Wholesale vs Retail markup?June 2 2013 at 4:49 AM
Michael Wendt (Login thegr8wendt)
I recently returned my brand new Cricket. I packed and shipped it in the original box (with some additional packing material because I felt it was inadequately protected) and I told the clerk I wanted the same insurance coverage that it came with. He told me that it was insured to just under $900.
Wait a second...
Retail price $1915
Insured to $900
Is there really that much of a markup? Or did the vendor simply under insure this high end air gun?
I don't know about you guys, but when I pay top dollar for an airgun I expect it to packed really well and insured for the full replacement price. Even if it costs a bit more for S&H.
What say you?
John in Tn
|June 2 2013, 7:15 AM |
You would be surprised at the prices dealers and manufacturers mark up their products. It's all about supply and demand and only partially based on what you can build it for and if you buy in bulk. I work for an aerospace company and we also take into account the competitions pricing and our markups range between 5 percent to 600 percent profit. There are many variables.
I agree with you Michael. Yes there is a $1000
|June 2 2013, 7:16 AM |
mark up going on there. At least that's what reasonable deduction leads me to believe. Ed's cost (or Vendor) in materials and time is covered by the $900 insurance. He would simply replace the rifle if it were destroyed in transit. Therefore he would be covered and buyer would get a replacement. At least that's what I think would happen.
I would be surprised
|June 2 2013, 8:49 AM |
If the actual cost to manufacture the rifle exceeds $500.00. The manufactuer has many costs to account for beyond just the cost of goods sold. Facilities, tooling, labor, utilities, SG&A expenses, logistics, etc, before you even consider the manufactuer's or the dealer/distributor's profit. The question you have to ask is: Is what I am paying a fair price for the product I'm buying relative to the other similar products available. If you build a high quality product and stand behind it, you should expect to make a significant profit in the marketplace.
remember, markup is not "profit"
|June 2 2013, 8:59 AM |
the dealer has an overhead of his own that has to be covered by his markup. When that overhead is covered he is left with "profit". From that he has to pay taxes. His overhead will depend on his business model. If he is like Airguns of Arizona (as just an example) he has a bricks and mortar store with rent, utilities, phones, insurance, employees and money tied up in inventory, etc. That eats a lot of that markup leaving a little "profit" at the end.
Re: remember, markup is not "profit"
|June 2 2013, 11:48 AM |
funny thing , i use a gun and pawn shop that is 2 blocks from basspro close to my home. the pawn shop has and always beats basspro's prices. the pawn shop has been here a lot longer than basspro. suprizingly not that many buy air guns from the pawn shop, i do though as when you come in they all say may we help you , or we will be with you as soon as we get done with this customer please browse around . they are making money on guns or they would be priced a lot closer to baspro. there is a $40 diffrence between the 2 places on a diana 34 , or almost $60 between a stoeger x-20. i will supoort the pawn shop as its localy owned . but markup and fleecing is 2 diffrent subjects. now they have academy 12 blocks away and they are realy selling cheep but academy dont carry much in airguns in our area
or just a guess at partial or stock value.. most of the time its the stock
|June 2 2013, 9:40 AM |
that takes the damage.. O
'net problem...as much misinformation as information.
|June 2 2013, 9:59 AM |
Even though this may be way out of date, didn't think they put an artificial limit. Am sure you'd have had to proove it's value if they had to pay up, but that's on the back end of the transaction.
If you declare it to be worth $1915.00, thought they'd just charge you a higher insurance fee. Packages o get damanged, but they also just "evaporate" in the system (lost, stolen, delivered incorrectly, truck wrecks, plane crashes, etc.).
200% markup is pretty common on most products
|June 2 2013, 10:09 AM |
Maybe 20% is profit the rest is overhead and expenses.
|June 2 2013, 10:16 AM |
Retail is retail. If you are the end user you pay retail. That is what the word means.
What an item costs has nothing to do with its retail value. If you pay what the market is then its fair regardless of what cost is.
I'm in retail and it amazes me that people want to worry about that. What does a share of apple stock cost? The price of the paper. What you pay is what the market value of what perception is for value.
I hope the people that I do business with make money because I want to continue doing business with them and I hope they invest in newer and better technology. That helps me.
|June 2 2013, 12:19 PM |
Manufacturer to dealer markup for the airgun industry is about 20-30%. Often less.
Fed Ex makes you open a package if you insure it for more than $499. UPS lets you insure to $999 before requiring inspection. If you package the way you should, you know that this is the most tedious and time consuming part of a sale. Opening and repacking is not an option.
I figure that a broken stock is the greatest chance for a loss. At any rate, unless the package disappears (unlikely with tracking), you will have salvage value.
Have been doing this for a long time and have never heard of 100% markup. If it existed, you would see prices all over the place for the same rifles - regardless of MAP.
Beeman used to claim his rifles were superior to the same models from other vendors to justify his prices. He still does through editorship of the Bluebook by claiming there is something magic about "San Rafael" or whatever. There isn't. There is no difference between a 124 bought from Beeman and one from Robert Law. Same with the HW stuff. A lot of knowledgable folks consider a Marksman Model 61 made on BSF machinery to be superior to a 77.
It is a cutthroat business and a 100% markup is a pipe dream.
|This message has been edited by JW652 on Jun 2, 2013 9:24 PM|
I have never had to open a package for the carrier...
|June 2 2013, 2:43 PM |
and many of my sales have been insured for over $1000.
|June 2 2013, 9:20 PM |
It depends entirely on whether the local office or box store goes by the company rules.
Generally with Fed Ex, if you have an account and print your own label, they don't make you open the box.
UPS is more strict (at least here at the main depot), but if you do a lot of business and they know you or do a pickup they don't check.