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B&C buy out Eighteen Sound

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djkeet View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote djkeet Quote  Post ReplyReply Direct Link To This Post Posted: 08 October 2017 at 4:22am
Originally posted by Andy Kos Andy Kos wrote:

[QUOTE=levyte357-]I'm  wondering if 18sound prices, could go any higher..

Will they lower, now?



Its fairly well known in the industry that in order to remain competitive, 18sound prices have been a little lower than they should have been, resulting in their profitability being somewhat lower than it should be.


Your right Andy the discussion started elsewhere with me being also sceptical of the buy out (and then more info was provided by B&C).Time will tell as regards the cost they are still expensive to an end user in the UK and I'm not sure whether the market could bear an increase, what could be beneficial would be an equalising around Europe/elsewhere and the cost to bring 18 to the UK.As well as materials cost, this Brexit saga hasn't helped either all ive seen is a hike in everything to nuts and bolts and the only leverage is quantity/postage I know companies can operate outside some of these constraints, it will interesting to see if B&C take note of the buying habits of regular and potential customers as you say early dayz

Edited by djkeet - 08 October 2017 at 4:28am
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Andy Kos Quote  Post ReplyReply Direct Link To This Post Posted: 08 October 2017 at 10:56am
Originally posted by djkeet djkeet wrote:

Originally posted by Andy Kos Andy Kos wrote:

[QUOTE=levyte357-]I'm  wondering if 18sound prices, could go any higher..

Will they lower, now?



Its fairly well known in the industry that in order to remain competitive, 18sound prices have been a little lower than they should have been, resulting in their profitability being somewhat lower than it should be.


Your right Andy the discussion started elsewhere with me being also sceptical of the buy out (and then more info was provided by B&C).Time will tell as regards the cost they are still expensive to an end user in the UK and I'm not sure whether the market could bear an increase, what could be beneficial would be an equalising around Europe/elsewhere and the cost to bring 18 to the UK.As well as materials cost, this Brexit saga hasn't helped either all ive seen is a hike in everything to nuts and bolts and the only leverage is quantity/postage I know companies can operate outside some of these constraints, it will interesting to see if B&C take note of the buying habits of regular and potential customers as you say early dayz

I believe (I could be wrong here) that some of the reason 18sound havent been that profitable is that they have been competing for market share in countries in South America and Africa, where there is less money, so they have had to fight harder to get a piece of the pie. Consider if you have a factory with 100 workers building speakers, you would rather stay busy than have to lay off staff, so reducing prices for some markets to keep the factory busy is the better short term option, as there is always next year.

I dont expect any direct price changes in the UK as a result of the buyout, the guys at B&C arent stupid. They will talk to people, they will analyse, and then do what they think is right. I'm sure they havent bought 18sound to break it, as they highly respect 18sound as a brand. This is more of a strategic move to consolidate market position.

Whats more likely to affect UK prices in the short term is raw material price increases. There have been massive jumps this year. Chances are 18sound will have a new price list, but NOT as a result of B&C buying them, but because, Steel, Aluminium, Dysprosion and Neodymium have all been steadily increasing in price the last year.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote levyte357- Quote  Post ReplyReply Direct Link To This Post Posted: 08 October 2017 at 5:02pm
Company not doing very well, so then putting prices up, some how, doesn't seem very business savvy.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Andy Kos Quote  Post ReplyReply Direct Link To This Post Posted: 08 October 2017 at 6:18pm
Originally posted by levyte357- levyte357- wrote:

Company not doing very well, so then putting prices up, some how, doesn't seem very business savvy.

You're missing the point here a little.

Any business could drop its prices, and work on wafer thin margins, Apple could sell iphones for £200 if they wanted to, but they dont, as there are big profits to be made, so they sell them for the maximum they think they can get away with.

In some cases 18sound has been underselling itself, as the products are very good, but not enough profit is being made from them. The trick is to find the sweet spot, and price it just right to maintain good levels of sales, and make sufficient profit.

Are you better off selling 1000 units at £10 profit each, or 500 units at £30 profit each? 


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Post Options Post Options   Thanks (0) Thanks(0)   Quote MarjanM Quote  Post ReplyReply Direct Link To This Post Posted: 08 October 2017 at 7:27pm
BC and 18sound price is very similar. So profit margin should also be similar.
To me here per instance BC is more expensive then 18Sound due to their distribution policy.
Their inability to solve the problem stopped me from using their products because they are not competitive enough.
But when you take a look at the list price, there is not much difference in price.
So prices for 18Sound in UK are mostly dictated by the distributors and their will to pass less of the discount to the end users.

As for the raw materials price increase. Well i have divided opinion about that. Last time when neo went crazy they all increased their prices. Then neo got back to its regular price, but no one lower the end product price.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Andy Kos Quote  Post ReplyReply Direct Link To This Post Posted: 08 October 2017 at 7:47pm
Originally posted by MarjanM MarjanM wrote:

BC and 18sound price is very similar. So profit margin should also be similar.


To a certain extent yes, but pricing policies vary between manufacturers, distributors and markets. 

For example, pricing tends to be more agressive in South America and Africa, and in some cases some people will go a little lower than normal in order to achieve a certain level of market share, in the same way supermarkets run loss leaders, it's part of an overall strategy to achieve certain goals. Sacrifice a bit of profit in order to achieve a short term goal, something many people probably do to win a new customer, it's difficult to catch up on this later though, once you go in too cheap to start with, you can get stuck a little too cheap.

Beyond that, business structure and efficiency can have a fair bit of impact on profit margins. Small things can add up quickly and reduce profitability quite significantly.

This wasn't a case of 18sound being 'in trouble', they are still solvent, with significant assets, and still profitable, just the profit was not particularly high. The parent company that owns 18sound is disposing of it to focus on other more profitable parts of its own businesses. 




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Post Options Post Options   Thanks (0) Thanks(0)   Quote Andy Kos Quote  Post ReplyReply Direct Link To This Post Posted: 08 October 2017 at 7:52pm
Originally posted by MarjanM MarjanM wrote:

As for the raw materials price increase. Well i have divided opinion about that. Last time when neo went crazy they all increased their prices. Then neo got back to its regular price, but no one lower the end product price.

Look at a commodities broker and check the prices of Steel, Aluminium, Dysprosium and Neodymium for the last 12 months. They have all gone up steadily, and hardly any manufacturers have increased their standard prices in the last 12 months, most have effectively had to absorb a 15-20% increase in raw material costs. 

P-Audio have basically informed me that they can not hold the price of ANY neodymium products, and neo products will be quoted for on an order by order basis. Some little neo tweeters that are popular in Europe have gone up nearly 25% from 6 months ago.

I do see your point about manufacturers not dropping prices when neo goes back down, but you have to remember when prices shoot up, they often have to absorb the price increase to start with, so they need to recover those losses over time.

Virtually every brand is planning imminent price increases, they are all just waiting to see who moves first, and how far they move. 

Budget ferrite products wont be affected much, but neo products will.



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Post Options Post Options   Thanks (1) Thanks(1)   Quote MarjanM Quote  Post ReplyReply Direct Link To This Post Posted: 08 October 2017 at 9:33pm
Andy, last time neo went up for 400%.
Yes it is a significant price difference and companies adjusted their prices in mater of months.
Then it went down and prices of products remained the same.
Its been 4-5 years since.
And lets be fair, neodymium part in a loudspeaker is only a small portion of the cost.

I use very similar analogy when people are expecting 500W subwoofer box to cost half the money of a 1000W subwoofer box.

Aint working that way. Cone, voice coil, basket, man hours, makes a big part of the cost too.
Its as if Baltic birch goes up for 50%. Aint going to change much on the end price. If you make the box of high quality, the paint will cost more the wood.


Edited by MarjanM - 08 October 2017 at 9:35pm
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Andy Kos Quote  Post ReplyReply Direct Link To This Post Posted: 08 October 2017 at 9:39pm
Originally posted by MarjanM MarjanM wrote:

Andy, last time neo went up for 400%.
Yes it is a significant price difference and companies adjusted their prices in mater of months.
Then it went down and prices of products remained the same.
Its been 4-5 years since.
And lets be fair, neodymium part in a loudspeaker is only a small portion of the cost.

I use very similar analogy when people are expecting 500W subwoofer box to cost half the money of a 1000W subwoofer box.

Aint working that way. Cone, voice coil, basket, man hours, makes a big part of the cost too.
Its as if Baltic birch goes up for 50%. Aint going to change much on the end price. If you make the box of high quality, the paint will cost more the wood.

 
I do see your point, but I do know also that the profit margins for high quality box manufacturers are higher than the margins most transducer manufacturers work at. They can absorb some increase in raw material costs, but at the end of the day they are businesses, and there to make a profit, they cant absorb all the increases. Many of the price increases have already happened some time ago, and they have been absorbing the costs up until now.

If wood went up 20%, and paint went up 20%, and drivers went up 20%, and your steel grille went up 20%, you would end up increasing the price of your finished product at some point. If it was ONLY wood, or ONLY paint, it would be easier for you to absorb just one cost. In this case its several raw materials at once.


all of this is on top of currency instability, and upward pressure on wages too, everyone wants a pay rise all the time....



Edited by Andy Kos - 08 October 2017 at 9:40pm
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Post Options Post Options   Thanks (0) Thanks(0)   Quote MarjanM Quote  Post ReplyReply Direct Link To This Post Posted: 08 October 2017 at 10:10pm
So far i dont see any change in hardware cost. We do it all locally at a metal fabrication shop.
I guess UK was hit harder than anyone because of the pound drop. Euro has gained a little over the dollar, so i guess that helps us here. And labor cost is very competitive too.
But as you know, we have other problems, like insane transport costs.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Andy Kos Quote  Post ReplyReply Direct Link To This Post Posted: 08 October 2017 at 10:31pm
Originally posted by MarjanM MarjanM wrote:

So far i dont see any change in hardware cost. We do it all locally at a metal fabrication shop.
I guess UK was hit harder than anyone because of the pound drop. Euro has gained a little over the dollar, so i guess that helps us here. And labor cost is very competitive too.
But as you know, we have other problems, like insane transport costs.

Steel has crept up around 12-15% over the last 12-18 months. Its a change, but on its own its not massive.  It fluctuates up and down, and most people buy stock in advance, so it takes time for the increases to filter through. This is the wholesale USD export price of steel thats gone up, obviously this can be offset a little depending on the exchange rate you're getting for your dollars.

For hardware, the steel cost is less than the machining cost, so in many cases you wont see much of a change. The steel cost is just one part of a bigger picture.

The price changes I am seeing mostly affect neo products, there is minimal change in ferrite products.

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Post Options Post Options   Thanks (0) Thanks(0)   Quote MarjanM Quote  Post ReplyReply Direct Link To This Post Posted: 08 October 2017 at 11:26pm
Most of the steel here comes from Ukraine, they are fucked up badly too, so i guess we kinda take advantage of that.

What is odd is that we have one of the biggest steel mill manufacturing all sort of sheet metal. All goes for export so we import cheaply from Ukraine. Sometimes things dont really follow any logic.


Edited by MarjanM - 08 October 2017 at 11:27pm
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