What Dealers Pay
From detritu–(at)–x.netcom.com Fri May 29 12:41:00 CDT 1998
From: detritu–(at)–x.netcom.com(Lord Valve)
Newsgroups: alt.guitar,rec.music.makers.guitar,alt.guitar.amps
Subject: Re: ?Dealers, Prices, At Cost, Markup????
Date: 29 May 1998 07:36:11 GMT
X-NETCOM-Date: Fri May 29 12:36:11 AM PDT 1998
Xref: geraldo.cc.utexas.edu alt.guitar:264263 rec.music.makers.guitar:207749 alt.guitar.amps:107643
In
>
>
>I am curious to know how much do music stores (especially large chains
or
>stores such as Sam ASh, Guitar Center & Musicians Friend) markup the
>prices after buying them at cost. What is considered at cost normally
for
>guitars, amps and the likes (strings, tuners, etc..). I had a friend
who
>told me after speaking to someone who used to work at Sam Ash in the
drum
>department, that the drums were marked up 110% after buying at cost. I
was
>wondering how much these stores normally buy the equipment for.
>
>
Lord Valve Speaketh:
I own a music store. This is the straight dope. Things like
accessories (cords, strings, straps, etc.) are usually marked up the
highest. In the quantities the large chains (like Guitar Center, Sam
Ash, etc.) deal with, it is not at all uncommon for them to buy strings
at 15 cents on the dollar. This means that a set of strings which
retails for 5 dollars is bought at wholesale for 75 cents. If they
sell you the strings at 50% discount (2 for the price of 1), you pay
$2.50 per set. This puts the markup at 333%, for a gross profit of
$1.75 per set. Big-ticket items, like mixers and power amps, are a
different matter. Many of these items carry a 40% dealer discount,
with some at 50%. At a 40% discount to the dealer, a mixer which
retails for $500 costs the dealer $300. If the dealer sells the mixer
for 25% off, this results in a gross profit of $75, or a markup of 25%.
The mega-dealers often get off-sheet pricing; for instance, Guitar
Center gets a 9% additional discount from “end-column” pricing. This
means that a QSC amp which wholesales for $500 (the price *I* pay)
costs Guitar Center $455…thus giving them a $45 advantage when
selling the unit to the public. Guitar Center, however, has *no*
service department (at least, the one here in Denver doesn’t)…and my
store *does.* That’s *my* advantage! 🙂 The mega-stores can often
cut deals with manufacturers for special “one-time” pricing…for
instance, Sam Ash might cut a deal with Shure on 5,000 SM-58s at only
75% of the usual wholesale price, and then sell them to the public at
or near cost. This brings customers into the store; they are also
going to try to sell you a stand, cable, windscreen, case, etc. with
the mike, and those will *not* be heavily discounted. Some lines, like
Ashly, for instance, do not provide off-sheet pricing to *any* store,
regardless of size. Ashly has one price for 1-5 units, and another for
6 units and up…end of story. This means that prices on Ashly will be
fairly competitive, wherever you go. Many manufacturers are now
setting MAP guidelines; “MAP” stands for Minimum Advertised Price, and
no dealers are allowed to advertise a MAPed item for less than the set
price. (This doesn’t mean they can’t sell it for less, just that they
can’t advertise it for less.) Behringer is one line that does this…
so if you check the same item in your Musician’s Friend, Sam Ash, Music
Emporium, and American Musical Supply catalogs, you’ll see that the
prices are all the same. *Ask* for a better deal on the phone, and you
*might* get it. Hope this clears things up…
Lord Valve
Website at: http://www.freeyellow.com/members2/lord-valve/
“I got the chop…I’ll never get popped.” – Tower of Power
