Margin on speaker sales by high end dealer

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.

they are not making enough to get rich that is for sure!

No, after the dealer pays $5000 for a $10000 speaker, he has to pay the sales person, the rent/mortgage, insurance, taxes etc. But the mark up is 50% of the retail price, minus shipping costs, which are sometimesy the reps commission.  The B&W rep showed me the invoice for the speakers he sold me.  He would deliver them to make the extra 10% commission  (of wholesale).