So, what is a "fair" markup for guns?


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tommytrauma
January 14, 2003, 01:52 PM
I've read a few different threads today that included comments about "rude" customers telling gun retailers that the customer could get guns cheaper on the net. I recognize that a brick and mortar business is going to have a overhead to make, and that the dealer has a right to a profit, and I certainly wouldn't hesitate to pay a bit more to support my local guy. But...
I've been thinking of picking up one of those little kel-tec fold up carbines as a plinker. Not a lot of practical use for me, but they look like a fun toy. I was also planning on picking up a kel-tec P-32 until I found out that a .380 version is coming around soon. I found the rifle for $265 online (plus 20 bucks in a transfer fee of course) and the pistol for $220. Called my local dealer, and he quoted me $395 for the rifle, and $300 for the mouse gun. Needless to say, I'm getting the rifle on line.
So, am I one of those whiney customers you hear so much about, or is my local dealer one of those rip off dealers you hear so much about?

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Correia
January 14, 2003, 02:11 PM
Neither. It is all capitalism.

You as the consumer will choose where to purchase your gun. Your dealer decides what to charge. Some dealers will adapt and be profitable. Others will go out of business and new ones will take their place.

Adapt or die. I hate the word "fair".

Blackhawk
January 14, 2003, 02:16 PM
A "fair price" is what a buyer is willing to pay and what a seller is willing to accept.

It's that simple....

Hkmp5sd
January 14, 2003, 02:17 PM
You may also consider that your local dealer isn't necessarily getting his guns from the same supplier as the online dealer found. There are any number of reasons why one dealer charges more than another and they are not all tied to greed.

It all comes down to a product is worth whatever you are willing to pay for it. No matter what price you find a product for, 10 seconds after you buy it, someone is gonna tell you that got more/better for less. Never fails.

rock jock
January 14, 2003, 02:19 PM
I consider 10-15% above wholesale to be in line with most dealers. One local guy charges 20-25% above wholesale and does quite a bit of business. I'm guessing that his client base is fairly well uninfomred about gun prices.

Marko Kloos
January 14, 2003, 02:22 PM
The word "fair" really has no place in a free market. A dealer is free to charge whatever the market will bear. If nobody buys from him because his markup is higher than that of other gun dealers in the area, he will probably alter his pricing structure or go out of business.

A "fair" deal is whn both parties walk away from it happy. If one party feels unhappy about the conditions of the deal, they are free to step away from it and seek new trading partners.

bountyhunter
January 14, 2003, 02:22 PM
Even in **********, we have a couple of decent dealers who order guns for you and sell them at about 15% - 20% above their cost (Sportsmen's Supply in San Jose). I think that's pretty fair. Some of the internet places claim to sell 10% above cost, but you have to pay shipping and accept a high risk in the transaction. Of course, we also have robbers who charge top retail price plus "handling" and tax, and some who just make prices up (Kerley's in Cupertino leaps to mind).

stubby
January 14, 2003, 02:29 PM
I purchased dozens of firearms from a dealer that wanted $10.00 for every gun (new or used) that moved out of the door of his business. That was the way he did business. He is out of business now but not because he wasn't making money, he sold out to another dealer. He made a good living for many years at $10.00 a shot. Of course, he sold a lot of guns that way and made up in quantity what others were making on higher profit but fewer sales. It was small shop in his garage but on Saturday's he was so busy you couldn't get through the door. A am guessing he would sell 50 guns on a weekend day.:)

KMKeller
January 14, 2003, 02:29 PM
My favorite local dealer flat rates it at 10% above wholesale.

Blackhawk
January 14, 2003, 02:31 PM
The word "fair" really has no place in a free market.Actually, a free market is underpinned by the concept of fair, meaning there is no duress on the part of buyers or sellers compelling to accept any transaction they don't mutually deem "fair."

"Fair market price" is defined in the annals of law as being what a willing buyer will pay a willing seller with "willing" meaning, of course, no duress.

A mass seller will determine the price to charge for a product by the bell curve. If every prospect buys, the price is too low. If none buy, the price is too high. The sweet spot is somewhere in the middle, and it constantly fluctuates as it marches to the beat of the immutable law of supply and demand.

10-Ring
January 14, 2003, 03:19 PM
Also, consider online/ mail order just requires someone taking orders and some kind of warehouse where as a retailer requires an actual store front & probably employees...costs, costs, costs.

I don't mind paying a little extra to help keep my favorite shop open. My area has lost quite a few shops, you have to support the local economy.

TheOtherOne
January 14, 2003, 03:27 PM
And who cares if they think you are a whiney customer. Some guy that just lost a sale and wants to vent by calling me names isn't going to bother me because I've saved $100 by getting it somewhere else.

cheygriz
January 14, 2003, 03:41 PM
A stocking dealer has to have his money tied up in inventory. He also has overhead. Rent, utilities, insurance, employee salaries etc.

If he can't make a markup of at least 15-20 percent, he probably won't last. If he's in a hiogh volume area, he can probably get bu om 10-15 percent.

A dealer in Denver should be able to move a greater volume than a dealer in Raton.

There are two problems here. Many customers do not understand the free market system. They think there's something wrong with making a profit. (The teachers are teaching this concept in the schools these days.)

The other problem is dealers who fail to understand the free market system. Many of them don't realize that they will have more money at the end of the day if they sell ten items and make one dollar on each, than if they sell one item and make five dollars on it.

One dealer told me that he would take a torch and cut a gun in half and sell it to the scrap metal dealer before he would take one cent less than MSRP. This jerk's no longer in business, BTW.

The free market system works best when both sides use reason and common sense.

larryw
January 14, 2003, 03:46 PM
Life isn't fair. Reasonable markup depends on many factors, such as market, demand and overhead. And it will vary from a storefront that offers no knowledgable help to a full service dealer who you can trust. I don't mind paying more for the latter and have no loyalty to the former. Wanna guess which type historically suffers the most in hard times?

Bountyhunter: interesting observation regarding a couple local shops. Exactly opposite of my experiences. Last time I (ever) shopped at Sportsman's Supply, they wanted to charge me over $30 for a box of Win WhiteBox 44 Spec. I've found Kerley's to always be reasonably priced. Interesting, isn't it? :)

blades67
January 14, 2003, 03:52 PM
Whatever is agreed upon.

Take a Macroeconomics course and all will be revealed.

duncan
January 14, 2003, 04:32 PM
Around Seattle and Western WA,

10%

I have no problems with supporting my dealers but if they're over, I'm buying out-of-state and paying $15 shipping and $20 FFL fee and avoid the allmost 9% sales tax.

Try buying several AR-15's at $1K a pop to have to fork over $90 each time. Encourages out fo state large purchases!

JohnBT
January 14, 2003, 05:38 PM
Don't know what a reasonable markup is. I know that I'll pay for service and selection.

I like being able to drive less than 15 miles and handle a bunch of guns. In order IIRC after 30 years of looking - one big glass floor case of 9mm, one of .45, one of .40, one of Performance Center and Baer, one of S&W little revolvers, one of Taurus revolvers, one of big S&W revolvers, (turns corner) one of .22 pistols, and lastly one of centerfire single action revolvers.

Then there are the guns on the wall behind the counter: the ones on sale, the big rack of used handguns, the expensive rifles, (turns corner) the expensive shotguns. Then the floor racks of rifles and shotguns out where you can pick them up - two looong aisles worth mounted high and low. This is the run of the mill new and used stuff - the cheaper Kimbers, all the Remingtons, Rugers, Brownings and Benelli Super Black Eagles :)

And you know what I really like? When I decide to buy something and don't want the display gun, they'll walk all the way to the back and go into the warehouse to get one that's never been opened. They'll even bring 2 or 3 out so I can pick if I'm nice.

How much is it worth to see a gun up close and not just a picture in a magazine or on the web? A lot to me.

Yeah, I frequently complain about their prices, but look at what they have to offer.

And then there's the whole fishing department, reloading, some clothes, waders, safes, live bait, etc.

Heck, how much would you contribute just to get somebody to open a place like this in your town?

John

J Miller
January 14, 2003, 06:12 PM
JohnBT,

I knew of several shops like that in Phoenix and Scottsdale AZ years ago. But sadly now they are gone. There are many good shops though and they are to be supported.

I live in IL now and the gun shops here are but a filmy shadow of the ones in AZ. Little inventory, and even lesser selection.
Their pat answer to any question is: Nope, don't have it in stock, but I'll order one for YOU!

Wherein lies my problem. I will not buy a gun of any kind I haven't examined beforehand. There are just to many things that can go wrong. Many dealers say, "it's not me that guarantees the guns, if it's bad, send it back." No, I must see, examine and decide before I put down my dollars.

So I believe it is better to pay a bit more for a gun that a local shop has in stock, one you can examine BEFORE purchase, than to save money buying from an enternet source. And to have a gun shop with stock on hand, you must support them.
One person can't do it all. But when I want something I try them before I order from the 'net.

I believe that is fair.

rock jock
January 14, 2003, 06:25 PM
tommy,

Next time ask what the "average" markup is to avoid all these smart*** answers. I mean, jeez people, we know what he meant.

Wildalaska
January 14, 2003, 06:54 PM
I purchased dozens of firearms from a dealer that wanted $10.00 for every gun (new or used) that moved out of the door of his business. That was the way he did business. He is out of business now but not because he wasn't making money, he sold out to another dealer. He made a good living for many years at $10.00 a shot. Of course, he sold a lot of guns that way and made up in quantity what others were making on higher profit but fewer sales. It was small shop in his garage but on Saturday's he was so busy you couldn't get through the door. A am guessing he would sell 50 guns on a weekend day.

OK, so he making $500 per day profit (50 guns x$10)..out of his garage..if he does that every day (highly unlikely) hes making 15,000 per month, max in "profit". Thats OK for a guy in his garage..

I assume thats $10 over and above the cost of the gun plus shipping.

Now look at the same figures for a regular store. Start off with $15,000 "profit per month. Its a small shop, so lets take off $1,000 for rent. He doesnt want to be there all the time, so lets say he has part time help, say 80 hours per month at $10 per hour. Take another $800 off. Take another $100 per month off for FICA and UI and workers comp. Take another $100 per month for phone and licenses and permits. Take off for security system. office supplies, equipment, utilities. Add to the fact that hes not selling 50 guns per day, but averaging 20...so his profit is not really $15,000 per month but $6,000 per month. Of course he has got to buy inventory too, sure as heck he doesnt sell everything....

There are far better ways to make a living...

BTW, I can sssure you that the overall profit margin for new/used guns is around 15-17%. Thats exactly what it costs you to order from the "10% over cost bandit".

80fl
January 14, 2003, 07:12 PM
If I could only make 10%-20% on my primary retail item, I think I'd be pumping gas at the 'cum&go.

With the exception of large ticket items, anything less than 100% is a marginal markup.

As I've felt for many years; If you can't make a profit on one item, you're not going to make it up with volume.

A gun shop truly must be a labor of love, 'cuz at 10% you'd be lucky to net minimum wage.

Ed Brunner
January 14, 2003, 07:17 PM
Who can define fair ?
The seller can put any price on his property. It is really up to the buyer. If there is no buyer it has no value. Fair doesn't apply.

Matthew Courtney
January 14, 2003, 08:42 PM
Unless and until you have ever run a store front business, you can not really appreciate the overhead costs involved. Many localities add to overhead with security, insurance, and other requirements unique to firearms dealers. Business strategies vary widely, and so do mark ups. It does not matter how cheaply you can purchase a gun on the internet if there is no FFL around from which you can arrange pick-up.

Lord Grey Boots
January 15, 2003, 01:21 AM
Back to the original question. Those prices do seem a bit high even for a storefront dealer.

The P32 should be closer to $240, at least thats what I paid for mine from a Seattle area gun shop.

cratz2
January 15, 2003, 06:09 AM
I have no problem with a dealer charging whatever he wishes to charge, I just don't understand why so many of them lie... I've been wanting a blued CZ75B SA in 9mm. Two dealers in town have them in stock in 40 S&W. One price is $379, another is $389. My preferred dealer said he could order one for me for about $390 and another dealer in Columbus said she would have them in stock in a couple months for $376. I go down to Keislers (major online reseller, one of the largest in the midwest for LEO) and they have a blue 9mm hanging there for $479. I said that I would take it if we could work on the price. Told him of the other prices and he dismissed me by saying that those prices were below their actual cost. I just kind of laughed and walked away.

Another thing I don't understand is on gunbroker.com there is a dealer or service, I don't know, I've never used it but it's gunfinder.net They advertise 10% over dealer cost. This is also what my local dealer (Plainfield Shooting Supplies) says he charges. His prices are consistantly 5-12% lower than gunfinder's Someone's lying and I don't suspect my dealer is selling for below his cost and that only leaves one option. Unless their 'cost' includes overhead and not just their dealer 'cost'.

There's a lot to be said of having a good relationship with a local dealer, esp if there is one that charges minimal markup. I've probably spent $10,000 in the last two years with mine. He sells new guns at 10% over 'cost' discounts used guns significantly for good repeat customers, decent trade-ins (assuming it's nothing too exotic) and is a generally pleasant and knowledgable guy. Doesn't charge me anything to receive in transfers and their price on the hard-chrome P32 was $239 when I got mine.

*8*
January 15, 2003, 12:43 PM
In my humble opinion, The fair markup for standard production guns should be 10-15% over wholesale/distributor price.

On the other hand, NFA transferrable guns are marked up higher due to the fixed supply and every year the demand for transferrable machine guns are getting higher, if you live in a state that doesn't allow NFA weapons then it would be wise to purchase a second residence/vacation house in a machine gun friendly state.

JohnBT
January 15, 2003, 04:35 PM
rock jock - Who you calling smart*** ? I gave the man a straight answer. Fair markup isn't just about $$$, it's about what you need and what you get.

If a couple of bucks is really so dear, get a part-time job or a second part-time job.

If you don't like my posts, feel free to keep your 'jeezes' to yourself.

John

rock jock
January 15, 2003, 05:32 PM
I think it was pretty clear that tommy was asking whether the dealer's markup was in line with standards for the business, not if the dealer had a moral obligation to offer the guns at a lower price. The fact that he used the word "fair" does not detract from his intent and instead of answering his question, he is deluded with lectures on economics.

However, maybe I'm wrong and I misread. Perhaps tommy can chime in and clarify.

Peetmoss
January 15, 2003, 06:56 PM
Fair Price doesn't exist. Both parties are generally trying to make the most money they think they can or save the most they can in any deal. However I would gladly pay more probably alot more for a dealer who spent time with me, didn't try to make me a instant felon, or lie to me. Unfortunatly I have yet to find one dealer in CNY that fit the criteria I have just set forth. And Gem sports is the worst.

Redlg155
January 15, 2003, 09:12 PM
Unless the area you are in is devoid of all competition and folks are not willing to drive any distance for a better price, the "fair" markup is ultimately dictated by the consumer. Now if you live in Delta Junction Alaska (I used to live there :D) and the nearest dealer is 100 miles away in Fairbanks, you and your dealer are just going to have to come to a compromise! Actually, if I remember correctly, there were no "gun dealers", just the local Fred Meyers. I spent equal time there as I did the tasty freeze. :D

For the most part weapons are a "luxury" item. If given the chance to buy food or weapons for MOST folks food comes first. Medical bills or weapon. Clothes and shoes for family or weapon.

Most times the purchase of a gun becomes secondary after other commitments are taken care of. When you do have the money you will visit the dealer that best meets your expectations on price and service.

Pretty easy..Good Prices+Good Service = Happy Customers and Dealers.

Good SHooting
RED

John Galt
January 15, 2003, 11:25 PM
Not specific to guns, but:

Basic retail on that type of item is frequently a 30% markup.

On the accessories under $10, a higher markup makes sense.

In most any business, the prices are adjusted to closely match the competition and then you compete on service, atmosphere, etc.

In any business, if you make a very good profit, someone else will move in and compete. Both move to a lower profit. This continues until no one is making quite enough profit & that is where things settle in.

Of course, the internet shopping kind of spoils all that.

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