# What's a Reasonable Markup?



## The Italian (Feb 11, 2020)

I'm not interested in causing a riff and this is a genuine question. Whatever your stance is on brick & mortar stores, it's logical that they need to pay for overhead that virtual stores don't have. I'm asking specifically about the car audio industry. I personally, like to support local retailers if they provide solid customer service. 

So, assuming that you will have separate labor charges, what is a reasonable markup on equipment? Perhaps, the pros (business owners) in these forums have their own policies and I welcome them to participate in this chat. As a consumer however, how much more are you willing to pay?


----------



## miniSQ (Aug 4, 2009)

The Italian said:


> I'm not interested in causing a riff and this is a genuine question. Whatever your stance is on brick & mortar stores, it's logical that they need to pay for overhead that virtual stores don't have. I'm asking specifically about the car audio industry. I personally, like to support local retailers if they provide solid customer service.
> 
> So, assuming that you will have separate labor charges, what is a reasonable markup on equipment? Perhaps, the pros (business owners) in these forums have their own policies and I welcome them to participate in this chat. As a consumer however, how much more are you willing to pay?


mark up from what? Sonic Electronix pricing?


----------



## The Italian (Feb 11, 2020)

miniSQ said:


> mark up from what? Sonic Electronix pricing?


Markup from reputable online retailers.


----------



## drphilb (Oct 23, 2014)

What your talking about is extremely subjective. Markup or Margin usually is determined by the industry. Producers create the product and depending on the cost of manufacturing determines the base cost of raw materials, labor, transportation, R&D and overhead and that is just to create the product. Retailers then mark it up but depending on the manufacture, the manufacture sets the Retail price which then the authorized dealer sells it at. Obviously there is a margin there but if everyone is selling at the same price it helps the authorized dealer keep the margin that is set by the manufacture. Some manufactures enforce standard pricing to reduce the chance of retailers side selling which then the brand loses the ability to continue to sell at set margins. Great example of this is WoofersEtc.. They side sell multiple brands and are not an authorized dealer for ARC so if you buy from them ARC will not cover the warranty. From a side seller you do not know where the side seller got the equipment from. Some China companies create forgery products that may look like the genuine but are not and use cheaper electronics 

Stinger is a good example of over priced products that are produced in Mexico and China but sold at retail for a stupid margin. They have a lot of products now so I am referring to the non electronic ones, These products have a higher margin then lets say an AMP so since they are not an electronic equipment, then makes no sense to buy direct from a shop. Hard to say what the standard margin is for any one product but as things go electronics has a high margin compared to the actual manufacturing when they are produced in China vs the US. But we all know that the US is far superior as a whole then most companies overseas because the engineering and labor. Obviously there are exceptions. 

Bottom line is you get what you pay for so when you decide on your product after doing your research and shop around. Shop at an authorized dealer unless you want to roll the dice. Buying at a shop vs online unless directly from the manufacture gives you the convenience to work with the shop when you have issues. Warranty is huge only because so many people do not know what they are doing when they install which is why speakers blow and shops offer the best protection for warranty replacement when things go wrong.

Good luck...


----------



## The Italian (Feb 11, 2020)

drphilb said:


> What your talking about is extremely subjective. Markup or Margin usually is determined by the industry. Producers create the product and depending on the cost of manufacturing determines the base cost of raw materials, labor, transportation, R&D and overhead and that is just to create the product. Retailers then mark it up but depending on the manufacture, the manufacture sets the Retail price which then the authorized dealer sells it at. Obviously there is a margin there but if everyone is selling at the same price it helps the authorized dealer keep the margin that is set by the manufacture. Some manufactures enforce standard pricing to reduce the chance of retailers side selling which then the brand loses the ability to continue to sell at set margins. Great example of this is WoofersEtc.. They side sell multiple brands and are not an authorized dealer for ARC so if you buy from them ARC will not cover the warranty. From a side seller you do not know where the side seller got the equipment from. Some China companies create forgery products that may look like the genuine but are not and use cheaper electronics
> 
> Stinger is a good example of over priced products that are produced in Mexico and China but sold at retail for a stupid margin. They have a lot of products now so I am referring to the non electronic ones, These products have a higher margin then lets say an AMP so since they are not an electronic equipment, then makes no sense to buy direct from a shop. Hard to say what the standard margin is for any one product but as things go electronics has a high margin compared to the actual manufacturing when they are produced in China vs the US. But we all know that the US is far superior as a whole then most companies overseas because the engineering and labor. Obviously there are exceptions.
> 
> ...


I understand what you're saying, I do. The thing is that it's difficult to even get straight answers from the few shops that still exist. The subject is more complicated than my simple question but I didn't want to alienate anyone as tends to happen sometimes. I will give a real world scenario that might help narrow some answers. 

You go to an AD for a product you like (say Audiotec Fischer) and they have amps you like, but you also want Audiofrog or Legatia drivers which they don't. In this case they push Focal. Now you're in no man's land because believe me, they will try to convince you that Focal speakers are superior. An educated consumer sometimes wants advice on every aspect of their system, and other times they know they want a particular product. 

The debate of the superior product is completely moot. The most ethical way to deal with this situation is to provide the customer a detailed quote breaking down parts and labor. If the labor is higher for the speakers purchased from another source, that's fine. Just one man's opinion.


----------



## DiamondFanatic (Dec 26, 2007)

What straight answers are you looking for? An itemized quote for install?


----------



## The Italian (Feb 11, 2020)

DiamondFanatic said:


> What straight answers are you looking for? An itemized quote for install?


Well, that would be very helpful and I can tell you that it's not all that easy to come by.


----------



## DiamondFanatic (Dec 26, 2007)

Can you elaborate? Is the shop doing some sort of install price if the equipment is purchased and you’re looking for the difference if you brought the gear?


----------



## Porsche (Jun 29, 2008)

topics like this are senseless. really no ones business except the owner, unless they tell you is cost or 5-10% above you will think they are ripping you off. the consumer has ZERO idea what takes to run a successful business. shop insurance, techs insurance, rent, tools, electrical, etc etc etc than you have to pay the techs and yourself. its a shame that good shops have to wheel and deal now because of the internet, its the reason why probably 85% barely get by and the other 15% aren't far behind them


----------



## DiamondFanatic (Dec 26, 2007)

^ Agreed w/Porsche, shops that do good work will run a good margin. There’s a reason this is DIY Mobile Audio, historically at least the site was full of people who were interested in saving money buying non “name brand” product or installing themselves. Or they do it because they don’t have a high caliber installer locally, or it’s a fun hobby not just to save money, whatever it is. 

If you can’t do the install yourself and you still want super specific product below MAP you are likely going to be disappointed. An easy solution is to study up on here and all the other great resources available now and tackle the instal yourself, then you can buy whatever you want however you want 😀


----------



## The Italian (Feb 11, 2020)

Porsche said:


> topics like this are senseless. really no ones business except the owner, unless they tell you is cost or 5-10% above you will think they are ripping you off. the consumer has ZERO idea what takes to run a successful business. shop insurance, techs insurance, rent, tools, electrical, etc etc etc than you have to pay the techs and yourself. its a shame that good shops have to wheel and deal now because of the internet, its the reason why probably 85% barely get by and the other 15% aren't far behind them


Pretty sweeping comments. I didn't say that I knew what it took to run your shop or anything even remotely like that. I also didn't say that my goal was to "wheel & deal" with a shop. Other industries are run more directly and it's easy to know what you're paying for in advance. Car audio services seems to be run like some kind of shrouded secret. If you walk in without knowing anything about the topic and lay down so they can charge whatever they want, then they're happy. If, on the other hand, you do have an interest in this as a hobby and you have given careful consideration to your system design, they tend to muddy the water by not disclosing details.


----------



## DiamondFanatic (Dec 26, 2007)

How specific are you being with the shops? It’s hard to tell because in this thread you are still vague about what you are asking them to do.

What specific work have you requested a quote for?

Depending on how specific you are being with them about details (type, brand and size of wiring, discussing details and specifics you have researched online etc) some shops may be getting the feeling you would be a difficult client?


----------



## Jroo (May 24, 2006)

As a consumer, I pay for experience, service, and warranty. In terms of what a business charges, that is up to them. We pay for value and there are times when the value is more important to me to go to the store rather than online. Power wire, deadner, install stuff I will buy online. Headunit, speakers, I buy at the store. I want to be able to deal with a person if there is an issue so I am willing to pay extra for that. The other thing is most online dealers dont function like Crutchfield. In my experience, many are just a pain in the butt to deal with if you have an issue or need to return.


----------



## drphilb (Oct 23, 2014)

I thought the original question was around product not install, install is a whole different area because now your relying on the shops skill sets and what their posted rates are per hour and then the job is their estimate of how many hours it would take to complete. Shops are going to push what they sell simply because they have a relationship with the manufacture/distributer. If you want a certain product you may need to purchase it outside the shop and have them install it. The better the shop the higher the cost. I was quoted 30k from 2 shops to do the work which does not include the equipment. This is why most of us are here. If you have the means to pay a shop and they are at your expectations then go for it. Research the shop, get pics of previous installs, ask for references or simply do it yourself. Its a lot of work and requires patience and practice but you can do it!!!


----------



## The Italian (Feb 11, 2020)

Good follow-up posts. I will expand a bit for clarity. @drphilb, you are correct about the original question. The thing that I find lacking is firm pricing broken down by category. I have received neither equipment nor hourly rate pricing. The shops that I've been to or spoken with are vague regardless of my approach. Originally, I asked them to design a system given my listening preferences. This was with them choosing the equipment and designing the layout. As time went on, I started to do the layout myself. At that point, I provided them entire illustrations of the components with location and dimensions. The specific equipment was still open for discussion based on the fitment restrictions. 

I have done a great deal of research on the OEM system in the car I'm going to upgrade which is significant because there was nothing online. The question of bypassing the amp while keeping all of the OEM functionality had not been addressed and it was a free for all of opinions without basis. Now, we have every wire identified, every connection confirmed, etc, etc. That was a tremendously time-consuming task. I have asked for estimates from two shops who still have not provided me with one. Since I am moving across the country, it no longer matters because I will be having the system done in another location. 

As for whether I am a "difficult" client or not @DiamondFanatic, I may well be one. I don't think I'm being unreasonable and if you consider what I've done so far as things done by a difficult customer, then perhaps. I believe that I am an informed consumer who wants a quality job and is willing to pay well for it. Again, the impression that I get is that they prefer uninformed customers who come in and say, go ahead and do what you want. I don't have a budget for this build so it's not a money issue. It is simply a matter of customer service. If they can't take the time to provide estimates, then how can you have faith in their willingness to invest time into your build? Maybe it's this COVID situation and this year has been difficult for everyone, I don't know. I asked one shop to simply install a DSP and AMP that I already have exclusively for my 2,000 trip and it's been two weeks without a call back. The DSP is one I bought just for this single trip and I am going to put it in a closet once I get my permanent one so it's not an issue of warranty or anything else. Oh, it's brand new btw.


----------



## DiamondFanatic (Dec 26, 2007)

I’m still not really following... the manufacturer effectively sets the margin with MSRP and MAP. A shop may (or may not) go lower if you do a full system as a package price. But could you expect that MAP is a reasonable price to pay for the equipment? Or was that not the question?

What kind of car is this?

You’re also trying to get this done during one of the busiest times of year, your install my be losing in priority to someone who is also buying gear from the shop.


----------



## preston (Dec 10, 2007)

I orginally got the impression you were asking how much more would someone be willing to pay for retail.
ie if you can find the amp for $500 at WoofersEtc, what would it be worth to you to buy it from your local retailer. Like, would you be willing to pay 10% more ? 20% more ? 

Most shops build the profit of the parts into the job, so when you bring in your own parts they usually have to up the labor cost. 

Ive never paid anyone to install car audio, but in other realms of life I usually accept 15% over internet prices if I'm working with a professional (auto mechanics being my prime example). One interesting data point is that bicycle shops have given up on trying to order/sell parts at markup, and just do straight labor charges now and will often give you the internet price on things because they know its an absolutely losing battle, so they just charge what they need to for labor.


----------



## drphilb (Oct 23, 2014)

One other area to consider in regards to equipment is the level of SQ your looking to go to. Most brands have levels they claim to be higher SQ then their entry level. As a guide to this, its a bit subjective because any equipment no matter the SQ quality is dependent upon the quality of the install and tuning. Tuning is by far the most important aspect of a SQ build. Like any contractor a shop is going to go for the easy sale. I think the best advise is to get references and pictures before you commit to avoid trouble. If the shop is unwilling to work with you then move on since that is a red flag. I know that its not the shop as much as it is the installer so build a relationship with the installer. A shop may have a superstar and also a complete idiot working for them so know who will be working on your vehicle. If an installer spends hours working up a quote for the customer and they just walk away, this may be what you experiencing. If you like the installer and feel their hour rate is reasonable, ask for the line level quote and if they require a deposit then pay it to go towards the job. Research is your best answer. This forum won't be able to help you figure that out since you have to do that on your own but of course we are offering you advise. I personally got burned on a shop years ago with a job that was crap and learned my lesson then which I am sharing. Shop your installer with care and get pictures and references.


----------



## haakono (Apr 5, 2009)

Seems like the topic has sidestepped a bit from the original question. But another thing to consider when comparing (large) online retailers vs local (small) specialty car audio shops is what they pay for their products themselves. 

These large corporation can and will negotiate far better prices from the distributors, when they buy lets say 500x of the same amplifier or component set in a single order, than a small shop that only can manage to buy a few to have in stock at a given time. 

So the online retailer can have lets say a 50% markup, and still sell the product cheaper than the local shop can with a 30% markup. It's not an even playing field.


----------



## The Italian (Feb 11, 2020)

Three thoughtful responses, and I thank each of you. I posted another thread asking for recommendations on shops in SoCal. Thanks to the members of the community, I've begun to put together a list. 

@DiamondFanatic, I guess that I don't know the exact MSRP of various components. I suppose I can do that legwork too but I'll be glad if and when I find a shop that runs their business the way I run mine. In other words, I would provide all of that for a customer and I hope to find the same. As for losing out to other jobs, I'm actually willing to purchase equipment from the right shop so it's not that. There is ONE piece of equipment that I want to use and it will be used regardless of who does the installation. It's no longer available and I want to run it. Since it's my car and my money, it's going in. Everything else is open for discussion. 

@preston, you're right on with your comment. That was the original question and I still don't know the answer. I started down this road in an effort to understand industry pricing and before all of the pro or amateur installers go off on me, I realize that's a mighty big spread. But there has to be a way for consumers to gain some insight into this dense forest. It's their cars, it's their money, and it seems like only the insiders know what to expect. 

@drphilb, you're right about the term SQ; it is subjective. I believe that you have to have a good understanding with the person you're working with in order to not end up on different pages. As for getting to know a particular installer rather than a shop, that would be ideal but I haven't found it so easy thus far.


----------



## DiamondFanatic (Dec 26, 2007)

Ok I apologize I missed your main question earlier. In my experience if I was shopping for mid-high end I would only buy from Sonic Electronics or WoofersEtc and similar online shops if I was installing it myself and it was a great (30%+ off MAP on speakers or amps) deal. One easy benchmark is Crutchfield. They honor MAP pricing requirements and they stand behind their product the same way a brick and mortar retailer would. Any brick and mortar store will (likely) price match Crutchfield. With Sonic and the others it comes down to risk tolerance if you’re installing it yourself. Are you going to be frustrated if you get a previously installed unit (happened to my buddy with Sonic)? What if you have a defective product, are you going to be annoyed to have to send it back and wait vs over the counter exchange? What if the service sucks over the phone? 

For your installer (if you’re not installing it yourself) they will have the same issues... if you bring the gear what do they do if there is a problem with it during install? What about anytime after that? Strong potential for a frustrated client if a problem happens and it could be gear or install but they can’t warranty it.

Personally if I was paying for someone else to do the install I would buy the speakers and amplifiers (and install parts) from them. If they’re integrating it and tuning it I would buy the DSP as well. Either way I would expect to purchase the install parts from them. That way if something doesn’t work out you can expect them to do everything to make it right. And you can just enjoy it with full part and labor guarantees/warranty.

Expanding on the earlier comment the margins IMO the difference is mostly driven by the type of product:

install parts > speakers > amplifiers > decks/screens


----------



## Ge0 (Jul 23, 2007)

preston said:


> I orginally got the impression you were asking how much more would someone be willing to pay for retail.
> ie if you can find the amp for $500 at WoofersEtc, what would it be worth to you to buy it from your local retailer. Like, would you be willing to pay 10% more ? 20% more ?
> 
> Most shops build the profit of the parts into the job, so when you bring in your own parts they usually have to up the labor cost.
> ...


Unfortunately bike shops that do this are closing their doors left and right. Performance bike was one. The only shops left around me push Trek, Giant / Specialized, or Cannondale products. The smaller niche dealers are falling like flies. I have always built / maintained my own bikes so it does not impact me that much. But, it is sad to see I can no longer take a short drive to buy what I need and chat it up with the shop owner or mechanics. I now order my supplies from large online retailers.

The same goes for computers. There used to be numerous computer stores around me. They all closed with one exception. A chain called Microcenter. Somehow they are able to meet or beat internet pricing in a brick and mortar store. Lines go out the door to buy from them. My suspicion is that they do this by paying their employees peanuts. Their employees don't know much about what they sell. Microcenter has a high turnover rate.

So how would we expect a car audio shop to exist competing with these margins? I'm in the position where I can pay an extra few bucks to buy from them and keep them around. However, there are no more shops around me that do nothing more than cookie cutter installs anymore. Crap...

Ge0


----------



## drphilb (Oct 23, 2014)

I have found this to be totally true about shops, there are very few and in that you have to be so careful because most are what Geo said. Anytime you go beyond a head unit and the basic setup you may run into issues with shops. There are a few good ones out there but few and far between which is why this forum exists to help the DIY person figure it out. If you do go to a high end shop expect to PAY. I would guestimate your ticket for a more advanced install will be north of 10k


----------



## The Italian (Feb 11, 2020)

DiamondFanatic said:


> Ok I apologize I missed your main question earlier. In my experience if I was shopping for mid-high end I would only buy from Sonic Electronics or WoofersEtc and similar online shops if I was installing it myself and it was a great (30%+ off MAP on speakers or amps) deal. One easy benchmark is Crutchfield. They honor MAP pricing requirements and they stand behind their product the same way a brick and mortar retailer would. Any brick and mortar store will (likely) price match Crutchfield. With Sonic and the others it comes down to risk tolerance if you’re installing it yourself. Are you going to be frustrated if you get a previously installed unit (happened to my buddy with Sonic)? What if you have a defective product, are you going to be annoyed to have to send it back and wait vs over the counter exchange? What if the service sucks over the phone?
> 
> For your installer (if you’re not installing it yourself) they will have the same issues... if you bring the gear what do they do if there is a problem with it during install? What about anytime after that? Strong potential for a frustrated client if a problem happens and it could be gear or install but they can’t warranty it.
> 
> ...


Thanks for addressing the original question, I appreciate it. As I've said, I don't mind paying a bit more to a good shop as long as it's a reasonable markup. I do want to support the remaining "good folks" out there.


----------



## The Italian (Feb 11, 2020)

I know that these forums are meant for DIY'ers and I don't mean to deviate from that. 10 or more years ago, I would have fallen into that category but today, I just don't. I still enjoy being involved and sharing the comradery of people with the same interests. There are a few reasons I am not installing systems myself. I'm not in a good physical condition to execute the work. In addition, I was very active in this field at a time when technology was much less advanced. "Tuning" meant something different; using DSP's and laptops to manipulate signals was something that would have seemed like science fiction if anyone would have told us about it. 

Regardless of my previous experience and current research, I readily admit that others are infinitely more qualified than I am to address these tasks. Bottom line is that while I am an informed consumer and I expect someone to not talk down to me and to be upfront with me, I value their time and capabilities. I readily pay other professionals for their services and this is no different.


----------



## ckirocz28 (Nov 29, 2017)

The Italian said:


> I'm not interested in causing a riff and this is a genuine question. Whatever your stance is on brick & mortar stores, it's logical that they need to pay for overhead that virtual stores don't have. I'm asking specifically about the car audio industry. I personally, like to support local retailers if they provide solid customer service.
> 
> So, assuming that you will have separate labor charges, what is a reasonable markup on equipment? Perhaps, the pros (business owners) in these forums have their own policies and I welcome them to participate in this chat. As a consumer however, how much more are you willing to pay?


Not too much more than the MSRP.


----------



## drop1 (Jul 26, 2015)

I know 2 shop owners very well and get very good prices from them. I will not out them but markup on things like speakers is pretty damned high, even on the internet. 

Most shops these days get by on cheap items. They'd rather sell 100 cheap radios than have one expensive one just sitting in stock. There is also a larger markup on cheaper items. It seems the more expensive the item, the less room they have to move on it. I can get a lot of stuff at cost so I know what they are actually paying but to reveal that would be rude af.
I run a business as well and I dont even have a shop. Just fuel, materials, tool keep up and especially insurance and taxes take about 40 percent of my income. I camr even imagine having to pay fir a building and all the utility bills that come with that....


----------



## 4SixtyTwoFairlane (Feb 21, 2021)

Although I don’t do newer car stereo installs, you are the type of customer I avoid. You say you are not all about price but that’s what you’re about. You should start looking for a shop that has happy customers. Spend your time researching that, talk to the customers and then pick where your going to get your install done. Let them guide you through selection. If you don’t trust your shop your in the wrong store. Tell them you’re budget upfront, before you talk about the system. The quality of the install is more important than the names on the components. A reputable shop will tell you upfront if you’re budget isn’t in line with your expectations.


----------



## diy.phil (May 23, 2011)

11% to 14% costco style will be just fine lol. They have a lot of highly paid employees and expensive facilities/overhead.


----------



## Gary S (Dec 11, 2007)

Retail markup of car and home stereo is 33% - 50 %. However, you can often talk to a mom-and-pop store and negotiate a discount. 

However, manufacture's markup to the wholesalers and retailers can differ and be up to 100%, even $200% ....boutique brands like JL, Hertz, Audison, etc. tend to jack their prices up much more than 2nd tier manufacturers like Cerwin Vega, Epsilon, Polk, Orion, etc.


----------

