Gun dealer/distributor pricing policy


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matsaleh
July 13, 2003, 04:33 PM
Want to get some opinions here, although I know most of you are shy and reserved about chiming in on things, please give it a try. :p

I saw a gun I'm interested in on an online dealer's website. While they do have an online catalog for consumers, they have a policy that they do not display pricing info to consumers, only (via password protected access) to dealers on file with them. Therefore, I can see that they have a gun I want, but I have to get my local dealer to contact them for a price.

I wrote them and asked them why have such a policy, when their competitors do not. This policy requires me to contact my local dealer, have him contact the distributor, get the price, and contact me again. This process takes longer and more effort than necessary when I'm just price shopping. Instead of going through this trouble, I'm more likely to deal with someone who makes it easier for me.

The distributor's reply was that they are protecting the dealers, and allowing them to make a profit. They also said that, if the consumer knew the real price of the gun, how could the dealer make a profit in this transaction? This makes no sense to me. Cars are sold every day with informed buyers knowing the invoice price and other cost information, and then negotiating with dealers for a final customer price.

IMO, this policy relies on consumer ignorance to make a profit, which is, to me, essentially deception. This is disrespectful of the customer, and is an attempt to subvert free market forces to preserve a profit. Of course a local dealer must make a profit to stay in business. I have no problem with that. If I know the cost of an item, and I know what the dealer's markup is, I can make an informed buying decision. Or, if I think the dealer's markup is too high, I can either try to negotiate, or go somewhere else. I don't see the problem there.

In an age where pricing information is readily available in general, this practice is certainly a way to lose my business, at least.

Just wondered what others thought about this.

BTW, I'm not going to say who the distributor is, because I don't want to start a flame war, malign any individuals, or otherwise make things personal.

Cheers.

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PCRCCW
July 13, 2003, 05:25 PM
This is simple. Find a dealer/dist. online/locally or where ever that has pricing/availability/products that you like and support them. Why people do the things they do? and tryin to figure it out, will give you ulcers if you choose to let it.
I have a dealer for a father....yet I dont buy every gun from him. He does however do all of my transfers.
I love gunsamerica.....you contact the seller...work out the details and transfer the gun. Boom.
One thing that does drive me nuts are the +10% gun dealers....(ya right whatever:rolleyes: :) ) I had a couple try and "prove' to me that they brought the gun in from one high end distributor by showing you there price and the price they charged you...yet got the gun elsewhere..........love it. And Ive called a couple of them on it also......IDIOTS!
A certain very well known and high priced dist. in RENO is very spendy compared to ALOT of other places......yet more dealers have their catalog around than not. Some keep it around for "reference" material.
Shoot well and shop well.

nextjoe
July 15, 2003, 12:11 AM
This is how the gun business works, and how it has worked for as long as I can remember, and probably a long time before that.

Manufacturers sell to wholesalers. We don't get to know what the wholesalers pay. Wholesalers sell to dealers. We (usually) don't get to know what the dealers pay. The dealers sell to us. They put on a price tag and we can either buy it at the listed price, negotiate on the price, or not buy it at all.

The problem is, while you say you have no problem with the dealer making a profit (and I believe you) some people do. Some guys think paying anything over dealer cost is a "rip-off." Try dealing with customers who think you don't deserve a profit.

If you put a little effort into it, you can usually find out what dealer cost is. You'll find that the margin the dealer makes is usually 10-25%. That's a THIN margin. I don't know if it still holds, but supermarkets used to have a 100%+ profit margin as standard, and most people don't write indignant protests about Del Monte not telling us what they charge A&P for a can of creamed corn.

Almost nobody gets rich selling guns. Next time you're at your local gun shop, check out what kind of cars are parked in back. Not many BMWs in the employee parking. The owners, and certainly the employees, are probably just barely keeping their heads above water. And lots of gun shops aren't even doing that.

I guess I'm just saying you should keep it in perspective. We don't often get bent out of shape over grocery prices, but we throw fits over guys in a very, very tough business trying to protect their already razor-thin margin. Gun shops have to contend with ridiculous insurance costs, high security expenses, LOW profit margins, often-unfriendly local governments and zoning restrictions, guys who want to talk all day but never buy anything, and a whole mess of gubmint paperwork that HAS to be done right. I don't begrudge them their cut of the action, and I KNOW they're not making "excess" profits (no such thing, anyways).

Best,
Joe

mrtgbnkr
July 15, 2003, 12:27 AM
One other thing to consider...while you may be able to look up "invoice" price on a car, believe me when I tell you that that is NOT what the dealer pays for the car when all is said and done. The car business is full of hold-backs, kick-backs, dealer incentives, dealer cash "rebates" from the factory... When all is said and done, a dealer who sells a car at "invoice" is still making a respectable profit.

Mark

NukemJim
July 15, 2003, 08:26 AM
Gun shops have to contend with ridiculous insurance costs, high security expenses, LOW profit margins, often-unfriendly local governments and zoning restrictions, guys who want to talk all day but never buy anything, and a whole mess of gubmint paperwork that HAS to be done right. I don't begrudge them their cut of the action, and I KNOW they're not making "excess" profits (no such thing, anyways).

Agreed.

Another point is that if you always buy on-line how long is a local dealer boing to be in business to do the FFL transfer paperwork ( I do not believe that a gunshop could stay in business on transfer fees alone ), help you with a problem by talking to their staff, have instock ammo when you need it in a hurry, meet other gunowners, physically handle guns that you are thinking of buying ( I have a firm personal rule that if it is over $200.00 I have to touch/handle the item before I buy it ). And in my particular case it is where I shoot as well so I want it to stay in operation.

As alway I could be wrong


NukemJim

AJ Dual
July 15, 2003, 11:41 AM
I agree that the dealer has got to eat, and untill you've ran your own business, you won't understand just what all the overhead, costs, taxes etc. are really like on the bottom line. And it is true, he has to stay in business for you to transfer your mailorder stuff to you. Otherwise all the good SGN/Internet pricing in the world does you no good.

However, OTOH, I have to actually be able to afford the gun in the first place to be able to buy it from said dealer. When I see something like an $800 CTME parts gun that Century lists for $399, I do get a tad... :scrutiny:

My mental calculation as to what a fair dealer price is goes something like this.

Distributor price
+Shipping/handling
+ FFL's normal transfer fee if I ordered it direct instead (most are $50 around here, high)
= What I'm willing to pay

The Distributor prices we see online and in Shotgun News are usually tier 1/quantity 1 pricing. If your dealer has any kind relationship with the distributor, his prices should be a bit better from, quantity, holdbacks, incentives, whatever, and that profit goes back into the above formula to help his bottom line. (which probably works out to the afore mentioned 15-25%...)

I think that's fair, and how I base my offers on something that's overpriced in the case. On several occasions the manager has been receptive, and they seem to have a two-tier pricing policy, for those in the know, and the newbie...

The Dealers who gouge might want to keep in mind that when they overcharge* on a gun, that's money the customer might have had left over to buy accessories, where the real margin is anyway. Plus there is a tax burden on inventory on hand, better to get rid of it, because each quarter it sits in the case, it's eating into it's margin.

*(as a Libertarian, I agree if someone buy's it for full price, the dealer wasn't overcharging, caveat emptor and all that...)

matsaleh
July 15, 2003, 11:32 PM
Thanks for all the great feedback!

This is how the gun business works, and how it has worked for as long as I can remember, and probably a long time before that.

Well, this may be, but I don't think it's justified.

In my case, I saw an SA version of the gun I'm interested in at AIM Surplus for a very good price. However, I want a DA/SA model, which I saw over on the distributor's site. All I want is a ballpark price range to see if it's worth my time following up on the deal. My guess is that the price of the DA model to me would be comparable to the SA model, give or take a few bucks. But I want to confirm that. If the distributor tells me the dealer price, and tells me it's a dealer price, and the dealer will probably charge me more, then fine - the final price is between me and the dealer, but at least I know where he's coming from.

Besides, the distributor clearly has a "consumer" catalog, but won't show the prices to me. Sort of useless, IMO.

Anyone who thinks they can purchase a product for zero markup from someone in the business of selling merchandise is not worth wasting time on. That said, there's nothing wrong with trying to get the best price I can. If I know the average markup is 25%, but the price I'm being quoted by a dealer has a 30% markup, then I know there is room to negotiate, or at least I can shop around until I find someone to sell it to me at the lower price.

And, yes, most definitely, the value of an item is the price that buyer and seller agree on. If the dealer's smart, he won't cut a deal he can't afford. If I'm smart, neither will I. I just want some information to help me decide.

Cheers all!

nextjoe
July 15, 2003, 11:52 PM
matsaleh,

I understand where you're coming from. Actually, things have gotten better (from the consumer's point of view) in this regard in recent years. Thanks to the internet, you can sniff around a little here and there and usually find the dealer price. It wasn't so easy in the past.

Another thing I thought of after replying the other night... I think it's important to put these things into perspective. Think about all the big expenses you have little or no control over and HAVE to put up with. In my state, I'm legally required to buy car insurance in order to drive. There's no realistic, legal way for me to avoid it, and it costs me a LOT of money that I'd rather spend on guns. THAT, to me, is worth getting ticked off about.

On the other hand, if you pay a couple dollars extra on a gun, you're helping a pro-gun business and a fellow shooter. What's so bad about that? I'd much prefer my dollars going to fellow gun people than the insurance bloodsuckers.

Best,
Joe

matsaleh
July 16, 2003, 12:13 AM
On the other hand, if you pay a couple dollars extra on a gun, you're helping a pro-gun business and a fellow shooter. What's so bad about that? I'd much prefer my dollars going to fellow gun people than the insurance bloodsuckers.

I am only too happy to give my business to a pro-gun (and capitalist) cause. And I have no qualms with buyer and seller agreeing. The only issue I have with this policy is that it explicitly depends on customer ignorance (even enforces it) to "defend" the profit. I just don't get that. If $500 is a fair price, and I want to pay $500 - no big deal. But when I'm trying to find out whether I can expect to pay $200 or $800, and the "person in the know" says "you're not cleared for that", it's kind of insulting. I mean, eventually I will find out, and I will *not* pay more than I am willing to, so why make it harder for me? I would think they want my business.

To me, the best answer would have been:

"Our price to dealers is $XXX. We sell only to dealers; here is a list of them in your area. Their final price is up to them - they have to make a profit, so they will mark up the prices as they see fit."

Simple, honest, businesslike... I would respect that.

Cheers.

nextjoe
July 16, 2003, 01:41 AM
Out of curiosity, what is it you're looking to buy, anyways? I'm guessing a CZ-75 based on the hints you dropped. If so, 2003 dealer prices on the CZ line got leaked online a few months back. Shouldn't be too hard to find.

Best,
Joe

firestar
July 16, 2003, 03:00 AM
Instead of not buying from a local dealer, I will more likely buy from him if I know the wholesale price. For example, I am sort of considering buying a Makarov. I know that SOG has them for $129.99 wholesale. If I try to get my dealer to buy it for me, I will have to pay shipping and FFL fee. It comes out to about $170 if I do it that way. If I see a local dealer that has them for $180-190, I will snap one up because it is not worth the hassle of going the mail order route for a few bucks. This way, a dealer can make $40-50 off me instead of having to gouge me on FFL fees that really don't cost him a thing.

$40-50 may not seem like a lot but it beats nothing and that is what most dealers make because they are too greedy.

Majic
July 16, 2003, 03:54 AM
Another thing that has to be considered is the location of the dealer. A wholesaler may sell a certain model for a price to all the dealers, but the dealer working in a high cost of living area may have to charge higher prices. His rent, power, wages, taxes, and insurance may be reflected in the price so he can stay in the market in say a large city. The same model firearm bought from the wholesaler to a dealer in an area with lower overheads can be bought cheaper.

manwithoutahome
July 16, 2003, 04:59 PM
The solution is simple. Get a C&R and send to these companies, even ones that only sell "modern" guns. Most to all will send you a dealer password so you can look up the prices.

Also, as many have said here, when you buy a gun at the local dealer, you are not just paying for the gun. You are paying:

Rent
Electric
Time (dealers time, they have to make some money to live and eat)
Employee pay
Employee benefits
Unemployment Insurance
Fed/State taxes

The lists goes on and on. That is the way of business and it's great to get a good deal on something but don't expect to get it at a loss or non-profit from the poor folks trying to make a living and giving us the chance to keep the 2nd alive.

M

Waitone
July 16, 2003, 09:48 PM
I feel you pain for wanting to make sure you get a "fair" price (whatever that means).

You can attempt to determine channel pricing, distribution costs, dealer markup, and a thousand of other decisions to be made before a price is determined.

Or

You can write down the specs of a firearm you want to purchase and pick up the freakin' phone and call varous dealers and ask for their best price. They may refuse because their policy is storefront sales only. They may agree and give you a quotation.

And

You can go the web and look at GunsAmerica.com and get an idea.

Then

Summarize your information. You will quickly see pricing will cluster with a few outlyers. Then when you walk in and purchase said firearm, you have just established market level pricing. Don't like the price, purchase something else.

I used to sell to third party distributors and I can assure you no one is getting rich. Different markets and different industries have different structures which dictate the minimum level at which they can participate. You trying to second guess their cost structure and applying what you think is a proper level of profitabiity smacks of a government bureaucrat's attitude. Let the market work for you.

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