True price of hi-fi

[Frank Harvey]

fatboyslimfast:The further up the scale, the bigger the margins (although in real, not necessarily percentage terms). Richer sounds aren't going to making a great deal on the Cambridge A1 amp for instance (retailing at £70), but it does get people onto the "ladder". A Naim Nait XS will be making a lot more. This will depend. You have to take into account that Richer own Cambridge, so with one less 'middle man'. The profit margin on Naim, is actually a lot less then other British manufacturers.

One of the reasons the Naim is a lower profit margin is that they go to many extreme lengths during manufacture that other companies would laugh at if it was suggested in the board room. One thing is that the standard components, and yes, there are some standard components in there just like ANY product at ANY price point, are matched for each channel. So if a resistor/capacitor etc could have a variance of +/-5dB (whatever the measurement is for said component), that could be anything up to a difference of up to 10dB between the two channels at any one time in the signal path. Naim painstakingly match these normally unimportant components by hand, so the difference is within about .5dB if I recall correctly. Naim do lots of little things that takes man hours, but lots of little things add up to a big difference when the product is finished.

Some manufacturers don't bother with this. They'll just buy the resistors/capacitors etc in bulk and just use them, with no regard for the sometimes wildly differing tolerances.

 

[Anonymous]

johnnyjazz this applies to just about everything you buy from cars to washing machines and the computer your using to access this forum its one of the fundamental principles of economics and capitalism

i really cant see the point of this thread at all

 

[Andrew Everard]

FrankHarveyHiFi:You have to take into account that Richer own Cambridge, so with one less 'middle man'.

As has been several times on these Forums, Richer doesn't own Cambridge Audio.

Audio Partnership does, although Julian Richer is a shareholder in AP.

However, Richer Sounds is the sole retailer for Cambridge Audio in the UK, which is why CA products are less expensive here than they tend to be in markets where a traditional manufacturer->distributor->retailer chain exists.

 

[Frank Harvey]

johnnyjazz: It would be very interesting to hear the opinions of some of the guys on this site who are stockists and actually sell the equipment. Hopefully I can provide some insight for you

 

[Anonymous]

thats why ebay does well ... it's only worth what you are prepared to pay (new or used) ... less overheads for business sellers so prices are cheaper

I see that tesco now has (or is getting) a seller account on ebay and more and more large chainstores are following suit

 

[Anonymous]

Andrew Everard:
FrankHarveyHiFi:You have to take into account that Richer own Cambridge, so with one less 'middle man'.

As has been several times on these Forums, Richer doesn't own Cambridge Audio.

Audio Partnership does, although Julian Richer is a shareholder in AP.

However, Richer Sounds is the sole retailer for Cambridge Audio in the UK, which is why CA products are less expensive here than they tend to be in markets where a traditional manufacturer->distributor->retailer chain exists.

worth pointing out that jr is the majority shareholder in audio partnership

 

[matthewpiano]

Ebay is all well and good but, at the end of the day, it isn't in the same ball-park as a proper bricks and mortar retailer. The two just cannot be compared.

As for all the stuff about RS and Cambridge - its getting a bit long in the tooth. At the end of the day whatever arrangements and relationships are in place benefit UK customers because we get the kit cheaper than elsewhere in the world, and it is very good and well designed kit.

 

[Frank Harvey]

JoelSim: Then of course you have materials costs, which will be higher naturally for the high-end kit, then you have the lack of economies of scale to buy these components as a supplier will give a far better rate when you are buying 100k of anything rather than 500.

Then you have manpower, someone still has to man the Customer Service, and with high-end you get better service (usually), again this has a cost. You still have a CEO, and MD, a sales force blah blah blah.Another cost is hi-fi shows. A 3 day show (4 to the manufacturer) can easily run into 5 figures per show.

 

[Frank Harvey]

Andrew Everard: As has been several times on these Forums, Richer doesn't own Cambridge Audio.Sorry. I did actually type that they either own or are in partnership, but changed it to just owning it as Ithought that was the case.

 

[Frank Harvey]

johnnyjazz:Hello David, i think you might be the very man to answer my querie, by all means i,m not having ago at hi-fi retailers, just curious.Obviously I can't disclose retailer's profit margins, but as has been said already, they do vary wildly, so there' no single answer to the question. All I will say is that it's anywhere between 'comfortable' and 'virtually zero'!!

 

[Anonymous]

matthewpiano:Ebay is all well and good but, at the end of the day, it isn't in the same ball-park as a proper bricks and mortar retailer.

at the end of the day, if you can buy the exact same item with the same guarantee for just over 1/2 the price of what you would have to pay from a high street vendor ... you will (and should) buy from ebay or similar sites

it's sad in a way, as many good vendors cannot compete anymore and are going into liquidation as can be seen daily ... that's why many high street vendors are now selling online

there is a saying used in engineering: 'If you use yesterday's technology today, you will be out of business tommorow'

or as they saying goes in the stockmarket fraternity: ' If you want to run with the wolves, you have to lean how to P*ss on the trot'

 

[Anonymous]

FrankHarveyHiFi:
Andrew Everard: As has been several times on these Forums, Richer doesn't own Cambridge Audio.Sorry. I did actually type that they either own or are in partnership, but changed it to just owning it as Ithought that was the case.

dont worry david

jr owns 51% of the company that owns ca

effectively your right but business speak says otherwise

doesnt matter anyway the fact is they make good products that unfortunately noone else in the uk can sell

 

[Frank Harvey]

momo72: I'm not sure mark-ups are that gigantic, then again there needs to be room for margin to account for cost of staff, kitted demo room and of course the electricity needed to run all these systems at the same time if required.

There's a lot of things people don't realise you have to pay for. You have to advertise your store, so mags/internet costs etc. You'll usually have a guy who's running the bare bones of the website who improves things here and there to streamline things. Phone bills, which include phone/fax/internet etc. Cost of demo stock and also back up stock - to run a fully successful website you have to keep the stock - not enough stock and you have disgruntled customers. Add to my last point that you have to pay for collections and redeliveries of faulty stock. Electricity isn't just the lighting and demoing of equipment - a store with a successful website will have God knows how many computers which will be running constantly to provide a 24 hour ordering service. Licenses - we have to pay licenses to show films in demo's in store, and we also have to pay a license to be able to play radio and CD's in store too. And of course, a TV license - the BBC's not going to miss anyone out!!

There's loads more too, but it's stuff the public never really get to know about.

 

[Anonymous]

FrankHarveyHiFi:

momo72: I'm not sure mark-ups are that gigantic, then again there needs to be room for margin to account for cost of staff, kitted demo room and of course the electricity needed to run all these systems at the same time if required.

There's a lot of things people don't realise you have to pay for. You have to advertise your store, so mags/internet costs etc. You'll usually have a guy who's running the bare bones of the website who improves things here and there to streamline things. Phone bills, which include phone/fax/internet etc. Cost of demo stock and also back up stock - to run a fully successful website you have to keep the stock - not enough stock and you have disgruntled customers. Add to my last point that you have to pay for collections and redeliveries of faulty stock. Electricity isn't just the lighting and demoing of equipment - a store with a successful website will have God knows how many computers which will be running constantly to provide a 24 hour ordering service. Licenses - we have to pay licenses to show films in demo's in store, and we also have to pay a license to be able to play radio and CD's in store too. And of course, a TV license - the BBC's not going to miss anyone out!!

There's loads more too, but it's stuff the public never really get to know about.

feel for you mate and many will also ... and is fully understandable ....we all know when a vendor owns a shop, there is additional overheads such as shop rentals, telephone bills, council taxes, staff wages etc, .... but you need to move with the times (if you have not done so already) ...

more and more people are now buying online (or comparing prices from vendors vs the cost online and differences are sometimes huge) ... online sales is definately the way forward IMHO

 

[Frank Harvey]

dim_span: at the end of the day, if you can buy the exact same item with the same guarantee for just over 1/2 the price of what you would have to pay from a high street vendor ... you will (and should) buy from ebay or similar sitesSory, but that's not true. Many manufacturers don't allow third party sales of their equipment. Some products sold through ebay/play/amazon won't have a warranty. I've tried to stress this many times, but it never seems to be acknowledged.

There are some manufacturers who are currently enforcing the above officially.

Why would a retailer need to sell on ebay/play/amazon? There's no real need for it. You have your website, you have forums, you have your store, you have your internet/mag advertising. If you're not sellng enough from that then you're not doing it properly. Places like those mentioned are rife with dodgy sellers, and if the hi-fi buying public are enticed onto these forums as their main source of product, a lot of people are going to get burned. You'll attract more dodgy people who see the popular products as a source of quick income. places like ebay should not be the sort of place to buy AV or hi-fi, especially the igher end stuff. I think ebay should just be private sellers only, NO retailers or businesses.

 

[Anonymous]

FrankHarveyHiFi:

dim_span: at the end of the day, if you can buy the exact same item with the same guarantee for just over 1/2 the price of what you would have to pay from a high street vendor ... you will (and should) buy from ebay or similar sitesSory, but that's not true. Many manufacturers don't allow third party sales of their equipment. Some products sold through ebay/play/amazon won't have a warranty. I've tried to stress this many times, but it never seems to be acknowledged.

There are some manufacturers who are currently enforcing the above officially.

Why would a retailer need to sell on ebay/play/amazon? There's no real need for it. You have your website, you have forums, you have your store, you have your internet/mag advertising. If you're not sellng enough from that then you're not doing it properly. Places like those mentioned are rife with dodgy sellers, and if the hi-fi buying public are enticed onto these forums as their main source of product, a lot of people are going to get burned. You'll attract more dodgy people who see the popular products as a source of quick income. places like ebay should not be the sort of place to buy AV or hi-fi, especially the igher end stuff. I think ebay should just be private sellers only, NO retailers or businesses.

to be 'Frank' ... if I were in your business, and not yet selling online, or gearing up in that direction, I would be very worried indeed

 

[Frank Harvey]

The other thing about amazon and play is that when you sell on their, you're effectively advertiing them, and paying them for the privelidge!!

Imagine someone orders something off amazon. They see a product, it's agood price, they buy it. Their friends some round, see it, hear it or whatever, and they ask where they got it from. I bet you 9 times out of 10 the reply will be, "I got it from amazon". They'll remember that, and when they come tolook for similar products, they'll think amazon, not necessarily YOUR company. I bet most people ordering stuff from these sites have no idea where it's actually coming from, which again, opens up the fraud aspect.

 

[Anonymous]

FrankHarveyHiFi:

The other thing about amazon and play is that when you sell on their, you're effectively advertiing them, and paying them for the privelidge!!

Imagine someone orders something off amazon. They see a product, it's agood price, they buy it. Their friends some round, see it, hear it or whatever, and they ask where they got it from. I bet you 9 times out of 10 the reply will be, "I got it from amazon". They'll remember that, and when they come tolook for similar products, they'll think amazon, not necessarily YOUR company. I bet most people ordering stuff from these sites have no idea where it's actually coming from, which again, opens up the fraud aspect.

David, I hear what you are saying, however times are changing and one needs to 'be on the ball' at all times ... at the end of the day, it all boils down to profits to stay in busineness

20 years ago, I was stuck on a drawing board doing engineering draughting (drawing office) ...

CAD (computer draughting was in it's infancy .... and just taking off...all the older senior engineers were anti-cad as they did not want to learn new things and move with the times ....I resigned and moved with the times and learned cad at another company for a much lesser wage

when cad eventually took off,all the older senior members were without a job ...

we see that happening now in the retail sector ...those who do not adapt to the internet , are all being forced to shut shop due to lack of profits

 

[matthewpiano]

dim_span:FrankHarveyHiFi:

dim_span: at the end of the day, if you can buy the exact same item with the same guarantee for just over 1/2 the price of what you would have to pay from a high street vendor ... you will (and should) buy from ebay or similar sitesSory, but that's not true. Many manufacturers don't allow third party sales of their equipment. Some products sold through ebay/play/amazon won't have a warranty. I've tried to stress this many times, but it never seems to be acknowledged.

There are some manufacturers who are currently enforcing the above officially.

Why would a retailer need to sell on ebay/play/amazon? There's no real need for it. You have your website, you have forums, you have your store, you have your internet/mag advertising. If you're not sellng enough from that then you're not doing it properly. Places like those mentioned are rife with dodgy sellers, and if the hi-fi buying public are enticed onto these forums as their main source of product, a lot of people are going to get burned. You'll attract more dodgy people who see the popular products as a source of quick income. places like ebay should not be the sort of place to buy AV or hi-fi, especially the igher end stuff. I think ebay should just be private sellers only, NO retailers or businesses.

to be 'Frank' ... if I were in your business, and not yet selling online, or gearing up in that direction, I would be very worried indeed

Since Sony Centres took over what used to be Sony Style and customers have been able to buy from their local (independently owned) Sony Centre at that store's prices on the main UK Sony website we've done quite a bit of business online. HOWEVER, the amount of business we do in-store absolutely leaves it in the dust.

I speak to a lot of customers on a daily basis and I am increasingly finding that they really do value the in-store experience and the support and advice that is available. I have talked huge numbers of customers through their digital re-tune over the phone, often both TV and recorder, over the last few weeks and answered many more queries in-store. What internet retailer or E-Bay seller is going to offer that?

In my opinion, bricks and mortar retailers offering high standards of service and expertise have nothing to be 'very worried indeed' about at all.

 

[Frank Harvey]

dim_span:to be 'Frank' ... if I were in your business, and not yet selling online, or gearing up in that direction, I would be very worried indeedObviously we have our website. We used to sell some discontinued items on ebay, but haven't done for a couple of years - we tend to find another site is easier, and doesn't cost anything.

We don't need ebay or play to sell current items, we put a lot into marketing, which shows in how much we've grown in the past few years. Slow growth - no point in running before you can walk, as has been proven with other retailers.

 

[Anonymous]

Cool ... no probs ...glad all is working fine and hope all goes well in the future ....just gave my 2 cents worth ...

 

[Frank Harvey]

dim_span:David, I hear what you are saying, however times are changing and one needs to 'be on the ball' at all times ... at the end of the day, it all boils down to profits to stay in businenessThey definitely are changing. This year our store has managed to match our internet site.......take from that what you will.

 

[Anonymous]

Hi guys, WOW a lot said about this topic, OK back to my original question, does anyone have any idea

1 A said piece of hi-fi retailing at a said price, 2 How much are the components in the said piece of hi-fi REALLY worth, 3 Is that said piece of hi-fi worth the asking price

 

[Andrew Everard]

2 Much less than the price of the finished item, but then how much is a BMW worth if you take it from the showroom and recycle it for scrap?

3 Only you can decide that.

 

[Frank Harvey]

No one but the manufacturer will know what it costs for their parts or labour, so it's a question that won't get answered. All you can do is speculate.