Opening a gun shop -- UPDATE: Two Years In!

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NoVAShooter said:
2) Competitive pricing. You don’t have to be the lowest, you don’t have to match Bud's, but at least be in the ball park. I know this will differ from person to person, but based on my option and from what a lot of other posters have indicated, I think if you are within $25 to $50 (out the door), for a $500 gun, you stand a good chance of getting their business over Buds.

So given the number of people in this thread that have expressed that one of the reasons they like Buds and other out-of-state transfers is that it allows them to duck the sales/use tax, what you are really saying is that you expect a dealer to be a solid 10% BELOW Bud's prices before taxes.

Well, technically, no one is ducking sales tax, use tax maybe, but not sales tax. Plus, IMHO, it won't be long before online sales will be subject to sales tax (not a big fan of taxes, but I am a big fan of fairness).

Also, on a $500 gun from Bud's, with free shipping and $25 transfer fee, I pay $525 OTD. Using my $25-$50 ballpark range, I would buy that same gun in a LGS if it was sold for $550 to $575 OTD. Taking into account the 4.5% tax I would pay, this means the LGS would have to sell the same gun for $526 to $550. For your clarification, that means you, the LGS, are selling the gun for 5% to 10% MORE than Bud’s not less.


You people are totally unrealistic, and it's obvious you've never run a retail operation.

I don’t have to run a retail operation know that it is possible. I’m getting these prices from somewhere (sometimes from an actual brick and mortar LGS).

Also, on a pragmatic note, I don't have be realistic. I can buy a gun from any store that has the lowest price available whether you think that price is realistic or not. If store A wants to sell me a $500 gun for $10, it is of no concern to me if that store is losing money or not, or if your store is going out of business because you can’t compete. That may sound very callous, but it's not personal, it's all business. I face the same challenges in my line of work and I doubt I’ll get any pity from LGS owners if I lose a contract because I was outbid by an ‘unrealistic’ offer.

Bottom line, you are free to shop anywhere you want to shop. You are free to buy from one store or another. You're out of bounds complaining about pricing, transfer fees, etc. at any particular store. If you don't like their prices, DON'T SHOP THERE! If you are right that the prices are out of line, the market will agree with you, and that shop won't be there for long.

You are absolutly correct. That is why my number 2 item for a LGS is Competitive pricing. Trust me, if your prices are out of line, I won't be complaining, I just wont be shopping there regardless of how long it's in business.
 
Nova shooter, the only people saying anything about ducking sales tax has been gun shop owners, employees, or part time employees. They are the usual gunshop people that get talked about for thinking they are doing us a favor by opening the doors up and that their prices are final, no transfers and if you don't like it you can go down the road. The ideal model of a business doomed for failure. I would never set foot in such places.
 
Taking into account the 4.5% tax I would pay, this means the LGS would have to sell the same gun for $526 to $550. For your clarification, that means you, the LGS, are selling the gun for 5% to 10% MORE than Bud’s not less.
And the LGS is paying the distributor $510 shipped for that gun because he doesn't move 10,000 units a month. Even at $550 that's only 8% markup. Throw in sales tax at 5% (to make the math easy) and the customer is at $577.50 OTD.

Then if the dealer is really unlucky the buyer uses a CC to pay, so he loses 3% of the OTD price, or 17.33, to the merchant processor.

So, on this transaction:
The state makes $27.50
The merchant processor makes $17.33
The FFL makes $40 - 17.33 = $23.67

Yeah, I'm really going to work hard, take the risks of running a business, deal with the ATF, etc. all so the state can make more money than I do on a sale. :rolleyes:
 
There is a good idea for a new business in here Sam. Like Pak-Mail did. Just do it for guns instead of mail. Call it Pak-Gun. just do the transfers and sell ammo and reloading supplies. You could use all your cash to buy ammo cheaper. And optics. just sell those, and you will probablly do better as we all need ammo, and most long guns need a scope or some sort of sight. I notice that buds and the rest kind of stay out of the optics except Optics Planet. Maybe they are on to something. They will never get ammo as cheap shipping it as you can in a store, "as long as you buy enough".
That may be where it all ends up. Let the online guys fight for the pistols and sell the rest.
 
I have no complaints about doing transfers. I have no capital tied up in the gun, and if there's a problem with it the buyer gets to work it out with the seller.

FWIW we charge $10 for them, but we're not a retailer either. I've seen the numbers for a retail shop, no way would I consider opening one.
 
Bubbles, I agree. If you were though you def have to start small, do transfers, sell used guns bc your biggest profit margins are usually there, and be very nice to your customers with none of the "our price is final and go down the road if you dont like it" arrogance. Oh wait, disregard what I just said. You can't call yourself a gun shop if don't have $1,000,000 of gun inventory.
 
Sam and gym make great points. For transfers, charge 10% of the gun costs up to $500. Anything over that is a flat $50 fee.
That would seem very reasonable. It someone came in waving a printout from Bud's and demanding a $20.00 transfer you could gently decline but tell the person to make themselves feel at home and to consider purchasing their next firearm through your LGS.
 
Don't forget to invest in good accounting software to help keep your books in order as well as a good set of internal controls.
 
Maybe even charge an additional 2 or 3% for anything over $1000. Those would not happen much but when they do its worth more than $50 for a $2500 gun. With the 2% premium the total transfer would be $80 on a $2500 purchase. I think this system would be fair for both parties.
 
By what logic should the transfer fee depend on the price of the gun being transferred?

The work and time spent doing the transfer is not dependent on the price of the gun!

It seems that the sliding scale pricing is just another attempt to squeeze customers a little more, something that will not lead to positive long term customer relationships.

Bob
 
The work and time spent doing the transfer is not dependent on the price of the gun!

It seems that the sliding scale pricing is just another attempt to squeeze customers a little more, something that will not lead to positive long term customer relationships.

Bob

You mean like our current taxation system? ;)

Maybe more gun shops should do like Bud's and have a posted price that is CASH, you want to use a credit card or something else? The price goes up 5%.

A lot of folks seem to "forget" that they owe use tax on their purchase to their respective states (where there is a sales tax) and hold that amount against the LGS who merely collects it and passes it on. With the new laws coming into effect regarding sales taxes on internet purchases, that should level the playing field a LOT
 
So let me get this straight....many gunshop owners find it perfectly acceptable to "punish" me for shopping through Buds, because I'm not paying their marked up price for the same gun? Guess who's business you'd lose for life with that one statement. I've bought 15 guns the last year, 0 from my LGS who does my FFL transfers but 15 transfers were run through her at $25 each, and 1 FROM BUDS. You'd lose ALOT of my business for being snotty about 1 GUN. How much money do you expect to make from selling me a NIB Kahr CW40 at a competitive price? $30? My FFL made that in transfer fees alone on that deal from Buds. Yet somehow she's still made OVER $500 MOST OF IT PROFIT, from FFL fees, magazine and holster sales, etc...All without clogging her inventory and limited shop space. How many new guns would I have had to buy from the LGS to make her $500 in profit? And you still think I deserve a "punishment" of higher transfer fee's or a refusal to complete the transfer so you can make MORE MONEY!?! Some of you LGS owners need to take some night classes in sales and marketing, because you are missing the point with the gun market. IT ISN'T THE GUN THAT BUTTERS YOUR BREAD. ITS THE ACCESSORIES, AMMO, AND GOOD FEELINGS.
Hypocrites to crow about "free market", "anti-commie/anti-socialist" and how "conservative" and "American" most of you are, then beg for special treatment in the marketplace, because you can't or won't compete.
 
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Well, like I said also, it would require more thought. And seeing as how ill prolly never have a gun shop ill never really need to give it more thought. One thing though as a customer would you want to pay a $30-$50 transfer fee on say a $150 gun? That's why it would initially be a sliding scale. To help out the customer. NOT to squeeze more out of them. And that $150 gun may not be transferred bc of the price. Some guns the shop just simply can not get them. So all transfers are not just bc you want to save money. So if im helping the customer out by charging less to transfer inexpensive guns then why should I not make a few extra dollars on the very few unusually expensive guns that I would transfer? And again this would require more thought. It may be better to just stop at $50.
 
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There are a lot of low priced guns I pass on, only because paying 50-100 bucks kills the "deal" I was getting on that gun I didn't need, but would have bought.
You guys know the type I'm talking about, like a cheapo 22, or a beater 357, that I would refinish, But throwing a hundred bucks on a gun that was a hundred bucks, kills the whole idea.
 
Bud's was one of the first to use the drop-ship business model for firearms. Since they move a lot of guns they can often sell the gun via their web site, drop-shipped from the distributor to the transfer dealer, for a lower price than the transfer dealer could buy it from the same distributor.

Also, while most transfers are easy, occasionally firearms arrive broken in transit, they were not as described, the wrong gun was shipped, the seller gets denied by NICS, etc. Then the transfer becomes a lot more than "merely 10 minutes of paperwork" (which it's not even when everything goes smoothly).


So, part of the problem is that Bud's advertised customer satisfaction may be a bit overrated, if there are some quality of product/service issues. Not to mention issues with NICS, all of which requires more paperwork. I get that.

And, to a point, I can understand the issues with Bud's essentially undercutting LGS.

Perhaps I'm in the minority here, but I feel there is no substitute for handling and inspecting a weapon in person, as opposed to online. Most especially used weapons. You can't do that online until you've already handed over your money. And there are other factors I consider as well:

1. My time is valuable to me. If buying through a LGS saves me time, then it may well be worth a fairly significant price difference to me.

2. I value customer service. A real person, who takes an interest in my concerns, whatever they may be about firearms, wins out over an online customer service routine. I am more willing to reward a LGS with my business when I can walk in and get an answer, or a referral to someone who can help me.

3. If I order a weapon online and ship to a LGS, additional accessories are likely to be purchased there because I can TRY them before I buy them.

Don't get me wrong...I like a bargain as much as the next person; and I'll be the first to admit that almost all my ammunition is purchased at Walmart. But there are non-monetary qualities about ANY "brick and mortar" business which people like me appreciate very much...and understand that a higher price is the price we pay for it.

This is why my first posting back in #48 talked about that.

:):)
 
I have two LGS here, and they seem to fill different niches:

The first one I used when I started out had a very modern, open, and welcoming atmosphere. It's set up much like a jewelery store, with a U-shaped counter down the middle with the pistols, and rifles/accessories on the walls. The inventory is about 1/3 Glocks, 1/6 revolvers, 1/3 Glock-equivalents, and 1/6 mouse-guns. Rilfes is about 1/3 ARs, 1/3 AKs, and 1/3 everything else. I liked this place since they had plenty of all the basic platforms, and the staff was very willing to walk you through the options available in each. If I were a clueless newb, I'd be steered toward a "safe" buying decision like a Glock, Remington 700, or AR. The guys here expect the customers to have questions and require explanation. Their prices tend to be significantly higher, but that is less of an issue for a new-to-guns person who needs help getting everything set up. Transfer fees are fairly high. Ammunition is quite expensiive, but very diverse. Eventually, I tired of browsing the predictable inventory, and learned that new guns and rare ammo were cheaper online. I got into reloading, and found myself buying less and less assembled ammuntion. The guns I was interested in acquiring were never to be found, and had to be special ordered. I was comfortable around guns now, so I decided to check out a place I had previously thought "too inside" for a new guy...

The other place is an old, dusty, poorly lit building in the sticks that smells of cosmoline. Populated by guys wearing sleeveless flannel shirts, hats with messages, scowls, and unintelligible accents. I always feel like a tool coming in theiir in my Business Casual after work, and my Washington St. accent (this is Texas, BTW), but at least I'm an informed buyer who's comfortable around guns. I was uncomfortable buying my first gun at the other store (hadn't around guns much before that), I would have been downright intimidated in this place. The clerks are mostly knowledgeable, but are not very forthcoming. They tend to be very stern when asked anything, and would prefer to be left alone (if you're an unfamiliar customer) so they can keep an eye out for shoplifters. They know most folks don't buy anything, and they would rather not waste energy engaging customers who just want to browse in peace. The selection is much more diverse, more than half is an ever-chaning assortment of used guns on racks down the center of the room. The pistols are in a glass counter located against one wall, with the new inventory on wall racks above. Though there are ARs and AKs, they are of several varieties, as well as various milsurps, leverguns, bolt actions, and black powder guns. Unmarked foriegn ammo crates abound, and only a few dusty 20round boxes are on the shelves for common calibers. There are few reloading supplies aside from powder and primers. It would be very confusing for someone new to the arena, but a boon to the experienced Gunnie. This store seems to accept that its customers are experienced shooters and reloaders who buy what they can online. Brass and small-box ammo is cheap to ship, and a better selction available online, as are more common firearms. But primers and powder are expensive to ship in reasonable quantities, as are large ammo crates, and buying sight-unseen milsurps or used guns is a crap-shoot. By offering more of what experienced gunowners prefer to buy in person, the store avoids competition with online sellers, and even makes easy profit transferring firearms.

You have to decide what "vibe" or market you want the store to serve. Since big-box stores like Cabela's and the like are perfectly set up for unloading overpriced guns on naiive buyers new to the shooting sports, I'd think a better strategy would be to supply bulk-bought accessories, and to a lesser extent firearms (of a diverse variety), to experienced shooters. If people learn you have good stuff they can't get elsewhere, and sell at a price they can't get without massive bulk purchases, you'll have legions of loyal customers for years to come. I'll go out on a limb and suggest you skip the gunshows, since I have found they are mostly junk, and a savvy customer would look elsewhere for deals. I also do most of my shopping on weekends, and I'd be irked to find my LGS had closed on my day off to go set up shop on the other side of the city. Be sure to offer (at least) basic gunsmithing services like tapping recievers and checking headspace. Make sure he's actually available, too. I'd pay good money to have a used milsurp's headspace checked before shooting it (especially if it was bought online), but my LGS's smith is too backed up with rechambering and muzzle-device projects.

TCB
 
Start small and grow as you have the money. This is true for all businesses. You can add the "wants" later when you have extra money. Simple and clean, look at the successful stores but don't copy them. Heck, look like Starbucks or another coffee shop! They did a ton of research and testing designing their stores.

For your store, decorate it very welcoming and open, don't make it look like a cliche military surplus store with threatening posters all over. One or two USA flags would be good, but don't wallpaper the walls with flags. Might want to avoid animal heads on the walls at least for a year or so.

You want to put at ease, the complete newbies who are nervous coming in, expecting the cliche "racist, rednecks, Confederate flags, etc..." (especially the growing market of women) to come in and be at ease and then focus on purchasing a firearm and some training. Think of the new mothers discovering reality and their "mama bear" side. You don't want newbies to come in and feel intimidated, or seem creeped out by your store.

Have a good security system and have some off-duty cops help you test it well. Give Police, EMS, Fire, and Military (Coast Guard too) a small to medium sized discount too.
 
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So I'm supposed to charge $6.90 for a transfer on some POS $69 milsurp? I don't think so...
Naah, I don't think that system really makes sense. No reason not to just pick a price that compensates you reasonably and fits in the local market.

Just as my humble opinion, I've not been anything like personally offended (not really offended, just flabbergasted) about what a dealer wants to charge for transfers until they start to climb up to and over the $50 range. If I like a shop and have been treated well and it's convienient to my location, I'll pay them $30 even if I know I could get it transferred by someone else for $20 if I'll drive a bit more.
 
<deleted> And please, give me a link to a $69 milsurp. Im sure lots of us want to know. Thanks for the heads up in advance.
 
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