1. Attention: We have put together a thread with tips and a tutorial video to help with using the new software. Please take a moment to check out the thread here: Trapshooters.com Tutorial & Help Video.
    Dismiss Notice

Dealer Mark-Up Analogy

Discussion in 'Uncategorized Threads' started by JH, Feb 26, 2008.

Thread Status:
Not open for further replies.
  1. JH

    JH Well-Known Member

    Joined:
    Jan 29, 1998
    Messages:
    1,359
    When one shops for a new vehicle we tend to read Edmunds, Consumer Reports, etc. to access "dealer cost" services in order to get a good deal from the auto dealer. We tend to offer a certain amount over dealer cost or, at worst, dealer invoice. We never pay MSRP.....We know certain cars have a 13% dealer profit margin, others up to 25% or higher....

    When it comes to shotguns that cost almost as much and sometimes more than a car, we seldom use the same strategy...for example, what is the dealer invoice on a Krieghoff and what profit margin are they operating under...23%? 40%?...why is it that we do not offer a certain amount over cost to the shotgun dealer just as we do with auto dealers?

    Judging from the advertised prices for new Perazzis, Krieghoffs, etc. we reserve the dickering for cars, trucks, etc. but not for shotguns....We need a gun price service similar to the many available for trucks/cars. Why is it that gun buyers who tend to fight auto dealers for the last penny when making a deal do not do the same with high price shotguns?

    What is the going price for a new Krieghoff over dealer cost/invoice?
     
  2. bigben

    bigben Active Member

    Joined:
    Jan 29, 1998
    Messages:
    559
    Bangalore, the above services to access "dealer cost"give you cost, but most people never know the "hold-back" the manufacturer gives the dealer, don't forget, anyone in business must make a profit to stay in business or go belly up!There are governmental mandates, state taxes, federal taxes, unemployment taxes etc. and other expenses that do not appear important- unless you are in business! If you are not in business, try this an analogy, take your wages for a year, take your expenses, deduct them from your total wages, do not include ANY expenses other than the absolute cost for you to exist! no tv's no movies, no shooting, no eating out, nothing! if you make 30, 000.00 per year and your bare essential expenses are 25,000.00, you have nade a profit of 5000.00! now have someone tell you you made too much money, give it back to your employer! Now you will have a better understanding! you will find at best a 2 to 5 % difference in the selling price of a premium gun, because there is mot much profit when you consider the amount of units sold, cars are sold in the millions, quality guns are in the hundreds per year, big difference, all the best, incinerate em!
     
  3. msmith

    msmith Member

    Joined:
    Jan 29, 1998
    Messages:
    497
    Location:
    North tonawanda, NY
    Excellent topic. I would bet about 25%. When you see dealer advertise ( which they pay for) certain guns for 20% off, you know that they are still making some $$ on the deal. At Christmas ,DuPont had Kolars 20% off. Last year Chris Meast also had 20% of Kolars. They kid of drop their pants on that. Now knowing this will help in future price negotiations if I buy another Kolar. I do realize they have to make some $$ to stay in business. This is going to be a interesting topic. MIke
     
  4. phirel

    phirel TS Member

    Joined:
    Jan 29, 1998
    Messages:
    9,556
    So many do not accept that a business should make a "fair profit" but they expect the business to pay a "fair wage" to there employees.

    Bangalore- We are free to make any offer we wish to a gun dealer and he is free to accept our offer or reject it. On way to get the price down is to offer cash. If a dealer has a new K-Gun priced at $13,000 and you lay down 120 one hundred dollar bills on the counter, the dealer would seriously consider your offer. But if you simply ask him if he could take $12,000 for the gun, it is easier to turn down your offer than to turn down a stack of 120 one hundred dollar bills. I buy things using this technique on a weekly basis for my wifes antique store. It works for items from $10 to $10,000 dollars.

    Pat Ireland
     
  5. Fast Oil

    Fast Oil TS Member

    Joined:
    Jan 29, 1998
    Messages:
    918
    Just to ad to Pat's thought, when you use a credit card the dealer just lost anywhere from 1.5 % to 5% to his "silent partner" the credit card. Cash or check just might get you a discount.

    Scott
     
  6. dbls_champ

    dbls_champ TS Member

    Joined:
    Oct 2, 2007
    Messages:
    66
    Pat,

    I have no problem with a business making money. But what is considered a fair profit, I know of several companies that consider several billion dollars a year of profit fair but they pay their employees an average of $30,000 dollars a year, I use to work for a couple of them. I guess it is just the point of view you are coming from. I figure the CEO making $100,000,000 a year considers himself making a fair wage, but the worker making $10 an hour doesn't.
     
  7. primed

    primed Well-Known Member

    Joined:
    Jan 29, 1998
    Messages:
    1,119
    Pat

    It is the dealer's responsibility to make a "fair profit" and it is the consumer's responsibility to try to get the "fair deal". The definition of "fair" is where the negotiations come in. When both sides come out happy with the price, the deal was "good".

    Personally I don't care what they pay their employees. That's between them and does not concern me. Should I pay a higher price because the dealer pays extremely high wages? I think not.

    FWIW

    Bob
     
  8. esoxhunter

    esoxhunter Well-Known Member

    Joined:
    Mar 15, 2006
    Messages:
    2,085
    Location:
    Wisconsin
    When I buy a car it seems the dealer and I are adversaries. The dealers goal is to get me to pay as much as possible and it is my goal to pay as little as possible. To make a deal, we both have to come to an agreement. If we don't; that doesn't make either one of us wrong. I understand the dealer must make a $ to stay in business. But I also need to watch out for #1, (me) when I sign the contract. No different when buying a gun or anything else. Ed
     
  9. W.P.T.

    W.P.T. TS Member

    Joined:
    Jan 29, 1998
    Messages:
    8,368
    When I buy a new vehicle, I have a price in mind when I walk into the dealer and make my offer after they dance around the price and talk to the sales manager ... I make the offer and tell them take it or leave it and have not had to walk for years ... I do not care how much a the dealer makes on a deal, I care how much the dealer makes on the deal with me and thats with cars, guns, and anything else I buy ... WPT ... (YAC) ...
     
  10. mirage1

    mirage1 Member

    Joined:
    May 16, 2006
    Messages:
    293
    I think guns are like cars-there is more to the equation than just price.
    What kind of service do you get-how are they to deal with,,etc.
    When I buy a car I would like that person to be straight and honest-
    and honest in his effort to resolve any problems. Hopefully, that salesman
    and dealership will be around will I am in the market for a car again.
    For me this applies to buying a gun as well.The lowest price isn't
    always the best price.

    Joe
     
  11. phirel

    phirel TS Member

    Joined:
    Jan 29, 1998
    Messages:
    9,556
    dbls_champ- As you stated, the tern fair depends on ones view point. When Exxon makes several billion dollars profit, but that amounts to only a 7% return on their investment, some would say that is not fair and others would say it is fair.

    When a CEO introduces changes that earn a company an additional $20,000,000 in profit but he is paid only $1,000,000, some would say that is fair and others would conclude it is unfair. If you want a job with great insecurity, become a CEO. You either increase profits or you are gone. There are always a lot of CEO jobs available. I would hire one today for my very small business. Are you interested? All you have to do is generate more money for me than I pay you.

    Pat Ireland
     
  12. dbls_champ

    dbls_champ TS Member

    Joined:
    Oct 2, 2007
    Messages:
    66
    Pat,

    I would have to be one of the people who say that Exxon's profits are a little extreme, I definately won't defend them. I don't know any CEO that has made a company an additional $20,000,000 while being paid $1,000,000, it is usually the opposite. Most CEO's I've had to deal with were just figureheads that took credit for other people's work, barked out stupid orders and collected a pay check. As for CEO jobs being insecure, doubt that, on the contrary most CEO's keep their jobs if the company is doing bad and the workers are laid off, most of the time the CEO's even keep their big bonuses. It hasn't been that long ago when Bank of America announced poor earnings, I think it was bank of america, they still gave their CEO a $28,000,000 bonus but told the workers they would have to supply their own bathroom soap. A CEO has to be really really bad to be let go and then the company still compensates them excessively. I worked for a fortune 500 company about 8 years ago that cut all of it's employees insurance, they said it saved the company an estimated $274,000,000, which it did. But they turned around and gave all of their upper management a %100 raise that just happened to equal $274,000,000.

    And finally, about 50 years ago CEO's made roughly 50 times the average employees wage compared to 450 times in 2007. I have a hard time defending that also. Oh yeah, I don't need to work for your small business I have a good career.
     
  13. Bob Schultz

    Bob Schultz Well-Known Member Supporting Vendor

    Joined:
    Jan 29, 1998
    Messages:
    2,774
    Location:
    Tuxedo NC
    As a firearms dealer I can assure you that I make money selling guns. I have to if I want to continue in the business, after all it's not a hobby.

    Markup on guns varies from one product line to another. The mass produced guns like Remington and Beretta offer very slim margins on their lines of autos and pumps. High end products offer more margin simply to offset the costs of inventory, (Yes, we pay for them and no, the gun manufacturers do not give them to us on consignment to sell.)insurance ( My business insurance for liability selling firearms is $6200 a year!) and overhead. Why would I want to stock $200,000+ worth of guns for less return than I can get in interest or stock funds with virtually no work or risk?

    msmith: Kolar had a bunch of combo sets with the .740 bores at the end of the year and offered them to dealers at a discount. There was nothing wrong with them, just the new .750's were selling and the others were slow. Cash flow is king in any business so Kolar offered a deal to the dealers that allowed them to pass the savings on to the customer. Browning, Remington and Beretta offer these deals to their distributors as well and they usually happen in the fall of the year.

    The best way to approach a dealer is with the truth. If you are just kicking tires (we all do it!) don't ask the "What's your best price question?". Tell him you are just looking and ASK if you can pick up a shotgun. We are glad to answer all your technical questions. When you are ready to buy, make the dealer a fair (no bull$#*#) offer of what you are willing to pay, right now, for the gun. This way the dealer knows you are serious and will more than likely work with you, after all we do want to sell guns. There are a bunch of guys that have not figured out that dealers remember the bull artists .... just like the car business, money talks and bull$#&% walks! As Pat Ireland states above, all dealers like cash, enough said.

    Trading guns is a horse of a different color. An important thing to remember is you will always come out better if you can sell your gun outright and buy the gun you want with cash. That being said, if you have to trade always bring the gun with you and clean it up a bit before you show it to the dealer. You wouldn't buy a nasty dirty gun from the dealer, why would you expect him to want your gun in that condition! Understand the fact the dealer does not really want your gun. Let me repeat ... the dealer does not really want your gun. So, its likely he will not give you retail for it! He has to invest money in it, probably clean it, insure it, drag it around to the shoots and display it, then work to sell it and, hopefully, make a profit. Factor that in when you go to trade and you'll likely find you are getting a fair price.

    Most of all I and the other dealers appreciate your patronage. You are the reason we exist! If you have an issue with any product we sell, tell us and we'll do our best to make it right. We thank you for your business and hope to see all of you at shoots during the year.

    Break 'em all! Bob Schultz
     
  14. motordoctor

    motordoctor Shoji Tabuchi in Branson

    Joined:
    Jan 29, 1998
    Messages:
    3,708
    Location:
    ohio
    Bob Schultz is correct. It is that way in any business. He is honest and fair in his dealings. Remember that you will probably need service on that firearm and the guy that sold it to you will probably take care of you. As far as cars go. Remember that the dealer usually has a 3% holdback from the factory plus some have incentives that the factory offers if they sell a quota, You Will NEVER get into that money. They also take your used car in on trade just like a gun dealer. You will never get retail for that trade and yes cleanup the trade regardless of being a gun or a car. The guy has to make a profit on something to stay in business. Good post Bob. Motordoc
     
  15. JH

    JH Well-Known Member

    Joined:
    Jan 29, 1998
    Messages:
    1,359
    Thanks for your input. Given the spiraling prices of the "premium" guns and the fact that most have around a 23-25% dealer profit margin (dealers need to make money to stay in business but what is "fair" is all relative)....I will resort to simply offering what I deem "reasonable" over their cost. The offer will go something like this:

    Dealer: I have a K-80 Gold Scroll Sporting gun for $16,000.

    Customer: I will offer you $500 over cost.

    I think more premium guns will sell (higher volume which will offset the lower profit margin)if dealers do not hold to their "get close to retail" strategy. Just a thought.
     
  16. msmith

    msmith Member

    Joined:
    Jan 29, 1998
    Messages:
    497
    Location:
    North tonawanda, NY
    Bob, not to start a pi##ing match but the Kolars that DuPont had were .750 bore guns. Chris Meast's discount was on all Kolars in stock. Both dealers had the deal on skeet and sporting guns, not just trap combos. Looks like Christmas time is the time to purchase a kolar because this happened both times in the last 2 years.. Mike
     
  17. chuckles

    chuckles Member

    Joined:
    Jan 29, 1998
    Messages:
    945
    Location:
    Michigan
    This is America, most items offered for sale in USA have prices based on "supply and demand" and competitive influences.....generally speaking if a person cannot afford a certain gun he/she moves on to a gun that is affordable, nothing magic here and the original cost of the gun is relative anyway and no ones business other than the manufacture.....

    Just out of curiosity... Bangalore is India's number one HiTech employment city, we the USA, have lost 10's of thousands of HiTech jobs to this Global player....what is your connection to Bangalore as you are using it as a screen ID...

    regards
     
  18. Shooting Jack

    Shooting Jack Active Member

    Joined:
    Jul 29, 2006
    Messages:
    3,538
    Location:
    Blackshear, Georgia
    After reading this thread I have more questions about carrying high end guns than I did before. As a Beretta and Benelli dealer(the most expensive guns we carry) I mark guns up 15Pct so a $2000.00 gun sells for $2350.00 and then I get 3 pct for thirty day payoff 2 pct for 60 day payoff and 1 pct for 90 day payoff. Over ninty day I get no discount. At the markup of 15 pct they are close to the lowest mrp allowed to be advertised and we sell a good number of guns but have very little haggling room. Most people that don't buy initially because they didn't get a discount will be back when they see how much they are at other places. As for a high end gun, the longer it sits there the more it cost you as a store owner. At what point do they become unprofitable? Especially with the high end guns it seems that you are gambling that you can beat the odds. I guess there's more to it but it does seem to be a gamble to me. Do they offer buy back programs or guarantee dealer trades?

    Having worked in automotive dealerships for a few years I know that they have a lot more room to play with in the price of a car. I can't see that you can compare automobile sales to gun sales unless you know all, I repeat all the variables. Jackie B.
     
  19. BT 99 Plus SS

    BT 99 Plus SS TS Member

    Joined:
    Jan 29, 1998
    Messages:
    4
    A friend and I have a small gun shop.

    We mark our guns up 15% and everything else up 25%. This gives us room to deal.

    I have yet to be beat by Gander Moutain or Cabela's.

    But people still like to go there and buy stuff with their name on it.
     
  20. Big Heap

    Big Heap TS Member

    Joined:
    Jan 29, 1998
    Messages:
    1,748
    Joe Ljutic (RIP) was walking back to his trailer after winning a handicap shootoff, gun in hand. Another shooter walked up to Joe and said he would sure like to have a gun like Joe's. Joe told him to bring 40 100 dollar bills to the trailer and he could have this one.

    Pretty easy to make gun deals when you can go home and make another one the next day. No middleman profit involved in that deal.
     
Thread Status:
Not open for further replies.
Search tags for this page

dealer analogies number

,

what is the dealer profit on a krieghoff