Retailers's profit on keyboards

[J. Dan]

I don't know specific margins, but I know a guy who owns a music store that's been around since before the GC's of the world, and the internet/catalog houses. He said since all of that has come around, he basically makes no money on the big ticket items, they just get people in the door. Now since he's smaller, that may just be because he can't get the same volume discount as the big guys. But in either case, with all of the prices so well advertised, GC and the internet dictate the price he can charge, and he makes nothing. Instead, he makes his margins on cables, reeds, intrument rentals, and lessons. He's been successful by focussing on churches and schools, and prividing more technical support and design assistance to people who need it.

[zxcvbnm098]

My experience at retail is that the GC's of the world actually do NOT get a better price break on, say , a new Roland keyboard. The Mom and Pop store may have to "floor" the item, i.e. use credit to bring it in stock, which brings up their price, but the wholesale price from Roland is the same for GC as your local dealer, even though GC may buy more.

 

Where GC kills the local stores is when an item is discontinued. GC can go to a manufacturer and buy up the entire stock of a given item at a blow-out wholesale price and advertise it in their flyer for a greatly reduced price, considerably less than even the wholesale cost would have been just weeks before. Smaller stores may still have stock on said item in their inventory, purchased at the old wholesale cost. GC is now advertising it for less than they (the local dealer) paid for it. This puts them in a horrible bind, and they rain down anger on their local rep for said product, when in fact these deals are cut at the home office level and even he was out of the loop. Sometimes they make good to the local dealers and reduce their invoices, but often times they don't.

 

Although Synthoid certainly got an amazing deal, my experience at GC is that they often do worse deals than the online retailers because they add an additional 10% to their wholesale cost on their books for what they call "Ad pack", i.e the cost of their considerable advertising they do. So if a salesman sells the item that lists for $100, and the dealer cost is $60, he looks it up in his computer and it tells him their cost is actually $66, and he only gets paid commission on the profit above $66. This is one of the many reason GC goes through sales people like socks.......

[MikeT156]

80s-LZ

 

Thats the case with all the small music dealers. I don't know any of the little guys that can charge MAP price on big ticket items and have people willing to pluck down their cash to buy from them. Small dealers often times don't have the people resources to know the products they sell, and paying a good tech costs money if they want him/her to stay. I've seen some decent people that were working for the little guys leave because they couldn't make any money. Small dealers can't "make it up on volume", although I never bought into that business model. It takes time and people resources to sell anything, so if you aren't making any money on it, all you are doing is trading dollars.

 

Many of these small stores are gone. Some deserved to fail, others couldn't compete and gave up. Conversely, if a dealer is going to be a box mover, we can't expect any kind of after the sale service. But we can expect a rock bottom price, I do. Instruments I may needed serviced I buy from my regional dealer if he handles the line. Otherwise I buy on price and fend for myself.

 

 

 

Mike T.

 

[HAMEGZ]

Back in the 80s and 90s I was friends with a local music store owner. He told me he had three tiers, A, B, and C cost items. ROlands then were B items(60), Peavey were A Items(50).

His cost of operation was relatively cheaper then, and he would let you take 30-90 days to pay on installments, depending on who you were, in house.PLUS, the personal service on set up or warranty on items purchased there.

 

I could get a roland keyboard for 30 off, take 90 OR 120 days to pay the payments, and he would order service manuals for me .

 

Of course, there were no internet mail order stores in those days, the alternative was driving to the "big city" music stores.In those days those big city stores were piano/organ and band instrument stores that were getting into the MI scene, and there were no discounts. A store selling Acoustic pianos had no list price, it was up to the dealer.

 

A few brave souls opened stores for the working musician and offered equipment catering to us and even discounts, and the rest is history.

 

There still are dealers that have personal service here in this forum for one , but they are not within driving distance for me .

 

Just reminiscing ......

[Steveaudio]

I'm from the Olden Days, where to get a good price on KB equip., I'd drive to NYC & compare prices at Sam Ash & Manny's. Bought my Fender Rhodes Stage '73 that way, after driving 5 hours each way from Boston (fun trip, with a couple of my roommates, starting out at 5 am, & I earned my living with that Rhodes for 20 years). I never thought about the "Retailer's profit", just about how the price compared to other dealers.

 

In recent years, I've been buying & selling used KB equip. on Fee-bay, or CL. With the internet, you can see how prices plummet on recent used equip. that people bought even 6 months or 3 years ago. Let's face it, most KB equip. plummets in price if you buy it new anyway.....

 

 

[C.J. Lewis]

Dealer "cost" is what it costs them to purchase the item from the manufacturer or distributor. The "actual" cost includes paying staff to support the customer, paying rent on the store, paying utilities so the lights stay on, paying for cables/speakers/headphones so you can demo the keyboard, paying shippers/receivers to manage getting the gear into the store, yadda yadda yadda.

 

Frankly this sort of questioning is disturbing, because if only 1 person in 100 takes "cost" to mean "I can beat down my local dealer to only making $50 on the Motif XF that I'm gonna buy, because he didn't do anything to help me decide on what keyboard to buy, and I could have just bought it from website XYZ and saved that money, so he should be happy I'm buying it from him". The natural result to this sort of thinking is that retailers close up shop... and given the amount of whining in this forum from folks who don't have local retailers, I'll give you two guesses what my thoughts are on the subject, and the first one doesn't count.

 

When I first saw this topic, I literally laughed out loud. As someone who has been in the wholesale and/or retail buying side of keyboard and other music technology for almost (cough) 20 years , I can tell you that in the past 3-5 years, profit margins on electronics have dwindled to virtually single digits on most product - especially really popular products - similar to consumer electronics. There are certainly plenty of exceptions, but the 'internet consumer' has literally driven the price down to the point where retailers (almost an irrelevant word at this point) have to make their money on accessories and service. This same 'internet consumer' is really only interested in saving the most possible money he or she can.

 

I certainly don't fault anyone for going after the best deal they can get --- but as Sven said, the longer and more deeply this continues, we may find ourselves with less keyboards to buy, and less places to buy them from.

 

Here's why >:

 

Manufacturer makes product ---> sells product to distributor ---> sells product to dealer ---> sells product to end-user

 

Now, reverse the formula this way:

 

End-user grinds dealer for $50 over cost (from Sven's example) ---> after a period of time, dealer stops stocking said product because they can't make money ---> distributors lower dealer cost on product to help offset lack of sales and attempt to keep as many dealers buying as possible ---> manufacturer makes less product because distributors and dealers aren't buying all the available product.

 

This chain, allowed to proliferate, squeezes mom and pop stores to carry more profitable and higher sales velocity items ('the race to the bottom'). Eventually, manufacturers make less and less keyboards - especially cool, pro level products because the race to the bottom has inundated the market. This especially affects our favorite makers of esoteric stuff (nord, Kurzweil, DSI, Muse, etc.) We (as in the industry) know that you (the customer) will always want the 'bestest internets deal' with free shipping, no tax, free iPod, klezmer stand, and a new kitchen faucet...it's our nature. I would Just consider what the potential outcome could be...? I'm just sayin'...

 

Thoughts from the buying public? (as I sit here considering how to get the bestest deal on a CP1...

[Synthoid]

When I first saw this topic, I literally laughed out loud. As someone who has been in the wholesale and/or retail buying side of keyboard and other music technology for almost (cough) 20 years , I can tell you that in the past 3-5 years, profit margins on electronics have dwindled to virtually single digits on most product - especially really popular products - similar to consumer electronics.

 

Just to clarify... I didn't start this thread to find new tips on how to get the best keyboard deal. It was because I had been able to buy my Korg M3 at such a low price, and then was later told I'd paid under dealer cost by a keyboard salesman at a mom & pop store. I wanted to make sure he wasn't "blowing smoke."

 

[Ken Beaumont]

Music stores like GC are great at items that are at the end of their shelf life or used. New stuff you can get better deals online. Mom & pop stores are going the way of the dinosaur. Most of them only sell guitars under $1000, accessories and high school band instruments. Piano stores are getting non existent. Our local piano "outlet" specializes in Yamaha acoustic pianos. The guy used to have 3 stores in the local area. He is down to one and had to go back to work to keep that. I used to have a local store within 5 miles of my home, that closed 2 years ago.

[Synthoid]

Mom & pop stores are going the way of the dinosaur. Most of them only sell guitars under $1000, accessories and high school band instruments.

 

Don't forget music lessons.

 

Our local mom and pop store carried synthesizers for the first year of business, and I asked if they ever needed a synth teacher to give me a call. Apparently nobody even asked.

[theGman]

IvoryCi has got it exactly right. I am in a small business...mine is ceramic tile and stone, but the food chain is similar to music stores.

 

We get squeezed by Lowes and Home Depot and the net. Employees at these stores in this field don't know there a$$ from a hole in the ground, spew out misinformation, sell off-grade products, but they sell everything CHEAP. Sales slow? They just drop their prices more, having nothing else to offer.

 

People who do care about better quality, product knowledge and good service to shop at my store. For this, they pay maybe 5 to 10% more on equal quality goods. God bless them.

 

What I'm saying is to give your local guy a shot; tell him you would buy from him if he can get near the big box price. Just give him a chance! Most will deal, since a half loaf is better than none.

 

Paul

[MikeT156]

IvoryCJ:

 

As they say, there's two sides to every story. When I am interested in buying a new instrument or PA component, or any piece of equipment that I have to depend upon for gigs, I usually buy it from my regional music dealer that has a great technician. He knows what Chuck Levins and other big box movers are selling similar items for to customers. I buy from my regional dealer because he can service it if/when it breaks and provide a loaner in an emergency. He is providing a value added service and its worth paying them more $$$ than a box mover only internet store. Internet stores that know less than I do about the products they sell and provide no service after the sale are the ones I beat up on price. They are not adding any value to the sale, so I am not adding any money to their coffers.

 

Shortly after I bought my Motif ES8 six years ago, I decided to get an Alesis ION as my second tier synth. The MAP was $799 at the time. I found an advertised price of $699 on line, and my Internet dealer would sell it to me for $645.00. Being that the ION had a history of some problems, I gave Sweetwater a call. My Rep wanted MAP price, I gave him the link for the $699 price and told him if he matched that price, he had the business. I also needed a new KB stand, and cables. He said he couldn't do the $645 price I mentioned, but he would match the $699 price. When I gave him the order for the stand and accessories I accepted his standard price for it so he could make something on the deal. The reason I bought from Sweetwater was that I knew if a problem developed with the ION, they would take care of it. I've used their service dept before and they know what they were doing. So I didn't take the lowest priced deal, but Sweetwater adds value, so I took their deal. The rep was satisfied with it and I was too. I never had any trouble with the ION, but I felt better about buying it from Sweetwater in case it crashed and burned.

 

I don't mind paying more if I get something in return for the $$.

 

 

 

Mike T.

[ITGITC]

People who do care about better quality, product knowledge and good service to shop at my store. For this, they pay maybe 5 to 10% more on equal quality goods. God bless them.

 

What I'm saying is to give your local guy a shot; tell him you would buy from him if he can get near the big box price. Just give him a chance! Most will deal, since a half loaf is better than none.

 

Paul

 

Always.

 

Better quality, product knowledge and good service will always be important to me. And I like helping out the local economy too.

 

Hang in there, Paul.

 

Tom

 

 

 

 

 

[Synthoid]

The reason I bought from Sweetwater was that I knew if a problem developed with the ION, they would take care of it.

 

I bought my ION there as well. Sweetwater's tech support is excellent. After unpacking, I had a question about the ION that wasn't explained in the manual (yes I read them). I called Alesis first for help; however, the person in tech support there didn't have a clue.

 

Sweetwater answered my question and I was up and running.

 

 

[ProfD]

First and foremost, support your local retailer or else your next door neighbor may be out of a job.

 

Otherwise, I wait until a product has been discontinued before buying it. That way, I'm paying a helluva lot less than those who jumped on the bandwagon early.

[allan_evett]

.....

 

This chain, allowed to proliferate, squeezes mom and pop stores to carry more profitable and higher sales velocity items ('the race to the bottom'). Eventually, manufacturers make less and less keyboards - especially cool, pro level products because the race to the bottom has inundated the market. This especially affects our favorite makers of esoteric stuff (nord, Kurzweil, DSI, Muse, etc.) We (as in the industry) know that you (the customer) will always want the 'bestest internets deal' with free shipping, no tax, free iPod, klezmer stand, and a new kitchen faucet...it's our nature. I would Just consider what the potential outcome could be...? I'm just sayin'...

 

Thoughts from the buying public? (as I sit here considering how to get the bestest deal on a CP1...

 

When I worked for two Chicago area retailers in the mid 80's, I discovered that several "customers", after hearing my demos and discussing options, had driven down to the nearest GC and made their keyboard purchases. Basically the high tech dealer for whom I worked took a similar approach to Sweetwater in their pricing, i.e. - placing a value on knowledgeable staff, and service.

As a buyer, if I need knowledge about a product, and after sale support, I won't play the game described above; but that's me. Having expectations of a fair world is denial of reality.

If, on the other hand, I don't have need of product support - before or after sale - on a particular item, I will sometimes buy it online/mail order - especially if my competent and knowledgeable local dealer doesn't carry it. As much as possible, I try to support quality local retail/'mom & pop'.

 

A favorite memory from my time with the 'other' retailer (a 'mom & pop') was when the owner - during the process of being severely ground down during a guitar sale - promptly turned his back to the customer, jacked his arm up behind his back, and said: " C'mon, twist it some more, would ya ? ". The customer bought the guitar, at a fair price, with hardly another word. It was an awesome moment

 

 

[synthdogg]

IvoryCJ:

I decided to get an Alesis ION as my second tier synth. The MAP was $799 at the time. I found an advertised price of $699 on line,

 

Doesn't MAP stand for "Minimum Advertised Price?"

 

Looks like that doesn't stand up very well....

 

 

[Chris Link]

Allan's story reminds me of a small moderately high end clothing store my wife worked at and a problem customer. Sort of guy who always tried to get a special deal on stuff that was already marked down, etc.

 

This guy wants to buy a suit that's half price already. The cut is wrong and is probably going to take a couple of serious alterations, i.e. you're now losing money. The owner says no, not gonna sell it to you. I can't probably make it look good. Customer insists that he is going to buy it. Owner, a bit of a hothead anyway, says not only am I not selling you THIS suit, I'm not selling you anything, ever again. Fired him as a customer. I guess the look on his face was priceless.

[Mogut]

Thoughts from the buying public?

 

I am having an out of money experience.

[MikeT156]

misterdregs:

 

Sometimes you just can't work with difficult people. When I use to work in the computer reseller industry (yeah, me that HATES computers) people were constantly beating us up price. They wanted the hand holding of a brick and mortar store for free and expected mail order prices. That doesn't work.

 

One "customer" we were stuck with use to come into our store and pick everyones brains to find what what was the best of whatever he was shopping for at that time, and then buy it from an Internet company or a "mail order" house. Then when he couldn't figure out how to get it to work on his computer, he would call us for tech support. I recognized his voice on the telephone when he called and when he started asking questions about how to get it to work with his equipment, say an installation problem, I told him to "call the mail order house you bought it from" and hung up on him. I told the rest of the staff if he called to transfer him to me. (I was the store manager). Then he started coming into the store to get free info in person. So I had to tell him that if he wanted to find out how to get the stuff he bought elsewhere to work, he had to pay us 60 bucks an hour, up front. He left.

 

There were also people that would try to tell us how to demo a product they knew nothing about, how we should teach a training class when they knew absolutely nothing about it.

 

Everyone is born with one bun hole, some people are born with two. One in their but and the other one on top of their shoulders.

 

 

 

Mike T.

[J. Dan]

Regarding internet shoppers and the effect on the market (i.e. less product, etc.), this scenario can apply to any industry if you let it. It's all about how you choose to go to market. If you sell on price, you devalue the entire industry, that's economics 101.

 

For my day job, I sell a product that is the highest priced in the industry. There are other manufacturers who make product that will work just fine in most of the applications for a lot less money. So why do they buy from me? I take care of them. They know I'm there any time they need me. I help them out with other problems surrounding the application, give advice, educate them on the technology and ways to improve their process and ultimately eliminate whatever pain they may have: reduce outages, reduce maintenance, increase throughput, control costs, improve quality. After all that, if another guy comes by and says I can give you a comparable product for half the price, the customer says no thanks, because I already demonstrated that his purchase paid for itself.

 

Now back to keyboards. We had a mom & pop shop back in the day that required all of their employees to be extremely knowlegable. I consider myself pretty well educated, and I didn't pass the test you have to take while applying for a job there. As I was learning about keyboards in my younger days, I learned a lot from the folks working there. I got to know them - I still run into some of them. They were not the cheapest, but you better believe I paid the premium to buy from them. How could I face them if they found out I had a new keyboard that I didn't buy there after spending so much time with them getting information? When you have a relationship, the sale is much more personal.

 

GC offers me no value. Usually the kids working there are idiots who know nothing and could really care less about solving your problems. It's an internet purchase with a showroom. I feel no need to pay a dime more than I have to.

[Eric Iverson]

Yes, customer service still counts for SOMETHING - assuming you want REPEAT business, and positive word of mouth....

And yes, some customers don't understand, or care, that the music store is a business and the owners (and salesmen) have to make a living, too... fine, let them buy online, get a lemon, and try to get it fixed for free! Or have someone be able to say... "that problem comes up fairly often... why not try this and see if it helps"... and try it and it actually works... WHAT A CONCEPT!!

[theGman]

I don't have a music store in my area to even "give them a shot", taking my own advice from an earlier post, so I usually buy major purchases online.

Someone mentioned Sweetwater; I have found them to be an excellent online resource, with their free shipping and 2 year in house service, professional everything. I have also done "package deals", getting a keyboard for less, but buying accessories to give them some $ back, and found them most accommodating.

I usually DO pay a little more than others final prices, but this is where their service guarantees make me feel comfortable.

 

Paul

[Steveaudio]

I don't have a music store in my area to even "give them a shot", so I usually buy major purchases online.

Someone mentioned Sweetwater; I have found them to be an excellent online resource.

 

Paul

 

The only major music store left in my area (I think) is the GC in Boston. I bought a couple of fairly expensive things there, mics, & monitor speakers, 10-12 years ago, & the GC people were totally OK. It is kind of a zoo there, but you can listen to gear, or play it.

 

I've had 2 dealings with Sweetwater: The first, I was shopping for mics, & called them a couple of times. Then serious Family issues intervened for 2-3 years until I could get back to mic shopping. When I called again, the salesman gave me a major a** reaming b/c I hadn't bought mics yet (?!); it was real nasty. So I went to GC & paid the sales tax to buy my expensive Neumann mics there.

 

2nd: Later on, I wanted an Alesis Masterlink. I got a diff. salesman at Sweetwater--he was great. I bought it from them, then had some issues with it, & he went over the top to give great customer service.

 

Let's face it, the internet has changed everything. Esp. if you already know what you want.....

 

[Ken Beaumont]

I started using Sweetwater 3 years ago, because every time I ordered a guitar or anything fragile through Musicians Friend it came broken and I would have to send it back. Every time! They always took it back but what a pain in the rear! So I started ordering from Sweetwater, what I really liked was the knowledgeable sales staff and support. And I haven't had anything shipped with obvious shipping damage. I had a Juno D stop working after 3 days, they shipped me a new one with a shipping label for the old one. I received it in about 3 days. So I have been quite satisfied with them. And I have bought a lot of stuff from them in 3 years.

[MikeT156]

Contrary to popular opinion, Sweetwater will deal on price. You won't always pay the highest price out there. They won't be the cheapest because their business model is more expensive to operate. Their sales reps work straight commission so they can't sell for box mover prices if they want to survive. But if you need their level of service, they's a good option. I've never had a bad experience with them.

 

 

Cheers,

 

 

 

Mike T.

[Dave Bryce]

Getting political on this Forum is not allowed. However, I don't know if bigotry is covered by the moderator.

You better believe it is.

 

A series of posts were removed from this thread. This is the only line left from them, and the responsible party has been warned. Bigotry will not be tolerated here, period.

 

We now return you to the thread in progress.

 

dB

 

 

[Sven Golly]

Bigotry will not be tolerated here, period.

 

Thank you, dB.

[Joe Muscara]

A series of posts were removed from this thread. This is the only line left from them, and the responsible party has been warned. Bigotry will not be tolerated here, period.

Thanks dB. Reporting it crossed my mind, but I wasn't sure. Next time, I will be.

[sakari lindhen]

yes, thank you. hope my deleted posts were not offensive , I dont know the procedure for reporting an offensive post

but will try to find out if such a regrettable occasion arises again..

[theGman]

I want to apologize for using a word I shouldn't have. It was my ignorance, I was not trying to hurt feelings in any way. Sorry again. This is a great forum and I don't want to cause offense to anyone.

If you knew me you would know that is true.

 

Paul