A Dealer's View of Discounts and Service (Oct. 1976)

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by Martin Clifford & Margaret Eisen

Let's be honest about it-discounters of stereo equipment are getting the lion's share of the retail dollar. You can buy name-brand components at cut-rate prices in almost any neighborhood drug store these days.

If you're smart about good equipment and IF you know how to shop, you can buy cheap and do just about fine. But what happens if you're not shrewd enough to get past those two big "IFs"? And what are you going to do about service three, four or five years down the line? We know a hard-nosed and almost brutal realist of a hi-fi dealer, Ralph Sommer, President of Barnett Bros., a 50-year-old family business in downtown Philadelphia. Because we know Ralph has a passion for honesty and rarely pulls a punch, we thought we'd ask him some "embarrassing" questions about the true values available at discounters and how much good service should really cost.

Sommer agreed to a "no holds barred" question and answer session, and what we got back was a highly controversial article. Here's how it went:

Audio: What brands do you handle?

Sommer: Among others, Bose, Revox, Yamaha, McIntosh, ADS-Braun, Stax, Tandberg, B&O. Klipsch, Ortofon, SAE, Soundcraftsmen, Thorens, Elpa, Lux, Sennheiser, Beyer, and dbx.

A. What are your prices for this equipment?

S. Standard, easily higher than the discount houses, and probably higher than my competitors.

A. Do you charge the list price?

S. List price is in some ways fictional. I make what I consider a fair evaluation of the value of a product and charge accordingly. The price I set can, quite conceivably, be less than what the manufacturer sets as his "suggested list price."

A. What is your profit margin on equipment?

S. My margin on legitimate name brand items--not the so-called house brands--is between 30 and 35 per cent, and I defy any dealer to operate a business for over 50 years, as we have, on a smaller margin. It is unrealistic for a consumer to expect the dealer to operate on smaller margins and stay in business, and if the dealer is out of business, where is the customer going to go when he needs his component fixed?

A. What do you say when a customer tells you that he can get a piece of gear cheaper elsewhere?

S. I tell him to buy there, if he wants to, and if he isn't aware of who the cheapest discounter is, I'll give him the names and addresses of the closest ones. But it isn't the initial purchase price that counts, but the total cost over a period of years, just as with cars. For example, if two cars have identical purchase prices but one gets 10 more miles per gallon, then the other one is going to cost you several thousand dollars more over the life of the car. It's the same way with hi-fi equipment; service charges can add so much dollar-wise, that what was originally a relatively reasonable purchase, now has become an extremely high cost item. And this is particularly true if no service at all is offered with the original purchase.

A. What you're saying, then, is that the purchase of a hi-fi system is the same as with any other item, such as a suit, shoes, or refrigerator.

S. That's a common misconception. Next to a house and a car, an audio system can easily be the third largest purchase in an individual's life. Furthermore, a good system is much more complicated and sophisticated than even a refrigerator. There are many good cleaners and tailors for the suit, many good cobblers for the shoes, and many good refrigeration repairmen, but where are the expert audio technicians? And what has happened to the numerous schools that used to teach all this, as well as the basics of electronics?

A. But can't radio and TV repairmen also do audio repairs?

S. That's another mistaken idea. TV repair today is fairly systematic, and most TV makers follow the same pattern, although I'll grant there are some exceptions. A television set is one component; whereas the average high fidelity system consists of a number of components, a tuner, a stereo amp, a transcription grade turntable, headphones, speakers, etc., to say nothing of the various other components such as equalizers, cassette decks, and so on. Not only that, but high fidelity manufacturing is so highly competitive, that the circuitry for these systems has become increasingly complex. These components are not something for either the average TV repairman or amateur "tinkerer" to fix. In addition, manufacturers are constantly introducing new circuit concepts, and consequently the hi-fi service technician must study constantly just to keep apace with the field.

A. What is the biggest advantage of having equipment repaired by the person who sold it to you?

S. He will be interested in getting the equipment working permanently and properly, not just fixing the immediate problem. It's like being out of town and going to a strange doctor when you hurt your ankle. The doctor would probably just concern himself with the injured ankle, and not with your general health.

Also, in being familiar with the equipment we sell, we are able to anticipate many problems before they actually occur, and repair them before they result in major damage to the component. This is the philosophy behind our annual equipment checkup.

A. Is this part of your service policy?

S. We have a five-year service policy on all equipment that we sell, and we will repair all defective electronic parts at just $1.00 charge. This is provided that the customer brings his equipment in annually for an equipment checkup. This used to be free but now we have to charge something or the maker's warrantee would not be valid because of a recent FTC ruling.

A. Why bring it in once a year?

S. There is a gradual deterioration in the component parts, even solid state. A coil may become slightly misaligned, a resistor may change value so it's out of tolerance, or a filter capacitor may become leaky. This deterioration is so gradual that the owner isn't sure what's happening; and if he brings it back when it finally stops working completely, then it cost too much to repair. This is known as preventive maintenance.

This is the same as you going to a doctor once a year for a check-up; even though you think there's nothing wrong, you want to make sure.

"When a customer says he can get a piece of gear cheaper elsewhere, I tell him to buy there if he really wants to."

A. Do you give estimates on repair?

S. No, we don't give estimates for these five reasons: it takes time, locating the trouble is the greatest part of any repair job, we are definite in our diagnosis, knowledge is costly, and the components must be made to operate to complete the diagnosis.

A. How can a customer know what the repair bill will come to?

S. He must tell us how much he is willing to spend. One of the big problems in high fidelity repairs is locating the defect. Sometimes the defect can be subtle and take a competent repair technician several hours to run down.

When you're paying for repairs, you're paying for technical knowledge and ability.

"A dealer shouldn't be afraid to itemize a bill that takes hours of a competent technician's time."

"Lemons occur in every industry, but the 'let the buyer beware' should not apply to the quality dealer."

It must be understood that if we see, during the course of the repair, that it will cost more than the customer is willing to spend, then we stop and contact him. If he wants to authorize the higher bill, fine; if not, we put his equipment back together as it was brought in, and charge him $5.00 for handling, which doesn't begin to cover our costs.

A. Should the customer get an itemized repair bill?

S. Yes. A dealer shouldn't be afraid to itemize a repair that takes hours of a competent technician's time and then replacement of a part that may cost just pennies.

A. Has there been a deterioration in the manufacturer's quality control?

S. There are two factors to be considered here, the human and the electronic. With the human factor, we are at the mercy of people who may not be mentally alert on a given day. With the electronic factor, we must consider whether it is being subcontracted or not. In short, how much control does the "manufacturer" have over the product on the line? To give a simple example, the manufacturer may be using a contaminated solder bath, producing problems in equipment that may not show up for six months or more. By that time the equipment is in the customer's hands.

A. Do you think manufacturers deliver very much out-of-spec equipment to dealers?

S. Once in a while, but rarely with the top-quality lines.

A. Do you ever run into equipment that requires no servicing?

S. Yes, often.

A. Do you ever get very old equipment for repair?

S. Yes, we've had equipment as old as 25 years come in. Some people become attached to their hi-fi system and even if the cost of repair is more than the value of their gear, they prefer it to buying new components.

A. What happens when a maker produces an outright lemon?

S. I believe it is the function of the dealer to help cushion such problems, and this is why some manufacturers are so selective about granting dealerships. But if the manufacturer is "quality conscious," he will not be afraid to admit his responsibility.

A. How do you handle lemons?

S. By the time the customer comes to us with his complaint, we are generally aware of the problem. And we can, if necessary, offer the customer some stand-by equipment to use until we get his original equipment repaired. And if the manufacturer is a responsible one, as most are, he will back his good name with a new piece of equipment when the case is extreme.

Let's face it, lemons occur in every industry, but the saying "Let the buyer beware" should not apply to the quality dealer. Our policy on this is that for five years from purchase we will replace free any component part where the defect is due to faulty workmanship. If the situation warrants, we will try to get an entire new unit with the cooperation of the manufacturer.

I'm sold on delivering top-grade service. I've seen the industry change in a lot of ways over the past 25 years, but human nature hasn't changed one iota. Every customer who walks into my store expects me to stand unconditionally behind the products I sell, and he has the right to expect that.


(Source: Audio magazine, Oct. 1976)

Also see:

30 Years of Audio (May 1977)

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