Are we paying way to high margins?

[reachkalyan.kr]

I disagree Elangoas - the actual costs for dealers in a ratio between units sold and cost of fixed and variable overheads. So if you consider the miniscule volume of sales of high end audio/video in India the overhead cost is significantly higher than other countries.
Secondly in the example you described you are again missing out on the volume of sales of this $800 receiver on Amazon.com. How many units were sold at this price? And can the Indian dealer sell the same amount of units (legitimately with import paid etc.). If so it is apples to apples, if not he has to charge whatever it takes to cover his costs. Anyways these are my opinions, I must be wrong so please ignore. You are right - we are paying too much for everything in India.
Cheers,
Sid

Imo.
As one FM mentioned "we have to do something"IMO nothing can be changed just like that.
If we dig deeper to the core the final outcome would be discussion will leads to out of topic pointing out inflation,dollar value,politicals,economy,govt and so on.
Which we dont have much control about.

 

[elangoas]

I disagree Elangoas - the actual costs for dealers in a ratio between units sold and cost of fixed and variable overheads. So if you consider the miniscule volume of sales of high end audio/video in India the overhead cost is significantly higher than other countries.

How has Taga Harmony managed to price it on-par with international price (or) less in India despite the "less sales" which other distributors say this as the reason..

Secondly in the example you described you are again missing out on the volume of sales of this $800 receiver on Amazon.com. How many units were sold at this price? And can the Indian dealer sell the same amount of units (legitimately with import paid etc.).

I may not have the data.. But, if there are 50 ppl who can buy a $,1200 AVR, then there would be 100 (or) more ppl to take the same product if it was priced $800..

If it was offered In india like that, even slightly more, am pretty sure more users would have considered..

 

[sidvee]

How has Taga Harmony managed to price it on-par with international price (or) less in India despite the "less sales" which other distributors say this as the reason..



I may not have the data.. But, if there are 50 ppl who can buy a $,1200 AVR, then there would be 100 (or) more ppl to take the same product if it was priced $800..

If it was offered In india like that, even slightly more, am pretty sure more users would have considered..

You are absolutely right - less sales is not the reason for high pricing in India. Dealers and Distributors are charging too much and they are becoming rich consequently. My analysis is not correct, please ignore. I don't have the experience to understand how pricing works.
Cheers,
Sid

 

[Thirumalkumaran]

The problem is anything apart from basic survival needs are considered "Luxury" in India,.
And it is assumed that they can charge exorbitant price for the same.

 

[vinyl]

I have been wondering if we have been paying way to high margins on audio products. I understand it is gross margins, but when they range from 40% upward it seems a bit ridiculous. Distributors are not keeping stock for demos nor are dealers doing the same. What are we paying such high margins for? All the guy does is place an order and deliver it to you, usually after an advance payment has been taken from the client and for this he charges a fat markup? I feel the audio community should come together and address this issue if possible. Curious what others feel or their take? Maybe my calculations are wrong.

Margins do need to be reduced. Even Indian manufacturer Sonodyne is happily over pricing their products.

 

[audiopro]

I would suggest the following:

1. Ask for a MINIMUM of 20% discount on high end products above say 2L keeping todays prices as reference or just boycott the distributor. If you are buying high end cables atleast 30-40% is doable. Hifimart prices seem about fine once they are offered as a special. The hifimart special price is a reference for low end pricing. No I don't work for hifimart. Just what I'm seeing.

2. We should make it a movement to buy directly from the distributor as most dealers are not adding any value.

They don't have products to demo because they cannot invest in them. It is just a source and dump the product on the customer strategy and make a margin. Maybe the distributor can ask the local dealer to install the setup for which he gets a fee say 5 percent or a flat fee. He doesn't need a shop because anyways there is nothing to see in the shop.

Ideally the dealer distributor should work in a partnership. The dealer must have different products to demo and maybe even do a home demo at a small fee. This reduces our risk of buyers remorse and buying blind for which a dealer margin is justified. The problem is the distributor just wants to off load his products and will offer the dealer a deal and then the dealer thinks he can make a bigger margin buys the products. Then he is stuck with it and dies. Hence the distributor dealer model is almost dead. Even in the US most dealers are demoing from their home or a room in their house.

Distributors must move online and sell like large online retailers abroad like musicdirect, audioadvisor, etc. This is the beginning of us getting fairer prices.

3. Do not trust your architect. Nowadays the new dealer is the architect commanding almost 25 percent margins. Daylight robbery. I would blacklist architects who did that. They have their so called consultant who knows nothing and is just a dalal between the architect and distributors. Guys sorry but this is the truth. My friend did his house up and the architect did a terrible job with in ceiling speakers that make the false ceiling resonate but the architect wouldn't budge based on what recommendations I made.

4. We must start/ support DIY/ kits guys in India. While they cannot match high end products easily I believe we can get a taste of the high end by importing kits or using very good drivers. Why don't we have a bunch of guys who are say certified to assemble kits? For example suppose I import an Audio Note Kit and I do not have the time/ resources to build it. But if we had hifivision certified assemblers they would build it for a fee.

5. The Marantz and IAC distributors seem to be offering reasonably decent prices based on what I see at hifimart. And these are low to mid range products. The higher you go the bigger the margin gets. There is more room to wiggle there.

All I'm saying is that we should stand up as a community and say NO. Someone compared fuel prices to audio and said suck it up. Fuels a necessity and hence the govt taxes it as a guaranteed source of income. It's a separate topic but to me fuel taxation is almost like the British taxing salt. Maybe we can do a fuel march someday where we go and dig an oil well

 

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[drkrack]

1. There's a general rule "Luxury items will be Costlier in a Developing Country than in the Developed Countries"...
"Whereas essential items will be cheaper or Similarly priced in developing countries than developed country" parameters to differentiate will be per capita income!
Why? Market will gather its resources and competition towards the essential items as the need for luxury items will be less in country with low per capita income. That's why luxury cars and hifi generally cost more in India than say US.

But God forbid due to extensive sitting and listening (most audiophiles run this risk) you develop hypertension, routine hypertension tablet like Amlodipine costs 4 Rs in India whereas it costs Rs 450 in USA . Bypass will cost 3L in India whereas it'll be USD 70000! Same goes for Cochlear implants if you need one...
So don't Crib too much on prices of hifi in India IMHO.

2. Taxes depend upon how much corrupt the system is, also Freebies, Subsidy given by Govt. A fallout of Socialism is, it will tax hardworking and high earning people MORE to provide Freebies to Less productive ones. The populist measures are to be blamed here. Also if everyone were to pay income taxes GENUINELY things would be much different.

So we in India are not only buying hifi, Petrol /diesel , but paying taxes also; so as to provide for Freebies and political expenses planned by Spineless governments. So feel free to avoid paying taxes.

3. My concern with Indian distribution network is that the quality of After Sales service they provide inspite of charging a hefty margin ; someone was comparing with Car dealers - in my experience the after sales service is not even 10% as good as the Car dealerships provide.
Also their investments in marketing the products is abysmal. Can you compare that with Car dealers? People don't know that there's high end audio beyond "BOSE". Indian dealers are just squeezing bucks out of the enlightened audiophiles, most of the times the sellers do not even have a basic knowledge about the products they are selling.

So its advisable to buy from international market and keep the difference amount for repairs or sending the device to US /UK Manfacturer for warranty.

 

[elangoas]

Same distributor who distribute Taga in India does distribute other brands of so said high price.

So why the rationale in pricing ?.. Charging premium for a specific brand?..

Benz and Maruti are not priced same.

Yes.. Because Benz is not made in India.. It is brought to India either as CKD (or) CBU, which attract 40% ~ 110% duty.

While Maruti Suzuki production is fully localised here.. Hence the affordable pricing..

This is not the scenario with hi-fi, as everything is imported to India..

Even Indian manufacturer Sonodyne is happily over pricing their products.

This brand has gone to hibernate mode ..

 

[Thirumalkumaran]

Benz and Maruti are not priced same.

But you survive on a Benz if either topples...

 

[Hari Iyer]

The problem is anything apart from basic survival needs are considered "Luxury" in India,.
.

IMO most audio dealers are having this audio business only as "Front". Their actual business may be something else very lucrative and profitable. Due to lower demand, you just can't survive by selling amps and spkrs in India.

 

[Selvin]

The GST and customs law for import is different from other countries. When we pay petrol and diesel from different cost to other countries we don't bother much as we can't do much against government. Same here there is a additional 10% non refundable customs duty taken by government which goes as hidden expense. Blame the government for these high prices on AV gears not the distributor.

Can't agree. Now after GST the import tax for electronics is only 18%. Not sure about the 10% non refundable customs. My question is if some products like Yamaha, Rega, Kef are available here more or less same price (may be 10% difference) as in international. Why not other products. I know at least two brand when after the distributor changed the day next the price went up 100%.

 

[audiopro]

Can't agree. Now after GST the import tax for electronics is only 18%. Not sure about the 10% non refundable customs. My question is if some products like Yamaha, Rega, Kef are available here more or less same price (may be 10% difference) as in international. Why not other products. I know at least two brand when after the distributor changed the day next the price went up 100%.

You are absolutely correct in your observation on pricing.

 

[Selvin]

This dead horse has often been flogged. We've ranted and generally cursed our AV distributors and dealers.

Let's progress to the next step: what can we, as buyers, do to change it? Unless we propose concrete steps to favour us, and can influence distributors and dealers, this remains an academic rant.

+1 True.

 

[Selvin]

This is truly from my experience.

There are enough good dealers here. They will come down from the list price and offer good discount and match the price as in international or bit higher. Even I bought few gears lesser price here. If the bargain not works out and if the product is still costlier than 20% of international price I search for an alternative product or explore the import option.

There are very few un ethical dealers also around. One example. I was on interested a gear which listed price is about 2.5L. Suddenly one day I saw the product listed in amazon for 1.8L. My target price was 1.6L. I directly called the dealer and asked for a final price in view of direct buying. He explained all stories and given final price as 2.1L. Then I told about his amazon listing. He denied his listing and told that he can't come down and disconnected the phone. Bit later again he called me and told no such listing in amazon and claimed I am telling lie. Immediately I opened the system on holding his call and found the listing was removed. Fortunately in the last time I saved a screenshot with an intention of negotiating with other dealers. I told him I have your listing screen capture if you want I cam email to you. He SMS his email and I forwarded the screen capture and no reply from him further.

 

[efernand1]

While each of us have our experiences and opinions about dealers and distributors.....some things to be kept in mind.....

• Your Budget...how much you are willing to pay / adjust
• How much can you wait for the product or if it is a life death situation to have it now!
• Evaluate if you really need all the features and will use 80% or more of those features with your current day to day routine.
• Engage with Dealers and Distributors actively on a regular basis over whatsapp or something....this helps to build up rapport and the overall relationship. It does not matter then if you dont buy from them regularly, they value you as a person and not customer...win win situation ....
• When you want something...speakers or amp or avr or pj etc......contact them and ask for best rates.....usually if they are good to you...you can easily get minimum 20% off on mrp.....if you can stretch it.....even another 10 to 15% is achievable.
• Agree there are bogus or money minded dealers or distributors out there....every one wants to make money....just review and get the right ones in your contact list.
• Whatever purchases i have made here in Mumbai were at par with US rates...sometimes even lesser.....
• When possible, one of us can speak to a distributor and get a good rate on certain products and post the details in HFV...Group Buy!

This is my views and i am sure all of us have similar or slightly different views......all healthy discussions!

 

[audiopro]

All I am saying is be aware.

Investors margin

While each of us have our experiences and opinions about dealers and distributors.....some things to be kept in mind.....

• Your Budget...how much you are willing to pay / adjust
• How much can you wait for the product or if it is a life death situation to have it now!
• Evaluate if you really need all the features and will use 80% or more of those features with your current day to day routine.
• Engage with Dealers and Distributors actively on a regular basis over whatsapp or something....this helps to build up rapport and the overall relationship. It does not matter then if you dont buy from them regularly, they value you as a person and not customer...win win situation ....
• When you want something...speakers or amp or avr or pj etc......contact them and ask for best rates.....usually if they are good to you...you can easily get minimum 20% off on mrp.....if you can stretch it.....even another 10 to 15% is achievable.
• Agree there are bogus or money minded dealers or distributors out there....every one wants to make money....just review and get the right ones in your contact list.
• Whatever purchases i have made here in Mumbai were at par with US rates...sometimes even lesser.....
• When possible, one of us can speak to a distributor and get a good rate on certain products and post the details in HFV...Group Buy!

This is my views and i am sure all of us have similar or slightly different views......all healthy discussions!

Are you buying directly from the distributor when you are close to US rates or slightly below it (which is the real US rate since in the US too you get 10-20% discount)? Don't have to reveal the names but I am curious. Or is the distributor the dealer like say AV vision etc.

 

[elangoas]

The terms are not set by distributor it is the manufacturer who does it.

I think you are referring to the base price of a product.. If so yes.. It is the dealer / distributor, who decides on the rest of the chain in the price..

Aren't manufactures around the world trying to take a pie of market share for bragging rights?..

If you have to grow your market share, you got to crack it someway..

Remember Taga was even priced lower than current price it sells they acquired a brand awareness in India and so increased it also they are going to increase the prices again might be news for some here

I have been following Taga prices since it appeared here.. Except very few products, prices have remained the same (or) slightly changed..

I sincerely hope Taga doesn't take the route of other brands..

I bought a Klipsch product from US for Rs 27K .. The same was priced 60K in India, when i checked with Cinebels India, they said US price of 27K was per piece and not for a pair.. But i was able to get a pair for 27K from US ..

 

[panditji]

I have imported stuff from retailers abroad whereby the dealer makes money, the distributor of that country makes their money, I pay for shipping for just one unit/pair of speakers, customs duty, customs duty agent clearance fee and even then my landing price is 60% of the Indian distributors MRP..

And just to add, I get fantastic service from the dealers abroad when it comes to any issue (just one issue so far for which I was shipped the replacement part by the international retailer ASAP) which is unheard of in India......

So I disagree with all the overhead costs, customs duty etc etc arguments as the distributors pay customs duty on distributor price and not the retail price and they ideally should be importing stuff in bulk with lower shipping costs and clearance fees spread across multiple units... Not only is the Indian distributor earning more than the international distributor and retailer combined but wants another 80-90% margins when they simply order on receiving advance payments.... Hence people buy from abroad....

Also you cannot compare high end cars and hifi... High end cars have far more engineering, much high cost of raw materials and human effort as compared to hifi components...The cheapest Santro costs the same as the entry level Tannoy Prestige speakers but just compare what goes inside either of the products...

 

[panditji]

Forgot to add that since I imported the goods for my own use, I could not claim the 18% IGST tax included in the customs duty but the indian distributors get that back...So they are essentially paying 12-13% customs duty on the distributor price whereas I paid the full 41% on the retailer price.... Also I don't think salaries of the staff in the UK/Western Europe/US is comparable to what the Indian guys pay to their staff.... And if someone wants to open a showroom in South Mumbai/South Delhi in a posh/tony area and then complain that the rentals are high, it is simply ridiculous and bad business sense on their part...