Does it really matter?

Up here in Toronto area, if you get 25% off the list price, you did really well.

From personal experience, I'd stay awya from that Momogram unit like it were a house on fire no matter what price you can get it at. Free is too expensive.

Harry if you do find someone getting 40 points please foward me his contact info. I know a B-School professor that'll design an entire course around that guys strategy.

I'm gathering you are wanting to haggle with the guy. Are you going to haggle with WalMart for that TV or kids bike? What about at the gas station. Mabey the power company is feeling generous enough to cut you some slack on your next 10 kilowatt hours.

Are you aware that Monogram has a min. price policy? Take Live Wire's advice and get a product that fits your needs, budget and astetic prefs. and worry less about whether you can squeeze $25 out of some guy trying to make a living in flat to receding market.

In any distribution system, regardless of what the % appears to be as standard or at first analysis, there are other layers of incentives on top of that. These will be invisible to you even if you get to see a whole lot of paperwork, paper trail, etc. Every day things change, and you will not be among the first to know if you are not in the business. My guess is the appliance business is like that too. Trying to find out what their costs are is not a productive use of your time, even if you are opening your own store. Just like you, they also have hundreds of decisions to make about where to spend their money. No client is offering to pay some of their rent and train their staff. Either they are or they are Not willing to give you a price you think is acceptable.

In my case I had to say I was ready to buy, so I guess you should say so too, to get them to view you as a closer and to be willing to close a sale with you. What I did to show respect and ask for same was to tell them that I was ready to buy (cash or card, no financing, no "terms") with no more questions to ask, and that I was sensitive to price. Everybody I dealt with was very passive. Even after they gave me a price I found acceptable, they didn't close the sale so I had to say "OK, write it up, let's get this done."

If you ever did find someone willing to show you his on paper costs, I'd bet that there are other incentives ($$) that you are not aware of and that are not shown on that paper.

HTH
dAvid

Tri State area is 12 to 16%, Wolf is 15%, Viking 16%, their are 75 dealers with in 25 miles of each other all fighting for the same customer, not to mention all the phone guys.

Wow! I did not realized it was such a low markup on appliances. It like half of what I thought it was. So 20% is the average it seems. Huh! I guess I got a very good deal after all! I purchased a LG LMX21981ST at BestBuy.com and forced them into the Home Depot 10% Credit Coupon. I going to try to do it again with a dryer too!

"In any distribution system, regardless of what the % appears to be as standard or at first analysis, there are other layers of incentives on top of that."

I did not realized the meaning of this until I did some investigating. Markup is low but they get kickbacks from manufacturers to push certain models and also special discounts on buying in quantity that is not in the markup! The timing is important to since manufacturer will offer special prices to get rid of inventory but it is still shown as a minor price decrease. If a dealer goes over their manufacturer sales quantity they get another discount on future buys too!

It is all, like you say hidden! But I stick with the overall; assumption that it is around 40%-50% range when everything is included.

harry - you are getting a lot of posts here that are defensive of appliance store margins - true. But it is not true that they are getting 40-50% margins.

No retailer "buys in bulk" on high end appliances. Larger appliance retailers might buy 20 GE fridges, or Whirlpool dishwashers, but you just don't do that for Viking ranges or Sub Zero fridges, and a mom and pop NEVER does that. They just don't have enough capital to keep laid up in inventory until that lot is sold. That far outweighs any 3% discount you might get for buying a truckload. So, that $1K wholesale priced fridge that they charge $1199 for now costs them $970, and they either pass along that extra $30 to the consumer as a package incentive or they keep it. If the fact that they can now have a "profit" of $230 vs. $200 really makes it so that you refuse to buy from them unless they declare it publicly and then sell it to you for $1020 like the online store with no brick and mortar overhead will, then I don't know what to say other than you really have a distorted view of how the appliance business works.

And, any manufacturer who offers "spiffs" generally offers them to the sales people not the retailer and they might give that salesperson that extra $30 instead of the retailer when he sells 5 fridges in a week's time. If he doesn't reach the goal set, he doesn't get the $$. If everything goes right, it might add up to another $200 a month, which isn't peanuts for someone living on a just above minimum wage retail salary, but is probably no where near the zillions of dollars you imagine. It's certainly not enough for you the customer to get your knickers in a knot about.

High-end manufacturers mar up significantly. I can personally tell you that a certain high-end manufacturer pays $32 for one of their extremely high-end countertop toasters. Their dealers sell this toaster for over $350.

As far as refrigerators and ranges - it depends on the manufacturer and their distribution system. Some manyfacturers will sell directly to consumers while others refuse to do that and involved dedicated dostributors and dealers. I have found that the distributor-driven relationship is a better deal and higher level of support for the consumer. when you have an issue with the product, you call your dealer for resolution. If they cannot help you, the distributor has some levelrage to get the issue resolved. Ultimately, you can call the manufacturer and register a complaint.

TOP SECRET: If your issue merits a true resolution, write a letter to the company President and you are guaranteed a reply from at least someone on the staff.

Normal people with normal curiosity can want to figure out how things work in high end appliance stores. Nobody wants them to go out of business.

In some stores like IKEA or Walmart it seems they to want to confuse you by "presenting" some good deals and some terrible deals all_as_if they were equal in importance to you to to them. In spite of this or because of this they manage to sell a lot.

At specialty appliance stores I sometimes get a bit of the same impression. I'm glad to read the two posts above because they each confirm different aspects of the business.

I do understand these guys are not making megabucks. I don't mind them raising their prices either.

What I dislike is (in some makes) systematic price rises, year after year. A couple high-end fridge makers have increased price a lot every year for several years. This opens the market for other companies to get into the residential fridge market. Meanwhile, the owners of those companies increase their net worth and we keep on our toes looking for the best product at the best price.

-david

"No retailer "buys in bulk" on high end appliances. Larger appliance retailers might buy 20 GE fridges, or Whirlpool dishwashers, but you just don't do that for Viking ranges or Sub Zero fridges, and a mom and pop NEVER does that."

I am sure that national chains, Best Buy, Lowes, Home Depot; buy more the 20 GE fridges at any one time! I guessing it is an unlimited fill with very good margins after the first 100K units ordered. After all; both Best Buy and Home Depot are international companies. 100K units might last them a quarter for a certain manufacturer!

While BB and HD may well buy 100k fridges as a co. during a given period, the storage, distribution and sometimes selection is more regionalized. Meaning the boys from H.Depot don't store all those fridges in Atlanta then send out a truckload to Detroit and San Fran when the units rollout of the door. Big business has gone to more of a just in time scheme so inventories are reduced. you don't think the suits at Best Buy and the Depot like tying up millions in cash so they can hock you a fridge or TV for 20 points max at the end of the day do you?

Most of the big boxes don't "buy" wholesale at all, except for the very very few low priced low featured items they actually keep as stock in the store. They have a "Pay by scan" system where the manufacturer absorbs the burden of warehousing, delivery, and forecasting needs and trends. When you walk in and buy a fridge, you don't get the display or one pulled out of the back. The order is given to the manufacturer electronically and it's delivered to the regional/local delivery agent (usually also a division of the manufacturer) and then it goes to you as a customer. The big box then pays the manufacturer after the sale is completed. No money is tied up in inventory or storage of inventory at all.