Dealer Cost Vs List Price

From detritu–(at)–x.netcom.com Sun Oct 24 10:42:22 CDT 1999
From: detritu–(at)–x.netcom.com(Lord Valve)
Newsgroups: alt.guitar.amps
Subject: Re: Company Muscle Re: PRICE MISQUOTE ON MESA TUBES (SEE CORRECTION)
Date: 23 Oct 1999 06:00:24 GMT
Xref: geraldo.cc.utexas.edu alt.guitar.amps:210511

In <19991022145332.23965.0000002--(at)--g-cg1.aol.com> deidelber–(at)–ol.com
(DEidelberg) writes:
>
>>>(I forget the real
>number, but the dealer discount was something on the order of 30% or
so)…
>My friend’s amp was ready a few days after, and when he went to the
factory
>pick it up, he was approached by T.L. who was apparently quite upset
and
>told my friend that he had done the company a “great disservice.” My
friend
>was pissed as hell, as you can imagine, and that was the last time he
dealt
>with Boogie for any reason.<<
>
>Why was your friend pissed off? He saw some confidential information
while
>”buzzing around the factory.” Then he disclosed this information to
the
>public. T.L. had reason to be pissed off.
>
>By the way, even if the dealer cost was 30% off list (don’t forget to
add
>shipping and overhead for the store), that profit margin really isn’t
bad at
>all. Most of the music gear goes to dealers at 50% off list.

Lord Valve Speaketh:
Lots of people in the retail trades make a big deal out of
“protecting” dealer price lists and such. That’s where
codewords like “keystone” and the like came from. My take
on it is this: I don’t give a rat’s ass if anyone knows
what my cost on an item is; they are free to buy or not
to buy as they choose. Many musicians, for instance, have
no idea that strings can be had on the wholesale level for
as little as 20 cents on the dollar. (This means that a
set of strings which retails for ten bucks only costs the
dealer two.) In this case, the dealer can offer the customer
a half-price “special,” where two sets of strings are sold
for the retail price of one set. On its face, this looks
like a great deal for the consumer, but in actuality the
dealer is taking in 2-1/2 times his cost. Of course, this
is an extreme example; a *large* number of sets must be
purchased for the dealer to obtain this much of a discount,
and that pretty well limits deals like this to the megabucks
outfits like Guitar Center, Musician’s Friend, etc. Some
items (Mesa amps, for instance) don’t carry a large markup.
Mesa’s discount schedule is 25% on some items, 30% on
others. Behringer stuff is 50% (keystone) as is QSC.
Other lines (like Studiomaster) have different schedules
for different items; the higher-end recording consoles
carr a 40% discount, while the low-end mixers go for
50% of retail. Sometimes the net price to the dealer
depends on how quickly the invoice is settled…the
invoice terms may be “10%/30, net/31.” This means that
if the dealer pays the invoice in 30 days or less, a 10%
additional discount is applied to the total. A $100
item may have an invoice price of $60, with a 10% discount
for prompt payment; this puts the net price for the item
at $54, which is a 46% discount from retail. Many dealers
will split the markup with the customer by offering a 23%
discount on the item. Customer’s price = $77, dealer’s
profit = $23, which is a decent markup. I don’t know why
they don’t teach this stuff in the third grade; many people
have no idea how business is actually done. This probably
accounts for the 90% small-business failure rate. At any
rate, if anyone wants to know the discount schedule for anything,
I’ll be glad to tell you if I have the info. It’s not like
selling missile secrets to the Chinese, for pete’s sake.

Lord Valve

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