From bruce@ashbysolutions.com Tue Dec 06 12:26:55 2005
Subject:Re: fair CX-3 price

Hi,

>Most of the products at retail stores have a markup of anywhere from
>50% to 300% of the wholesale price.

This is one of the oldest and most misunderstood "truths" in music retail. I'm a music dealer, and I know better.

If one is talking about no-name drumsticks, knock-off brands of school or orchestra and band instruments, etc. then your statement may be true. If the product in question is a piece of used gear that the store practically stole from an unsuspecting owner, then it might also be true. If, however, you are talking about the mainstream products from major brands (Fender, Roland, etc.) or boutique products (Speakeasy, MIDI Solutions, etc.) the markups aren't nearly as big -- unless they happen to be closeout items. Yes, that $99 "Christmas Special" guitar set might have cost the dealer $50, but that Fender Twin or Motif 6 in the window is not in the same category. If it was, the new prices on eBay would be so low that used gear couldn't be sold there anymore. (Many of the "new in box" items offered for sale on eBay are direct warehouse-to-customer deliveries where the seller is more than happy to pocket $15-25 per sale, since he/she has exerted no more effort than to write an ad,
and then email the manufacturer with the shipping info.)

If a name product has an SRP of say, $200, I can pretty much guarantee that dealers are paying more the $50-75 that your statement implies. After that, shipping costs, credit card fees, etc. come out of the dealers side.

If someone bought a brand new $2595 SRP CX-3 for $550, and the dealer wasn't just dumping a line that wasn't selling, then a fair amount of used gear went into the sale, too.

Regards,

-BW

--
Bruce Wahler
Ashby Solutions™ http://music.ashbysolutions.com
978.386.7389 voice/fax
bruce@ashbysolutions.com

At 04:18 PM 12/6/2005 +0000, you wrote:
>retailer has to make a profit to stay in business. The markup is
>determined by how much competition the retailer has and/or the
>availability of the product. There is nothing wrong with making a
>profit. And if the retailer is not competitive on their price they
>won't be is business for long. That's Economics 101.
>
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