Why is there hardly any price competition in hifi?

[Daverz]

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.

Yeah, my local high-end boutique gives a 10% "friend of the store" discount, but I can't remember how much I had to spend before I was considered a "friend of the store". I think it was only that I bought a lot of records from them. But I also had upgrade-itis pretty bad, so I'm sure they were happy to see my coming.

 

[amirm]

As noted, the contractual requirement is to not advertise below certain price. So you will not be able to use online price shopping tools to find a discount.

While dealers can discount, do that a lot and some brands will drop you. After all, it is their choice who sells their products and there is no obligation to sell something to a certain dealer.

All of this leads to odd situations. Just bough an LG TV and they gave me a $100 to buy a $99 insurance with it! LG won't let them advertise or sell at lower price so they bundle this insurance with it as a way to be more competitive with another seller elsewhere.

 

[carlob]

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.

1487€ shipping included but I don’t think they ship outside Italy: https://www.magicsound.it/p/kef-r3/

 

[thewas]

As said dealers are afraid of getting dropped by some brands so they won't advertise lower prices online.
Here in Germany many believe that for example for B&W you always pay the list price, but if you get your butt up and go to a dealer and have a honest and serious talk you can get some very serious discounts.
The problem is that "generation internet" thinks prices can only googled or asked per email and exactly there you won't get any discounts as its a written evidence which dealer don't want.

 

[pozz]

$0.02: It's due to each manufacturer's claim to uniqueness. Without measurements and a clear understanding of what they mean these products are not comparable and so can be priced without too much reference to competitors.

 

[suttondesign]

As noted, the contractual requirement is to not advertise below certain price. So you will not be able to use online price shopping tools to find a discount.
While dealers can discount, do that a lot and some brands will drop you. After all, it is their choice who sells their products and there is no obligation to sell something to a certain dealer.

I handle Benchmark, Topping, Matrix Audio, Stax, and some others. Some of these companies are very strict about both advertising and the actual sale price. If I discount even the actual sale price, they will drop me as a dealer. How do they know? The warranty card and proof of purchase (receipt, bill of sale, or just a requirement that the customer report the sales price in order to get the warranty).

This form of resale price maintenance is legal in the U.S. What is not legal is conspiring with competitors to fix prices.

What is so unfair to me is that some of the mfrs. also sell at full retail but can beat me by offering no-hassle returns within 30 days and no sales tax to most other states. They also offer B-stock at reduced prices. The best I can do is give credit for something I take in trade as part of the sale. Hint.

 

[mansr]

As said dealers are afraid of getting dropped by some brands so they won't advertise lower prices online.

That's fucked up. Assuming the manufacturer gets paid the same amount regardless, a lower retail price should lead to more sales, something any normal manufacturer would be pleased with.

 

[suttondesign]

Here is what they say: "It cheapens the brand."

 

[thewas]

That's fucked up. Assuming the manufacturer gets paid the same amount regardless, a lower retail price should lead to more sales, something any normal manufacturer would be pleased with.

Their logic is that such behaviour can lead in the long term to a "cheapo = not high end" image and thus also less sales.

 

[mansr]

How do they know? The warranty card and proof of purchase (receipt, bill of sale, or just a requirement that the customer report the sales price in order to get the warranty).

Another good thing about Europe: no warranty cards.

 

[suttondesign]

In theory, I am locally (within 100 miles or so) exclusive on some lines, though in practice, since everything is interwebs now, I'm competing with retailers all over the world. When someone wants to spend an hour comparing two DAC's and then buys it somewhere else, I lose big-time. And that happens more than it doesn't happen. I rarely do auditioning any more because it's totally a loss for me to allow tire-kicking, and then customers want a discount too. The answer is probably that everything should be sold through a few online retailers except for massively expensive things that must be auditioned, like speakers. Oh well, I make a little on the side to put my kids in private school and get to feed my hobby along the way.

 

[mansr]

Their logic is that such behaviour can lead in the long term to a "cheapo = not high end" image and thus also less sales.

Nobody will sell for less than wholesale price, so the manufacturer always has control of the general level.

 

[thewas]

Nobody will sell for less than wholesale price, so the manufacturer always has control of the general level.

As said its more about the brand image. High End products have often very high margins due to small sale numbers and if some dealers sell them alot cheaper then buyers who paid alot more will be upset and also dealers which just have to live on such brands won't survive, everything has 2 sides.

Another good thing about Europe: no warranty cards.

Some companies also get around this in Europe by offering extended warranty if you send in the warranty cards.

 

[mansr]

As said its more about the brand image. High End products have often very high margins due to small sale numbers and if some dealers sell them alot cheaper then buyers who paid alot more will be upset and also dealers which just have to live on such brands won't survive, everything has 2 sides.

If you feel that nobody should be able to buy your thing for less than $x, then don't sell it for less. Easy.

 

[Koeitje]

As said its more about the brand image. High End products have often very high margins due to small sale numbers and if some dealers sell them alot cheaper then buyers who paid alot more will be upset and also dealers which just have to live on such brands won't survive, everything has 2 sides.

The margins on the mass movers such as the B&W 600 series are already crazy high, so its not just high-end products.

 

[Chrispy]

Thought the demand of a warranty card return/registration thing was not enforceable here in the US (or is that state by state only?)....I've seen some entice the voluntary giving of marketing info (i.e. the warranty card/registration) with an extended warranty, tho....

 

[thewas]

If you feel that nobody should be able to buy your thing for less than $x, then don't sell it for less. Easy.

As I wrote above some dedicated high end dealer with a nice show room and good service often needs very high margins to survive and if prices are freed than some bigger or just mainly online competitors with poorer services can destroy them by doing some "destructive competition".

Please don't get me wrong, I am not a big fan of such price fixations but can also partially understand why the are used.

 

[sejarzo]

There is also far less competition now in high end brick and mortar stores than there was in the 1970s-1980s.

I never paid MSRP back then. The way I did it was to buy at least two items at once. I bought my SME 3009III tonearm, a Denon DL103D cartridge, a Marcof pre-preamp, and a pair of DCM Time Windows and the receipt showed a single package price for all the items. (Can you tell I read the Audio Critic back in the day? That went along with my Apt Holman preamp and Apt 1 power amp.)

Same thing when we finished our home theater in 2004. Hitachi TV with stand, plus Paradigm Studio l/c/r/surrounds with stands, all on one receipt, with a package price.

If I can ask, Amir....isn't that how most whole-home solutions would be sold? How does the manufacturer really know what the customer is charged for their component(s) in such a case?

 

[wje]

I have an audio dealer local to me and when I was looking at SVS subs about 4 months back, I went into their store and inquired about a discount on the same item that they were selling on Ebay. They responded with the same price as being charged on Ebay. So, instead of giving me a 10 - 15% discount to buy directly from their store, they'd pay the 10% Ebay seller's fees, shipping charges as well as the 3.9% PayPal fees. SMH.

 

[sejarzo]

Actually, it's not only high end. Even in general consumer stereo, there's now Best Buy and nothing else, at least here in our area. Circuit City gone, HHGregg (which wasn't really that much of a music gear store anyway) gone, etc. etc.