Dealer cost/markup on new guns


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heron
April 21, 2010, 11:14 AM
Okay, I sent in my entry for the NRA-ILA contest, and the Grand prize is 19 guns, which I selected from a list.

Now, supposing I won this instant armory, I really have no desire for most of the ones I checked; I just checked off 19 items for the purpose of the contest.

So, I'm guessing that they would all be shipped to the dealer of my choice (a good local shop). I would then say, "I only want these; would you buy the rest of them?"

If the dealer wanted them, I'd want to get a price that's fair to both of us. I know that, on a lot of goods, dealer cost is about half of MSRP. I also know that this isn't true of everything, and markup or profit margin may be less than that on guns.

So, could someone give me an idea of what to ask? Is dealer cost about half of retail, or is it substantially higher?

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CoRoMo
April 21, 2010, 11:29 AM
You're getting the cart before the horse a bit, aren't you. Let's wait to see if you are lucky enough to win the grand prize first. But to answer your question, some dealers price their guns as little as 5% above cost. Some obviously make larger margins, but it's much smaller a percentage than most anything else in retail.

Hatterasguy
April 21, 2010, 11:32 AM
I don't know why but 10% is stuck in my mind.

Unless its something new and hot like the FN Scar or LWRC REPR, than its a BMW 7 series payment.:rolleyes:

kostyanj
April 21, 2010, 11:40 AM
A dealer that I used to get from told me he charges a 12% margin on guns.

smince
April 21, 2010, 11:50 AM
A dealer-friend who has a good business says he would rather make $25-30 on a gun and sell a lot than try to make his car payment on one gun :D

content
April 21, 2010, 12:22 PM
Hello friends and neighbors // This would be close to finding a gun shop to sell my firearms/gear on consignment in the case of my death.

I checked with several before I got what I considered the best response. Now my family has this as an option for any that might not be passed down(cringe).

Bubba613
April 21, 2010, 12:30 PM
The dealer should offer you 15% over your cost for the guns you've won in the contest.

Bubbles
April 21, 2010, 12:50 PM
Depending on what they are the FFL may or may not be interested, especially if he's already got the same models in stock.

I'd suggest consigning them with the dealer instead.

hso
April 21, 2010, 01:05 PM
No, dealer is not half of MSRP on firearms. New firearms are actually the smallest margin for a brick and mortar gun shop and most retailers don't even charge MSRP to get the full margin.

heron
April 21, 2010, 01:10 PM
You're getting the cart before the horse a bit, aren't you. Let's wait to see if you are lucky enough to win the grand prize first.I just thought I'd get some info about this before I forget about it (which I will). Boy Scout motto, y'know.

The dealer should offer you 15% over your cost for the guns you've won in the contest. Well, that would certainly be a bargain for him . . . all I've got invested so far is a postage stamp.

I've noticed that some places sell for less than suggested retail, maybe 5% or more -- my local shop is one of them -- so that tells me that dealer cost has to be somewhat less than that; I'm guessing maybe 15%. I also know that some dealers charge more than MSRP. I just needed a reasonable price range.

IF I win (big if), and if he doesn't want them, he can put them up on consignment for me.

Thanks, everyone; that helps.

Bubba613
April 21, 2010, 01:33 PM
If you want to consign them, take a look around the net and see what people are selling the same guns for, e.g. on Gunbroker.

Salty1
April 21, 2010, 01:54 PM
My actual sell margins only average 10% over cost, I put slightly higher margins on the cheaper guns than I would say an STI or Sig. No dealer is going to pay more for them than their cost would be new from the distributor or manufacturer, it makes no business sense at all. I would only consider 10% below my cost for them so I could make some money while my cash was tied up, fast moving high quality guns could be another story though, then maybe 5% below. Dealer cost is no where near half of MSRP, not sure where you heard that but is is totally false. If you were lucky enough to win the auction sites would be the best place to sell them, then again the pricing needs to be right, the old saying that a sucker is born everyday may be true but gun buyers typically know values and what the going price actually is, the smart ones never buy from places like Bass Pro or Cabella's.

Sniper X
April 21, 2010, 02:00 PM
To address a few comments about other "retailers" We only make 10% IF THAT in the (TV Film, video production) broadcast equipment sales world. It is surprising how much people who walk in here THINK we make percentage of markup wise. Shoot, I have people asking me to take off 20% for a sale!

JohnBT
April 21, 2010, 02:09 PM
Don't forget to save enough $$$ to pay the IRS if you win. :(

Zack
April 21, 2010, 02:31 PM
Okay, I sent in my entry for the NRA-ILA contest, and the Grand prize is 19 guns, which I selected from a list

Where do I submit my forum :D ?

HGUNHNTR
April 21, 2010, 03:56 PM
In the gun shop where I worked a few years back, it varied by gun. 870's were pretty much given away at cost so we were not undersold by wally world. Other higher end firearms usually were a 18-24% profit margin. Used guns were another story altogether.

CoRoMo
April 22, 2010, 09:44 AM
Yeah, used guns are like used cars.

chief52
April 22, 2010, 10:04 AM
In the gun shop where I worked a few years back, it varied by gun. 870's were pretty much given away at cost so we were not undersold by wally world. Other higher end firearms usually were a 18-24% profit margin. Used guns were another story altogether.
HGUNHNTR: great response. I was a little surprised no one gave a really specific answer other than what markup ISN't rather than IS until you opined. Funny how vehicles (20-30 grand) have 10-20% profit and furniture about 40-60% and clothing the same, but guns have only 5-10%???? Not even the box stores (Cabella's, Bass Pro, etc) operate at less than 10%.

nulfisin
April 22, 2010, 10:23 AM
What is the margin on ammo and other non-gun sales? Guns shops must make SOME money somewhere. How?

Bubba613
April 22, 2010, 10:32 AM
Ammo runs about the same as guns. It didnt used to be quite like that, but with the run up in prices no one is going to buy a box of .45acp for $39.
Holsters, mags, cleaning supplies, pepper spray, optics, slings etc etc all have decent margins.

ForumSurfer
April 22, 2010, 10:58 AM
Ask yourself this:

If you won a new car, would you let the holding car lot give you an extremely low ball price for it? Or would you accept it, pay your taxes, research the resale value and auction it off somewhere to make the most profit? Is several hundred more dollars worth your time?

You'd likely get at least $100 more per gun selling them privately, assuming you didn't keep them. If you ended up selling only half, that's around an extra $1000 for your time at least. Well worth it!

wishin
April 22, 2010, 09:04 PM
Ask yourself this:

If you won a new car, would you let the holding car lot give you an extremely low ball price for it? Or would you accept it, pay your taxes, research the resale value and auction it off somewhere to make the most profit? Is several hundred more dollars worth your time?

You'd likely get at least $100 more per gun selling them privately, assuming you didn't keep them. If you ended up selling only half, that's around an extra $1000 for your time at least. Well worth it!
You're right, but do you realize how many new car buyers leave hundreds, and sometimes a thousand $ or more, on the table when trading in their used car? Some folks don't want the bother of selling stuff.

jmr40
April 22, 2010, 09:17 PM
Around 10-15% at most on new guns. It depends on the gun and how hard or easy they are to sell.

mgkdrgn
April 22, 2010, 10:13 PM
Now, supposing Is dealer cost about half of retail, or is it substantially higher?

Don't I wish. If I can get a 10% margin over my cost, I'm having a good day.

Phydeaux642
April 22, 2010, 10:14 PM
Some obviously make larger margins, but it's much smaller a percentage than most anything else in retail.

Try selling consumer electronics.:banghead: Horrible margins thanks to the interweb. A lot of brick and mortar stores are going by the wayside because too many internet sellers are happy with a couple of percentage points. When/if that happens to my local gun shops, I'll likely not buy any more guns. I support the local economy as much as I can. Sorry for the sidetrack.

Crawford
April 23, 2010, 12:44 PM
Try selling consumer electronics. Horrible margins thanks to the interweb. A lot of brick and mortar stores are going by the wayside because too many internet sellers are happy with a couple of percentage points. When/if that happens to my local gun shops, I'll likely not buy any more guns. I support the local economy as much as I can. Sorry for the sidetrack.

Electronic retailers have "Monster Cable" and other add-ons as their case cows. I'm sure gun shops have some items they can push for profit.

Bubba613
April 23, 2010, 12:51 PM
The "high margin" items are things like Rem oil. Buy it for $1.95, sell it for $3.25, call it a 33% margin.
How many bottles do you need to sell to cover a $4,000/month overhead?

HOWARD J
April 23, 2010, 12:55 PM
How much will the gun shop charge you for receiving the guns????
You know you are going to get a list price 1040 from NRA.----------------:eek::eek::eek:
In the long run you may wish you were not the lucky winner.....................:banghead::banghead:

Uncle Alvah
April 23, 2010, 12:59 PM
I also know that some dealers charge more than MSRP.


Instances of that are VERY rare.

On a new, popular gun, say an XD, a dealer might make $50-$60 on average. Google "gun dealer millionaires" , I doubt you'll find much.;)

On used guns, the money is made on the buy, not on the sell.

lab28143
April 23, 2010, 01:50 PM
I had a local dealer sell to me at cost. plus the s/h charges

natman
April 23, 2010, 01:58 PM
At the shop where I worked we were on the higher end and we only got 20-25% on guns. The money, such as it is, is made on accessories and clothing. Guns are sold just to get people into the store to buy other things.

**IF** you win, I wouldn't expect to get more than half retail from the dealer if he'll agree to take them at all. If he wanted a particular gun, he can order one whenever he wants. He may not be in a position to take on 19 at once, they may not be the guns that sell in his territory, this season, whatever.

Personally I'd make a deal to transfer the guns in bulk, then sell them on Gunbroker.

NMGonzo
April 23, 2010, 06:28 PM
Sell them locally

mgkdrgn
April 24, 2010, 09:25 PM
Now, supposing I won this instant armory,

If you do, you'll owe about 1/2 of their MSRP value (or whatever the IRS decides to value them at) in income/FICA/MEDICARE taxes .... Fed, state, and local if any. Oh, and they want that RIGHT NOW.

THEN you can concern yourself with selling them. In the end, you'll end up with maybe 25% of the MSRP in your bank account.

Mr.Davis
April 24, 2010, 11:36 PM
Guns have exceptionally low profit margins for dealers. I was shocked when I learned that new guns typically only have a 10-15% profit margin for dealers. They could make a little more if they sold at MSRP, but I only see big boxes try that around here.

Keep in mind that once the guns are transferred to you, they'll effectively be used merchandise. I doubt a reputable gun dealer would resell them as "new" merchandise, meaning there's going to be a bit of a hit associated with the "used" or "preowned" stigma.

I bet a lot of dealers would be willing to pay 65-70% of MSRP on the guns, even if they had to sell them as used.

I suggest considering a trade for part of their value in this case (if you win, of course). You could probably get a little more value for your money by trading for inventory he already has than asking him to write you a $7k check.

Gregaw
April 25, 2010, 08:01 AM
I buy from a small dealer that doesn't carry much inventory and he just charges a flat $20 over his cost when he orders me a gun. The same amount as if it were a transfer fee.

Jimineer
April 25, 2010, 11:43 AM
Markup? Might also depend on whether or not your dealer also has a range. My LGS had a big sale recently. I asked one of the employees why, and he said it is so they can keep people on the range - so I took this to mean, range time, gun rentals, buying ammo, accessories etc. So maybe margins on guns arent' all that great and the money to be made is on the other stuff they sell plus range time, ammo, etc.

Just another data point.

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