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Davewhityetagain

Trade price

40 posts in this topic

:cool::cool:Asked for a price list off a dealer, sent me a mixed up list some prices are trade and others RRP :shock:

Now as Icehockey Man is practiceing sums what's the mark up if it costs say £10 and you sell at £89

answers both in percentage and a fraction please

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If £89 is inc vat and the £10 is the ex vat price he pays, that's an 86.8% margin for the dealer. Unusually high.

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Yes,89% is ludicrous(spelling),but sometimes I get the feeling there isa witch hunt for some people to make a living on hifi forums,if someone does a good job,provides you with the kit you want and enjoy,at the end of the day does it really matter how much someone makes?

There is of course the obscene but just look at clothes,I see shops sellings 60% off,so how much are they making?but people still buy, I don't see the big deal.

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Trade prices are usually net,so you need to add VAT 17.5%?,still not much on a tenner.

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Although 86% would seem to be an excessive margin for component hifi, given that the purchase cost for this item is only £10 it suggests it is an accessory such as an interconnect or a metre of cable off a reel. Such items bought in bulk can involve a substantial initial investment on the part of a dealer and may take a while to sell meaning that their money is tied up.

We all want our dealers to have a wide range of such cables available at different prices. Such a margin may be what it takes to make that investment worthwhile.

It's also a sad fact that dealers who rely solely on the 30-50% margin available selling component hi-fi tend to struggle. If they can add value by terminating their own cables etc they can charge more and make themselves more profitable.

Anyone who thinks hi-fi retailing is a 'get rich quick' way of making a living should think again. I know a few retailers and the successful ones are those who can combine their selling with a bit of small scale 'manufacturing' on the side. Only way to be profitable it seems.

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I am calculating the dealer margin which is found by

100 -((purhase price ex vat/selling price ex vat) x 100)

in this case

100 - ((£10/£75.74) x 100)

= 100 - (13.2)

=86.8%

That is how dealer margins are worked out. Profit calculations are something else.

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A percentage is the top part of a fraction whose bottom part is 100.

So 50% means 'half of' and 25% means 'a quarter of'. 100% means the complete quantity.

wpc1.gif

Why bother with them?

Percentages are useful because they make it very easy to compare things.

For example, suppose the marks in two successive tests are 67/80 and 51/60. It is not very easy to say which of these was best. Percentages use our ordinary number system of 10's, 100's etc and, because they are out of 100 rather than 10, we avoid a lot of the decimal points which make some people twitchy

Example

The price of some apples is increased from 48p to 67p. By how much percent has the price increased by?

% change = 67 - 48 × 100 = 39.58%

48

this best of all

http://www.projects.ex.ac.uk/trol/scol/calpcent.htm

original value £10 sell at £89 = 790%

try a few

for example £350 pre amp sell at £750 = 100%

that ones for Icehockeyman

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Pray tell, what item sold by a HiFi shop costs £10 and retails at £89? Sounds rather strange to me!

Margins on kit in the trade are usually in the order of 37%, providing you pay the invoice within 7 days (30% + 10% settlement). In simple terms that means that a £1000 retail item costs the dealer about £630. £65 of the £370 gross profit goes straight to the VAT man, the remaining £305 pays the rent, rates, salaries, utilities etc.

Some items have bigger margins, speakers are generally a little higher, accessories like cables tend to be the highest, but nowhere near the 87% in Dave's example.

So looking at it another way, that 10% discount you weedle of the dealer actually represents 27% of his wages. This 'negotiation' usually happens after all the dems etc, so how would you like it if your boss came up to you on payday and tried to pay you 27% less....

Ed.

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Mr Ed wrote:

Pray tell, what item sold by a HiFi shop costs £10 and retails at £89? Sounds rather strange to me!

Some items have bigger margins, speakers are generally a little higher, accessories like cables tend to be the highest, but nowhere near the 87% in Dave's example.

If you read the post its not 87% its 790% christ I am going blind and can read the post

as for the item its speaker cable

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murray johnson wrote:

It's also a sad fact that dealers who rely solely on the 30-50% margin available selling component hi-fi tend to struggle. If they can add value by terminating their own cables etc they can charge more and make themselves more profitable.

Anyone who thinks hi-fi retailing is a 'get rich quick' way of making a living should think again. I know a few retailers and the successful ones are those who can combine their selling with a bit of small scale 'manufacturing' on the side. Only way to be profitable it seems.

Exactly,if you get 50% even on cables your very lucky,most people buy small items in the richer sounds price bracket,I think for survival you also need a internet shop,low over heads,I'm glad I don't have staff to pay.

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You're sitting at home thinking what to do. HiFi retailer crosses your mind, so you investigate. You discover that small dealers (like you must beto start) make a mark up of around 30 - 60% on kit. You do your sums and work out that provided you sell 'x' stock, you can make a living. Aftr a year or so you want to expand and grow. There are many paths to follow but these two routes occur. Either gain a name as a friendly, well priced dealer, neccesarily small and with limited stock, but with specialist knowledge, or bung an extra 10- 20% on mark up and use the money to grow. In the latter case, I hope you go bust, in the former, may you flourish and grow. There is no easy money long term solution. Hard work and expertise are the way to go though.

A small analogy...don't you complain about horrendous mark ups on restraunt wine. I was offered a bottle I know retails at around £15, for £59 recently! Bloody nearly 300%. I know it's wrong and the answer to' that's the way they make their money' is, ' if their food was fantastic and well priced, they'd be packed every night. I think everyone here would shop somewhere where the goods were a reasonable price, the staff were knowledgable and friendly and the stock well matched and sourced.

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Dave,

I could have guessed that it was cable, but what cable? I'm guessing that it is the most basic bellwire and the £10 repesents a full 100m roll, selling it at 89p/m allows for measuring and cutting 2 x 5m lengths. If it is, then someone is still taking the piss, but it would hardly be worth mentioning.

Ed.

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murray johnson wrote:

Anyone who thinks hi-fi retailing is a 'get rich quick' way of making a living should think again. I know a few retailers and the successful ones are those who can combine their selling with a bit of small scale 'manufacturing' on the side. Only way to be profitable it seems.

Ones branching out into AV will survie as will the smaller ones looking after the turntable fans

With makers cutting the number of dealers they supply, Arcam for example getting rid of a third its going to be a blood bath over the next 18 months I know of two dealers gone Tony I think spoke of a couple, Audio T closing a branch Sevenoaks getting rid of a branch even Richersounds has plans to get rid of couple :shock:

With basics cossting more ie gas and electric petrol and council tax up lots, people have less to spend on hi fi

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