[woodsyi]

I have been thinking that buying products from big companies translates to paying more for part of the business overhead, label premium and the long term availability of customer service .  A corollary of this would be that I would get more bang for the buck if I go with a reputable but smaller direct marketing company.  Would this still hold true in the used market? Or have the market forces already adjusted the price when offered as used?

Or is my premise off base?

[miklorsmith]

It looks to me like 50% off is a starting point regardless.  Gear with a good reputation holds its value better but I haven't seen direct-sale products hold value better.

[zybar]

Woodsyi,

I think it does.

In fact, some of the smaller companies' products become an even bigger bargain on the used market!

While some products from the smaller companies retain a higher resale value than larger and more well known companies, many products don't.  As such, they become an even better bargain at their used price.

George

[zybar]

It looks to me like 50% off is a starting point regardless.  Gear with a good reputation holds its value better but I haven't seen direct-sale products hold value better.

I have had products from Salk Sound, Bolder Cable, and Modwright that have held its value much better than competing products from more established and larger companies.

George

[miklorsmith]

I would agree on the value statement.  Some of the big boys hold their value well too, I guess my view would be that it depends on the manufacturer.

[zybar]

I would agree on the value statement.  Some of the big boys hold their value well too, I guess my view would be that it depends on the manufacturer.

Exactly!   

[whubbard]

And the quality of the product...

[lcrim]

I think the perception of quality has very little to do w/ the size of the manufacturer particular in this niche market.   The smaller volume merchants truly have to rely on that perception of quality since the market is limited.  Customer care is of a different order than in the mass market.   We all know who are the responsive, knowledgeable individuals in this market.  I don't want to list them for fear of slighting somebody but their work retains its value many times better than the mass marketers.
One anomaly I experienced recently  is that the  Head-Fi guys tend to ask for a good deal more than 50% of original list for used equipment.  Strange

[chadh]

One anomaly I experienced recently  is that the  Head-Fi guys tend to ask for a good deal more than 50% of original list for used equipment.  Strange

This is true.  But it doesn't really imply that head-fiers make more money when selling their gear.  I think it's a convention in their own little market that allows them to maintain the ridiculous rate at which they all go through gear.

When amp designer X announces a new design is forthcoming, fifty head-fiers step up and pre-order the units at full price.  Eighteen months later, when the first units become available, these first fifty guys get their amps.  They promptly sell them two weeks later for 90% of the full price.  Then the next cohort of head-fiers, the ones who snuffled up those 50 amps as soon as they hit the used market, sell the amps themselves after another two weeks, this time for 80% of the full price.  This continues, until the full price of each amp has been shared amongst as many people as possible, and the amp is sitting on a shelf collecting dust (since, by then, 27 new amp designs have hit the market). 

This only-slightly-exaggerated description of the head-fi market highlights something important.  The single largest determinant of the price a person is willing to pay for a durable item such as an audio component is its expected resale value.  Perhaps you think an item is widely perceived as high quality, or maybe there are bragging rights associated with owning a particular brand, or maybe the manufacturer provides excellent support for owners, or maybe the brand is so well known that the sheer number of potential buyers is overwhelming, or maybe you're operating in a market like the head-fiers where convention dictates relatively high resale values.  In any of these situations you'd expect high resale values of the item, and would be inclined to pay a high price.

To answer the original question, then...

If buyers were prepared to pay a 25% premium (for example) for a component produced by a large company when purchased new, there is no a priori reason to think the consumer will not be prepared to pay a 25% premium for the same component when purchased used.  Obviously, there are all sorts of things that could well change the relative valuations of two similar components though.  For example, if some of the premium was paid for more convenient or superior service under warranty, this portion of the premium would disappear once the warranty expired.  If a small, direct marketing firm began to gain wider acknowledgment for the quality of their work, then the premium paid for the large company's product would shrink.   If the large company shows signs of financial distress, and people worry about their ability to provide ongoing product support, the premium paid for their products would shrink.  These statements are just as true for used products as for new.

Chad

[TheChairGuy]

Nice post Chad 

Father Theresa/woodsyi
Look no further than the US auto resale market for a somewhat analagous situation to audio gear sales prices - some vehicle fetch higher and others lower resales based on supply and demand, primarily. Initial (new) selling prices don't seem to be a determinant of future resale percentages, but due to supply and demand of that product.

If you buy that new car in lime or mustard green...expect that it will likely fetch less than the more ordinary silver that anyone might buy.

Likewise, I would suspect that if our electricity rates suddenly shot up 3x from currently rather suddenly, there would be offered depressed prices on tube amps and elevated prices on Class D amps as a result.

Black was the de facto color of electronic gear for two decades...then the pendulum swang back toward silver more recently.  I now find the same (or similar) item in silver fetches higher prices than black in today's market.  Happens all the time with (used) Musical Surroundings Phenomena phono preamps....which were sold in both silver and black a few years ago - silver sells fast and for higher prices nearly all the time on Audiogon.

So, there really is no concrete philosophy that can guide you from failure to get the best deal....as that target is always moving.

However, I have migrated to buying new gear more often from direct sellers of audio gear....figuring that the elimination of the middleman and their 40% or so markup likely results in a better value delivered to my door.  Then again, larger companies can take advantage of their scale and use offshore labor to manufacture their product, significantly shaving costs to offer better value.  Each case is individualized.

Hopefully, whatever you buy is enjoyable to you and works for as long as you own it 

John

[kbuzz3]

Not to hijack but how many of us have hesitated on the purchase of gear from any type of manuf. if they are worried about resale or perceived resale later.... seems like a sad blip on the journey to finding your last system. Id like to think we buy gear only on its perceived sound value to  our own system and not to others. But i dont think thats the case

One example is the dehavilland preamps. Over the years I have seen folks post their love the octal pre-amps but also many posts on resale from: it doesnt sell at all to being snatched up in hours.....mmm

Feel free to move this if considered off topic

[chadh]

Not to hijack but how many of us have hesitated on the purchase of gear from any type of manuf. if they are worried about resale or perceived resale later.... seems like a sad blip on the journey to finding your last system. Id like to think we buy gear only on its perceived sound value to  our own system and not to others. But i dont think thats the case

One example is the dehavilland preamps. Over the years I have seen folks post their love the octal pre-amps but also many posts on resale from: it doesnt sell at all to being snatched up in hours.....mmm

Feel free to move this if considered off topic

When I buy a house, I worry about how much I will be able to sell it for in the future.  When I buy a car, I worry about how much I can sell it for in the future.  Why should it be any different with audio gear?  In fact, it should probably be a bigger deal with audio gear, given that people tend to turn their gear over more frequently than they move houses or trade-in cars.  It would seem foolish to make audio purchases under the presumption that a component will be held for ever.  On the other hand, if I take account of the expected resale value of an item and end up keeping it, it reflects the fact that what I have and keep is truly of higher value to me than the alternatives available.

The last thing I would want is to be forced to keep something I didn't like because I had ignored the possibility that low resale value would prevent me from selling it and moving to something more satisfying.  Maybe if you have sufficiently deep pockets you can take these sorts of risks - but I don't have that luxury.

Chad

[woodsyi]

Great posts, guys.  I don't tend to sell my stuff so I haven't worried too much about resale value but I may have to start selling some as I am running out of storage room and rooms to outfit.  Aside from Audiogon sales data and reviewing recent sales, are there any other resources for determining the initial resale price?  How much do you mark down for blemishes and how much do you mark up for premium upgrade/mods?

[kbuzz3]

Not to hijack but how many of us have hesitated on the purchase of gear from any type of manuf. if they are worried about resale or perceived resale later.... seems like a sad blip on the journey to finding your last system. Id like to think we buy gear only on its perceived sound value to  our own system and not to others. But i dont think thats the case

One example is the dehavilland preamps. Over the years I have seen folks post their love the octal pre-amps but also many posts on resale from: it doesnt sell at all to being snatched up in hours.....mmm

Feel free to move this if considered off topic

When I buy a house, I worry about how much I will be able to sell it for in the future.  When I buy a car, I worry about how much I can sell it for in the future.  Why should it be any different with audio gear?  In fact, it should probably be a bigger deal with audio gear, given that people tend to turn their gear over more frequently than they move houses or trade-in cars.  It would seem foolish to make audio purchases under the presumption that a component will be held for ever.  On the other hand, if I take account of the expected resale value of an item and end up keeping it, it reflects the fact that what I have and keep is truly of higher value to me than the alternatives available.

The last thing I would want is to be forced to keep something I didn't like because I had ignored the possibility that low resale value would prevent me from selling it and moving to something more satisfying.  Maybe if you have sufficiently deep pockets you can take these sorts of risks - but I don't have that luxury.

Chad

Good points chad. Your response made me think of this issue in different ways, truly the sign of a great post

[sts9fan]

you may pay a bigger mark up for the big time Krells and Wilsons but you are also able to use their marketing budget when you want to swap out.  People have heard of them so are not afraid. 

[richidoo]

[snip] larger companies can take advantage of their scale [snip]

Not just in lowered manufacturing cost, but other resources of a larger company are potentially greater value to the consumer, engineering resources, R&D, financial reserve to take on deeper scientific discovery. But the customers' perception of value really depends on the leadership of the company to determine what you get for your money. I was looking at Bent's new website last night, as a great example. One man who has real technical and marketing skill can still enjoy success all by himself and deliver super value. On the other hand AR gear is also a great value, like buying a Mercedes, but the AR experience couldn't happen with one man. In both cases it is the company leadership that sets the tone culturally which affects everything in house including product value.

Some people like the idea of associating with an underdog who is winning against the goliaths, while others will like the idea of owning "the best" by which I mean (tongue in cheek) "the most famous" brand.