Agreed. With no dealers nearby and I don’t attend shows either so like much of the modern world I have to rely on personal recommendations and do the normal “research it to death” and try to come up with the best solution for the choice I am trying to make. I haven’t had to send anything back yet.
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With the direct model, I would guess that PSA would not have to sell as much to meet current sales/profit figures. Let’s face it…there are many generous dealers out there who will give big discounts when you contact them. So I am guessing the discounts are one of the reasons for going direct. Plus, overall “discounted” sales de-values the product over time. Especially in the used market.
That is absolutely correct. Preservation of the products resale value on the used market is a big motivator for us. Our customers regularly complain about the equipment’s used value because of the discounting on new products.
But to your point about having to sell less. I know it’s a good and reasonable and seemingly obvious point, but it’s not true. Here’s the thing. The margins dealers (or we) make at retail have to be spent on all that it takes to get the products
in front of people and whatever benefits are offered. In our case we offer a very generous trade-up program, free 2-way shipping, technical support, and increasing sales support and setup advice. In order for this model to work we have to hire staff (and not
sales people but HiFi experts), build a new website, fund all the cool new stuff we have planned, trade shows, etc.
In the end it’s a lot more expensive from our side but we believe well worth it to make sure our customers are taken care of the way they deserve and to maintain and uphold the products value in the marketplace.
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Good points. Plus, you may need to spend more on advertising, getting more product to reviewers, etc. Basically, you’ll need to make up for some of the exposure of PSA by dealers. The big initial exposure to PSA, for me anyway, were the Music Direct catalogs.
For me at least, this is disappointing. I like working with my dealer on these things.
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Free 2 way shipping is a valid point…as its anyway better to try a speaker at home. For some it might still be a bigger decision to go into that than to just listen at a dealer. But personally I’d favor the home trial.
Regarding used prices I’d guess that independently of PSA‘s efforts, the PSA used prices can’t be much higher than those of comparable products due to the used market competition, but I may be wrong.
So will the current MSRP remain the same or change since there will be no dealer markup?
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I agree. I have worked with the same person for almost 30 years.
As far as the used market is concerned, I have never once sold a piece of equipment on the used market so for me that is not an advantage. I buy a piece of equipment after much careful deliberation and keep it for life. So, no benefit for me of used value (same with me for cars). I understand why PS Audio may like it but again, it might have a negative affect for me since I pay less than MSRP.
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^ This. ^
Certain PS Audio dealers regularly sell new A-stock gear for 33% to 40% off MSRP. Presumably, the dealers are still making a profit at these discounted prices. So, for example, a DS Sr. DAC, which lists for $6K, can be purchased new for @ $4K from a PS Audio dealer. If PS Audio is going to cut off the dealers and sell the DS Sr. DAC direct to consumers for $4K or less, than I understand the new factory-direct model and support it, even though it will hurt the former dealers. But if the factory-direct price will remain at $6K, then I fail to see how this new sales strategy benefits the consumer.
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I agree with Bootzilla 100%
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It appeared that Paul was trying to get ahead of that customer concern in his response, noting that increase expense in marketing and customer service will be taking up that 30-40% dealer margin. However, that must be a pretty steep increase
in customer service and marketing. I know I’d rather get a better consumer price. But then you get into marketing psychology…premium product premium price…
OK but what about international sales? In the UK I am fortunate in having a dealer within 25 miles who allows extensive home auditioning before purchase. If the PS Audio direct retail price is going to be increased to cover the extra support they are going to offer in the US does that mean that international ‘wholesale’ dealers will be buying at that price and hence the price from the selling dealer will have to increase?
I just auditioned a component (new technology) in my system w/ 30 day money back. It did not work as advertised and I shipped it back for $48… that is all it cost me to try it in my system. No salesperson working me, gas and drama getting to dealer 50mi away, or demo system not mine. It was worth the $48.
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@bootzilla - Dan - poll time! I might not have a need for dealer; however you make a valid point here. How does this model benefit the customer financially?
Does PS Audio discount from their direct sales now? Or do they charge full retail listed asking price? I never bought direct from PSA… but rather from an online dealer.
I would not expect to see lower prices on current equipment. You would have a high number of current customers who purchased directly upset that they paid a higher price. I just hope PSA does not turn into Cary Audio with all the confusing “purchase/service” levels, etc. The Cary site is a joke.
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One thing to consider is, with a direct sales model, the burden of sales & support will be upon PSA and PSA only. That said, they will need to dedicate an appropriate amount of human resources (amongst other things) in order to handle all of what was required of dealers prior. So, all of the emails, phone calls, in-person demos, etc., etc., will now have to be 100% tended to by PSA staff. This will be an extra labor expense.
Secondly, aside from the obvious which is a fatter bank account, PSA could decide to improve their products and service with this increased profit in ways we may not realize. For instance, hiring additional programmers to increase product reliability and/or improve speed to market. Or, dedicate more effort to R&D to improve existing products or introduce new and exciting technology. While saving customers some hard earned cash is always a wonderful thing - a gesture anyone can appreciate - there could be other uses of this increased profit margin by PSA designed to benefit the masses.
Pure conjecture here on the secondary point, but just another point of view to consider… I’m sure @Paul knows exactly what will be needed and done in accordance with this new corporate model and can speak accordingly.
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In the recent past, PS Audio offered the DS Sr. DAC factory-direct for $4K, albeit for a relatively short time window. Apparently, the company was not worried about hearing from people who previously paid $6K factory-direct. If the direct sales model leads to lower prices for consumers, then I am all for it.
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I’ve always wondered about the metrics of direct sale, in-home trial model. It seems like a lot of returns could be so expensive but maybe only a few customers actually decide against a purchase after the trial.
I have bought all my PSA gear from dealers, always at a decent discount. No way I’d pay retail for ANY brand of audio equipment. Seems that segment of buyers will have to look elsewhere. Upgrades from here on will likely have a different label, in my system. Right now I have P20, DSD, DMP, BHK300s, BHK Pre.
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