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"Secrets" about the consumer audio business you may find interesting

Powerbench

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And that’s dealer margins…add to that distribution, shipping , distributor fees, commissions or salaries, warehousing and advertising. I bet the actual manufacturing cost and profit for factory albeit either in China or France etc is somewhere between 5-20%.

They would never admit the true cost.

Case in point walk into a car dealership. There is no way the dealer principal can afford a multimillion dollar building, with overhead and salaries etc without making huge dollars on sale of each unit.
The costs involved are astronomical!!
 

Descartes

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And that’s dealer margins…add to that distribution, shipping , distributor fees, commissions or salaries, warehousing and advertising. I bet the actual manufacturing cost and profit for factory albeit either in China or France etc is somewhere between 5-20%.

They would never admit the true cost.

Case in point walk into a car dealership. There is no way the dealer principal can afford a multimillion dollar building, with overhead and salaries etc without making huge dollars on sale of each unit.
The costs involved are astronomical!!
Yes costs are high but I know a number of car dealer owners and they are extremely well off! Same with Audio Dealers!
My problem with audio or car dealers is they are just “middle men”, also I really don’t understand why companies like Sony, Sound United, JVC and many others are practicing price fixing! It thought that it was illegal in the US? Why should a retailer be forced to sell products at a fixed price? MSRP is manufacturer SUGGESTED retail price, not mandated!
And industry people wonder why internet sellers are flourishing.
 

Frgirard

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Yes costs are high but I know a number of car dealer owners and they are extremely well off! Same with Audio Dealers!
My problem with audio or car dealers is they are just “middle men”, also I really don’t understand why companies like Sony, Sound United, JVC and many others are practicing price fixing! It thought that it was illegal in the US? Why should a retailer be forced to sell products at a fixed price? MSRP is manufacturer SUGGESTED retail price, not mandated!
And industry people wonder why internet sellers are flourishing.

Where had you see retailer forced to sell products at fixed price ?
 
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Frank Dernie

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I remember when working for Garrard being surprised by the various levels of profit percentage built into the recommended price.
By far the biggest margin was offered to the retailer, I was told in order to attract customers with a substantial discount whilst still making money (this was in the 1970s). I always thought it bizarre that Garrard with all the cost and risk of design and build and a huge numbers of employees got the smallest percentage.

I was told by a senior BMW engineer when they were supplying their F1 engine to Williams that the biggest budgets for a new car were development and tooling costs and marketing. The development and tooling investment made the car good and reliable and the components cheaper individually meaning the actual car itself wasn't expensive to build in parts (the tooling has to be amortized over the number of cars sold of course).
He said the marketing cost per car was greater than the bill of materials! Obviously the most important thing is to maximise the number of customers choosing to buy!

Another interesting bit, for petrolheads, was that the straight 6 M3 engine was effectively half of the V12 BMW motorsport had designed for the McLaren F1 and whilst superb on its own cost more to make than an entire 5-series car. The V8 version that replaced it was a development of a normal production engine and much cheaper to make but great marketing since it was seen as an upgrade.
 

Powerbench

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Back in the 80s an old university roommate of mine worked at Kraft Foods in Montreal when it (Kraft Dinner) was still only 50 cents a box- he said even then the box and associated graphics/advertising cost more than the cheese/pasta inside.

IMHO we as Westerners who brag of our standard of living, lifestyle, possessions and homes are slaves to a system that perpetuates and worships materialism and a system that protects and preaches that “gospel” of entitlement hence as a right and no longer a privilege.

The moral ambiguity of that selfish mindset concludes self-gain at the expense of others (whether minorities, or consumer markets or even nations).

Hence we are potentially victims of said system.
Nothing wrong with having stuff as long as we are not mastered by it.

Hence here (ASR) we test every claim in the midst of a sea of BS. Keeps one grounded in reality based on empirical fact!
 

Frgirard

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IMHO we as Westerners who brag of our standard of living, lifestyle, possessions and homes are slaves to a system that perpetuates and worships materialism and a system that protects and preaches that “gospel” of entitlement hence as a right and no longer a privilege.
more than 500 million Chinese have a standard of living equivalent to ours.
What do you think they do with their money?
 

suttondesign

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Yes costs are high but I know a number of car dealer owners and they are extremely well off! Same with Audio Dealers!
My problem with audio or car dealers is they are just “middle men”, also I really don’t understand why companies like Sony, Sound United, JVC and many others are practicing price fixing! It thought that it was illegal in the US? Why should a retailer be forced to sell products at a fixed price? MSRP is manufacturer SUGGESTED retail price, not mandated!
And industry people wonder why internet sellers are flourishing.
Vertical price fixing is legal in the US. That is, a mfr can set the minimum retail price of its own products and enforce that by terminating relations with resellers who discount.

Horizontal price fixing is illegal in the US. Mfrs cannot collude amongst themselves to fix the price of goods.
 

dlaloum

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Vertical price fixing is legal in the US. That is, a mfr can set the minimum retail price of its own products and enforce that by terminating relations with resellers who discount.

Horizontal price fixing is illegal in the US. Mfrs cannot collude amongst themselves to fix the price of goods.
Lots of stuff is "illegal" - but lack of actual policing, can result in some practices becoming normalised.

Theory of "free market" capitalism, as invented by Adam Smith, required that substantive regulation be included to ensure the "freedom" of the market through competition, with heavy regulation and its policing being an absolute requirement to ensure that distortions to that freedom of the marketplace through Monopolies, Oligopolies etc... (including various price fixing strategis... both vertical and horizontal) - were strictly avoided.

The "robber barons" and the corporations, have spent generations breaking this down, regardless of the terminology used, todays US, and many/most of the international marketplaces are far from "Free Markets" - and contrary to much of the political hot air around the topic, the policy proposals of the right (deregulation, small government, etc..) tend towards an environment that encourages monopolist behaviour (the antithesis of the free market), whereas the policies of the left (regulation, larger government - more involved ), tend towards a truer reflection of "Free Market".

Common use of the term "Free Market" is downright Orwellian "Newspeak".
 

srrxr71

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Big business at this point is just incorrigible. I don’t even want to get into and it’s too complex really to have any real insight.

However what about small business? Is anyone going to bat for us?

Either party in office it’s kind of the same. The big corps keeping screwing us. Neither left nor right gives a damn. Both sides screwing us in their own ways.

Both sides support the defacto monopolies. I don’t know which side is even talking about breaking up google.

Meanwhile the benevolent left will tax us to death and introduce regulations that only companies of a certain size can afford to comply with.
 

Frgirard

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Lots of stuff is "illegal" - but lack of actual policing, can result in some practices becoming normalised.

Theory of "free market" capitalism, as invented by Adam Smith, required that substantive regulation be included to ensure the "freedom" of the market through competition, with heavy regulation and its policing being an absolute requirement to ensure that distortions to that freedom of the marketplace through Monopolies, Oligopolies etc... (including various price fixing strategis... both vertical and horizontal) - were strictly avoided.

The "robber barons" and the corporations, have spent generations breaking this down, regardless of the terminology used, todays US, and many/most of the international marketplaces are far from "Free Markets" - and contrary to much of the political hot air around the topic, the policy proposals of the right (deregulation, small government, etc..) tend towards an environment that encourages monopolist behaviour (the antithesis of the free market), whereas the policies of the left (regulation, larger government - more involved ), tend towards a truer reflection of "Free Market".

Common use of the term "Free Market" is downright Orwellian "Newspeak".
The war is economic. the market is the Battlefield and the army the big cap.

the free market is a myth. he has never existed and will never exist.
only the European plutocrats imagined its existence. but that is changing.

Adam Smith, it's church literature. the real commercial life is the balance of power.
 

Frgirard

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Big business at this point is just incorrigible. I don’t even want to get into and it’s too complex really to have any real insight.

However what about small business? Is anyone going to bat for us?

Either party in office it’s kind of the same. The big corps keeping screwing us. Neither left nor right gives a damn. Both sides screwing us in their own ways.

Both sides support the defacto monopolies. I don’t know which side is even talking about breaking up google.

Meanwhile the benevolent left will tax us to death and introduce regulations that only companies of a certain size can afford to comply with.
i worked for UTC now Raytheon Technologie.
the rules was the same for a company with thousand employees or ten.

were the leaders of utc leftists?
 

srrxr71

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i worked for UTC now Raytheon Technologie.
the rules was the same for a company with thousand employees or ten.

were the leaders of utc leftists?
The point being that when you make compliance so complicated that you need teams to ensure compliance can a company of 10 afford to comply?
 

srrxr71

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The war is economic. the market is the Battlefield and the army the big cap.

the free market is a myth. he has never existed and will never exist.
only the European plutocrats imagined its existence. but that is changing.

Adam Smith, it's church literature. the real commercial life is the balance of power.
We know power > money. However in the local scene one restaurant can compete with another. Even compete with fast food chains. Thankfully.

On the billionaire level actually a couple of upstarts are the richest people on earth. Starting with bill gates, Steve Jobs, the Google nerds, the Facebook guy, bezos etc.

There are quite a few of them who are the new crop of oil barons. They used knowledge and connections plus hard work and extreme luck to get money and now they wield ungodly amounts of power over society.

They exemplify the statement that one makes their own luck. But that’s not enough. It takes 20 coin tosses in a row in your favor to get something like a Google.
 
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Head_Unit

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The point being that when you make compliance so complicated that you need teams to ensure compliance can a company of 10 afford to comply?
Licensing as well, hence no small companies making AirPlay stuff or HDMI or surround decoders :(
 

Rick Sykora

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Am borrowing somewhat from another post of mine, but the overhead costs from service and support are often vastly underestimated as part of a product's cost...

As for serviceability, there are tradeoffs beyond just the electronics. Even the cost to ship a return may exceed the depreciated value of the module. If not shipping expense, then the labor and handling costs can mean repair cost exceeds the cost to build new. As for older tech like thru hole, unless you drive some major volume, unlikely you get to dictate how your components are packaged. If your volume is smaller, your component packaging choices are determined by other interests. Even if your unique component may be thru-hole, other supporting components may only be available as surface mount.

I worked in industrial electronics for decades and our customers have a high desire for long service life for automation electronics. Even with some significant volume, our volume did not compare with consumer electronics. For example, CPUs and memory components are key to controllers. As those components have much shorter life cycles than the life cycle of the controller, you are forced to consider constant redesigning or carrying large older component inventories. In either case, these are added costs to longer product life.

As for support, staffing for handling inquiries and repairs is another business within a business. There is staff needed to do everyday tasks, but a single rework or recall (much worse) can tax resources and significantly eat into profit margins. For that matter, support is often unpopular with management. Too often it is viewed as an afterthought and not included on the overall product strategy. My son recently asked me to look into his dead electric scooter. It was not powering up. I confirmed the battery was charging and then sought some info on fusing. The company phone support was one person who insisted it was the $200 battery and could not tell me anything about fusing. Worse yet, their technical escalation was via email and even after proof of a good battery, wanted us to replace the battery. The battery was putting out the nominal voltage (42 Vdc), so I asked if it were bad, why was it not enough power (likely 3 volts) to operate the display? I never got a response. This was a smaller company but have experienced comparable service issues with bigger companies with just obtaining a simple replacement part. Am sure many of you have similar complaints as well. :eek:
 

Head_Unit

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I was told by a senior BMW engineer when they were supplying their F1 engine to Williams that the biggest budgets for a new car were development and tooling costs and marketing.
I worked for a large autosound company and would say similar. Way back when, most of the cost of a fancy cassette deck was fancy physical parts. Fast forward and all the design and production and TEST engineering, along with tooling, added up to amortization of roughly HALF the cost. In other words, take the parts cost and double it before even starting to profit.
 

Doodski

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I worked for a large autosound company and would say similar. Way back when, most of the cost of a fancy cassette deck was fancy physical parts. Fast forward and all the design and production and TEST engineering, along with tooling, added up to amortization of roughly HALF the cost. In other words, take the parts cost and double it before even starting to profit.
I specialized in component level high end car audio repair for some years and found it to be a wonderful interesting and pleasing occupation. I worked the monster amps and all sorts of head units from cassette, DAT and mini-disc. I found the Soundstream TC-308 to be the best cassette head unit of all the cassette head units I ever serviced in and out of warranty. It had adjustable play trim at the front panel & had the most interesting cassette mechanism inside that had the lowest wow & flutter I have ever spec'd in a car head unit and better than nearly all home cassette decks other than maybe 2 models that where really low W&F too. It was a limited production unit that cost upwards of retail CDN $2K and people where buying them because they sounded so good. I always wondered what the cost of building such a unit would be and I think you probably hit the nail on the head. A thousand+ dollars would maybe be enough for such a head unit. The mechanism is a work of art.
p1.jpg

dscf0167-jpg.16547
 

Inner Space

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I was told by a senior BMW engineer when they were supplying their F1 engine to Williams that the biggest budgets for a new car were development and tooling costs and marketing.
I worked on a lot of car commercials in the 1980s. Budgets were lavish. A guy from Honda told me that a thousand dollars out of each new car's sticker was spent on advertising it.
 
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