That’s all well and good but If I can get 40% off MSRP and still sell what I am replacing I will be way ahead of just trading in.
OK folks, let’s take take a chill pill and relax. Do a little thought experiment, and this is how things are likely to play out…
PS Audio already is doing direct sales. That much, we know. What we don’t know is what the % of their total sales revenue this represents. That number and it’s trajectory might surprise us.
In any event, since they are already doing direct sales, they have a pretty good handle on what the “take rate” of products shipped out for evaluation is. It’s probably pretty high, meaning that returns are an acceptably low %-age of what of what goes out the door.
Given a low number of returns, shipping a demo unit out and back, and then shipping a new unit to complete the sale is a waste of resources. Not to mention that you would have a pretty large “fleet” of loaners tying up precious capital.
Likewise, peddling a returned unit as “new” is likely to fall afoul of Federal FTC and various state truth in advertising rules. I doubt PSA Audio would want to risk trashing their reputation this way.
Moreover, the Lanham Act allows companies to file a lawsuit against competitors for false or misleading advertising if the product involved was sold across state lines. Too big of a legal risk to take, IMHO. If you think high-end audio is expensive, try getting sued as a company.
What we ARE likely to see is a market in “demo” or “factory refurbished” units either by PSA Audio, an outfit like The Music Room, or a new business entity that appears to make a market in the trade-ins, used and demo gear. This is likely already happening. Pay a visit to the TMR website and check out the inventory of PS Audio gear they have. If all sales going forward are direct, the % of returns probably won’t change much, but the absolute number of them will increase because of the new direct-to-consumer business model. This assumes that PS Audio maintains it’s “no strings attached” trial policy.
The demo or refurbished gear will come backed with a full factory warranty and with a significant haircut of the MSRP. In fact, my ancient PPP was purchased direct from PS Audio as a discounted “B-stock” item back in the day. So this is not something that they haven’t done in the past.
This is already a feature of the auto industry (the courtesy and demo cars that the dealers maintain) and others. My last 3 or 4 computers have been purchased direct from H-P via their Business Outlet website, which features heavily discounted refurbished, closeout and overstock items. 99% of the time, “refurbished” in this case simply means a box that has been opened and returned by an enterprise customer for whatever reason and was never plugged in. One of their reps told me that in some cases, the items returned were never opened. Regardless, they can’t sell it as “new.”
So there are likely to be “almost new” units available for bargain hunters at attractive prices.
If the accountants at PS Audio are not already doing financial models on this, Paul should fire them first thing on Monday.
Good points. Selling demo or refurbished units is another way to discount, and get the more price-sensitive buyers and those who don’t have 10 year old gear sitting in their closet to trade in.
I’m not ambivalent about PSA going direct-only. First, the so-called ‘discount’ I may receive from a brick-and-mortar dealer I know is a feel good, but meaningless gesture and only a reflection of how much margin the dealer is already willing to forego on the sale. We’ll see what this means for PSA’s direct-only pricing approach, but what is the difference if going direct leads to a lower ‘retail’ by cutting out the cost of maintaining a dealer network? It makes no difference to me at all. Second, I’ve found essentially no value-added in recent years going to a brick-and-mortar store for an audition and purchase. PSA has been supporting a free in-home trial program. No brick-and-mortar audition can ever be the equivalent of a trial in my own system in my listening environment with my favorite music. As for service, my experience with PSA’s service folks has been truly outstanding. What am I getting from a brick-and-mortar dealer in the way of advice that I’m not able to get straight from the experts themselves?
Paul’s rationale for the change is indeed a recognition of reality and I see zero sacrifice to me as a consumer and PS audio owner at all. Go for it Paul!
How this “plan” actually plays out especially with the speakers in the equation is yet to be seen. All we can do is speculate as Paul’s statement was in no way definitive as to how things will ultimately look.
In what world is upwards of $2000 a meaningless gesture and what guarantee is there that PSA will drop their prices? Some of y’all are really comfortable with leaving money on the table.
I disagree. A constant flow of refurbished - B stock products is not good. PSA plays in the high end game. Do you ever see B stock Mcintosh, Levinson, Firstwatt, etc? Selling trade in units used is one thing.
The mass producers like Marantz, Yamaha have outlets for such (Assesories4less, etc) and I do not regard their brands as High end.
Seems better than believing it’s not
And just to be clear – the “lead to higher prices for new equipment” – that is because I have an established relationship with my dealer. So I do not pay full price for a new item. I’ve invested time and built up loyalty.
If PSA wants to go direct, I will be paying a higher price and receive no extra benefit (I went through PSA direct for customer service because it was direct and resolved things quicker).
PSA should adopt a loyalty pricing model – previous PSA customers can reach a certain discount percentage on new gear (in addition to trade in) based on previous purchases.
Or with supporting the people that design and build amazing gear - I’m not assuming you don’t support them
My system is set but if I were younger and stronger and had the sq ft, I’d be all over a P20 or two.
It’s definitely a balancing act, since PS Audio doesn’t want to tarnish its brand. You are right about that. But there should be ways to maintain integrity of the brand as high-end and still offer discounts in one form or another in order to make more sales. That has to be true.
Also, I’m sure I am not the only one on this forum who has purchased at least as much demo equipment as new equipment over the past 20+ years. With PS Audio, I used their great trade in program on an old but still functioning CAL Alpha and Delta. Same thing.
Having said that, I think @audiophilehi is correct. There will be some customers that PS Audio is going to lose. . . .
And I do wonder how they will be able to sell speakers direct only. . . .
In survey design, you want to ask questions with one variable per question. These are compound questions. Suboptimal for sure.
Where’s the tongue in cheek emoticon?
The lone question in the Poll asks: “Which of the following statements best describes your feelings about PS Audio going to an all-factory-direct sales model?”
What is ‘compound’ about that?
Pass/First Watt does in fact have a model in place to deal with demo units, etc. it’s called Reno HiFi and it is run by members of Nelson’s family. If Paul choses to do the same thing instead of letting TMR sell those units he could set up a second entity just like Pass has.
Sorry, the answers are compound. Happy vs. unhappy is one answer. And reasons that you have surmised is another. It would be better to ask how happy vs unhappy on a 5-point scale. Then ask a question that ask why or why not happy— with an other option for those who may have different reasons.
Okay, we’ll do it your way. . . .
SURVEY: On a scale of 1 to 5, with 1 being the least happy and 5 being the most happy, how happy are you that PS Audio is going to an all-factory-direct sales model?
FWIW all of the PSA gear I have purchased has been direct sales and the prices are sometimes negotiable. All you have to do is ask. There are also incentives for repeat customers, etc.