PS Audio-Dropping Dealers for Direct Sales

JayCee

Days of discounted PS Audio gear are numbered. Much spirited discussion on pros/cons of discounts industry-wide in the past few months on CP re. discounted Polk offerings...so this is relevant to modern business models. Will be interesting to see how PS Audio fares as I see them similar to Polk in performance vs. cost relative to their intended markets. Truthfully, not sure if I'd have PS Audio gear if I'd had to pay full retail. Would've forced me to consider much more expensive offerings.

Not trying to stir the debate, as it was covered in a previous PSA thread, but I understand @DSkip 's perspective....likewise, folks that can't or won't pay full retail. Much of his frustration as a dealer is being presented by customers at the PSA forum.

https://forum.psaudio.com/t/is-psaudio-going-direct-sale-only/12247/

Excerpts from the PSA forum from the horses mouth:

"Paul CEO PS Audio

It is true that over the next 4 months we will be moving to a direct-only model in the United States.

The world is changing in retail, and rather dramatically. While there are still some excellent dealers offering more than just an ability to order products—like advice, technical support, setup, etc.—an increasing number of sales in the United States are handled by online or catalog merchants (the Amazon Effect). While this “Home Depot” model of price-first and service and support second works well in some industries, we don’t think it serves our community as well as they deserve.

Our customers demand better. The only way we can ensure the same high level of advice, help, easy trial at home, and generous trade-in allowance for all our products is by moving to a direct model over the remaining months in 2019. What that means for our customers will be consistently better service, better advice, same-day-shipping, our industry leading trade-in program where we pay full retail for your used equipment, a whole raft of new initiatives and programs we’ve yet to roll out, and some exciting new products making their way into the world soon.

I am excited. Stay tuned."

...Paul's response to a comment on PSA gear on the used market and very relevant to DSkip's perspective:

"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.

Anywhoo, not advocating one way or another but anyone looking for PSA discounted gear without having to trade-in pieces they'd rather keep in a second rig....might want to consider the timing of their purchase(s).

tophatjohnny

Might be a good thing for PSA. I hear good things about their stuff. Only own one of their power conditioners and it performs great. Was not impressed in their players but I'm sure they're great too for some?? Doubt this move will hurt the company. Probably make them a lot more busy!!

F1nut

They already sell direct at full retail, so this move will in theory put more money in their pockets, but that depends on the volume of sales, which could drop considerably. One thing for sure, IMO is this move is not for the benefit of the end user.

displayname

Honestly, I'm a little shocked it took this long. But the timing makes sense as they prep to roll out large speakers. Getting those into dealers would be very expensive. Their trade-in programs made it tough for dealers anyway. I had tried to find some dealers around here before, and only found one in town listed, and they only kept the Sprout in house. I hope they do more than the big shows with this move. A "tour" of their gear would be a cool solution, but we'll see.

All in all, this makes little change to my personal access or opinion of the brand. I'm sure that some feel differently, but I'm equally sure that plenty of people feel the same.

mhardy6647

IMO, value is pretty immutable, at least in the short term.
If a component is "worth", say, 3000 USD, it's worth 3000 USD -- if one can routinely (or even occasionally, but reliably) get it for, say, 2000 USD, guess what? It's a "2000 dollar" component. The corollary being you'd be crazy to buy it for 3000, unless there were some significant added value being provided by the dealer for the extra grand.

This reminds me of Radio Shack in the 1970s and 80s. Their hifi components were mediocre and markedly to horrifically overpriced. Their speakers, for example, cost about twice what they would objectively be "worth" relative to other, similar and popular offerings.

But, guess what (again?! ) -- every three or four months, R/S would have a half price (more or less) sale on one of their popular speaker models; two for the price of one. Such a deal!

The canonical example was the Minimus-7, a mediocre homage to/ripoff of the Visonik David (or ads 200). The catalog price of a single Minimus-7 in its heyday was $49.95 (1978 to 1985, at least)



Once or twice a year, they'd be on sale for $49.95 a pair.
For that money, they were decent loudspeakers. For twice that -- not so much.
So, are they $49.95 speakers or are they $24.98 speakers?

If the P/S Audio components are worth their "list" prices against their competition, the company and the products will sell well; if not, they may ultimately adopt a model like R/S's (as Polk, Wharfedale, KEF, and ELAC, e.g., have done) or they will adopt a new marketing strategy -- or fail.

Coda: When the original Minimus-7 was closed out (to be replaced by a ported version (Optimus PRO 7) at the same price ($59.95) as the last offering (1993) of the (sealed box) Minimus-7 models. At that point, I bought a pair of Minimus-7s on closeout (R/S "Where Is, As-Is") for 38 bucks. Our daughter & son-in-law still have 'em, and still use 'em.



____________-

All catalog pages from http://www.radioshackcatalogs.com/catalog_directory.html

F1nut

I had a pair of those a very long time ago. Some years later I found them at my dad's house and hooked them up. They are not good speakers.

joecoulson

I had the ones with the wall brackets for sure.

I guess it was a matter of time before the Underwood model got slapped in the face. Understanding that the company wants to make more coin, they may be ok with the reduction (guaranteed) in volume because the net profits might make up for it over a period of time. Companies like Parasound who flood the market with every dealer under the sun are on the opposite end of the spectrum, but they seem to be doing very well.
I like my gear and am glad I got it at a discount. I do not spend all my money on discounted gear, I actually like to spread it around a little. Some to Underwood, some to local dealers, some to MD and AA etc. There is a value to having a single source dealer if you like to set and forget, but for me, I like to tinker and move stuff around. Being able to do that without approval from someone who has built up that trust is a benefit for me.
I will still purchase from PS A should they offer a product that fits my needs and the price is right, I do like their products a lot.

Mikey081057

Now are they going to sell direct through Amazon?

BlueFox

Selling direct and keeping their products over priced is probably not a successful strategy IMO.

tophatjohnny

Took a look at their speakers on You Tube..(had no idea they also made speakers?) Look pretty nice. Wonder if the likes of Auralic and Lumin will follow with a speaker line up someday? I mean why not??? 😂

tonyb

DSkip wrote: »

Thumbs up to ps audio. Smart move.

If everyone else followed their example, you'd be out of business.

Ok, so they're going to bring everything back "in house", to benefit themselves. Isn't that what smart business decisions are suppose to do ?

They still can't control the used markets, so finding their products at discounts won't be a problem.

kevhed72

While I am a fan of PS Audio, it all comes down to attempting to increase revenues and profits in the end. Anything else the PSA CEO mentioned in the quote above was secondary to increasing profits....because that is any company's main objective. But you all get that....🙂

Emlyn

I would notice no difference with this business model shift. The electronic components I have bought from PS Audio, eight of them, came directly from PS Audio with the exception of one I got from Audio Advisor that was drop shipped from PS Audio anyway. All were heavily discounted closeout or demo models in perfect condition. I still use a Power Director 4.7 daily that I got around 18 years ago.

Regarding their direct customer service, I regard it as stellar. I have a phono preamp that would not power up so sent an email to them. Within an hour two techs responded and said it was most likely just a blown fuse and emailed me clear instructions with photos on how to replace it. With an offer to send a new fuse if I wanted or a shipping label to return the unit for repair. I had a fuse and it took literally two minutes to fix it myself.

A local dealer, if they even offer repairs and I could find one who knew what they were talking about, would have taken much longer in my experience. And most of them don’t even keep product in stock because of the overhead.

tonyb

DSkip wrote: »

If you control the sales price you control the used market price. It’s that simple. Corrections occur once a new norm is set. Ps audio had already set themselves up where dealers couldn’t compete with them so this is the smartest thing they could have done.

Eh, yes and no Skip. A piece is only valued on the used markets by what someone is willing to pay for it. If used prices are too high, that piece will sit unsold until the seller lowers the price.

My guess is, PSA wants to be able to call the shots on what models get heavily discounted so they can control inventory, move what is slow selling at retail, while keeping the value of the good sellers. They can't control what a private seller is willing to sell a piece for. Too much competition in the marketplace to have that big of an ego.....no matter how good your products are. When resale of a certain brand remains too high, people will look for other options.

Emlyn

One company I am aware of that closely controlled their pricing through a dealer network was Rotel. They would allow a 5 percent discount to be applied for their dealers and cut off any that did not comply. But, their pricing was reasonable to begin with. I don’t think PS Audio has necessarily been reasonable with their retail pricing because they knew everything would be sold at a hefty discount unless a dealer found a sucker.

Come to think of it, I do have a couple receivers around that originally retailed for around $2K. Trade in on those could be a good thing.

displayname

tophatjohnny wrote: »

Took a look at their speakers on You Tube..(had no idea they also made speakers?) Look pretty nice. Wonder if the likes of Auralic and Lumin will follow with a speaker line up someday? I mean why not??? 😂

The speakers aren't out yet, but they are coming soon. They have publicly discussed three models in the AN (flagship) lineup, and Paul has shown prototypes of a Sprout bookshelf speaker. So maybe a Stellar line of speakers is on the road map as well? It'll be interesting to see how they continue to grow their product lines.

Emlyn

I haven’t really been paying attention to their new speaker line, but it definitely sounds a cut above the usual fare. Speakers as tall as Manute Bol coming eventually...

https://www.psaudio.com/newsletter/march-2019/

They probably would benefit from dealer distribution on the big ones unless they throw in the price of airfare and a hotel room to demo them in Colorado. Sounds like they’ll be quite expensive!

EndersShadow

Whelp I’m gonna keep all my AC-3s I got sitting in boxes for a long time now lol

motorhead43026

"" shet, I sold mine.

tonyb

DSkip wrote: »

What someone is willing to pay is directly related to what someone is willing to sell for. I single handedly raised the resale market for MastersounD in the US by refusing to sell at certain prices.

When people pay more for a piece, they are less willing to sell it for less.

Regardless, ps audio is now directly in control so they set their own value which will influence the second hand value, good or bad. I imagine the structure won’t change much.

Could be Skip, however, that also steers consumers to look for other cheaper alternatives by visiting other brands. Which, there is no shortage of these days.

tonyb

not sure we can use Polk as an example, given what LSIM's are going for now. Polk has much competition in their price class though, and that may be a better determining factor.

Maybe McIntosh is a better example. Back in the day, they used to be "the" high end brand. Even today, used pieces go for big bucks too. That has made some look to other brands, and many others popped up offering bang for the buck. You lose a certain amount of consumers by artificially keeping resale high. It's the proverbial double edged sword.

The name of the game, in my view anyway, is to sell units in volumes that support the company. Here in the states, high end is a niche market, hard to make money in a niche market with so much competition.

PSA knows that, so if volume isn't there, you have to get more per piece. Which to me is what they are doing.

SIHAB

I must be thick. Who else does this? Sounds like brand loyalty wins the day.

"What that means for our customers will be consistently better service, better advice, same-day-shipping, our industry leading trade-in program where we pay full retail for your used equipment"

What am I missing? I've been dying to try their power products...
but its down the priority list.

Nightfall

motorhead43026 wrote: »

"" shet, I sold mine.

If you'd rather keep it (if you haven't shipped it yet) it's all good, just let me know @motorhead43026 Someone else is selling me a Shunyata as well so it's really okay.

EndersShadow

^I think that was meant sarcastically

motorhead43026

No Sir shipped yours and Scott's today. I wasn't using them, too good of cords to not be in use.

Moose68Bash

kevhed72 wrote: »

While I am a fan of PS Audio, it all comes down to attempting to increase revenues and profits in the end. Anything else the PSA CEO mentioned in the quote above was secondary to increasing profits....because that is any company's main objective. But you all get that....🙂

You may well be correct about PS Audio, but the wise founder of a very fine company for which I worked for several years -- Cummins Engine Company (now, Cummins, Inc.) -- frequently said:

"Profit is the natural by-product of doing something well."

He would add that nobody pays a company to make a profit; customers pay for a quality product that meets a need (or a "want").

nooshinjohn

DSkip wrote: »

What someone is willing to pay is directly related to what someone is willing to sell for. I single handedly raised the resale market for MastersounD in the US by refusing to sell at certain prices.

When people pay more for a piece, they are less willing to sell it for less.

Regardless, ps audio is now directly in control so they set their own value which will influence the second hand value, good or bad. I imagine the structure won’t change much.

And PS Audio offering full price trade in value for used gear will pull much of that equipment from the used markets, thus driving up prices for the stuff that is out there.

mhardy6647

nooshinjohn wrote: »

DSkip wrote: »

What someone is willing to pay is directly related to what someone is willing to sell for. I single handedly raised the resale market for MastersounD in the US by refusing to sell at certain prices.

When people pay more for a piece, they are less willing to sell it for less.

Regardless, ps audio is now directly in control so they set their own value which will influence the second hand value, good or bad. I imagine the structure won’t change much.

And PS Audio offering full price trade in value for used gear will pull much of that equipment from the used markets, thus driving up prices for the stuff that is out there.

All of which is "up side" for owners of PS Audio products -- higher resale value.

tonyb

nooshinjohn wrote: »

DSkip wrote: »

What someone is willing to pay is directly related to what someone is willing to sell for. I single handedly raised the resale market for MastersounD in the US by refusing to sell at certain prices.

When people pay more for a piece, they are less willing to sell it for less.

Regardless, ps audio is now directly in control so they set their own value which will influence the second hand value, good or bad. I imagine the structure won’t change much.

And PS Audio offering full price trade in value for used gear will pull much of that equipment from the used markets, thus driving up prices for the stuff that is out there.

If they are going to pay full retail on trade-ins, what does that say for the price of new products ? Going north I bet.

It will only pull from the used markets from those willing to stay with the brand. Another question might be, what does PSA intend to do with all this used gear they take in ? Sell it as refurbs ? At ridiculous prices ? In a market filled with competition ?

I don't see this working out as intended for them. May benefit die hard brand loyal customers, but even they are going to pay one way or another.

JayCee

nooshinjohn wrote: »

And PS Audio offering full price trade in value for used gear will pull much of that equipment from the used markets, thus driving up prices for the stuff that is out there.

Used gear doesn't get thrown in a trash compacter...LOL. This is where PSA sells used gear:

The Music Room https://tmraudio.com/ and it's in Eire, CO...an hour from PSA. From TMR's site: "The Music Room is now the largest online retailer of pre-owned HiFi equipment in the world."

I'd be willing to bet they use other channels to sell of the less desirable pieces.

DSkip wrote: »

nooshinjohn wrote: »

DSkip wrote: »

What someone is willing to pay is directly related to what someone is willing to sell for. I single handedly raised the resale market for MastersounD in the US by refusing to sell at certain prices.

When people pay more for a piece, they are less willing to sell it for less.

Regardless, ps audio is now directly in control so they set their own value which will influence the second hand value, good or bad. I imagine the structure won’t change much.

And PS Audio offering full price trade in value for used gear will pull much of that equipment from the used markets, thus driving up prices for the stuff that is out there.

Have you looked at the details of that trade? IIRC, it is limited to 30% of the value of the product. When Underwood was a dealer, I think you could get it direct from them for cheaper without trading in gear than you could even after the discount applied from PS Audio. The idea behind their trade-in program is to provide discounts but also be able to recuperate that discount via the gear traded in. That gear goes right back into the market so I'm not sure how its being 'pulled' from anything.

For instance, if you have a $1,000 preamp and are buying a $1,000 amp from PS Audio, they will only really give you $300 value towards the preamp. If you buy a $3,000 amp, you'll get $900 of that $1,000 original value. In the first scenario they'll probably make a greater profit in the end than if they sold it direct and in the latter, they'll probably only be providing about a 10-15% discount in the end.

I do trade-ins as well and always try to offer a fair current-market price for the trade. I also don't cap it like PS Audio does, but I have had to turn down possible trades before because they just didn't make sense even though all values were fair. Such is business. The way PS Audio structures theirs, they don't have to turn down offers because they're going to get theirs either way. It doesn't bother me - its just two different ways to skin a cat.

Skip's right...from my research and deduction PSA gets their discount back. Since PSA is the only source, they'll have the distinct advantage to play cost vs. profit. One of the reasons I went w/Underwood was I didn't have to pilfer my gear to get a sizeable chunk off my BHK gear. My first PSA purchase was the Direct Stream DAC and was through Musicdirect. I balked at the used price they wanted and MD knocked $500 off without blinking. It was a "demo" piece. IE, returned by a previous customer and I had to have it de-registered through PSA.

Don't quote me on this, haven't verified myself, but what I'm currently reading on the PSA thread says they've increased their trade-in allowances. There's also lots of anecdotal posts that PSA's also discounted further based on one-on-one dealings with customers. My takeaway is, their going to wheel and deal if needed and it will be part of their business model. Kind of like the auto industry does. All this said....I could be wrong. Just one man's opinion.

Also, Paul (PSA CEO), publicly stated there would not be any increase in current product price.

displayname

JayCee wrote: »

Also, Paul (PSA CEO), publicly stated there would not be any increase in current product price.

It'll be interesting to see how their business model continues to evolve. Because Paul has previously stated publicly that they set prices as "cost × 5" I can't imagine he'd stray too far from that.
What's more interesting to me is their other future lines of business. Speakers are coming, but so is a studio, a record label, and possibly high(er) res internet radio. That's a lot of lines of business to dip into, so it'll be interesting to see how it all shakes out.