Consider this scenario:

Joe Consumer has decided to purchase a nice pair of speakers. He reads several magazines to find out which speakers the reviewers like this month. He settles on a pair with a “retail” price of $2599. They sound all right compared to the pair he bought in college 20 years ago (they are $2600 speakers, after all), and the store that carries them is willing to sell them for $1895; possibly less if he buys a refrigerator at the same time. Joe then goes on the Internet and finds a place on the East Coast that claims to sell them mail order for $1599. Almost 40% off! At this point, Joe infers that most audio equipment is available for at least 20 to 40% off. He is, however, becoming a little overwhelmed with all of the hype, specs, and conflicting information he’s being subjected to.

At the recommendation of a friend, Joe visits a high quality retail store. It’s a bit of a drive, but his friend says that they have a great showroom where they’ll take the time to help you audition a variety of carefully chosen speakers that represent some of the best values in the industry. They’ll even allow you to try out the speakers at home if you like! When Joe arrives, one of the staff demonstrates several pairs of speakers that sound amazing – much better than the $2600 speakers he heard before. And the ones he likes the best are only $1500 per pair! When Joe decides to buy them, the salesman offers him a good deal on some excellent speaker cables, and even offers to help with system setup and speaker placement. But there’s a catch – when Joe asks for his best price, the salesman tells him – $1500.

What gives?

Most audio and home theater products are commodities, designed and sold on the basis of having the most impressive list of features and specifications for the largest discount. Manufacturers of this kind of equipment are likely to spend far more money marketing their products than they spend on designing or building them. They tend to sell their equipment through appliance stores, large chains, or Internet sites where there is large sales volume potential with minimal danger of customers actually hearing the product or comparing it to anything good. Since most equipment is ultimately sold for about what it is worth, this kind of commodity gear must be heavily discounted in order to sell.

It’s too bad, but there are still plenty of people out there who believe that a big discount on a mediocre piece of equipment constitutes a good deal.

The store Joe found has made a choice to represent a different kind of manufacturer. These companies aren’t always household names, but many have been in business for a very long time. Most are privately held companies where shareholders and beancounters can’t do what they inevitably do. These companies have a desire to build products that are outstanding in terms of performance and value for the dollar. They spend an inordinate amount of money on the research, design, and materials that go into their products. Their pricing reflects the actual value of their products rather than an unrealistically inflated “starting point” from which they can be discounted. These companies insist that their products be represented by carefully selected retailers who have the facilities and expertise to demonstrate why their products are superior.

Based on everything he’s experienced up to this point, Joe comes to the insightful realization that his purchase decision should be made on the basis of how good the $1500 item sounds, not how much the $1500 item has been discounted.