mark-up on guns?

[natman]

Markup on NEW guns is about 25-30%. Most gun shops don't make a living selling new guns, they're just bait to get people in the doors to buy accessories that do have enough markup to keep the business running.

[Tinbucket]

When I ran a couple of drug stores and the warehouse things were a lot different.
First we went on the American Stock Exchange and the owners in NC became millionaires, then they went on the Ny Stock Exchange and made even more.
As a Store Manager at the last one and Whse Mgr I grossed about 8%. We netted 4% for the year and were happy.
I got my salary pluse1% of the net each month.
That all changed when Wall Street got in involved.
They demanded 5% payroll. They put utilities as controllable expenses taking much of my bonuses. Prices went up and selection went down.
They turned Mangers into Foremen. Wall Street demanded 20% and more but only they saw any of it.
My markups were never over a hundred percent on small times until we bought some stuff from Taiwan at a trade show.
Small plastic bowls cost us two for a dime. They wouldn't sell at 19 cents marked them up to 99 cents and we sold out.
Now this is how Wall Street works.
It would take more patience than I have to do a half way thorough piece on what little I know.
But for instance automobiles a big ticket item. They are losing profit margins not money right now so figures are skewed.
Between the Factory and the Customer there is generally 40%.
Floor Plan cost a lot so if they move them fast they make more.
If it sits on the lot six months the total profits are down quite a bit.
Next time a Salesman says he is losing money on every vehicle he sales tell him to lock the doors and sent the people home.
Now, since Clinton and demands from wall Street you have almost all firems going through Wholesellers. they wanted to track everything and increase the cost fo guns and in that vein multiplied Firearms license cost, place zoning restrictions into the mix. no more sales from garages and back rooms.
That adds a lot to the price we pay. If factories would sell direct to the little Gun shop again, our cost would go way down.
Between Factory and us I estimate there is 200% markup and more.
Wall Street and Investors and Hedge Funds are not in the business of making guns. they are in the business of making money. They maximize profitability by cutting all corners. Castings, blasting and bluing or painting, no fitting just assemblers.
Like other segments of the markets we don't find what we want most of the time but just the guns they want to produce with the most margin.
Time to quit typing.

[TomNJVA]

The "average" mark-up does not necessarily reflect the mark-up you pay. I ran a sales department for 20 years and pricing strategy is a critical discipline. In a well run company, the only relationship between price and cost is that it is nice if the price is above the cost. Price is set by the marketplace and cost by the manufacturing plant. A company's success is often dependent on their buying skills and pricing strategy, and "cost plus" pricing is usually not the best strategy.

For example, we sold high volume, competitive commodity products under contract at about cost to provide a base load to our plant, and made our profit on smaller volume specialty products.

For specialty products with a competitive equivalent we had list prices that were aimed at the list prices of our competitors. List prices (e.g.MSRP) were always quite high and are designed for those customers who have no negotiating power or prowess, such as small volume buyers. Higher volume or strategic customers could often negotiate better pricing as necessary for us to get their business.

For unique products without an exact competitive equivalent, prices were based on perceived value by the customer. If our product offered advantages over other available products, we charged a higher price even if it cost less to manufacture.

My experience is that most sales people have money in their back pocket - but you have to ask for it. At my LGS, all of the guns are tagged with an MSRP and I'm sure many people just say "I'll take it" and pay the price. But a simple "Is that the best you can do?" has always gotten me a discount, sometimes as much as $50.

TomNJVA

[pgdion]

Depends a lot on the gun. Some have higher margins than others but yea, it's not as high as people think. I get a gun a year at cost and that might be anywhere from $40 to $140 off a 500 - $600 gun. I got about $250 off a $1300 rifle. Not bad, but no 50% that's for sure. Now if you can buy from the manufacturer ..... now there is some savings. ;-)

[Tinbucket]

My figure 200% markup is off. that was from Clinton era and Client who operate a couple of Sporting good stores.
Last year my wife bought me kimber Ultra Carry II for 869.00 at Bass Pro. Same gun Baas Pro here 799.00.
Seen them advertised on the net from $549.00, I beleive to a ridiculous over $900.00.
I had a conversation about things general, with a Sporting Goods Mfg Rep. They don't tell their business. However the production cost of one pistol he knows of production cost, retailing at some places for over $800.00, is about $80.00.
So that indicates there is a lot of profit all along the line. No such principle as a fair profit. Top down economics.
If everyone stopped buying prices might come down some but the Investors would in reality close up shop and move their money.
Wall Street does not leave any money, on Mainstreet USA, very little To Employees or even Mangers/Foremen and the economy.
It all goes to CEO, and Board and a little to the small Investors.
Until we bring back Local Companies and Manufacturing, the dynamics and our pocketbooks won't change.
We have to bring back local Manufacturing, profits, and prosperity to Main Street and all Americans, and affordable prices for goods, in demand but no longer available. Then we can buy Pythons for $225.00 again, so to speak.
I generalized too much. I don't have the energy to do a half way analysis but we do pay more than is justified for everything and most of an inferior quality, not durable goods but consumables just lik you do grocerries, and that was their intention and dsign.

[osbornk]

I can only go by what I paid:

Mossberg 500 12 gauge field/deer combo-MSRP $474.50-paid $298 not on sale.

Taurus TCP MSRP $253- paid $199 not on sale.

RIA 1911 MSRP $610 paid $470 not on sale

S&W SD9VE MSRP $389-paid $289 on sale

Mossberg Blaze 47 MSRP $368-paid $259 on sale

Henry lever action 22 MSRP $360-paid $297 (now $274) not on sale

[natman]

I can only go by what I paid:

Mossberg 500 12 gauge field/deer combo-MSRP $474.50-paid $298 not on sale.

Taurus TCP MSRP $253- paid $199 not on sale. [etc, etc]

I'm not sure what point you're trying to make, but MSRP vs what you paid has nothing to do with mark up.

[rock185]

Interesting discussion. I was never a businessman, but was acquainted with the owner of a very competitive high volume gun shop, where I did business for several years. In conversation with him, he said he only made 7.00 on a new Glock. Some time later, he mentioned he was up to $11.00 on a new Glock. Said he had to carry them though because people expected him to have them. Sold a LOT of Glocks. He also said he made his money on used guns, not new guns.

[Mike38]

Interesting discussion. I was never a businessman, but was acquainted with the owner of a very competitive high volume gun shop, where I did business for several years. In conversation with him, he said he only made 7.00 on a new Glock. Some time later, he mentioned he was up to $11.00 on a new Glock. Said he had to carry them though because people expected him to have them. Sold a LOT of Glocks. He also said he made his money on used guns, not new guns.

If you believe what's on the internet on the manufacturing costs of a Glock, someone is making a ton of money. I've seen anywhere from $62 to $77 to make one. By the time we get one, it's over $500.

[JoeSixpack]

I've always heard on a avg gun markup is about 50 bucks.. not necessarily a flat %
Im sure high dollar guns have higher markup's though.

Now obviously this is the dealers mark up and not necessarily the total markup.. there might be other middle men taking a cut and we know mfg cost is a far cry from the retail cost especially with the embrace of cost saving techniques like mim and polymer, not to mention labor savings (out of country mfg).

Most of the money is made on accessories & ammo.. I've heard the markup on a cleaning kit is huge for example.

I bought a Taurus 709 for 170 (shipped to dealer) just recently and thought that was a pretty damn good deal.
I was actually looking at the kel-tec's but the price was just to cheap on the Taurus.

When I picked it up I told him about it and he seemed unimpressed.. He told me he could get them for $100.. this guy works out of his house and keeps zero inventory, primarily doing transfers, so he definitely has no buying power direct.

So unless he was lying where ever he gets them that's a pretty damn good markup for a kitchen table dealer.

[FITASC]

If you believe what's on the internet on the manufacturing costs of a Glock, someone is making a ton of money. I've seen anywhere from $62 to $77 to make one. By the time we get one, it's over $500.

What I had seen was that Glock charged NYC ~$75/gun when they got the original contract, with Glock's cost being half. Why are our costs as high? Because they can charge that; we have 11% PR Fund excise tax to remember as well. There are numerous taxes and fees that add up over all to consider.

[ShootistPRS]

you have the materials costs, the labor costs, machinery costs and the facility costs. That extends from the mine to the customer and does not include the shipping costs between each business in the chain. The manufacturer buys from suppliers and the supplies are shipped to storage facilities and then shipped to the wholesaler who then ships to the retailer who sells to the end user.
So you have supplier who processes the materials and stores them.
Next the manufacturers who make the product and stores them.
Then the wholesaler who stores and ships to the retailer
and the retailer who stores them and sells to the public
All these folks have costs and taxes that have to be paid as well as licenses that must be renewed and records that have to be maintained. Not one of them is "making a killing" on their markup. Some manufacturers will sell directly to retailers which cuts the cost to the end user but that is unusual.

[natman]

I've always heard on a avg gun markup is about 50 bucks.. not necessarily a flat %

No. A $50 markup might happen on a $300 22, but you'd go out of business if you only got $50 markup on a $3000 O/U shotgun. It's all about % return on your inventory costs.

Again, new guns aren't exactly loss leaders because you do make something on them, but they are primarily there to get people in the door so they will buy accessories and clothing that have higher enough markup to keep the business running.

[JoeSixpack]

Well the avg gun purchase is not 3k dollars.
and I did say Im sure it's different for more expensive guns.

most purchases are probably in the 3-600 dollar range I'd imagine.

But maybe you can share with us the hard and fast flat rate % then?
everyone is saying 10-15%.. well 10% on a 120 dollar hi-point is 12 bucks.. does that sound right to you?

[Snyper]

Quote:
Did that price include the 11% P-R surtax, local sales tax?

The surtax is paid by the manufacturers and is included in the wholesale prices.

[Gunplummer]

I have been in the machining trade most of my life. This is often a topic of discussion when someone prices a new rifle. Most of us could not figure out how Winchester or Remington could make money on a rifle with everyone taking a piece of the pie. The stock portion (Wood) must have a lot of "Fall off" due to internal flaws not seen. Disposing of chemicals from bluing must have increased the cost in the last 20 years. No wonder the larger companies started cutting corners on quality.

[natman]

But maybe you can share with us the hard and fast flat rate % then?
everyone is saying 10-15%.. well 10% on a 120 dollar hi-point is 12 bucks.. does that sound right to you?

I would if I could, but there isn't any hard and fast rate. It tends to run from 20-25% or so. That might seem like a lot, but it really isn't when rent, insurance, workman's comp, advertising, salaries, etc, etc have to come out of it.

[lefteye]

The "mark-up" on firearms is an interesting topic. The difference between the ACTUAL price of the firearm that is sold and the seller's cost of that firearm is a function of the market. In other words, it is a question of economics in the relatively competitive market for new and used firearms - in short, that is the result of the effect of supply and demand on price. A seller (whether private or a licensed dealer) obviously controls their own decisions but no seller controls the market and, therefore, no seller can actually control the mark-up. A seller can sell or refuse to sell at the current market price. Our experience in recent years with respect to the supply, the demand, and the price of AR type rifles is a good example of the variables that affect mark-up.