Margin on speaker sales by high end dealer

Great question. Most new sales average to 15% net profit in my store. I have to sell 2 million dollars to cover all expenses. Home Theater sales and installations lead to 10% net profit. 

What do you think retailers like Nordstrom and Macy's make?  You know this when they offer their 50% off sales.  A shirt selling for $100 suddenly selling for $50.  You can't tell me their cost is $45.  I am sure they are paying $25 which means their garments were not high quality to begin with.

I agree that just because you mark up something 50% means you cleared a $50 profit.  Merchants have to invest in their inventory, sit on it for possibly months and they have to pay for their rent and employee salaries.  By the time it is over, they would often realize a 20% net profit if lucky.  What I don't understand is how dealers cherry pick their inventory and assume a consumer would not spring for more expensive models.  It is their job to show the values of paying more to enjoy music longer term.  Consumers then turn around 2 years later, sell their gear for 50% on the dollar when they could have just been sold from the beginning what they will love long term.

I still think the way to buy gear is to attend audio shows to hear audio gear sold direct in order to get higher quality gear.  Manufactures do not have to pay for rent and pay sales people commissions so they can afford to manufacture their gear using higher quality components.  Most retailers simply do not stock a full line anyway so what purpose do they serve.  

good responses, hopefully the input from the knowledgeable folks on here have provided some clarity and education to those who need it about how the high end hifi retailing biz works ... it is a tough business for sure

some financial education is always a good thing

For many years I have purchased mostly High End used equipment.  I elect this option because I can purchase equipment based on what the market will bear and not the anti-competitive MSRP that is used to protect dealer margins.  To that end, I just cannot foresee any reason to change my purchasing habits in the future.  Most dealers now use the excuse that their cost is excessive because of the building, heating and cooling, utilities, etc.  However, many dealers are not selling online to take advantage of the reduced cost of doing business.  Seems unfair that "brick and mortar" stores are cutting it both ways and as usual the poor consumer is getting the raw deal. 

With all the pissing and moaning over the demise of retail audio, it’s wise to remember that retailers do not work for free. The only material benefit I can think of for an audio retailer is the opportunity to buy gear from their manufacturers at “accommodation” prices—which are typically 50% off MSRP (below cost!). QUICKSAND!!
Take it from an old store manager: Audio is sold by proper businessmen and women on the basis of Gross Margin.
Gross Margin = [Total Revenue – Cost of Goods Sold]/Total Revenue x 100. If the cost on an amp was $1000, I would multiply that times 1.65 and come up with a 35% deal—$1650 very acceptable except where “policies” dictate no discounting. Speakers are very hi-margin typically: 40% plus. TV’s are a problem. If you can get 20% margin on a TV, you’ve made a killing. Accessories and cables 55%+. So with hi-margin speakers and cables in a system, I can have plenty of room for “package” deals, discounting or hammer-and-tongs bargaining. Cost X 1.65 keeps the doors open. These are not secrets, but worth remembering.