Why is there hardly any price competition in hifi?

[Koeitje]

I've been looking for a new pair of speakers for a while. Currently I've got 2 brands/ranges on my shortlist: Kef R-series and the Revel Performa3. So I looked around if I can find a deal on either of these, but they are priced the same everywhere. Not just in The Netherlands, but all across Europe (to be fair, KEF is 10% cheaper in the UK). Everybody seems to be advertising with the MSRP. So I am guessing there is some unwritten rule by dealers to only advertise the MSRP and not some form of price fixing. Can anyone explain to me why there doesn't seem to be any form of price competition going on (apart from very popular B&W models and such)? Pick any other consumer electronics product and you will find many different offerings, but for hifi it all seems to be exactly the same? Why is that?

Should I just ask for a discount, because paying MSRP seems to be crazy? I work for a big (online) retailer were we sell some hifi speakers (not brands I'm interested in, but very well known and respected brands) and the margins on them are pretty high. Probably the highest of all the electronics we sell...

 

[Ron Texas]

In the US a lot of stuff is price protected. Dealers sign a contract not to sell for less than the manufacturer dictates. Hi Fi is a luxury item and this is the case with most luxury items.

 

[GaryS]

It seems like Unified Pricing Agreements have also made their way into TVs and other electronics, ie computers and parts.

 

[Koeitje]

In the US a lot of stuff is price protected. Dealers sign a contract not to sell for less than the manufacturer dictates. Hi Fi is a luxury item and this is the case with most luxury items.

That's illegal in the EU and I know we as a company take that very seriously. But still there are some products where that magically happens (Apple, Miele) because we just price the same as the rest of the market and vice versa.

 

[RayDunzl]

Make an offer.

They can accept, decline, or try to negotiate further.

 

[Koeitje]

Make an offer.

They can accept, decline, or try to negotiate further.

That's what I'll will end up doing indeed, it was just an observation I made while looking around for dealers.

I understand its a luxury product, but so are OLED TV's, high-end monitors, high-end GPU's et cetera....for which no shop sells it for exactly the same price as the other.

 

[RayDunzl]

In the US a lot of stuff is price protected. Dealers sign a contract not to sell for less than the manufacturer dictates. Hi Fi is a luxury item and this is the case with most luxury items.

Rules, subject to interpretation, of course...

https://www.ftc.gov/tips-advice/com...ws/dealings-supply-chain/manufacturer-imposed

 

[Koeitje]

Rules, subject to interpretation, of course...

https://www.ftc.gov/tips-advice/com...ws/dealings-supply-chain/manufacturer-imposed

"However, the manufacturer can decide not to use distributors that do not adhere to its MSRP. "

I'm pretty sure this wont fly in the EU. But of course they can mask it under some fake reason instead.

 

[Ron Texas]

The US isn't the EU. It used to be worse here. There was something called "fair trade". If one dealer signed a contract to observe manufacturer's pricing all dealers in the state were bound.

The ability to get dealers to sign these contracts depends primarily on the strength of the brand. If there is enough competition in the space dealers will carry a different product. While price protection is common with luxury items there are always exceptions.

 

[TheWalkman]

That's illegal in the EU and I know we as a company take that very seriously. But still there are some products where that magically happens (Apple, Miele) because we just price the same as the rest of the market and vice versa.

It's illegal, as well, in the US, though dealers hide behind this.

From https://www.ftc.gov/tips-advice/com...ws/dealings-supply-chain/manufacturer-imposed

Q: One of my suppliers marks its products with a Manufacturer Suggested Retail Price (MSRP). Do I have to charge this price?
A: The key word is "suggested." A dealer is free to set the retail price of the products it sells. A dealer can set the price at the MSRP or at a different price, as long as the dealer comes to that decision on its own. However, the manufacturer can decide not to use distributors that do not adhere to its MSRP.

 

[mansr]

Since we're talking about hi-fi, I'm surprised there isn't reverse competition. "If you find this product for a higher price elsewhere, we'll match it to make sure you get the best sound."

 

[A800]

Since we're talking about hi-fi, I'm surprised there isn't reverse competition. "If you find this product for a higher price elsewhere, we'll match it to make sure you get the best sound."

Impressive.

 

[dwkdnvr]

My understanding is that the agreements in the US are typically regarding 'advertised price' rather than actual sales price. So, the dealer can't advertise or 'list' the product for less than the MSRP or will risk losing the product line, but there isn't actually any limitation on what they actually sell for. IMHO this arrangement for the most part helps everyone to some degree - you actually have to engage directly with a dealer to get any form of discount, which helps to protect to a degree against online sales.
Of course, it's been ages since I've actually been to a brick-and-morter dealer, so I could we way off base.

 

[mhardy6647]

Hmm... I look at this question from a very different perspective. There is plenty of what I would consider price competition in hifi -- from my perspective, it is all about value.

If the quality of the whole package is worth the MSRP, it's a good value -- what difference does it make if you cannot get some dealer to knock a hundred bucks (or Euro or what have you) off the price?

Conversely, if, say, ELAC offers 99.7% of the "whole package" as, say, KEF (performance, aesthetics, construction, etc.) at, say, 70% of the price (MSRP) -- why the heck buy the KEF?

I know that some folks just want to barter -- I am not one of those folks, so I just don't get that form of human competitiveness.

 

[mansr]

I don't like the idea of having to haggle to get the "real" price of stuff. Now different retailers surely have different overheads, so when they all advertise a product at £999.95, at least some of them are ripping you off. With real competition, one can rationally look at the offers in the low quartile (assuming the rest are rip-offs) and weigh them according to other factors such as convenience, stock status, shipping cost, etc.

 

[direstraitsfan98]

It really depends on the brand. I think the brands that are extremely sensitive about their prices are the ones most at fault of manipulation of their prices thru the dealer networks. If you can't easily find price for something on google, it's most likely they are doing a lot of pretty high level back end deals with the distributor to keep price lists tight lipped.

You can find prices for KEF just by google'ing the product and price. Visions.ca, one ofthe many stores that sells KEF lists prices for all their products, and yes, you can negotiate 20-30% off list just by communicating with them. Other brands, like Accuphase, Bonicke, the dealers are very, very reluctant to give out prices unless you ask about 20 times in a row. I am pretty sure that the main distributor for Accuphase, Audio Alliance, has some sort of policy in place with dealers to not give out prices unless as a last resort sort of situation.

Just my 2c on the matter. I don't really like it at all.

 

[Mnyb]

In practice, there is price fixing in high end hifi in Europe. My Meridian equipment was partly ex demo stuff from the dealer and I negotiated some , that was possible.

But remember what Krell did . Many of thier amps are much cheaper in the US both used and new and as demo units . In some cases you just revire the primaries on the transformer and presto the amp is now 230v.
They installed software to detect mains frequency and made it so that only the importer could revire and unlock them for a fee , that made grey import from the US uneconomical

 

[Koeitje]

It really depends on the brand. I think the brands that are extremely sensitive about their prices are the ones most at fault of manipulation of their prices thru the dealer networks. If you can't easily find price for something on google, it's most likely they are doing a lot of pretty high level back end deals with the distributor to keep price lists tight lipped.

You can find prices for KEF just by google'ing the product and price. Visions.ca, one ofthe many stores that sells KEF lists prices for all their products, and yes, you can negotiate 20-30% off list just by communicating with them. Other brands, like Accuphase, Bonicke, the dealers are very, very reluctant to give out prices unless you ask about 20 times in a row. I am pretty sure that the main distributor for Accuphase, Audio Alliance, has some sort of policy in place with dealers to not give out prices unless as a last resort sort of situation.

Just my 2c on the matter. I don't really like it at all.

All EU shops sell the R3 for €800 (or 798 or whatever looks better). I understand that you don't want to advertise the bottom price, that makes sense...but I'd at least expect somebody to sell them for €750 a piece. The margin for that is easily there and would make you take most of the market as a result. So something else must be going on there.

 

[direstraitsfan98]

KEF products go on sale few times a year. At least here in Canada, they do. They don't in Europe? Also, the 1600 euros a pair is still cheaper then the actual list price of the R3, which is $1999/€1999. To give another example, the KEF LS50 has been on sale brand new for $999 CAD for over a year now, even though it's technically a $1499 USD / $2100 CAD speaker.

 

[Koeitje]

KEF products go on sale few times a year. At least here in Canada, they do. They don't in Europe? Also, the 1600 euros a pair is still cheaper then the actual list price of the R3, which is $1999/€1999. To give another example, the KEF LS50 has been on sale brand new for $999 CAD for over a year now, even though it's technically a $1499 USD / $2100 CAD speaker.

Well I've only been watching the prices for a couple of months. 1600 euro's a pair is the price you can buy them directly from Kef. They are probably more expensive in the US because it being an European brand (like Revel is more expensive here).

In the UK they are cheaper, but this a 100% looks like price fixing to me.
https://pricespy.co.uk/audio-video/speakers-headphones/surround-bookshelf-speakers/kef-r3--p4941652