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Old June 26, 2013, 02:26 AM   #1
GunXpatriot
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How much is mark-up on ammunition?

So I was wondering, how does getting ammunition usually work for a LGS?

So let's suppose, I dunno, .30-06 ammo. Remington Core-Lokt, the budget hunting stuff. All the places I (was) buying from before the crisis, a 20 round box was going for about $20. Now when LGS get ammo, do they usually get it direct from manufacturer, or would they get it from a distributor?

Also, what would the difference be between the two, whether it be firearms, ammunition, accessories, etc. Is there a difference between distributor and manufacturer?

And how exactly does the distributor even make money when it's coming from the same source? A wholesale license, I guess?

So take this 20$ box of Core-Lokt .30-06.

For how much money did the distributer pay for this box, and for how much did they sell it to a LGS? Or on the other end, how much would the LGS be paying directly from Remington?
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Old June 26, 2013, 07:18 AM   #2
BigD_in_FL
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Don't forget the 11% FET.

Small LGS gets goods from wholesaler.
Wholesaler may get it directly from Manufacturer or from a Jobber depending on his volume

LGS markup is whatever he can sell it for in his location factoring in his fixed costs, variable costs, overhead, and profit. Remember, he has taxes, salaries, more taxes , Obamacare, utilities, payroll taxes, shipping, etc to consider
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Old June 26, 2013, 07:52 AM   #3
Rifleman1776
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Why do you want to know?
A private business can charge whatever the market will bear. Don't like his prices? Go elsewhere.
Usually, in the gun business, and many others, quantity is everything. The dealer that orders 30 cases at a time will get a better price than the guy who only orders one case.
Steady sales are more important than margin. Ammo sales bring customers into the store where they might buy something else at the same time.
For most stores the margin is probably about 25% of selling price. Wal-Mart might be about 50% even though they sell for less.
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Old June 26, 2013, 11:42 AM   #4
Tom Servo
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Now when LGS get ammo, do they usually get it direct from manufacturer, or would they get it from a distributor?
Unless it's a smaller or local outfit (Buffalo Bore, Atlanta Arms), it comes through a distributor. The dealer's lucky if he gets a 25% margin.

$20/box for the Core-Lokt is actually pretty good.
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Old June 26, 2013, 03:13 PM   #5
Skans
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Quote:
Why do you want to know?
Its a good question. I'd like to know what the mark-up on ammunition is as well. This would be good information for me to know in determining:

1. whether I'm paying too much
2. whether the cost of ammo+ mark-up is enough for me to finally invest in reloading equipment and supplies
3. if the mark-up is 50%, then perhaps I should invest in some brass stamping machines, and a Camdex reloader and start selling ammo to all the hoarders.
4. Or, just how much I can expect the ammo prices to fall when the hoarders need to eat again.
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Old June 26, 2013, 03:33 PM   #6
Tom Servo
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Or, just how much I can expect the ammo prices to fall when the hoarders need to eat again.
At retail (at least the ones who didn't go crazy during the panic), prices haven't changed. As such, we won't be seeing a significant drop in price in the near future.
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Old June 26, 2013, 04:29 PM   #7
Skans
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I think the Wolf Ammo prices have gone up substantially, when I can find the stuff. I think the mark-up on this stuff is pretty substantial, but I don't really know.
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Old June 26, 2013, 05:18 PM   #8
BigD_in_FL
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whether I'm paying too much
If you agree to pay his asking price, then you aren't paying too much.

There is a difference between "margin" and "profit" and how they are calculated, similar in nature the way a % is calculated when going up or down:
eg - going from 100 to 75 is a 25% reduction, but going from 75 to 100 is a 33% increase.

In retail 100% markup equals 50% margin
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Old June 26, 2013, 06:10 PM   #9
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Keep in mind that just because the retailer is charging more, doesn't necessarily mean he is making any more money on it than he was before the price increase. Maybe the distributor raised their prices so the retailer has to raise his to stay in the black.

Also the ones that raised their prices are the ones who have ammo on the shelves ready to sell. In case someone really needs some badly. What's the good in a $15 box of 30-06 if it's out of stock everywhere. Might as well not even exist.
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Old June 27, 2013, 02:27 AM   #10
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You know, about a year ago, well, I'm 17 now, I was thinking that maybe in the future, I would like to open a gun shop. Looking back at that pipe dream, all that will probably be gone by the time I'd have the money to invest in opening one..

But it's come to my attention that a gun shop is one of the hardest businesses that exist, to run.

Take a restaurant for example. An Italian place. I dunno, let's say you want a chicken Parmesan hero. I dunno, whatever they charge, like 8 bucks? You know, whatever it is. Now think about what they're putting in that sandwich. Chicken breast is dirt cheap, some shredded cheese, bread and some damn jar sauce. They just sold you an $8 sandwich that cost them like 3 dollars to make. Now sure, you factor in all of their costs, labor, wages, taxes, all the stuff.

And you say, well, they only made a few dollars on the sandwich really. But the thing is, even if this restaurant wasn't the busiest around, they are still making a high profit margin. As long as they have at least decent traffic, they're making money no matter how you stack it. Pretty much the same thing with more expensive meals. They might cost more to make, but they are still making high profit.

Now, you go into a LGS, even a popular one. I remember going into this one place, it's where I bought my Mossberg 500, back in Long Island. I happen to see a bill of sale from a distributor. They had sold them 5 or so Glock 17's w/10 round mags. The distributor charged, what I believe to be almost $500 per gun. They were selling them for like $550. I think MSRP on those is about $599, is it not?

So look at all the money they had to put up, for such a minute margin of profit. Seems that the ONLY way for LGS to make ANY money is to have a high volume of traffic. If you're not selling what you're putting in the case and on the shelves, you're not going to be in business for very long. And as a matter of fact, the only thing you'll gain is bankruptcy from all the investing you just did, not to be able to sell enough, fast enough.

And I believe there is all kinds of high dollar insurance policies needed to run a gun shop, shooting range, etc, correct? And then figure your dozens of other bills... I gave up on that dream right quick...
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Old June 27, 2013, 07:42 AM   #11
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GunX, you are partially correct. In restaurants the food cost is often one of the smallest expense factors for the business. Rent, debt payments, employees, utilities, and, never forget, taxes, all kinds of taxes. At the end the owner might be eating his own food to keep from starving.
I have owned clothing stores and a gun shop. In the clothing store some customers would sometimes complain if they learned my markup was 50% of selling price. Without going into details, that only sometimes covered the cost of doing business. A big loss was unsold merchandise, those unsold clothes represented money hanging there.
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Old June 27, 2013, 07:58 AM   #12
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I think GunX is right on the money. A viable gun store will need high traffic. High traffic means larger inventory and more turnover in inventory. Your manufacturers will favor high-traffic sellers as well. I've been shopping for guns for over 30 years. I tend to favor high-volume gun stores over the mom&pop gun store for several reasons:

1. More inventory and more interesting inventory
2. I don't have to chit-chat unless I want to see something. At mom&pop gunstore, I have to jaw with the owner, otherwise be thought of as rude for walking in, glancing at the inventory and leaving. I'm usually looking for something very specific and simply don't want to be sidetracked.
3. If I want help, there is usually someone there who can reasonably help me.
4. Prices are typically more competitive.

Driving traffic can be accomplished a number of ways. You have the traditional retail box where you stock inventory and wait for customers to wonder in off the street. Firing range is also a good draw. You can do gun shows on the weekends. Most dealers also have their inventory peppered all over the internet and on gunbroker. A fifth way is to establish a business based on doing reasonably priced transfers. Another way is to have a good gunsmith on your premises. I'm sure there are variations on each of these and other innovations out there to drive traffic - heck, that's what keeps the good ones in business!

Personally, I think if you have exceptional business skills, lots of dedication and a lot of money backing you (enough to buy very large quantities of inventory, establish a good location, and carry you and your business for 3 years, you have the makings of a gun store that might just be successful. You need some knowledge of guns, but good business skills will be far more valuable.....and much harder to learn.

Last edited by Skans; June 27, 2013 at 08:10 AM.
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Old June 27, 2013, 02:47 PM   #13
budd
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Mark-up on Ammo

Guys check "Cheaper Than Dirt" ammo prices especially rim-fire ammo. $ 49.49 for 50 rounds (one box) of CCI .22 Mag and $ 59.59 for a 100 rounds box of Mini-Mags .22LR
, and a BLAZER brand bulk box of 529 rounds of 22 LR for $ 249.49. These price are in ink in CTD's July Catalog that came in the mail Tuesday. Hell, at those prices I can shoot my 45 auto and 44 mags cheaper. What is going on?????
I thought the Ammo draught was ending?

V/R

Jim Budd
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Old June 27, 2013, 06:44 PM   #14
osbornk
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I think a gun shop would be less risky than opening a restaurant or clothing store.

A restaurant has to have food for everything on their menu. If people don't order the food you have bought, you have to throw it out.

If you have a clothing store, you have to stock many different sizes, colors and styles. If you don't sell all of them (and you won't) at retail, you will have to drastically discount them to get rid of the unsold sizes, unwanted colors and the styles that drop from favor.

Ammunition doesn't spoil and gun tastes change very slowly and old stock can increase in value.
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Old June 27, 2013, 07:08 PM   #15
BigD_in_FL
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And you say, well, they only made a few dollars on the sandwich really. But the thing is, even if this restaurant wasn't the busiest around, they are still making a high profit margin. As long as they have at least decent traffic, they're making money no matter how you stack it. Pretty much the same thing with more expensive meals. They might cost more to make, but they are still making high profit.
Sorry dude, you seem to have ZERO idea about running a business.......when you grow up and get some real world experience running your own business, get back to us......

85% of all restaurants fail in the first year and 85% of what remains fail in the second. If they are making so much profit, that would not be happening. Add in new taxes and Obamacare and low profits will be sucked dry even harder - doesn't matter what business type or size. Even the big chains are cutting everyone's hours to avoid the costs. So when you go get a job and experience, go open your high-profit business.....
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Old June 27, 2013, 07:44 PM   #16
sDot
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You gotta remember all the waste as well from a restaurant. If you are not busy all the time you are buying food and throwing it away the next few days. I co-owned a lounge once, horrible business. Most restaurant owners are just buying a job they can't get fired from.
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Old June 27, 2013, 07:56 PM   #17
22-rimfire
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Opening any small business is risky. You make a lot less than you thought you would and your costs keep going up. I think most regular people who open a gun shop or restaurant are essentially fulling a dream.

As a gunshop, you price things at a certain percentage markup above cost which covers your fixed costs. Then you have forum folks commenting how expensive things are at your shop. Hard to win without tremendous volume and it is hard to have the volume with limited supplies.
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