PS Audio going to direct sales only

I agree with SandAndGlass, once they make their change to no dealers they will adjust whatever needs to be addressed to make their model work. I liked the dealer network and really enjoyed working with one dealer, he was always a very accommodating and helpful dealer. It seems his margins changed, as I was able to secure a real nice deal at one time, and not such a great deal two years later, but fairly close.

The trade thing is an interesting concept, and for people that are what I would call "shy" shoppers, it allows them an opportunity to get some discounting by trading a used component. It appears the "real" retail price on their equipment is really 30% down from the actual listed price. Take the Direct Stream DAC as an example, listed at $5,999.00. I believe the "real" list price of that component is actually $4,199.00, as they allow UP TO an $1,800.00 discount for any component with a new list price of at least $1,800.00, but wait, their are some blanks to fill in, and the ones that will hurt you are the Condition of the component, where you have to check the Great box to get the full $1,800.00. If you check Good, the trade is reduced to $1,620.00 and Poor, you are reduced to $1,500.00, so it's not as easy as it appears to receive that total 30% discount. The other killer is the Contact With Tobacco Smoke question, which deducts an additional $180.00 for smoke exposure. So, you really have to have a mint component to get that full value of that component, and if your traded component had a larger retail value than $1,800.00, the ceiling on your trade is limited to $1,800.00 for that mint component with no smoke exposure. I'm pretty sure people probably fudge a bit on their trades, but I believe PS has taken that into consideration, they know people are going to fudge on the smoke and condition question, but I think that is probably not a big deal as their real Retail on that piece is not $5,999.00 but rather $4,199.00.

PS takes all these trades and let's a third party handle the marketing of these pieces. Anything PS gets over and above the $4,199.00 for say the Direct Stream is just some nice icing on the cake, at least this is how I see the plan.

The problem I see is that some savvy shoppers could possibly receive over 30% discount from their respective dealers on the PS equipment they purchased, and with their move to direct sales, that window will close. Obviously with the dealer, the buyer did not have to fool around with some lame trade to get their good price, they just worked with their dealer, and those days will be gone, so the buyer will now be forced to trade something in to get a discount at all, and that trade will be questioned if it's received by PS and deemed to be not quite as good as the buyer described when they initiated their trade! My guess is PS will "probably" let that little mistake slide.

I have read that any extra money that might flow to PS by doing away with their current dealers will be put in on more customer service and quicker shipments and an overall better buying experience, isn't that nice! Hey, the company needs to say something don't they, sounds like a plan, everything improves, ok! Here is an unknown, what if someone calls PS and says, Paul, my good friend, I'm a bit short this month, do you think you could help me out here and let me purchase a Direct Stream DAC at $4,199.00, I don't have a trade right now, and I want you to know, it sure would be appreciated! I could absolutely be wrong, but I think he might go for the deal, what do you think??

I know I will miss my good PS dealer, they were great to deal with. I just don't know what was wrong with a nice dealer network, where we could strike our best deal with the dealer, I was happy with that sales model. I think the "improved shipping, customer service, etc" is not a good substitute for a great dealer network, what do you think? One thing is for sure, as SandAndGlass says, they can easily tweek the new plan, adjust pricing, whatever it takes to continue to sell their products the way they want to.

 

At the end of the day, people will decide with their dollars. According to PSA, most of their sales are thru their direct website anyway. Myself, I was saving for a BHK250 amp. However, I can not pay the $7500 MSRP. My dealer discount was huge. PSA does have the trade in deal, however, I do not have anything I want to trade that is worth what the dealer was discounting. So when I get to my savings goal, I'll ask PSA directly about a discounted price. If that does not work, I will have plan B and C. The Pass 150.8 is probably the direction i'm leaning toward as plan B. Many may say that should be my plan A to begin with.

 

this is true ... a vast majority of high end audio products are sold to asian markets.

 

How can a trade in be a real discount? Likely you get more S/H on Ebay. A real discount is to knock 30% straight of the sale. I suspect the retailer is still making 10% profit on this. Realistically with any product you would do well to get 20%. I would expect 10% without any haggle as I know they give that on insurance replacements in UK (no proof required in my experience though that might have changed). Talking in general here not PS Audio. Selling direct they likely will make more money as you generally can't or are not inclined to negotiate an online price. Plus will PS Audio be taking trades? It does occur to me that we might be paying even more buying kit online since 'retail' prices are being maintained. Guilty of this myself but there is convenience and 30 days to assess and send back (UK and EU). You best bet online are limited offers such as supposed B stock or opened box or a price hike being delayed by one retailer (by error?). Recently saved myself £500 in the later case. When next checked price was up. Saving money these days on hi-end kit is more about buying before another unjustified price hike. Bought an SME arm when they announced forthcoming rises. Since then (2 yrs) an arm that cost me £1350 now retails for £2450 in UK. Most manufactures rely on far east were they can charge far more and since prices are now internationally transparent thanks to the internet domestic buyers are getting shafted.

 

You are correct, the 30% is a nice little trade gimmick, to get you feeling warm and fuzzy, it's not a discount. The real discount came from hungry dealers, and soon they will be gone, unfortunately. Because of the trade gimmick, I do believe the "real" list price is actually 30% down from the posted List Price on all PS Audio equipment. I believe when PS makes this transition, the end user will see many more sales from PS, cutting into that 30% trade gimmick. They will still be able to do the occasional 40-50% super sale every once in a while I'm sure.

No one really knows what percentage of sales PS did directly and what percentage went through dealers. To make this transition, they must have done the bulk of their sales direct. It will be interesting to see how their brand new line of speakers and new CD only player does with their direct only sales and if prices are reduced on anything below where they are now, and how many 30 to 50% sales we see in 2020. Anyone interested in their new products and their new ultimate DAC should take a chance and give them a call asking for that little 30% cushion to be removed from their new speaker purchase. Just say, Paul, my friend, I need a little !

 

Pardon me if this has been mentioned in this thread already. I'll keep this short.

IF they were going to be lowering their pricing to something like what Schiit has done from the start, it would be a very compelling move. Right now, the fact that they're still charging full-retail on everything seems a bit... how do I put this... selfish? That's putting it nicely.

I'm sure PSA has had issues with dealers, in the past, over-discounting but, to fire all dealers seems like a very bad move.

 

Perhaps that is why Music Direct sent an email yesterday offering 30% off PS Audio products. LOL

 

As I understand it (and my information is not perfect, but I think it's pretty good) there are three 'big' dealers, Upscale Audio, Underwood Hi-Fi and Music Direct. All three of those dealers have made a large commitment over the years to PS Audio and are now being shoved out the airlock without a space suit. These three dealers probably represent 1/3 to 2/3's of PS's domestic business.

Overseas sales are probably thirty to fifty per cent of PS's business.

 

Gato Audio recently pulled the same move: Gato Audio goes lean and cuts 40% of the pricing!
In putting this change in place they:
- reduced prices by 40% (and anyone purchasing just before the announcement will enjoy it as well)
- introduced free worldwide shipping
- 2 weeks trial period (unlike Buchardt's one month)

The fact that PS Audio will be implementing this change ONLY in the USA worries me. It's hard to see how they can discount 40% selling in USA when their dealers elsewhere (like Canada) are charging significantly higher. Dealers will pull their support if they think PS Audio's direct pricing is affecting their sales.

My guess is pricing in USA won't be too far apart from their international dealers which means we won't be enjoying that 40% discount that Gato buyers will be enjoying.

 

I would assume Audio Advisor would be in that group as well.

 

Gato's got it all wrong. When you go direct you're not supposed to LOWER your prices 40%. You're supposed to RAISE your prices 40%.

Just ask PS Audio.

 

I believe the program that PS implemented in regard to all these trades was probably somewhat of a pain for the dealers. I spoke to one dealer that said he simply did not like to participate in that program, it was really a thorn in his foot every time a customer would start talking about trade in merchandise. They do have a third party that handles all this stuff being traded and I'm sure they make some bucks on the trades, but I think the "real" list price is really 30% off their current list price, and I would not expect their list price to change on their current products, I think you will see their Direct Stream DAC still list for $5,999.00. Generally dealers are much more flexible than the manufacturer themselves, no I think the great discounts at PS will now be a thing of the past. I do think we will see the occasional super sale and they will continue to push this trade discount, evidently they have done very well with their little trade in program. As for me, I liked the dealer deal, but that is just me.

 

Are PS Audio's higher price products all made to order? That may help them cut costs.
They are running a holiday sale starting at 20% off (today is the last day) then ~every week the discount gets smaller by 5%.

 

Music Direct wants to move stock quickly. One of the things I sure found out, no one wants to pay much of anything for used PS equipment. I was very fortunate to find someone who was willing to pay more than 50% off the list price, and my equipment was virtually NEW, in every way. I had people offering me 60-65% off all day long for my virtually new equipment and they were very quick to tell me, it's going for 60-70% off all day long, and I did see it happening, especially when they dumped the Direct Stream Memory Player, and what do you think the older digital player and DAC are worth now, next to nothing, most people would consider them old technology, and not worthy of an offer. The player before the Direct Stream did not play SACD discs, which was a non-starter for me. Strangely enough, I was told their player that will replace the discontinued Memory Player will not play SACD's either, another non starter for me. That sale was a hard pill to swallow, and I was wondering if a buyer would ever surface, thank goodness they did.

I'm wondering, what in the world Santa is doing on this new CD transport that was suppose to be out before the end of the year and what about that entire line of speakers, why in the world would it not be out for prime time in 2019, come on Santa, beef thing up a bit. There are stockings to be filled.

 

does ps audio products actually deliver the performance/experience to the end user that reflects their asking price?


I personally feel they need a 50% reduction in price with the regular sale events dipping to 60% off, and Black Friday/Cyber Monday yearly event should be dipping to 70% off of their current retail prices.

how much you want to bet even if we were to take 70% off their retail price, they would still be making a profit off of us end user consumers. But seriously though, if someone could answer my question at the beginning of this post... would help enlighten me what is so special about PS Audio gear...

 

I would say no, because as I said, their "true" list price right now is at least 30% off of their posted price, which is why they have all sorts of discounting latitudes, 20% off of their posted list price on say the Direct Stream DAC is actually at least 10% over the real list price, they are cooking with grease!

Hey, if you really like the PS Equipment, I would put in some calls and try buying something at 40-45% off, I just think they would ship it out that day at 45% off of their list price. It's Christmas time, I'm sure they want to spread some cheer, Ho Ho Ho. PS is not like Wilson Audio, with PS the game is "Let's Make A Deal" You don't even have to choose the right door.

 

Personally, I think PSA will be fine. I own the BHK preamp. I got the pre new thru a dealer with 35% off (without trade). The unit is top notch and I love the fit and finish. I do admit, however, if I were going to spend $6000 on a preamp, I would have probably looked at brands like Pass Labs, etc before PSA.

 

I look for PS Audio to be seen much more at various key audio shows in the USA. Last year their room at Axpona (Chicago in April) was very impressive.

I fully understand their decision to go direct rather than through a dealer network. From my own industry experience many dealers are busy with their day-to-day operations, selling, installing and all of the issues that running a successful business entails. Manufacturers must rely on those dealers to promote their products and work with them on how to increase sales. If a dealer chooses not to involve themselves with the manufacturers marketing efforts it causes lost sales and opportunities. Going direct allows the brand much more freedom and the ability to talk directly to the consumer.

 

Dale, just think how they are set up now, I also knew about the "nice" discounts when they had a dealer network. We have both seen 35% and more through dealers, however what do we see now? Right now we see 20% off of list price if you bought a piece of equipment as of 12/2/19, and as of today, 15% off. So, using your BHK Signature Pre-amp as an example, the list is $5,999.00 and you got 35% off "with the dealer." So you paid $3,900.00 through your dealer. The best PS has offered now is 20% and now that has expired, which would have been $4,799.20.

So now with a retail of $5,999.00 less the 30% "gimme" discount for used gear, you have a "real" list price of $4,200.00, which is actually the "real" list price. Since PS now has no dealers they keep that extra 45-50% dealer discounting as well, so let's be conservative and say that extra dealer discount they have been allowing for years was only 50% , although I believe it upwards of 50-57% and why do I say that, because I bought some expensive pieces at a flat 50% discount, from a PS Audio dealer, not from PS directly , that's right, 50% off from the dealer, but for argument sake, let's be conservative and say the dealer got 50% off the "true" list price of $4,200.00, which would be a dealer cost of $2,100.00, and I'm thinking probably closer to the 57%, which would be a PS cost of $1,806.00. Wow, we have come a long way from $5,999.00. The OP asked, do we think the quality is there, well, as much as can be packed into a piece costing $1.806.00.

You know, I'm amazed at manufacturer's cost on equipment. I acquired a Sony 5400 SACD player and worked with Sony and they said their cost was $625.00, and you know they were telling a big one, it was probably about $500.00, however their office of the President would acknowledge a price of $625.00!

So, now you can clearly see why PS dropped the dealers, lots of rich, savory sweet cash to store in house, and I say, how sweet is that! Not for you, but Paul and the crew.

So now, if they sold you that same BHK Signature for let's say a 40% mark up over their cost, your price would be $2,529.00, and that is with PS seeing a 40% mark up, however, they will have some freight charges, but big companies get great deals on freight, nothing like we pay to ship things. Heck, a 100% mark up would be $3,612.00. To me, this should really reflect customer service that is OUT OF THIS WORLD, but for me, I think I would rather go with standard old fair customer service and a great deal on the front end, as you are going to loose your shirt and your britches on the back end when it's time for you to sell, been there, done that. Bottom line, YOU MUST get a GREAT deal when you buy, or loose badly when you sell, the used market is no market for customers that pay retail or anywhere close to it.

 

You make some good points.

Let's say Toyota, on a whim, starts selling a Camry that was $30,000 before and prices it like a Lexus $50,000. Then Toyota touts "trade in your old car, we can get you to the old pricing....see...the discounts are still there".......how many suckers would take the bait

One more thing.....all those high dollar power conditioners, etc that PSA sell has the highest markup of all their equipment. They make a killing for each unit sold...that's even before the new sales model.

 

You guys vastly underestimate the markup on low production, high end audio goods. It is an extremely high margin industry. PS Audio does not stand to make merely 40% margins. Their MSRP is at least 5x and probably 10x their BOM. So, that $6000 DAC actually costs PS Audio $600 (or giving them the benefit of the doubt, $1200) in material to build. Yes, they have other fixed and variable costs such as labor (wages and benefits), rent, utilities for those cold Colorado nights, marketing, etc. The markup is also supposed to account for distributor and dealer margins. Still, there is a ton of profit built into this pricing model.

Keep in mind, too, that the most expensive part of the BOM for high end brands is the casework. Yep, the audio bling that does not affect sound quality one iota. If PS Audio decided to sell its goods encased in thin sheet metal bent into shape with a brake, rather than cast aluminum, there would be a huge decrease in price.

The “regular” consumer electronics manufacturers typically price their MSRP at 2x their BOM. This 100% markup leaves razor-thin margins once distributors and dealers get their cuts (which are razor-thin as well). That’s probably a big reason why Oppo Digital went out of business—they had low margins on their products and did not sell enough of them, even though they had a dealer network and sold internet direct.

 

I hate to admit it, but you are probably 150% correct! Their margins are probably much higher than I gave them credit for, oh boy! My gosh, if Billy Budapest is correct and the margins are much greater than what I figured, that's almost like bank robbery, or it could be just plain old good business for the manufacturer!

 

My problem with direct purchase is you can't hear it before you purchase it, a real no-no in audio. You may be able to return it but you have to pay the shipping and insurance and possibly a restocking fee. Most audio components have a settle-in period, many manufactures say 2 to 3 hundred hours, will it be returnable after that time ?

Also, direct purchase cuts out the high mark-up from the retailers, yet I never see a price reduction at the consumer level.

 

The cost of the materials doesn’t say anything about the cost of design, labor, administrative employees, employee benefits, building rent and utilities, tools and equipment, vehicles, marketing, shipping, insurance, lawyers, accountants, and taxes...and whatever I’ve missed.

 

Me too. Looking to purchase a new DAC in January. The PS Audio Direct Stream is on my radar, along with offerings from Bryston and McIntosh.