PS Audio's Decision to Go Direct Pushed Me Out of the Hobby

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Seems to me people who are unhapppy are making a bunch of assumptions, some of which are probably wrong. For example, the assumption that PS Audio’s costs haven’t changed. The assumption that there are more dealers who are actually helpful to PS Audio’s sales than those who are not (those unhelpful dealers could actually end up driving no sales or even fewer sales by pushing other stuff to their customers). And also the assumption that PS Audio’s past strategy (direct plus dealers) is the profit-maximizing strategy. I hate to break it to people who love deep discounts, but often that is not the best strategy for a company that sells something that isn’t a commodity.

Jedi is correct, I think. PS Audio will experiment with this model for a while, and if it isn’t working they will rethink it. If it is working, they will do better financially, even if they lose some customers in the process. Just my 2 cents.

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Precisely.

And do call PS Audio if you have decided to purchase and ask what they can do for you.

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May I ask: How do you know this to be true? Unless one is an insider with access to their P&L data, and can review all of the CURRENT fixed and variable costs associated with their R&D, sales, marketing, new product launches, manufacturing, labor, etc., one cannot know that the sales model change was a boon to the bottom line. It may very well have been necessary to sustain (and/or achieve) profitability and drive business development.

FWIW.

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Distributors and dealers including transport and tax typically eat 60% of the MSRP, which is why they are able to offer huge discounts when their accountants or banks tell them that they have to sell stock.

Dealers need to pay: rent on inventory, as they pay for what they order up front; lease, electricity and utilities for their real estate; salaries, for sales people; for their own living.

They practically make huge losses when offering huge discounts. But, having thousands of dollars of equipment sitting in an inventory, eating rent and waiting to become obsolete, is the worst of the scenarios.

PS Audio builds to order, does not have to have huge inventory of finished products and is in full control of life time cycle.

Selling MRSP is big bugs for PS Audio if it really works, but it’s rather risk related as they loose a big chunk of network. Also costs go up when they have to deal with all customers individually.

With PS Audio’s current R&D effort to push so many announced new products to market, additional margin is easily consumed/needed.

Small reminder of announced or discussed but not yet released products:

  • Sprout passive bookshelf speakers
  • a series of 3 Stellar series speakers
  • a series of 3 AN series speakers
  • Octave Music, recording and mastering studio
  • Octave Music online service
  • Octave Music user interface for iOS and Android
  • Stellar integrated amp with (Octave) streamer
  • Stellar disk player
  • Stellar Octave server
  • Stellar Phono Preamp light
  • Signature/Direct Stream Octave server
  • Signature high end series Phono Preamp
  • Direct Stream Octave Streaming Bridge III
  • Ted Smith Obsidian (hope I remembered the name right) high end 2 part DAC
  • … what I missed

This is a extremely ambitious path forward, which is one of the reasons this forum is very much alive.

But obviously at a price. Like with any healthy profitable company, it has to be paid by current revenues on existing sales. There is a limit to how many annual salaries Banks are willing finance, till the products under development can enter the market and finally start creating revenues.

That is also a likely reason for the sales / sales price policy. Me being guilty of complaining about it, I enjoy reading about the developments. The reason I complain is: likewise Banks have a limit to finance all of this, customers have those too.

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substitute the word " INVENTORY TAX" for “RENT” in the US…

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Recall that no less than Paul himself stated way back in this conversation that over half of PS Audio’s sales were being made on a direct basis at the time the decision was made.

So with half the sales going through traditional channels and the other half going direct, they would have had almost perfect visibility of sales trends, profits, and costs of both channels, which would de-risk the decision considerably.

I’d also caution against assuming that the direct model comes with dramatically lower costs. For sure, some costs go down. But I can tell you from the experience that staying ahead of the curve in direct marketing in this on-line age does NOT come cheap. Nor does supporting the product development pipeline that Rudolf summarizes, above.

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Excellent point, the decision was not made in a vacuum but with intimate knowledge of the two competing sales models.

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Best be sure you do because when I show up with my F800GT I get a lot of “down the nose” looks for not riding a “real” BMW.

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I did love the two boxer twins I had (R90/6, R65) but those inline motors are also amazing.

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I’d love a boxer. But who knows if I ever get to ride again anyhow. Maybe someday.

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Not all dealers keep a fully stocked inventory of what they sell. Some might only keep one on had for demo purposes then order as needed. As a example just last month I installed a stereo in my Jeep Wrangler, alpine x209wra and a pair of audiocontrol amps and some other stuff… none were in the local stores inventory, they were ordered from their distributor.

A friend owns a local home theatre/automation store, he also keeps nothing in stock except for what he uses for demo purposes at his showroom.

Even if PSAudio builds to order, they would have a full inventory of the parts to make the product on hand, just a matter of the product being assembled.

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It’s not offense taken at being an old white audiophile. It is the exasperation of constantly hearing, “white men are the problem”, white men are evil", “white men stole all the money from the other peoples and genders of the world and this is why only white men can afford high priced luxury.” So the OP was saying, he, she, it, can’t afford audiophile because the evil old white guys screwed everyone over and stole everyones money.

So I was not offended just tired of hearing it. Last time it was a woman claiming that she is discriminated against as a women by all the old white men that work in audiophile. I pointed out that most audiophile clerks I have had contact with treat everyone with equal disdain.

So, thats all, just tired of the victimhood of others pushing the blame to the same old whipping boys.

So there :slight_smile:

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You can’t be. The OP said no.

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Cool. Yes. I hear you. You are privileged Tony D. Lol. Sorry. It gets under my skin as well. And my point about the flagging or non flagging was how this is the talk that people get their PC panties in a bunch - yet other stupid ‘stuff’ might get flagged like a rant on how power cords don’t make a difference or personal issues with a given member.

To me obvious observations such as old white guys like expensive audio is not bigotry but more aligned with the truth. I mean I could care less. Yet I understand completely where you are coming from in the context you mentioned.

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I hear you. I had BMWs for 20 years, than a few years off, and then I was finally able to buy something new and I looked at the new BMWs and there was so much technology! My tech level in vehicles for 30 years were those BMWs and a '66 Chevy Belair wagon with a straight six and three on the tree! I went with a Harley for the first time, a model in it’s then first year called the Fat Bob, and I really like it, still have it. . . but I miss that low center of gravity of the boxers and that feel that is unique. But I’ll probably never have another bike.

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Agreed. It’s a business like all others.

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Math 101… PS Audio no longer pays their products BELOW MSRP, usually it’s 50% to their dealer/distributors, yet have the same MSRP for consumers… 2+2=4 implies, that increases their profit margin! :thinking:

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Economic / inventory value of all loose parts together is a fraction of the value of the assembled product. That is why build to order is so attractive.

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It wasn’t the tech that put me on an F-bike, so much as size. I wanted a midsize touring bike and the boxers are all quite a bit larger, not to mention substantially more expensive. I suppose I could have gone the adventure bike route but the bike I got was really what felt best suited to me at the time.

Funny story, when I went to the dealer to get it, it had a hang tag for ladies’ gear on it still. I asked the salesman if he was selling me a ladies’ bike; he turned white thinking he lost the sale, but I let him off the hook pretty quick. It was just the right bike for me, stereotype or no. And if my fellow riders can’t see that, their loss.

If I do beat this cancer and ride again, I’m really interested to see my mileage change having lost 100 lbs. I get 50 now; we shall see what I get weighing more like a European than I did before.

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Not picking on Tony, here, but I needed a quote from the thread to tag with the following link. It’s a weekly installment of John Mauldin’s weekly newsletter “Thoughts From the Frontline.” (shameless plug: it’s one of my must-reads for minimally biased economic reporting, and it’s FREE if you sign up).

The subject is nominally about inflation, but towards the end he delves into the wealth differences among generations and touches on some of the causes.