Should Audiophiles Lease Gear?

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Should Audiophiles Lease Gear?


ID-10097403.jpgI've been working a lot with my mother in Philadelphia lately. Her husband, an audiophile of sorts, died in 2011. Even though he was a financial planner, it turns out his plan was to die broke and leave my mom in less than an excellent spot. We've been able to turn things around for her, as she has a good teacher's pension and has the remainder of my stepfather's pension to make for a comfortable monthly income. We sold the 3,900-square-foot family house in the Chestnut Hill section of Philadelphia and moved Mom into something more manageable and affordable in a close suburb. The latest challenge is getting her a new car. Up until now, she has only had one new car in her entire life, and that was a bone-stock 1984 Honda Accord that she bought for herself when she was the director of public relations at a major Philadelphia hospital. Now she's cruising in a 15-year-old Ford Taurus that's rocking over 160,000 miles, and it is time for a new G-ride, as the kids call it.

While Mom was in Los Angeles for Thanksgiving, we went to the local Mercedes dealer and test-drove E-Class and C-Class cars, including the newly design CLA. She liked the size and scale of the C-Class better, but she wanted a good number of bells and whistles, including all-wheel drive, slip control, a rear camera, lane-change avoidance software, navigation, heated seats, and Sirius satellite radio. The old stereo salesman in me couldn't help but to up-sell the accessories. Thankfully, we have good contacts with Mercedes, and December is the BEST time to purchase a new car. We decided to get the car back in Pennsylvania, but it came down to the question: should she buy or lease? We ended up opting for a 24-month, one-payment lease that came out to roughly $380 per month if you were to divide it - about $1,100 less than paying monthly. We figured a car is a depreciating asset, and 24 months at 7,500 miles per year (she drives nowhere) won't even use a set of tires. The rest of the maintenance is covered.

This whole car-buying process got me thinking about buying audiophile gear. High-end audio gear, increasingly, is priced like a C-Class Benz. Audiophile components have less consumer demand than relatively new cars. They also have the ability to plummet in value when you aren't buying A-list brands. I don't care what Joe Blow reviewer in whatever used-to-be-relevant audiophile print magazine says about some C-list audiophile preamp that sells for $9,500; if it's not an ARC, Mark Levinson, Krell, Classe, McIntosh, or other biggie, chances are good it will drop in value quickly. So why not lease? At this point, I don't know any brick-and-mortar audiophile store that offers leasing options for audiophile components, but why shouldn't they? You can lease a Xerox machine. You can lease a jet or a boat. Hell, you likely could lease a jet boat if you found the right bank willing to lend.

Audiophile companies are having a hard time replacing their core clients who have moved past their best spending years in the past decade. These companies have made their reputations on selling Dr. So-and-So one component after another as they come out with new goodies, upgrades, and bells-and-whistles for all of their gear. Why not partner with a major equipment-leasing company like GE Capital or someone with major financial might and offer customers an option to lease? Car shoppers buy more car when they take the lease option (my mom has Xenon headlamps and Sirius in her car now!), so why wouldn't audiophiles do the same? With sites like Audiogon and eBay, it's possible to predict how A-list gear will depreciate in the future. There could be buy options at the end of the lease if a component happens to have magic inside its chassis. The idea of leasing audio gear re-energizes the audiophile community in ways that could have a meaningful impact. Not only would audiophiles acquire more system than they would if they were buying using cash, but they would start a cycle of upgrades that brings the best clients back to the store more often. My mom will be back to the Mercedes dealer in less than two years, so she will likely be a repeat customer. Why not lock in the best audiophile customers to a similar upgrade path?

ID-100218800.jpgObviously, not all components would lease the same way. Just as an AMG Mercedes costs much more to lease than the same car with the V-8 engine (people assume the AMG gets a beating, thus is worth less; the AMG also costs more to service in the long term), I could see how Wilson, Revel, or Bowers & Wilkins 800 Series speakers might lease for less, while cutting-edge dCS, EMM, or other high-end digital components would have much higher payments to allow for advanced depreciation. It still might make sense to lease, depending on how you use your system.

Another customer for leasing could be the retailer himself. The stereotypical owner of a brick-and-mortar audiophile store is north of 60 years old. He (there are no shes - sorry) is getting more and more risk-adverse. He demands high margins and does little to market to new clients. Additionally, he wants his products "floored," meaning the manufacturer has to pay for them to be in the showroom at no cost to the dealer. Wonder why traditional audiophile gear is so expensive? Now you know. Audiophile equipment manufacturers can help get more components onto the showroom floor and/or into stock so that actual sales happen. If you have the gear in hand, a commissioned salesman will start licking his chops thinking of making that sale. If your lease terms are ending, you have months to figure out who and/or how to sell your floor sample ... or you can return it to the manufacturer to resell it. There are lots of options and possibilities.

Click to go to page 2 and read about the need for change in the industry . . .


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ID-100211508.jpgMost of us who watch the specialty audio/video industry know that something needs to change about the way business is done. A 65-year-old audiophile may still be buying gear today, but can you expect him to be buying just as much when he's 75? How about 85? Reaching a new generation of buyers is a complicated topic and one that we spend a lot of resources on here. Perhaps leasing a Millennial his first audiophile system is a way to get him or her (yes, I have hope that young women want to buy high-end AV in the coming years) that first system. For the hardcore enthusiast, a lease option brings him or her back to the store for more gear, more technology, and more fun ... more often. That is never a bad thing.

Would you lease a high-end audio component or system? Have you ever leased a car or other high-end product? Did you have a good, bad or indifferent experience? Are you a dealer? Would you like to lease gear to client? Please share your experiences and thoughts below.

While Mom was in Los Angeles for Thanksgiving, we went to the local Mercedes dealer and test-drove E-Class and C-Class cars, including the newly design CLA. She liked the size and scale of the C-Class better, but she wanted a good number of bells and whistles, including all-wheel drive, slip control, a rear camera, lane-change avoidance software, navigation, heated seats, and Sirius satellite radio. The old stereo salesman in me couldn't help but to up-sell the accessories. Thankfully, we have good contacts with Mercedes, and December is the BEST time to purchase a new car. We decided to get the car back in Pennsylvania, but it came down to the question: should she buy or lease? We ended up opting for a 24-month, one-payment lease that came out to roughly $380 per month if you were to divide it - about $1,100 less than paying monthly. We figured a car is a depreciating asset, and 24 months at 7,500 miles per year (she drives nowhere) won't even use a set of tires. The rest of the maintenance is covered.

This whole car-buying process got me thinking about buying audiophile gear. High-end audio gear, increasingly, is priced like a C-Class Benz. Audiophile components have less consumer demand than relatively new cars. They also have the ability to plummet in value when you aren't buying A-list brands. I don't care what Joe Blow�reviewer in whatever used-to-be-relevant audiophile print magazine says about some C-list audiophile preamp that sells for $9,500; if it's not an ARC, Mark Levinson, Krell, Classe, McIntosh, or other biggie, chances are good it will drop in value quickly. So why not lease? At this point, I don't know any brick-and-mortar audiophile store that offers leasing options for audiophile components, but why shouldn't they? You can lease a Xerox machine. You can lease a jet or a boat. Hell, you likely could lease a jet boat if you found the right bank willing to lend.

ID-100149315.jpgAudiophile companies are having a hard time replacing their core clients who have moved past their best spending years in the past decade. These companies have made their reputations on selling Dr. So-and-So one component after another as they come out with new goodies, upgrades, and bells-and-whistles for all of their gear. Why not partner with a major equipment-leasing company like GE Capital or someone with major financial might and offer customers an option to lease? Car shoppers buy more car when they take the lease option (my mom has Xenon headlamps and Sirius in her car now!), so why wouldn't audiophiles do the same? With sites like Audiogon and eBay, it's possible to predict how A-list gear will depreciate in the future. There could be buy options at the end of the lease if a�component happens to have magic inside its chassis. The idea of leasing audio gear re-energizes the audiophile community in ways that could have a meaningful impact. Not only would audiophiles acquire more system than they would if they were buying using cash, but they would start a cycle of upgrades that brings the best clients back to the store more often. My mom will be back to the Mercedes dealer in less than two years, so she will likely be a repeat customer. Why not lock in the best audiophile customers to a similar upgrade path?

Obviously, not all components would lease the same way. Just as an AMG Mercedes costs much more to lease than the same car with the V-8 engine (people assume the AMG gets a beating, thus is worth less; the AMG also costs more to service in the long term), I could see how Wilson, Revel, or Bowers & Wilkins 800 Series speakers might lease for less, while cutting-edge dCS, EMM, or other high-end digital components would have much higher payments to allow for advanced depreciation. It still might make sense to lease, depending on how you use your system.

Another customer for leasing could be the retailer himself. The stereotypical owner�of a brick-and-mortar audiophile store is north of 60 years old. He (there are no shes - sorry) is getting more and more risk-adverse. He demands high margins and does little to market to new clients. Additionally, he wants his products "floored," meaning the manufacturer has to pay for them to be in the showroom at no cost to the dealer. Wonder why traditional audiophile gear is so expensive? Now you know. Audiophile equipment manufacturers can help get more components onto the showroom floor and/or into stock so that actual sales happen. If you have the gear in hand, a commissioned salesman will start licking his chops thinking of making that sale. If your lease terms are ending, you have months to figure out who and/or how to sell your floor sample ... or you can return it to the manufacturer to resell it. There are lots of options and possibilities.

Most of us who watch the specialty audio/video industry know that something needs to change about the way business is done. A 65-year-old audiophile may still be buying gear today, but can you expect him to be buying just as much when he's 75? How about 85? Reaching a new generation of buyers is a complicated topic and one that we spend a lot of resources on here. Perhaps leasing a Millennial his first audiophile system is a way to get him or her (yes, I have hope that young�women want to buy high-end AV in the coming years) that first system. For the hardcore enthusiast, a lease option brings him or her back to the store for more gear, more technology, and more fun ... more often. That is never a bad thing.

Would you lease a high-end audio component or system? Have you ever leased a car or other high-end product? Did you have a good, bad or indifferent experience? Are you a dealer? Would you like to lease gear to client? Please share your experiences and thoughts below.


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