+++ I was going to mention the hole in Pauly's economics +++
Yep, not having a dealer network does save money. 100% correct. But who do you think pays for R&D? Who pays for the machine tools? Yep, you guessed it you do.
Sunk costs such as R&D and tooling costs are factored in the price, and low retail prices can be achieved only through economies of scale. The more units that can be moved, the lower the cost assigned to each unit. This is economics, pure and simple.
Besides, you think Oracle still has outstanding liabilities on the Delphi tooling machines? On R&D? I would think zero, no? The overheads on a Delphi is potentially much lower than that on a Teres.
If that sounds far fetched to you, consider a DL103. Dirt cheap with amazing performance. Denon can sell them at this low price via a dealer network because ALL
sunk cost pertaining to machine tools and R&D have been written off many years ago.
+++ His dealer may not itemize inventory carrying costs and GSA expenses on their invoices, but they certainly built them into their markup before quoting Pauly a selling price +++
My dealer doesnt carry stock.
+++ If they didn't do so, they'd go out of business +++
This will come as a big surprise to him.
+++ Saving 1-2% via improved cash flow by paying 80-100% more to subsidize dealer and distributor inventories is no savings, and believing so is naïve +++
I cannot comment on your numbers other than to say that if they are indeed accurate no audio dealer on the planet should make use of a dealer network. Since the majority do, and I assume they have sound business plans, I can only surmise your numbers are either totally fictitious and/or you have left some minor facts out to prove your point.
Thats really not nice Doug.
+++ If there's a distributor in the chain between Oracle and the dealer then there are two margins. +++
Actually, there are many more margins than only two. Unless Oracle mine the metals and manufacture all the components themselves, I paid multiple margins. I do believe Teres also has suppliers, so you paid multiple margins also.
And if you used a credit card or cash card, you possibly help finance my Oracle. Thanks Doug.
+++ That's my idea of a good ROI. +++
Indeed. Since ROI is Net income/Investment, ROI is 0% if you keep the product, < 0% if you return it. To me, <0% ROI is not a good thing.
+++ naïve economics +++
LOL. Yep, it sure is.
Regards
Paul
Yep, not having a dealer network does save money. 100% correct. But who do you think pays for R&D? Who pays for the machine tools? Yep, you guessed it you do.
Sunk costs such as R&D and tooling costs are factored in the price, and low retail prices can be achieved only through economies of scale. The more units that can be moved, the lower the cost assigned to each unit. This is economics, pure and simple.
Besides, you think Oracle still has outstanding liabilities on the Delphi tooling machines? On R&D? I would think zero, no? The overheads on a Delphi is potentially much lower than that on a Teres.
If that sounds far fetched to you, consider a DL103. Dirt cheap with amazing performance. Denon can sell them at this low price via a dealer network because ALL
sunk cost pertaining to machine tools and R&D have been written off many years ago.
+++ His dealer may not itemize inventory carrying costs and GSA expenses on their invoices, but they certainly built them into their markup before quoting Pauly a selling price +++
My dealer doesnt carry stock.
+++ If they didn't do so, they'd go out of business +++
This will come as a big surprise to him.
+++ Saving 1-2% via improved cash flow by paying 80-100% more to subsidize dealer and distributor inventories is no savings, and believing so is naïve +++
I cannot comment on your numbers other than to say that if they are indeed accurate no audio dealer on the planet should make use of a dealer network. Since the majority do, and I assume they have sound business plans, I can only surmise your numbers are either totally fictitious and/or you have left some minor facts out to prove your point.
Thats really not nice Doug.
+++ If there's a distributor in the chain between Oracle and the dealer then there are two margins. +++
Actually, there are many more margins than only two. Unless Oracle mine the metals and manufacture all the components themselves, I paid multiple margins. I do believe Teres also has suppliers, so you paid multiple margins also.
And if you used a credit card or cash card, you possibly help finance my Oracle. Thanks Doug.
+++ That's my idea of a good ROI. +++
Indeed. Since ROI is Net income/Investment, ROI is 0% if you keep the product, < 0% if you return it. To me, <0% ROI is not a good thing.
+++ naïve economics +++
LOL. Yep, it sure is.
Regards
Paul