The Remarkable Number of Factors Impacting Gun Prices


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Kynoch
July 4, 2013, 01:00 AM
I have long wondered about today's ridiculously high price of guns compared to say the latest golf club or power tool? The canned and axiomatic response "supply and demand" really doesn't do much to explain why guns are so expensive. After thinking about it a while, I am rather amazed at the number of factors that impact the price of guns. While I'm sure there's more here is my list:

* Gun making is historically a "feast or famine" business that keeps manufacturers (and their bankers) rightfully wary about increasing production capacity during high demand periods.

* Limitations on importing certain types of guns which impacts competition.

* Limitations on importing guns from certain countries which impacts competition.

* The cost of liability insurance.

* Government requirements can materially increase the purchase price of a gun.

* Gun making is a non-PC business that keeps other sporting goods companies from getting into the business which also impacts competition.

* Business credit to gun makers is now tightening-up due to this non-PC image. This may well increase their cost of capital.

* Fund managers and other investment holders have begun to prohibit firearms stocks as part of their portfolios which will no doubt impact stock prices.

* Unlike power tools and computers, guns don't wear out for the most part. Imagine trying to build a strategic 5 year model for a product that doesn't wear out and whose sales demand is largely drive by emotions? You might well be tempted to limit investment, impacting boom-times like today.

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taliv
July 4, 2013, 01:10 AM
actually, i think many factory guns are at historic lows, especially adjusted for inflation.

consider the price of bread, gas, electricity, cars, a burrito, a coke etc 10-20 years ago. all of those things have doubled in price or worse.

but street price on a colt AR is what? $300 less than it was back then? plastic wonder pistols haven't doubled in price. most modern guns are about what they used to be or less.

now granted, custom stuff like surgeon rifles and wilson combat pistols have doubled. and imported junkers have gone through the roof ever since the supply was cut off by our government.

i don't think most of your list is accurate. for example, gun mfgs are largely protected from frivolous lawsuits. their liability isn't really worse than most and it's a lot easier than some (compare to the liability of doctors or airplane mfgs like Cessna)

and most sporting goods companies DO sell guns.

rcmodel
July 4, 2013, 01:21 AM
* Gun making is historically a "feast or famine" business that keeps manufacturers (and their bankers) rightfully wary about increasing production capacity during high demand periods.Following heroic manufacturing efforts to provide the U.S. and our allies with arms for both WWI and WWII?

Both Remington and Winchester were left nearly bankrupt when government contracts were canceled at wars end.

No wonder they are a little leery of increasing production capacity to fill an artificial bubble that will surely burst one of these days.

rc

happygeek
July 4, 2013, 01:26 AM
* Fund managers and other investment holders have begun to prohibit firearms stocks as part of their portfolios which will no doubt impact stock prices.


If they dumped stock in Sturm Ruger & Co they're a **** fool. People that owned part of that company had to be the biggest winners to come out of Obama's first term. Their stock went from ~$10 to over $50 in less than 4 years :what:

http://www.wnd.com/files/2012/10/Ruger33.jpg

RiverPerson
July 4, 2013, 02:07 AM
How many of you are seeing guns going for the high prices people are asking?

I keeping seeing the same overpriced guns on armslist listed over and over. One local gun shop still has extremely expensive AKs and ARs from before Newtown. Another has some WASRs that he bought at the height of the panic that still haven't sold. I see overpriced mags and ammo just sitting.

A few months ago stuff was selling quickly, but people haven't seemed to come back down to Earth and realized that they can't cash in on panic buyers anymore.

armedaccountant
July 4, 2013, 02:19 AM
I just bought a SR40c new for 403.00 . Seemed very fair to me.

Kynoch
July 4, 2013, 02:28 AM
actually, i think many factory guns are at historic lows, especially adjusted for inflation.

consider the price of bread, gas, electricity, cars, a burrito, a coke etc 10-20 years ago. all of those things have doubled in price or worse.

but street price on a colt AR is what? $300 less than it was back then? plastic wonder pistols haven't doubled in price. most modern guns are about what they used to be or less.

now granted, custom stuff like surgeon rifles and wilson combat pistols have doubled. and imported junkers have gone through the roof ever since the supply was cut off by our government.

i don't think most of your list is accurate. for example, gun mfgs are largely protected from frivolous lawsuits. their liability isn't really worse than most and it's a lot easier than some (compare to the liability of doctors or airplane mfgs like Cessna)

and most sporting goods companies DO sell guns.

Take a hard look at what goes into say a DeWalt or Makita top of the line power tool versus a 1911 -- or for that matter a Glock from a design, materials and assembly standpoint. A Glock 17 at ~$600 vs. a Bosch hammer drill at $199.99? Take it a bit deeper and see what similar tools from Milaukee, Skil, etc. cost 30 years ago. They were largely more expensive than today.

Most sporting goods MANUFACTURERS do not make nor sell guns, nor would they get into the business due to the terrible PR that would follow no matter how good the $$ was.

While the "price of bread, a burrito, a coke etc." are not comparable to guns (guns are a durable item), all three are cheaper today then they were 20 years ago. I just bought quarts of Gatorade for $.88/each. I never saw such a low price 20+ years ago. Some with bead and fast food. A Whopper is definitely cheaper today then it was 30 years ago. Why? For the same reason sodas are also cheaper -- fierce competition.

Finally, more than one gun maker has commented at how much they spend on liability insurance and legal fees in their annual reports.

Kynoch
July 4, 2013, 02:34 AM
How many of you are seeing guns going for the high prices people are asking?

I keeping seeing the same overpriced guns on armslist listed over and over. One local gun shop still has extremely expensive AKs and ARs from before Newtown. Another has some WASRs that he bought at the height of the panic that still haven't sold. I see overpriced mags and ammo just sitting.

A few months ago stuff was selling quickly, but people haven't seemed to come back down to Earth and realized that they can't cash in on panic buyers anymore.

You bring up a very good point. Not all guns sell for their advertised price -- nor do accessories like mags.

I think my point is this. Strip apart a Glock and study each and every part. If a foreign manufacturer could clone (legally -- close but different enough not to trigger a lawsuit) a Glock 17 (which it could do) and sell it under the same circumstances that Black & Decker sells power tools (which it can not) without being penalized by the stigma of being a gun maker, that firearm would cost somewhere between $100 and 200.00 at Costco once competition truly kicked-in.

Kynoch
July 4, 2013, 02:36 AM
There are many products whose final price are dictated largely by their amortized design costs, materials costs, direct labor and overhead.

Guns are not. Not right now at least. They were in say 1980.

Kynoch
July 4, 2013, 02:38 AM
If they dumped stock in Sturm Ruger & Co they're a **** fool. People that owned part of that company had to be the biggest winners to come out of Obama's first term. Their stock went from ~$10 to over $50 in less than 4 years

http://www.wnd.com/files/2012/10/Ruger33.jpg
That depends. You're picking a cherry. What did Apple do during that exact same period? In any event, that's not the point. If the stocks of gun makers is rejected by institutional holders it could very well impact their cost of capital -- not to mention their stock price.

xxjumbojimboxx
July 4, 2013, 02:39 AM
How many of you are seeing guns going for the high prices people are asking?

I keeping seeing the same overpriced guns on armslist listed over and over. One local gun shop still has extremely expensive AKs and ARs from before Newtown. Another has some WASRs that he bought at the height of the panic that still haven't sold. I see overpriced mags and ammo just sitting.

A few months ago stuff was selling quickly, but people haven't seemed to come back down to Earth and realized that they can't cash in on panic buyers anymore.
I thankfully didn't buy anything major during the panic.. I did drop 1100 bucks on a pap92 krink with 4 mags and 1000 rounds.. it was much less then they were going for at the time, but perhaps maybe 150 more then I should have spent. I got caught up in the panic because I always wanted one. But this is where the gougers get what's coming to them... This is why I don't understand why people cry about them, because eventually they'll loose. wasr10's will go back to 500 bucks, they are almost there now. Anyone with a 1200 dollar wasr is either going to have to sell it for small money, grin and bear it, or just wait till the next panic... Which could be tomorrow, or could be never.

I did see lots of people paying astronomic prices for things... But they're not getting them anymore. The ads you see are drastic attempts of people to get their money back. And it'll happen slowly, but people will eventually sell those guns at a massive loss.. and that's where we, the savy THR user, will be, Waiting... To pray on the gougers :)

Kynoch
July 4, 2013, 02:46 AM
What WOULD happen if say Makita, Hilti and DeWalt were able to design simple firearms (like Glocks), manufacture them overseas and sell them without restriction (or stigma) in places like Wal*Mart, Costco and Home Depot?

A Makita Model 17 would be less than 200 bucks. Probably closer to $100.00 with two mags once competition kicked in -- presuming there was a big enough market for them to even take notice.

That in turn would put tremendous pressure (pressure that currently does not exist) on Glock, SIG, Ruger, et. al. to compete and to lower prices.

zdc1775
July 4, 2013, 07:38 AM
What WOULD happen if say Makita, Hilti and DeWalt were able to design simple firearms (like Glocks), manufacture them overseas and sell them without restriction (or stigma) in places like Wal*Mart, Costco and Home Depot?

A Makita Model 17 would be less than 200 bucks. Probably closer to $100.00 with two mags once competition kicked in -- presuming there was a big enough market for them to even take notice.

That in turn would put tremendous pressure (pressure that currently does not exist) on Glock, SIG, Ruger, et. al. to compete and to lower prices.
I would have to agree with you that without any restrictions the firearms industry would be much different than it is today. There would be more competition, more innovative designs, and most likely lower cost for the consumer. However the government unfortunately will not allow that.

beatledog7
July 4, 2013, 08:51 AM
I agree with taliv. With the obvious exception of ARs from about January to May, actual firearm prices have been only slightly higher than before SH.

Availability of most models has been down, so asking prices for guns with surging popularity have been up to reflect that, but I don't see any real across-the-board upward price trend outside of normal inflation.

If anything, firearms remain a bargain compared to the things nearly everyone buys (food, energy, health care, shelter, subscription TV).

Ammo and handloading components are way up in price, and that has driven the cost of shooting up in the same way that high fuel and insurance prices have made driving more expensive.

Sav .250
July 4, 2013, 09:00 AM
Supply and demand...................

Owen
July 4, 2013, 09:29 AM
Don't forget the distribution system, records keeping etc.

Lowe's buys direct from the manufacturer. Most gun stores can not. The retail cost is usually about 2x the manufacturing cost for the handguns I'm familiar with, and the manufacturer gets the smallest slice of the markup.

Bubbles
July 4, 2013, 12:10 PM
Here's another factor consider: when almost any other consumer product fails it's not potentially a life or death situation for the consumer. If a firearm fails to go bang on the range, get it fixed... unless it's your carry piece and you're being attacked. That cheap gun just became a rock.

Or let's say that handgun made overseas of cheap materials KB's in your hand. But hey, you're a price shopper, losing a few fingers is no big deal right? :rolleyes:

Raw material prices for quality metal are up and not coming down. Oh and here's a tip - we don't even make the best steel or titanium in this country any more, it comes from Japan and Germany. Most firearms are made in the US thanks to federal law; US workers aren't cheap. Throw in liability insurance, 10-11% FAET, cost of complying with federal and state regulations, etc. and guns suddenly look pretty darned cheap.

Queen_of_Thunder
July 4, 2013, 01:14 PM
Quality guns increase in price. The rest are subject to the prevailing politcal winds.

tarosean
July 4, 2013, 03:25 PM
I don't think their expensive at all compared to everything else now-a-days.

P5 Guy
July 4, 2013, 03:34 PM
What is the ratio of commercial sales of firearms to sales to agencies/governments?
Do firearms manufacturers take a loss on sales to agencies/governments that they tend to make up on commercial sales?

Kynoch
July 4, 2013, 04:53 PM
I would have to agree with you that without any restrictions the firearms industry would be much different than it is today. There would be more competition, more innovative designs, and most likely lower cost for the consumer. However the government unfortunately will not allow that.

You bring up a good point about innovation as well. Just imagine if the gun industry had the freedom, the goodwill and the revenue/profitability of other industries? Imagine if the major gun makers had designers and engineers in the same league as Honda, Apple and General Electric?

What's interesting is that when the demand for guns is driven up by the actions of government, the market acts completely different than if there weren't already preexisting government restrictions.

leadcounsel
July 4, 2013, 05:01 PM
Compared to other tools, sporting goods, etc. I think guns are 1) much more valuable and 2) much less expensive. I personally think that a gun is absurdly affordable given the potential to defend your life or hunt.

A set of golf clubs - which are simple metal shafts with a head, can easily run $1000.
A new snowboard or ski set - thin strips of wood and bindings, can easily run $1000.
A new quality power saw, which is a cheap motor, wheel, and blade can run a few hundred dollars.
A rubber car tire which is very simple is $100-$500.
A solid door for your home is $500. And that's just a cut piece of wood.
How about an aluminum baseball bat. $200.

And compared to the dropping dollar value, and other raw materials like oil, gas, electricity, etc. it's also quite affordable.

Finally, as mentioned, the cost of everything is high. A bottle of soda is $1-2. A gallon of milk is $4. Break, $3.

Kynoch
July 4, 2013, 05:05 PM
I agree with taliv. With the obvious exception of ARs from about January to May, actual firearm prices have been only slightly higher than before SH.

Availability of most models has been down, so asking prices for guns with surging popularity have been up to reflect that, but I don't see any real across-the-board upward price trend outside of normal inflation.

If anything, firearms remain a bargain compared to the things nearly everyone buys (food, energy, health care, shelter, subscription TV).

Ammo and handloading components are way up in price, and that has driven the cost of shooting up in the same way that high fuel and insurance prices have made driving more expensive.

Naw. It means nothing to compare firearms to "food, energy, health care, shelter, subscription TV" (even though food is often cheaper today than in year's past.) Guns are durable products, the balance are not except if you actually buy a house.

The best comparisons I can think of would be higher end sporting goods (like golf clubs) and higher end power tools. Though clearly not a perfect comparison they are close. Power tools are far cheaper than in years past. Even the latest and greatest cordless tools (which are not comparable to yesteryear's models) are cheap compared to guns.

You can pay big bucks for absolute top-of-the-line golf clubs from this year's catalog. You can also pay very little for what were the TOTL clubs just a few years ago. The competition amongst many golf club makers is BRUTAL -- particularly amongst the two biggest -- Callaway and TaylorMade. That level of competition simply doesn't exist in the gun world.

I laugh out loud at the thought of Callaway and TaylorMade making the statement that Ruger did -- that they were fully booked and that they weren't taking anymore orders. If either did something like that their competitors would SWARM after their customers.

In the gun world, such proclamations are treated as a badge of doing things right. They are good PR. In the golf world they would be viewed as a management failure.

cfullgraf
July 4, 2013, 05:08 PM
A Whopper is definitely cheaper today then it was 30 years ago.

.

I do not which Burger Kings you have been frequenting over the past 30 years.

Free market economy certainly does not apply to the firearm business as there are too many government applied restrictions and regulations.

Also, the volume of gun manufacturing is pretty low when compared to other goods. For example, only about 6 million M1 Garrands where manufactured over a 18-20 year production run. Not many in the world of production.

Over the years, manufacturing cost of firearms have gone down as designs and techniques have improved. Consider why we have Glocks and other "Tupperware" guns today instead of P-08 Lugers and Colt 1903 Hammerless pistols.

Kynoch
July 4, 2013, 05:20 PM
Don't forget the distribution system, records keeping etc.

Lowe's buys direct from the manufacturer. Most gun stores can not. The retail cost is usually about 2x the manufacturing cost for the handguns I'm familiar with, and the manufacturer gets the smallest slice of the markup.

Very, very true. The factors that impact the price of a gun in the USA versus (let's say) a cordless drill motor or a top-of-the-line fly rod is very, very long.

Gun makers try to preserve that distribution layer in part as an attempt to isolate themselves from liability. One huge exception is Wal*Mart that will not deal with distributors as a company policy.

Some here are suggesting that guns are a good deal based on the utility they provide or in comparison to other products that really aren't comparable. That's really not the topic.

The simplest example I can give is to disassemble a Glock 17. Take a good look at all the parts and how long it takes to reassemble. If Makita or Ryobi could make a clone of the Glock 17 in Taiwan or China under the same rules they current make power tools, guns would be a great deal cheaper.

Restrictions of all kinds currently keep this from happening.

Kynoch
July 4, 2013, 05:32 PM
I do not which Burger Kings you have been frequenting over the past 30 years.

Free market economy certainly does not apply to the firearm business as there are too many government applied restrictions and regulations.

Also, the volume of gun manufacturing is pretty low when compared to other goods. For example, only about 6 million M1 Garrands where manufactured over a 18-20 year production run. Not many in the world of production.

Over the years, manufacturing cost of firearms have gone down as designs and techniques have improved. Consider why we have Glocks and other "Tupperware" guns today instead of P-08 Lugers and Colt 1903 Hammerless pistols.

You make some outstanding points...

I don't eat fast food anymore ( :( ) but when I did you could buy a Whopper for $.99. You couldn't do that in 1980.

You're right about gov't restrictions and regulations. There are also societal factors. It wouldn't be PC for Callaway Golf to get into gun making and provide some real competition as an example

You hit on something very interesting. Gun production (while at industry record highs right now) is small potatoes compared to other industries. Ruger proudly proclaims that it is "sold out." I shake my head at the thought of Honda or TaylorMade making such a statement. It just wouldn't happen and if it did, the condition wouldn't last very long.

Hard manufacturing costs associated with a single firearm unit HAVE indeed dropped. Not because direct labor, materials or overhead is cheaper but because the newer designs are far more producible and many of the processes are far, far more efficient.

Kynoch
July 4, 2013, 05:39 PM
What is the ratio of commercial sales of firearms to sales to agencies/governments?
Do firearms manufacturers take a loss on sales to agencies/governments that they tend to make up on commercial sales?

I don't know and I'm not sure that's germane to the discussion.

What I have seen is how cheaply Glock sells (or sold) its firearms to individual public safety/military members. In the case of Glock it gave some idea of the huge margins in some guns in spite of all the regulations and restrictions.

In the book about Glock, Gaston Glock argued for a far less expensive MSRP for his Model 17. He would still make plenty of $$ and it would help him build market share. His chief in the USA cautioned that a low price would cause people to equate Glocks to being junk guns. Very shrewd.

That's back to my original point. Without all the regulations, restrictions and badwill within the gun arena, real, hardcore competition would have driven down the price of guns a long time ago.

happygeek
July 5, 2013, 02:38 AM
That depends. You're picking a cherry. What did Apple do during that exact same period? In any event, that's not the point. If the stocks of gun makers is rejected by institutional holders it could very well impact their cost of capital -- not to mention their stock price.


Not really, very few gun companies are traded publicly. I'm not picking a cherry, I'm naming 1 out of about 3; the other two being S&W and Olin (makes Winchester ammo).

Ruger's stock doesn't seem to have been hurt by institutional holders, or if it was the Greatest Gun Salesman of the Century managed to offset it and then some. Obama was very good to Ruger shareholders.

According to http://finance.yahoo.com/q/hp?s=AAPL&a=00&b=5&c=2009&d=06&e=5&f=2013&g=m and http://finance.yahoo.com/q/hp?a=00&b=5&c=2009&d=06&e=5&f=2013&g=m&s=rgr&ql=1 anyway, Ruger outperformed Apple between Jan 2009 - present. While I don't have any personal experience with their products, I'd have to assume they're 'happening' like the iPhone. Wish I had bought them instead of a Springfield M1A in early 2009 ...


The simplest example I can give is to disassemble a Glock 17. Take a good look at all the parts and how long it takes to reassemble. If Makita or Ryobi could make a clone of the Glock 17 in Taiwan or China under the same rules they current make power tools, guns would be a great deal cheaper.

Restrictions of all kinds currently keep this from happening.


Agree 100%, espicially if you factor in all the Russian, Chinese, etc surplus guns that we're not importing due to nonsensical politics.

IMHO Glock: The Rise of America's Gun was pretty well written and entertaining overall, in spite of the offensive title and a few bits and pieces of anti-gun silliness from the author. The book talked a lot more about Glock the business than Glock the pistol and I found the angle rather interesting.

cfullgraf
July 5, 2013, 08:47 AM
That's back to my original point. Without all the regulations, restrictions and badwill within the gun arena, real, hardcore competition would have driven down the price of guns a long time ago.

While regulations and restrictions artificially raise the price of guns relative to a free market item, if the volume of sales were high enough, they would not matter. There would be more manufacturers and therefore more competition if the sales volumes were higher.

Though out history, gun manufacturers have been on the brink of going out of business for numerous reasons. Generally, they push for a government contract and frequently go under when they cannot get one, or lose one.

Most of the old time gun names in the United States have struggled on and off for years and decades. In my 30-40 years of gun interest, Winchester has been in and out of business several times. Smith and Wesson has passed through several holding companies. There are others.

The gun business is not an easy one to be in.

Owen
July 5, 2013, 09:03 AM
You don't think there isn't already hardcore competition?

Kynoch
July 5, 2013, 04:27 PM
You don't think there isn't already hardcore competition?

No, I don't. There is certainly competition, but it's not hardcore like it is in other industries.

There are no TaylorMades in the gun industry How TaylorMade Made Its Move (http://online.wsj.com/article/SB10001424127887324900204578286173274533026.html) for instance. I would suggest this is due in part of gov't regulations/restrictions and the non-PC nature of manufacturing guns.

I was thinking about Apple and Ruger. Imagine if Apple said "we're booked for the coming year and we're not taking anymore orders." It just wouldn't happen -- they would create the extra capacity.

On the other hand the extra phones they built and sold would still need replacement down the road. That's not the case with guns.

I believe if there was truly hardcore competition for consumers' gun dollars, prices would be far lower (even with the gov't being involved) and there wouldn't be constant shortages.

Kynoch
July 5, 2013, 04:38 PM
While regulations and restrictions artificially raise the price of guns relative to a free market item, if the volume of sales were high enough, they would not matter. There would be more manufacturers and therefore more competition if the sales volumes were higher.

Naw. While guns are certainly not automobiles, iPhones or golf clubs, the market is certainly large enough and lucrative enough to attract more competition were it not for all the gov't regulations/restrictions and the social stigma of being a gun maker.

You're suggesting the classic model applies to guns -- supply will grow to fill demand and I'm suggesting that's not the case for the aforementioned reasons. At least not right now. I'm sure it has been in the past, and might one day be again, but for now, not way.

Though out history, gun manufacturers have been on the brink of going out of business for numerous reasons. Generally, they push for a government contract and frequently go under when they cannot get one, or lose one.

It's more complicated than that. You're right -- guns have traditionally been a feast/famine business. Take on a gov't contract, build a zillion guns, hope to get paid for them and if you survive, watch the sales of surplus guns (of both foreign and domestic makers) eat into the market share.

Most of the old time gun names in the United States have struggled on and off for years and decades. In my 30-40 years of gun interest, Winchester has been in and out of business several times. Smith and Wesson has passed through several holding companies. There are others.

True.

The gun business is not an easy one to be in.

I very much agree. Look at my first bullet on my original posting.

taliv
July 5, 2013, 04:49 PM
A set of golf clubs - which are simple metal shafts with a head, can easily run $1000.
A new snowboard or ski set - thin strips of wood and bindings, can easily run $1000.
A new quality power saw, which is a cheap motor, wheel, and blade can run a few hundred dollars.
A rubber car tire which is very simple is $100-$500.
A solid door for your home is $500. And that's just a cut piece of wood.
How about an aluminum baseball bat. $200.

and yet compare that to the complexity and difficulty of manufacturing a hard drive. the material involved, the precision required, the speed the platters move all point to the HD costing more than a porche. but no, they're $40 for a decent one. why do you suppose?


kynoch, those are relevant. the fact that they're consumable vs durable is not the point. the point is comparing inflation. guns are not expensive compared to other things today. and they're quite cheap compared to their historical prices after you adjust for inflation.


btw, i agree with owen that there is pretty fierce competition in the gun business. you probably don't see it as a consumer, but behind the scenes when you look at relationships with distributors etc, it's there.

Kynoch
July 5, 2013, 07:47 PM
and yet compare that to the complexity and difficulty of manufacturing a hard drive. the material involved, the precision required, the speed the platters move all point to the HD costing more than a porche. but no, they're $40 for a decent one. why do you suppose?

Cutthroat competition driven by the potential of enormous wealth through high volume sales that in turn drove huge cost reductions in both product and process designs and engineering

kynoch, those are relevant. the fact that they're consumable vs durable is not the point. the point is comparing inflation. guns are not expensive compared to other things today. and they're quite cheap compared to their historical prices after you adjust for inflation.

What type of product they are makes a huge difference. Comparing a firearm to other durable goods like power tools and sporting goods to guns is a lot more illuminating than comparing them to the cost of a loaf of bread.

Guns are extremely expensive today compared to say power tools (as just one example.) Someone on this thread said something like: I just bought XYZ firearm and I don't think it was expensive. They missed the point of the thread in its entirety.

This thread is not about the number of utils a firearm produces at a given price. It's the sales price of a gun relative to what it costs to make and sell less all the restrictions/requirements/added costs largely unique to the gun industry.

btw, i agree with owen that there is pretty fierce competition in the gun business. you probably don't see it as a consumer, but behind the scenes when you look at relationships with distributors etc, it's there.

It's all relative. It's not nearly as fierce as it would be in a truly free (or nearly free) market like making golf clubs, consumer electronics or computers. No gun maker moves (or is likely able to move) as fast and furious (no pun) as TaylorMade did in the example I gave.

It will be very interesting to see if the gun makers will be able to collectively maintain the level of supply/demand we all feel right now which is that of varying degrees of shortage. If this was another industry, the increase in production would have been felt long ago -- by existing players or new companies getting into arms making.

tarosean
July 5, 2013, 08:03 PM
IMHO Glock: The Rise of America's Gun was pretty well written and entertaining overall, in spite of the offensive title and a few bits and pieces of anti-gun silliness from the author. The book talked a lot more about Glock the business than Glock the pistol and I found the angle rather interesting.

That same author stated that it cost glock approximately 78.00 bucks to produce a gun.

Owen
July 5, 2013, 08:29 PM
That same author stated that it cost glock approximately 78.00 bucks to produce a gun

Was that just direct costs? or direct and indirect?

Indirect covers paying for people and floorspace that are not directly involved in manufacturing, like executives, marketing, lawyers, etc, taxes (VAT is 20% in Austria), insurance, etc.

Do imported guns get charged the Pittman-Robertson excise tax? That's another 10%.

JSH1
July 5, 2013, 10:29 PM
I was thinking about Apple and Ruger. Imagine if Apple said "we're booked for the coming year and we're not taking anymore orders." It just wouldn't happen -- they would create the extra capacity.

The recent gun buying frenzy is not business as usual. A company such Ruger would be foolish it add capacity to meet the demand from the last 6 months only to see order volume go back to historical norm and be stuck with extra capacity.

Apple is not a good comparison to Ruger. A smartphone has a useful life of 1-2 years and is hopelessly out of date in 6 months. Apple has the demand they do because their customers replace the product every 1-2 years.

Another great American company is a much better comparison to Ruger and that is Harley Davidson. During the boom years of the late 1990's Harley Davidson was sold out. They had waiting lists to purchase new motorcycles and dealerships added thousands of dollars of accessories to an average motorcycle. The waiting list was long enough that people paid new MSRP for 1-2 year old motorcycles. Harley could have increased capacity to meet demand but they didn't. Instead they sold every motorcycle they made at a premium price.

Beetle Bailey
July 5, 2013, 10:54 PM
FYI Ruger is planning to open another factory to help meet demand

http://www.nhbr.com/May-3-2013/Ruger-looks-to-open-a-third-gun-plant-but-not-in-NH/

BTW I ordered a .44 special Blackhawk last month and got it two weeks ago. Looks great and shoots like a dream :D

Kynoch
July 6, 2013, 05:31 AM
The recent gun buying frenzy is not business as usual. A company such Ruger would be foolish it add capacity to meet the demand from the last 6 months only to see order volume go back to historical norm and be stuck with extra capacity.

Nor is when the world went nuts when the iPhone came out. We didn't hear Apple saying that it wasn't taking anymore orders. Also, how do you know the current demand is going to last 6 months?

Apple is not a good comparison to Ruger. A smartphone has a useful life of 1-2 years and is hopelessly out of date in 6 months. Apple has the demand they do because their customers replace the product every 1-2 years.

I mentioned the durability of guns -- another interesting thing that impacts gun making. The point is Apple faced demand that Ruger NEVER WILL and we never heard that it's not taking anymore orders for a year.

Another great American company is a much better comparison to Ruger and that is Harley Davidson. During the boom years of the late 1990's Harley Davidson was sold out. They had waiting lists to purchase new motorcycles and dealerships added thousands of dollars of accessories to an average motorcycle. The waiting list was long enough that people paid new MSRP for 1-2 year old motorcycles. Harley could have increased capacity to meet demand but they didn't. Instead they sold every motorcycle they made at a premium price.

HD is not a good comparison to the entire gun industry. It would be a good comparison to say Colt -- a brand icon, but not the entire industry.

HD did a superb job of artificially limiting production for many years. It finally caught up to them. They now have domestic competition (Victory, Indian, etc.) and the international competition is harsher than ever but they sure cut a fat hog for many years.

Kynoch
July 6, 2013, 05:38 AM
Was that just direct costs? or direct and indirect?

Indirect covers paying for people and floorspace that are not directly involved in manufacturing, like executives, marketing, lawyers, etc, taxes (VAT is 20% in Austria), insurance, etc.

Do imported guns get charged the Pittman-Robertson excise tax? That's another 10%.

Hard costs -- direct materials, direct labor, plus associated overhead. No excise taxes.

Kynoch
July 6, 2013, 05:39 AM
FYI Ruger is planning to open another factory to help meet demand

http://www.nhbr.com/May-3-2013/Ruger-looks-to-open-a-third-gun-plant-but-not-in-NH/

BTW I ordered a .44 special Blackhawk last month and got it two weeks ago. Looks great and shoots like a dream

Indeed. It's looking for a ~250K square foot facility.

Carl N. Brown
July 6, 2013, 06:34 AM
include inflation in your price calcuations

In 2010 I wondered how the heck I was able in 1960 to go to a double feature at the Rialto (War of the Colossal Beast + Attack of the Puppet People), buy Reese's cups, coca cola and popcorn for the movie and after the movie walk across the street to the newstand and buy a "Famous Monsters of Filmland" magazine on a $2 allowance. I found an inflation calculator function at Wikipedia and found that $2 (1960) = $15 (2010).

Remember those $20 Lee-Enfields back in the day? Even adjusted for inflation ($150) they were a bargain.

Potatohead
July 6, 2013, 06:56 AM
A Whopper is definitely cheaper today then it was 30 years ago

this doesnt make a lick of sense..in high school, the value meal i used to get costed me 3.23$ (i remember because i went every day after school), today the same value meal is 4.99, before tax

Potatohead
July 6, 2013, 07:00 AM
I was thinking about Apple and Ruger. Imagine if Apple said "we're booked for the coming year and we're not taking anymore orders." It just wouldn't happen -- they would create the extra capacity.

i would think they have a much better margin (apple)..making it much easier to keep taking orders and adding capacity..also they dont sell "bubble" items like guns, that have buying trends that shift with the political landscape. Besides, ammo is the expensive thing in my part of the world, guns are the same as they were.

Kynoch
July 6, 2013, 04:12 PM
this doesnt make a lick of sense..in high school, the value meal i used to get costed me 3.23$ (i remember because i went every day after school), today the same value meal is 4.99, before tax

So?

Lots of food items are cheaper today then they were long ago. I just bought quarts of Gatorade last night for $.68/each on sale. The cheapest I have ever seen. Far, far cheaper than in the 1980's when I was in high school. The reason? Competition.

Two liter bottles of Coke are routinely .99 here. I never saw it that cheap in the 1980's or 199's.

Kynoch
July 6, 2013, 04:18 PM
i would think they have a much better margin (apple)..making it much easier to keep taking orders and adding capacity..also they dont sell "bubble" items like guns, that have buying trends that shift with the political landscape. Besides, ammo is the expensive thing in my part of the world, guns are the same as they were.

One of the reasons is Apple spends its "manufacturing time" on qualifying suppliers and not on building things which would be difficult for gun makers to do. You want to build iPhones for Apple? You want to make a mountain of cash? OK. But you're going to go through a very rigorous qualification process which you won't pass unless you are a top-flight vendor. The competition to supply Apple is huge and is a huge asset when Apple is pushed.

Guns makers do have some pretty difficult things to contend with. So do worldwide consumer electronic giants...

Kynoch
July 6, 2013, 04:20 PM
include inflation in your price calcuations

In 2010 I wondered how the heck I was able in 1960 to go to a double feature at the Rialto (War of the Colossal Beast + Attack of the Puppet People), buy Reese's cups, coca cola and popcorn for the movie and after the movie walk across the street to the newstand and buy a "Famous Monsters of Filmland" magazine on a $2 allowance. I found an inflation calculator function at Wikipedia and found that $2 (1960) = $15 (2010).

Remember those $20 Lee-Enfields back in the day? Even adjusted for inflation ($150) they were a bargain.

Guns aren't more expensive today simply because of inflation. Not by a long shot.

frankenstein406
July 6, 2013, 04:26 PM
No, I don't. There is certainly competition, but it's not hardcore like it is in other industries.

There are no TaylorMades in the gun industry How TaylorMade Made Its Move (http://online.wsj.com/article/SB10001424127887324900204578286173274533026.html) for instance. I would suggest this is due in part of gov't regulations/restrictions and the non-PC nature of manufacturing guns.

I was thinking about Apple and Ruger. Imagine if Apple said "we're booked for the coming year and we're not taking anymore orders." It just wouldn't happen -- they would create the extra capacity.

On the other hand the extra phones they built and sold would still need replacement down the road. That's not the case with guns.

I believe if there was truly hardcore competition for consumers' gun dollars, prices would be far lower (even with the gov't being involved) and there wouldn't be constant shortages.
Apple might take back orders but they cant just expand cause whats limiting them? Supply...

There's not many die makers if i remember yet and just because they made a hundred not all will work. there's a certain percentage of failing ones and many times they have contracts with other company's at the same time.

I believe it was at the foxconn plant where when steve enforced a even stricter quality control with no scratches that even the human eye couldn't see were deemed unusable.

this and very strict security led to the recent plant riots.

Kynoch
July 6, 2013, 06:56 PM
Apple might take back orders but they cant just expand cause whats limiting them? Supply...

Pardon me?

There's not many die makers if i remember yet and just because they made a hundred not all will work. there's a certain percentage of failing ones and many times they have contracts with other company's at the same time.

Again, pardon me? Are you talking about tooling resources?

I believe it was at the foxconn plant where when steve enforced a even stricter quality control with no scratches that even the human eye couldn't see were deemed unusable.

Apple's quality assurance plan is real world -- ISO 9000 or the like. Nothing magic about it. The key is sourcing, qualifying and keeping control of good vendors.

this and very strict security led to the recent plant riots.

"Recent plant riots?" Are you talking about Apple's concern of using vendors that did not pay a living wage to their workers?

Potatohead
July 6, 2013, 07:12 PM
So?

Lots of food items are cheaper today then they were long ago. I just bought quarts of Gatorade last night for $.68/each on sale. The cheapest I have ever seen. Far, far cheaper than in the 1980's when I was in high school. The reason? Competition.

Two liter bottles of Coke are routinely .99 here. I never saw it that cheap in the 1980's or 199's.
Maybe i read something wrong, but I thought you said a Whopper is cheaper today than 30 years ago? Not at my BK

frankenstein406
July 6, 2013, 07:37 PM
Pardon me?



Again, pardon me? Are you talking about tooling resources?



Apple's quality assurance plan is real world -- ISO 9000 or the like. Nothing magic about it. The key is sourcing, qualifying and keeping control of good vendors.



"Recent plant riots?" Are you talking about Apple's concern of using vendors that did not pay a living wage to their workers?
http://appleinsider.com/articles/12/08/29/apple_bid_for_exclusive_tsmc_chip_supply_access_denied_report_says.html

http://whdi-reviews.com/2012/09/now-samsung-refuses-chips-to-apple/

http://computer.yourdictionary.com/die

apple doesn't care about its workers, mr "jobs" bragged how he had them wake up all the workers the night before release(they can't leave the plant) because he needed the screens switched to glass when his iphone was getting scratched by car keys in his pocket. he bragged how they only gave them a cup of tea(maybe bread to) and they were back to work in the middle of night when american workers could never do this.

cfullgraf
July 6, 2013, 08:01 PM
One of the reasons is Apple spends its "manufacturing time" on qualifying suppliers and not on building things which would be difficult for gun makers to do. You want to build iPhones for Apple? You want to make a mountain of cash? OK. But you're going to go through a very rigorous qualification process which you won't pass unless you are a top-flight vendor. The competition to supply Apple is huge and is a huge asset when Apple is pushed.

Guns makers do have some pretty difficult things to contend with. So do worldwide consumer electronic giants...

About 5 million iPhone5's were sold in the first two months after introduction. (See http://statisticbrain.com/iphone-5-sales-statistics/)

If guns were sold in those volumes, you bet the gun manufacturers would be qualifying vendors and vendors would be beating a path to the doors to the manufacturers.

The sales volumes of firearms are just not there and the gun manufacturers cannot drive their supply chain market like Apple can. If I was a vendor, I work very hard for a few billion in sales with Apple versus a hundred thousand with Colt.

Anyone can dream that, like Micky Dees' burgers, billions and billions of firearms will be sold at fire sale prices, but it just will never happen. It did not happen before gun controls and certainly will not happen afterwards.

Kynoch
July 6, 2013, 11:24 PM
About 5 million iPhone5's were sold in the first two months after introduction. (See http://statisticbrain.com/iphone-5-sales-statistics/)

If guns were sold in those volumes, you bet the gun manufacturers would be qualifying vendors and vendors would be beating a path to the doors to the manufacturers.

There is more than enough volume in guns to have great influence on suppliers. Not Apple-level influence, but more than enough. The real differences lay not in volume but how the different supply chains are developed and used. Apple doesn't build anything. It designs, purchases, markets, distributes and sells.

The sales volumes of firearms are just not there and the gun manufacturers cannot drive their supply chain market like Apple can. If I was a vendor, I work very hard for a few billion in sales with Apple versus a hundred thousand with Colt.

You've provided us with a false dichotomy. Very few (if any) build-to-print instrument contractors face the choice you have outlined, so that's a non-starter. Outsourcing manufacturing is another area where gun makers are impacted by the gov't, particularly with guns or even parts made offshore.

Anyone can dream that, like Micky Dees' burgers, billions and billions of firearms will be sold at fire sale prices, but it just will never happen. It did not happen before gun controls and certainly will not happen afterwards.

You're just tap-dancing around the subject of the thread. There is little question that if a company could make guns under the same gov't and societal restrictions/regulations/views as companies can make say power tools that guns would be a great deal cheaper to purchase today. Increased competition alone would demand that.

Further, long ago, Glock made the decision to sell their Glock 17 at what was in essence the going rate for pistols when they introduced it to the USA. Not H&K prices and not H&R prices but pretty much what was average for the time. Gaston Glock felt that he should sell them for a far lower (yet profitable) price to build market share but his US chief feared that people would think they were garbage based on their price. Whether or not that was a good idea, I submit that if Glock had adopted lower pricing from the beginning, the semi-auto pistol market would be fundamentally less expensive then it is today, even with the gov't regulations and restrictions.

cfullgraf
July 6, 2013, 11:42 PM
Further, long ago, Glock made the decision to sell their Glock 17 at what was in essence the going rate for pistols when they introduced it to the USA. Not H&K prices and not H&R prices but pretty much what was average for the time. Gaston Glock felt that he should sell them for a far lower (yet profitable) price to build market share but his US chief feared that people would think they were garbage based on their price. Whether or not that was a good idea, I submit that if Glock had adopted lower pricing from the beginning, the semi-auto pistol market would be fundamentally less expensive then it is today, even with the gov't regulations and restrictions.

Or Glock would have gone out of business as the US Chief feared and the auto pistol market would be just as it is today only without Glock hand guns. Since Glock did not experiment with a low cost pistol, it is a moot point.

Zoogster
July 6, 2013, 11:55 PM
I have covered this topic before.

The US firearm industry is one of the least competitive due to what amounts to protection from foreign competition as a result of legislation.
Many foreign companies actually produce thier guns in the United States because they can bypass some of it.


Handguns, both pistols and revolvers need to meet certain ATF point systems for import, including many features that are intended to increase cost.
A huge portion of the market is essentially reserved for US manufacturers because foreginers that must follow a point system domestic manufacturers do not have to cannot compete.
This includes many guns made to meet a price point balancing quality where the market wants, without the additional costs of features that score points that the consumer does not.
It also includes most of the mousegun market, as lower powered calibers and smaller guners score horribly.

The same goes for rifle competition due to 922r. Many of the most popular rifle designs are not legal to import in the most desirable configurations. This adds overhead to get them here and then convert them into what the market actually would want using parts manufactured in the USA at higher costs.



There is many similar factors.

For example China and Norinco cannot import into the USA. At a time when a huge majority and almost any other typical consumer product comes in an inexpensive manufactured in China format, firearms are specifically prohibited from import from China.
You can buy everything except guns and ammo from China.


There is of course also increased costs to firearm manufactures. These include political costs to keep thier product remaining legal. Legal costs to fight all sorts of things. How often does a power tool company get sued because a tool safely functions exactly as designed, but is used by someone that intentionally harms someone else with it?
How many people are trying to ban hammers or chain saws, and how often do tool companies have to fight to keep such products legal? Almost never.
Yet with guns such things are common.
In fact how many huge companies manufacturing all sorts of products also produce guns, as is done with many other products? Very few outside of some foreign state sponsored or operated ones, because they want to seperate the liability and problems involved in firearm manufacturing from the rest of a huge conglomerate.
Instead they are smaller independent companies that are almost solely involved in firearms.




Most of the costs of firearms are as a result related to legislative restrictions and limitations, and legal issues.
Without such restrictions the US firearm industry would be a lot less powerful, the guns mass produced from China and sold through Walmart would be 1/4 the price, would dominate the market, and many US firearm companies would downsize or go bankrupt. The market wanting higher quality would be a smaller niche market, and many would declare some chinese products were quite good and US manufactured guns were not worth 4x as much.


One downside to that is thier would be far less career options in the firearm field in the USA. They would be outsourced.
The firearm market in the USA has what most of the workers and unions in other industries would love and argue for. Things like being far more resistant to Free Trade agreements, and outsourced competition. It is a big reason it is one of the stronger manufacturing markets in the USA, it doesn't have to compete like most other industries.

colorado_handgunner
July 7, 2013, 12:18 AM
Most of the costs of firearms are as a result related to legislative restrictions and limitations, and legal issues.
Without such restrictions the US firearm industry would be a lot less powerful, the guns mass produced from China and sold through Walmart would be 1/4 the price, would dominate the market, and many US firearm companies would downsize or go bankrupt. The market wanting higher quality would be a smaller niche market, and many would declare some chinese products were quite good and US manufactured guns were not worth 4x as much.


One downside to that is thier would be far less career options in the firearm field in the USA. They would be outsourced.

This is exactly why I am in favor of the current system. Some products are what should be considered "national security products". These you do not want to be in the control of a foreign power through importing. Firearms are one. Aircraft and ground armor are two others. Agriculture and energy also apply.

These products are inherent to preserving our way of life. Thus our government limits foreign competition to protect domestic sources through import restrictions (firearms) or tax breaks and subsidies (the other mentioned industries).

While I am a free market capitalist, I frankly do not have a problem with protectionism in certain industries, and actually support it.

Sent from my DROID RAZR using Tapatalk 2

happygeek
July 7, 2013, 03:25 AM
Huh?

How would allowing China to import firearms the way Canada does affect how the US military procures small arms? They recquire foreign companies like Beretta to open a factory in the states as part of the contract. I'm not sure how that's intertwined with civilians buying firearms commercially from China, Croatia, Turkey, whereever. Heck, civilians can already buy knock off M9s from Turkey or Brazil, just not from China. Which goes back to post #55, and I agree 100% with what Zoogster said. Up in Canada they're still importing Russian SVT-40s, Chinese commerical M14s, etc and they're getting them a LOT cheaper than we are.

Kynoch
July 7, 2013, 06:46 PM
Or Glock would have gone out of business as the US Chief feared and the auto pistol market would be just as it is today only without Glock hand guns. Since Glock did not experiment with a low cost pistol, it is a moot point.

No. Glock would not have went out of business if it sold its guns for a lower price. But lower price might well have agitated regulators like the US Gov't if the price was low enough, artificially limiting their sales. They would still have had military and LEO sales given the superiority of their product.

Glock does not sell auto pistols to the consumer market...

Glock already builds low cost pistols. This would be a matter of pricing the same models lower with tighter margins with the hope of increased sales.

Kynoch
July 7, 2013, 07:00 PM
I have covered this topic before.

The US firearm industry is one of the least competitive due to what amounts to protection from foreign competition as a result of legislation.
Many foreign companies actually produce thier guns in the United States because they can bypass some of it.


Handguns, both pistols and revolvers need to meet certain ATF point systems for import, including many features that are intended to increase cost.
A huge portion of the market is essentially reserved for US manufacturers because foreginers that must follow a point system domestic manufacturers do not have to cannot compete.
This includes many guns made to meet a price point balancing quality where the market wants, without the additional costs of features that score points that the consumer does not.
It also includes most of the mousegun market, as lower powered calibers and smaller guners score horribly.

The same goes for rifle competition due to 922r. Many of the most popular rifle designs are not legal to import in the most desirable configurations. This adds overhead to get them here and then convert them into what the market actually would want using parts manufactured in the USA at higher costs.



There is many similar factors.

For example China and Norinco cannot import into the USA. At a time when a huge majority and almost any other typical consumer product comes in an inexpensive manufactured in China format, firearms are specifically prohibited from import from China.
You can buy everything except guns and ammo from China.


There is of course also increased costs to firearm manufactures. These include political costs to keep thier product remaining legal. Legal costs to fight all sorts of things. How often does a power tool company get sued because a tool safely functions exactly as designed, but is used by someone that intentionally harms someone else with it?
How many people are trying to ban hammers or chain saws, and how often do tool companies have to fight to keep such products legal? Almost never.
Yet with guns such things are common.
In fact how many huge companies manufacturing all sorts of products also produce guns, as is done with many other products? Very few outside of some foreign state sponsored or operated ones, because they want to seperate the liability and problems involved in firearm manufacturing from the rest of a huge conglomerate.
Instead they are smaller independent companies that are almost solely involved in firearms.

Most of the costs of firearms are as a result related to legislative restrictions and limitations, and legal issues.
Without such restrictions the US firearm industry would be a lot less powerful, the guns mass produced from China and sold through Walmart would be 1/4 the price, would dominate the market, and many US firearm companies would downsize or go bankrupt. The market wanting higher quality would be a smaller niche market, and many would declare some chinese products were quite good and US manufactured guns were not worth 4x as much.

One downside to that is thier would be far less career options in the firearm field in the USA. They would be outsourced.
The firearm market in the USA has what most of the workers and unions in other industries would love and argue for. Things like being far more resistant to Free Trade agreements, and outsourced competition. It is a big reason it is one of the stronger manufacturing markets in the USA, it doesn't have to compete like most other industries.

I agree largely with what you're saying but it's more subtle than what you suggest. First, made in China (or Taiwan, Brazil, Turkey, etc.) does not necessarily equate to low quality. Nor does being made in the USA equate to high quality. Not by a long shot. This is particularly true with superbly designed guns like Glocks which amongst other things, allows for ease of production.

Even with all the import (and other) regulations I suspect there would be some very good money to be made selling largely imported firearms in the USA by established US companies using their extant marketing/sales/distribution/service systems were it not for the social stigma associated with making guns.

Again, there are all sorts of factors that impact the gun market. I think the reductionists view of some really miss a lot of the reasons that do impact the market.

Thanks for your input.

Kynoch
July 7, 2013, 07:03 PM
This is exactly why I am in favor of the current system. Some products are what should be considered "national security products". These you do not want to be in the control of a foreign power through importing. Firearms are one. Aircraft and ground armor are two others. Agriculture and energy also apply.

These products are inherent to preserving our way of life. Thus our government limits foreign competition to protect domestic sources through import restrictions (firearms) or tax breaks and subsidies (the other mentioned industries).

While I am a free market capitalist, I frankly do not have a problem with protectionism in certain industries, and actually support it.

Sent from my DROID RAZR using Tapatalk 2

Impossible if you support the regulations and restrictions that currently impact guns. Protectionism is the antithesis of "free market capitalism."

Kynoch
July 7, 2013, 07:06 PM
Huh?

How would allowing China to import firearms the way Canada does affect how the US military procures small arms? They recquire foreign companies like Beretta to open a factory in the states as part of the contract. I'm not sure how that's intertwined with civilians buying firearms commercially from China, Croatia, Turkey, whereever. Heck, civilians can already buy knock off M9s from Turkey or Brazil, just not from China. Which goes back to post #55, and I agree 100% with what Zoogster said. Up in Canada they're still importing Russian SVT-40s, Chinese commerical M14s, etc and they're getting them a LOT cheaper than we are.

True.

In fact, I suspect artificially controlling what is by far the largest consumer gun market in the world (the US) has actually crippled innovation which is also critical to a country's long term national security.

doc2rn
July 7, 2013, 07:09 PM
Originally Posted by Kynoch
What WOULD happen if say Makita, Hilti and DeWalt were able to design simple firearms (like Glocks), manufacture them overseas and sell them without restriction (or stigma) in places like Wal*Mart, Costco and Home Depot?

A Makita Model 17 would be less than 200 bucks. Probably closer to $100.00 with two mags once competition kicked in -- presuming there was a big enough market for them to even take notice.

That in turn would put tremendous pressure (pressure that currently does not exist) on Glock, SIG, Ruger, et. al. to compete and to lower prices.

We have that already, its called a Hi-Point and we all know how people feel about those guns. Love them or hate them, but they do get attacked from both sides of the political spectrum.

Kynoch
July 7, 2013, 07:15 PM
We have that already, its called a Hi-Point and we all know how people feel about those guns. Love them or hate them, but they do get attacked from both sides of the political spectrum.

Naw.

You're equating product quality to sales price and that's not accurate.

As an example, if it wished to, Glock could still sell its guns at a much lower price while maintaining a margin that would still be enviable to many manufacturers.

Owen
July 8, 2013, 01:21 PM
As an example, if it wished to, Glock could still sell its guns at a much lower price while maintaining a margin that would still be enviable to many manufacturers

I'm not sure they could. If the margin was significantly reduced, I would stop carrying them in my store. Considering the paperwork, record keeping requirements, and relatively low volume that guns sell at, the $20/gun i'd be reduced too wouldn't make it worthwhile for me to stock them.

Agsalaska
July 8, 2013, 01:35 PM
I just saw this thread. Good post OP. Those are all major factors.

oneounceload
July 8, 2013, 01:50 PM
What WOULD happen if say Makita, Hilti and DeWalt were able to design simple firearms (like Glocks), manufacture them overseas and sell them without restriction (or stigma) in places like Wal*Mart, Costco and Home Depot?


They already do - all are made in China.

As an example, if it wished to, Glock could still sell its guns at a much lower price while maintaining a margin that would still be enviable to many manufacturers.

The story goes that when Glock sold his guns to NYPD, he sold them for $75 because they cost him $52 to make. If you can make a product for that cost and sell it for $500, why wouldn't you? If you do not like the prices, you have several choices -don't buy them, or go into business and make the better proverbial mousetrap. In calculating your costs, do not forget all of those nasty things like FET, import tariffs and duties, employee salaries, benefits and taxes, utility costs, transportation costs, Obamacare for his US employees, local, state and federal taxes, and that little thing called profit - which if stagnated like you seem to think it should be, would stop reinvestment and growth and innovation.

Some folks really have to take classes in basic business 101. This stuff comes up almost every week because folks think everything is too expensive for their shooting hobby. It is a HOBBY; if it is too expensive, cut your costs or do something else. Your anger about high prices should be going towards high gas and food prices and healthcare which affects you on a daily basis, not towards a hobby.......

jrdolall
July 8, 2013, 02:06 PM
I bought 250 shares of Ruger in 2009:) still have it.

Deer_Freak
July 8, 2013, 02:20 PM
Some guns have just went up with inflation. But some companies are flat out gouging us. Winchester shotguns used to be one of the cheapest brands, especially pumps. I bought a Model 70 Winchester rifle in the late 80's for $189. Manufacturing techniques are less labor intensive than they were in the 80's. Not to mention Winchester used better quality wood than they do today. Brownings cost about the same as in the 80's and yes, the quality has dropped.

oneounceload
July 8, 2013, 02:29 PM
Why aren't you factoring in all of the other associated costs that go into that gun? There is a LOT more than wood and manufacturing technique - especially since 1989. Do you still make the same salary as then? Does your food, gas, etc. cost the same as back then? How about healthcare, taxes, etc? These costs have also gone WAY up for businesses during this recent "Recession" since most folks like to think that businesses don't pay their fair share. Costs are UP on just about everything; demand is up; raw materials are up; etc.......

Agsalaska
July 8, 2013, 02:41 PM
Some guns have just went up with inflation. But some companies are flat out gouging us. Winchester shotguns used to be one of the cheapest brands, especially pumps. I bought a Model 70 Winchester rifle in the late 80's for $189. Manufacturing techniques are less labor intensive than they were in the 80's. Not to mention Winchester used better quality wood than they do today. Brownings cost about the same as in the 80's and yes, the quality has dropped.
First without derailing this thread It is not gouging. There is another thread about gouging and if you want we can discuss why it is not gouging over there.

Second, costs of doing business have increased dramatically since the '80's. That gun, adjusting for inflation would be $387 today. But think about how much else has changed in the business world since then. Costs have gone up in many categories far faster than inflation. The two most extreme would be insurance and legal.

It is not fair to say that, because Winchester is charges far more today than they did in the '80s in real dollars, they must be making more money at a higher margin. That is incomplete at best.

Kynoch
July 8, 2013, 04:54 PM
I'm not sure they could. If the margin was significantly reduced, I would stop carrying them in my store. Considering the paperwork, record keeping requirements, and relatively low volume that guns sell at, the $20/gun i'd be reduced too wouldn't make it worthwhile for me to stock them.

A retailer could maintain their margins (in fact as a % of the sales price it would actually increase) even if Glock slashed their prices which apparently they have the cost structure to do if they so wanted.

The price reduction could come from Glock and not their resellers.

Kynoch
July 8, 2013, 05:09 PM
The story goes that when Glock sold his guns to NYPD, he sold them for $75 because they cost him $52 to make. If you can make a product for that cost and sell it for $500, why wouldn't you? If you do not like the prices, you have several choices -don't buy them, or go into business and make the better proverbial mousetrap. In calculating your costs, do not forget all of those nasty things like FET, import tariffs and duties, employee salaries, benefits and taxes, utility costs, transportation costs, Obamacare for his US employees, local, state and federal taxes, and that little thing called profit - which if stagnated like you seem to think it should be, would stop reinvestment and growth and innovation.

It's the old (profit/unit) * (volume comparison). Why would Glock sell their guns at say $250.00 each if they can get $550? Because they might be able to sell 10x the number of guns.

The other costs you speak of are largely sunk no matter what the firearm is sold for so they are a non-issue. No one here ever suggested that it would be healthy for Glock to cut their prices so low that selling their guns became unprofitable for them.

Some folks really have to take classes in basic business 101. This stuff comes up almost every week because folks think everything is too expensive for their shooting hobby. It is a HOBBY; if it is too expensive, cut your costs or do something else. Your anger about high prices should be going towards high gas and food prices and healthcare which affects you on a daily basis, not towards a hobby.......

It sounds as though you need to. Have you ever done any actual product costing or pricing? Why did you mention the sunk costs that remain no matter what the product is sold for? Why exactly did you mention profit? No on ever suggested that Glock not make money.

You false dichotomy of $75 and $500 is silly. There are plenty of more choices. It would be interesting to know exactly where the (price/unit)*volume would have been absolutely maximized for Glock? Maybe exactly what they did maximized income? They have done a stellar job but I suspect they would have made even more if they sold say 5x the number of guns they already have because of say a $100.00/gun lower price than their rivals (which would be fewer of course.)

Agsalaska
July 8, 2013, 05:18 PM
I think you missed the original point of the Glock comments and the pricing. It had to do with brand perception, not equilibrium.

Kynoch
July 8, 2013, 05:18 PM
Why aren't you factoring in all of the other associated costs that go into that gun? There is a LOT more than wood and manufacturing technique - especially since 1989. Do you still make the same salary as then? Does your food, gas, etc. cost the same as back then? How about healthcare, taxes, etc? These costs have also gone WAY up for businesses during this recent "Recession" since most folks like to think that businesses don't pay their fair share. Costs are UP on just about everything; demand is up; raw materials are up; etc.......

You're looking at it from one angle. Let's look at another angle.

In 1985 a Skil Saw, a Bosch Drill Motor and a Porter-Cable Belt Sander cost more than they do today even if one does not include inflation.

Guns on the other hand are far, far more expensive. This has a lot to do with the restrictions/regulations placed on gun manufacturing/importation and on the stigma associated with getting into the gun business.

Kynoch
July 8, 2013, 05:20 PM
I think you missed the original point of the Glock comments and the pricing. It had to do with brand perception, not equilibrium.

You are quite right.

I was responding to someone who apparently feels that maximizing the price/unit is always the best way to make the ultimate maximum profit for the business which is not true.

JTHunter
July 8, 2013, 05:45 PM
Hhmm - this is the second forum tha indicates another page but kicks back to the current page when I try to go on. Maybe this will do it?

Yep but it had indicated there were "posts 76-80" here and it's only this one at 76.

Crazy computers.

oneounceload
July 8, 2013, 09:30 PM
It sounds as though you need to. Have you ever done any actual product costing or pricing? Why did you mention the sunk costs that remain no matter what the product is sold for? Why exactly did you mention profit? No on ever suggested that Glock not make money.

Yes I have, both corporate-wise and as a small business owner

You're looking at it from one angle. Let's look at another angle.

In 1985 a Skil Saw, a Bosch Drill Motor and a Porter-Cable Belt Sander cost more than they do today even if one does not include inflation.


Yep because they were made of steel and made in the USA; now they are plastic and made in China. Chinese labor today doesn't even come close to union workers wages in the 80's. Labor costs and taxes, especially in Europe with al of their socialism bennies programs add a LOT to the overall costs

I was responding to someone who apparently feels that maximizing the price/unit is always the best way to make the ultimate maximum profit for the business which is not true.

Tell that to Google who charges you for electrons. Glock can charge what they don because folks will PAY that price. try checking gun prices in Canada, New Zealand, or many of the Euro zone countries and see what they have to pay. We have it very LUCKY here on pricing

Kynoch
July 9, 2013, 01:01 AM
Yes I have, both corporate-wise and as a small business owner

I find that to be interesting. Why did you mention the litany of sunk costs that aren't volume sensitive in that case?

Yep because they were made of steel and made in the USA; now they are plastic and made in China. Chinese labor today doesn't even come close to union workers wages in the 80's. Labor costs and taxes, especially in Europe with al of their socialism bennies programs add a LOT to the overall costs.

Actually the materials used in say a Skil worm-drive saw are pretty much the same as they were in 1980. In any event, go look at an 870 built in 1980 and one built today. The cost reductions taken in materials is obvious. The labor cost is axiomatic. It's one of the major points of this thread. Overall, the reason for the static nature or drop in pricing of power tools is due to increased competition.

Tell that to Google who charges you for electrons. Glock can charge what they don because folks will PAY that price. try checking gun prices in Canada, New Zealand, or many of the Euro zone countries and see what they have to pay. We have it very LUCKY here on pricing

You're getting off the point but you're flat-out wrong when you suggest Google sells electrons. Were that the case, companies would go out and erect server farms and each one would be mini-Googles and they are not. Google largely sells ways to access and manipulate information and to communicate. Think about that one a bit.

You're also missing the bigger picture in the (margin/unit) * (volume) matter. You simply don't know what pricing/volume would have maximized Glock's overall profit. To actually know that, Glock would have had to lower prices to see what sort of impact it had on volume and it never really has.

Yes, I know your retort is "because it doesn't have to!" That's right given the business path they have chosen but it in no way proves that it is the plan that would bring Glock the greatest wealth. I hope you understand that.

There are many things to consider if Glock would have chosen pricing of $250 (or even less) per pistol rather than more than double that. Some would no doubt have equated such a low price to substandard quality which was an initial concern.

Had the drop in price triggered a truly huge increase in sales, it would have brought attention by regulators through concerns of Glock's competitors and general fears that "too many cheap guns are flooding the streets of America." It might have even caused an able company to get into gun making once Glock gave insight into the size of the market.

It would have also led to lower material costs for Glock, probably a reduction in direct labor and definitely a reduction in the amount of overhead absorbed by each gun.

Zoogster
July 9, 2013, 03:49 PM
I doubt that Glock would have done better selling at half the price. They are already among the top in US pistol sales.
At the time they were the first mainstream widespread polymer pistol, though the VP70 predated it.

Being space age polymers sounds a lot fancier than being plastic guns. Pricing them too cheap would likely have caused people to associate them more with being cheap plastic than sturdy polymers.


They also ate costs and/or took minimal profit to get them into the hands of police officers across the nation. That was thier strategy, since the average naive citizen looks towards what the police or military use and often makes thier decision on that. Considering them the professional firearm users, most citizens assume what they use must be ideal. (It's not a bad way to choose a firearm, as at least it should be durable and reliable and result in a good decision by even those without much firearm knowledge.)
By making the Glock the police gun they then became a primary gun purchased by civilians copying the police.
This then offset the low gains from the law enforcement market.
New double stack wonder nines like the police were using became the prime civilian purchase.
What were the guns the police and military were switching over to in the 80s and 90s predominantly? Glocks and Berettas. Guess what took a massive share of the civilian market as a result?


Being reliable, effective, modular, and easily maintained with minimal parts kept them popular.
But it was initially about getting the gun associated with police that resulted in success, and part of doing that was being content with limited gains from the law enforcement market for a number of years and making a name for themselves. They were then able to reap the rewards of higher profit down the road. Glock was outselling most all metal firearms while costing a fraction to produce. Other manufactures also saw how high the profit margin was with plastic compared to metal, and after Glock made plastic acceptable to a public that previously would have derided it, most jumped on the polymer bandwagon. But Glock had already established itself as the polymer gun for the next generation and would continue to reap the rewards of being the primary law enforcement firearm.

The market is only so large. So after a point dropping prices further does not increase sales much. The percentage of the market that buys multiple of the same or similar guns is small, though you see a lot more of it on gun boards.
So without increasing the size of the market dropping costs even more won't necessarily result in more profit if the overall number of sold firearms is only slightly greater.
If they already have one of the largest shares of the market they only have so much more to gain, and would those minimal gains be worth it long term? Saturating the market with even more, being associated with being a lower cost gun in a society that equates quality with cost to some extent, and being purchased in greater quantity by the poor and undesirables a lot of anti-gun legislation of the time targeted.

At the time many states were combating inexpensive firearms. The ring of fire guns, Saturday Night Specials, and anything the poor could afford saw restrictions and legislation aimed at increasing the minimum price.
Part of this legislation many places was melting temperature of the frame. While trying to find properties to legislatively differentiate the less expensive firearms they realized many were made from lower melting point metals.
But the market was still largely metal and they all had significantly higher melting points than polymer firearms.
Glock as a police firearm priced only slightly less than other service firearms was not held to that standard, polymer was exempted, or other exceptions were made.
Had they priced thier guns lower they may have faced a lot more ring of fire type restrictions, and been held to things like the frame melting standards that would have banned them many places.



As for competition reducing costs, it does but the result is not always good.
Most products today are outsourced to cheap labor elsewhere, and firearms would be no different. The result would certainly be a much weaker firearm industry within the US itself, few career or job opportunities in the firearm industry, and a greater dependence on foreign factories for our arms.
A positive would be firearms at a much lower price point. Norinco combined with Walmart's economies of scale and distribution system would have firearms easily at 1/4 the cost of what we pay now.
But for how long? Would gun restrictions be passed more readily without domestic companies invested in the firearm industry joining with civilian firearm owners to fight them?

Kynoch
July 9, 2013, 05:03 PM
I doubt that Glock would have done better selling at half the price. They are already among the top in US pistol sales.
At the time they were the first mainstream widespread polymer pistol, though the VP70 predated it.

There is far more revolutionary things about a Glock than simply being made from plastic. You really don't how Glock would have done if it sold at a slimmer margin. Not only would it have captured more of the existing market, it might well have expanded that market and it might have dissuaded competition from others.

The market is only so large. So after a point dropping prices further does not increase sales much. The percentage of the market that buys multiple of the same or similar guns is small, though you see a lot more of it on gun boards. So without increasing the size of the market dropping costs even more won't necessarily result in more profit if the overall number of sold firearms is only slightly greater.

Not only could the market have been fundamentally expanded if the pricing changed, Glock could own a great deal more of it. Even if Glock owned more of the existing market they would greater increase their share.

At the time many states were combating inexpensive firearms. The ring of fire guns, Saturday Night Specials, and anything the poor could afford saw restrictions and legislation aimed at increasing the minimum price.
Part of this legislation many places was melting temperature of the frame. While trying to find properties to legislatively differentiate the less expensive firearms they realized many were made from lower melting point metals.
But the market was still largely metal and they all had significantly higher melting points than polymer firearms.

Ring of Fire guns were often dangerous to the user and typically under $50.00/each. Often half that. Not comparable to Glocks.

As for competition reducing costs, it does but the result is not always good.
Most products today are outsourced to cheap labor elsewhere, and firearms would be no different. The result would certainly be a much weaker firearm industry within the US itself, few career or job opportunities in the firearm industry, and a greater dependence on foreign factories for our arms.
A positive would be firearms at a much lower price point. Norinco combined with Walmart's economies of scale and distribution system would have firearms easily at 1/4 the cost of what we pay now.
But for how long? Would gun restrictions be passed more readily without domestic companies invested in the firearm industry joining with civilian firearm owners to fight them?

I would much rather see extremely strong competition in the gun industry instead of the overly regulated, overly restricted artificial market we have today. Springfield Armory imports its polymer pistols from Croatia which is no bastion of high wages or benefits. It's too bad they can't do so with less regulations and restrictions.

What I would really like to see is an erosion of the stigma associated with making and selling guns. It would it would nice to see the gun industry attract some top-notch entrepreneurs, designers and venture capitalists on a large scale which it currently does not.

russ69
July 9, 2013, 08:07 PM
I didn't read all the posts but I think the biggest cost increase is on the retail side not the manufacturing side. The cost of doing business is skyrocketing. More paper work, permits, training, fewer FFLs, etc. are driving retail expenses off the scale.

Kynoch
July 12, 2013, 06:16 AM
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Ignition Override
July 13, 2013, 02:07 AM
Won't ObamaCare be an added solid factor, which could force even gun stores into reducing the staff's weekly working hours,
in order to limit the cost of operating the businesses?

Kynoch
July 15, 2013, 06:17 PM
There are certainly fewer "kitchen table" FFL's then in the past and that does impact competition.

JSH1
July 15, 2013, 06:40 PM
Won't ObamaCare be an added solid factor, which could force even gun stores into reducing the staff's weekly working hours,
in order to limit the cost of operating the businesses?

Employers will not be required to provide medical insurance unless they have more than 50 full time employees. I doubt many gun store meet that criteria. The vast majority (90% or more) of companies with more than 50 employees already provide insurance. The mandate is there as a disincentive to keep employers from dropping coverage and moving their employees into the exchanges.

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