If you can manage to profit when selling a $3500 set of speakers and a $200 X-head amp for the combined price of $1700, you have the magic touch. Or, have you so grossly inflated the "normal" selling price that profiting off the $1700 is child's play?
What compensation do you offer your customers who paid $3500 for a system that now sells for less than half of their purchase price? If you do provide an adjustment, in what form is it offered? Is it applicable to the sale in question? Or, do you require the customer to buy something in the future?
We take a lower margin. It's very simple, when you have a guarantee to sell more of a product, you're willing to sell it for a lower margin. This is a pricing strategy practiced throughout the world on a daily basis. Its called purchasing power: the more you purchase, the better the pricing you get.
I work for AV123 on the side, part time. During the day I work for a very large electrical contractor. As an example, we do bulk buys of wire to hedge our bets for the price of copper increasing. Our distributors take a lower margin on this wire because they are being guaranteed we are going to be buying "X" amount through the year. They then negotiate with the manufacturer to do the same so that everyone through the chain as "X" amount already sold.
AV123 does the same thing from time to time when we require prepayment for products. We are collecting the money up front (just as our distributors do for us in the electrical industry) after we have negotiated with the manufacturer for these "sets". There is nothing unethical about it and everything is on the up and up for the customer. It very clearly states on our website that the customer is prepaying for these goods with a delivery date of "x" in the future. All parties are agreeing to the terms before money is taken. Not rocket science, just guaranteed profit based on lower margins.
Regarding compensating customers who have already purchased a product, let me ask, does Sony do that for you when you buy a PS3 for $600 then it goes on sale for $300 (yeah ok I know they aren't that cheap but we can all hope
)? No they don't. In the AV world (and many other tech based industries) early adopters very often pay a higher premium for a new product so they can be on the cutting edge and receiving a new product. It is no different here. While the standard pricing is higher than the speakers go on sale for, that is no different than any other company that puts on a sale. Does it hurt resale value? Yes it does temporarily as consumers are generally willing to pay a little more for a new product versus a used product.
I'm afraid you might not have liked my answer, but these are standard practices throughout our economy that are a simple fact of the day in which we live. Virtually all companies hedge their profits in one way or another and reduce prices for a product over its life cycle.
Scott
