1000 item would sell for $1670. A 50% gross margin (cost x 2.00) on a $1,000 item would be $2000.

To keep things simple, the amount of margin a dealer needs to make on average is determined by his rent/mortgage, payroll, utilities, city property taxes, etc. as well as the cost of goods. Payroll as a percentage of gross sales can be zero if it’s a family run business (but usually isn’t) and as high as 25% or so in areas that need higher quality staff. High turnover businesses such a grocery stores can have gross margins as low as 5% on average due to cash flow.

Unless there is a need to have extremely sharp pricing on particular items (such as a $65 pair of Grado headphones), retailers have higher margins percentage wise on less expensive items (a record clamp that costs $2.50 might sell for $10.00 or more), and lower margins percentage wise on higher priced items. In the jewelry business, a $10,000 diamond ring may have as small of a gross margin as $500 if it was special ordered and didn’t have to sit in stock waiting for a buyer, or $1000-1500 if it were going to sit awhile. Those $10k speakers could have a landed cost of at least $9k, depending on the manufacturer and how much business the dealer does with them.

But, unlike the auto business, where more profits come from financing, add-ons and maintenance than from actual car sales, most retailers don’t have multiple profit streams available. A high end dealer that offers installation, room tuning, etc can use the profits from those services to cut the margin they normally would have to get on equipment. A dealer that "only" has equipment sales for income can’t afford to discount as much, unless he is turning a lot of product each month.

Finally, like the auto business, if you’re looking for a deal as you’re paying cash, etc, you’re better off asking for it at the end of the month than the beginning, especially if business is slow. Best deal I ever got on a new car was at the end of the month during a recession when interest rates were in the high teens. The dealership hadn’t sold a car in over a week, and very few that month.
When you call a dealer and order a pair of 20k speakers, which he then orders and when received will deliver. He does not have your model in his listening room and a consumer has to go through the dealer to get the speaker. Seems a margin of 40% or more is a lot. Maybe dealer spoke with you for awhile, sent a quote and then took a credit card number and delivered it.
Fortunately there are multiple dealers in the area and competition would seem to be present. Maybe order out of state for a longer range delivery to avoid state taxes.

i really don’t need the services of a dealer so 8k 40% seems too high. Maybe 3k.
If margin is really 40% it impacts resale of product in secondary market so it would seem. Dealer or any other dealer certainly ain’t gonna pay you more than 12k as a credit during an upgrade effort. That’s why I am interested in learning what the margin is so I can get a feel for speaker value if I upgrade.
You can't look at gross margin in a vacuum.  You need to understand the dealer's monthly overhead cost/cost of operations.  That's why it's so important to push volume through.  Only through volume can you even start to cover the fixed monthly overhead.  If you don't sell enough widgets you could easily post monthly losses on your P&L even if you show a 40% gross margin on a single product sale.  This is really a ridiculous analysis the OP is trying to apply because the equation is far too dynamic for a linear thinker.
Someone mentioned, buy used. I have done this several times (at a dealership). If they have a demo item you are in the market for, you can get a good deal and a full factory warranty.
Three_easy_payments is correct. 40%-50% GROSS margins might seem like a lot. However, once rents, utilities, insurance(s), wages, unemployment, flooring costs, etc. have been paid, the dealer might be left with 10-15%, if they are lucky. Then, they get the privilege of paying income taxes on that. So net profits could be less than 10% when all the smoke clears.

Too many people have no idea about business or how they run so they try looking at things like gross profits in a vacuum and think that when they buy a $12k pair of speakers, the whole store closes early and rents a private jet for a trip to Milan for the week, or something.