Why do gun dealers like to jack up the prices?

I find it ridiculous that you can actually order a gun from an online website like J & G that makes a profit off it,

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Yes, how unamerican can you get! Someone should let our current administration know about this. Maybe a government gun subsidy program should be lobbied for.

Because, above transfer fees, many dealers need make a 10-15% profit margin to remain in business. A dealer whose only profit on a deal is a transfer fee isn't making much money. The reason gun dealers "jack up" prices is the same reason wholesale prices are ALWAYS lower than retail. At the retail level, items are sold at low volume for maximum profit. The same reason the dealer marks a "$300" dollar gun at $400 is the same reason your local grocery store buys candy bars for $0.50 a piece and sells them for $1.25. Even if i "KNOW" the candy bars are only "worth" .50 cents.....Unless I'm buying in bulk just like the store....theres no way I'm going to see that price when the store has to make their profit as well. Comparatively, even at the "inflated" prices you seem to believe guns are sold at...the profit margins on firearms are much lower than they are with many other goods.

I can't help wonder if you are going into your local gunshop and handling the firearms in question. Most people don't want to buy an item like a gun without handling it first. It costs money to maintain a store front and to pay salaries for employees - much more expensive than maintaining a warehouse and a website.

Also, if I have a problem w/ a firearm I purchase I can walk right back to my local gunshop, discuss the problem with them and they make it right - that service costs money.

David

I don't know about you, but I make friends at my favorite gun spots. Then you get nice surprises, like great service, free pizza, and even a little discount on bulk purchases, because they know you keep coming back. My last two acquisitions from my local supplier were within $50.00 of a quick online search. That little bit of profit for them keeps food on their table.

Preferring an anonymous, bottom line transaction for anything is fine on rare (tight) occasions, but if I prefer to have a relationship with the moms and pops who are doing right by their customers. Money isn't supposed to steer the wheel every time.

Good luck.

In the example you showed above, yeah maybe you should save $100 and get it online. I'd also recommend that when picking up the firearm, buy some ammo. You wouldn't have the option of buying online and getting it transferred to a store near you if that store doesn't stay in business. Transfer fees are a little extra dough, but support the shop that let you have a convenient option of buying online and picking up locally.

It's important to support your local businesses, in my opinion.

Davek, good explanation, however answer me this one. I was in a shop looking at pistols there where two exactly the same, I don't recall what they where, I mean exactly caliber, grips everything. the only difference was the serial numbers...oh and 100 dollars. When I asked about it, they brought them out looked and looked, called over the manager. He looked, only excuse given, must have bought them from two different sources, and put them back into the case.

As mentioned, they "jack up" the prices because they have to.

An online retailer has many advantages and less overhead than a brick and mortar store does. This allows them to offer a lower price to their customers, since they have less overhead to pay for.

FWIW, J&G does have a retail shop here in Arizona. I expect their price advantage comes from volume, not from a lack of overhead.

I find it ridiculous that you can actually order a gun from an online website like J & G that makes a profit off it, pay shipping, pay tax (WA state ), and pay the transfer fee, and still pay significantly less than what they quote you on.

As an example:
Dealer told me $525 for Vz-2008

$360 at J & G,
$16 shipping
$28.80 tax
$30 transfer fee

And yet it all comes out to about $434, almost $100 below what I have been quoted.

Anyone who does their homework would surely not fall for paying over what the gun is worth. The way I see it, I have hardly any money, and if I am going to buy a gun, I am not going to instantly lose $100 on it in value, simply because I paid far from what its worth.

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That's because J&G Sales is part distributor / part retail store. That price you see is typically what dealers will pay for that firearm. Several LGS in my area won't allow transfers from places like J&G, SOG, or AimSurplus primarily because they are showing dealer prices. You want the gun, you have to order it from them and yes, there is a markup because like all good businesses, LGS have to show a profit. There's the rent to pay, employees to pay, and a margin that ensures food gets on the table. I also know some LGS that charge 25 dollars for a transfer for something like a Gunbroker.com auction, and then 125 dollars for a transfer from Buds Gun Shop because all Buds does for something like 90% of their sales is drop ship it from a distributor to the receiving FFL. They don't even SEE the gun. So they price it at 30 bucks above dealer cost and they kill the local gun store who oftentimes cannot compete with that.

In a free market (so called) society the sale price is actually determined by the buyer. If I can't get X dollars for something I will sell it for X-? when I need the money. As buyers we have the great freedom of going elsewhere. One of my favorite LGS recently called me regarding a scarce new item I had asked about (LC9), but his price was $440 (true) more than I was looking to spend. I knew that eventually the price will settle at around $340.00 or so. He was looking to get MSRP, a level I will not buy at. So, I defer my purchase until I find it at my price or I do without. The spirit of competition is your friend. I will always shop my favorite stores within 80 miles or so, and buy at the lowest price I can find, never will buy online.

This same store once sold me a new 9mm pistol, and when I got it home I discovered that the decocker lever was gouging the frame. I drove back and received a refund and bought another pistol for more $, not so easy with an online dealer.This is a prime example of the customer service you are paying for at a real store.

I would expect the local brick and mortar to be more expensive, to pay for their extra overhead, and it is capitalism; charge what the market will bear and all of that. I'm all for al businesses trying to make as much profit as possible. Everybody wants to make the big bucks. I would too.

BUT: There seems to be some crazy business model some places adhere to that "If I can't make a profit by charging $$" then charge $$$ which causes volume to fall and less profit. So then they charge $$$$ and then go out of business claiming that Walmart put them out of business instead of at least trying to lure more customers with a lower profit margin and be a 2 car family instead of a 4 car one. That apparently is how the shop out of county is looking at it (see below).

Then there's my local shop who's practice on new guns is to list on the sale's tag 'dealers cost', 'MSRP', and 'Your cost'. One county away and dealing with the same gun, different SN, the 'your cost' is less than the others 'dealers cost'. And we are not talking 5% type numbers but closer to 30% difference. To me that is lying to the customer and that isn't the type store that I want to make shooting friends in or trust them in even working on a gun for me.

Any commodity on this planet is worth exactly what people are willing to pay for it. Every salesman in the world wants to charge as much as he thinks people will pay. If he is charging too much, he will either not sell it, or change his mind and sell it for less. OR, MAYBE he knows something you don't.

Things I might guess, that he has sold his last several for that price, and so there is no reason to believe that he won't do it again. See, even with smaller price differences, it is a calculated risk. Let's say I want to buy an item for $120 in my hometown sporting goods store, but I know that the warehouse store in the next county has the same item for $100. Now before I jump for joy, I need to ask myself; "Is it worth the drive and the time?" It's an hour away. And an hour back. Plus gas. I probably won't want to JUST go there to get the item, plan on some other items and lunch too. Oh, the kids will want to go. NOW how much does it cost? My time is certainly worth more than the $20 I would save for two hours of driving. This is why my hometown store is still in business.

I'm going to guess that the store you are looking in has people come in every day complaining about internet deals they have had go bad. Wrong item. Bad service. Wasn't what I thought it would be when I actually handled it in real life. BATFE hassled the dealer about the transfer. Fraud. Any of a dozen reasons that they will do anything they can to not have to use the internet for a gun purchase ever again. To THESE people, $90 seems like a reasonable price to pay for dealing face to face. (And in my experience, the difference isn't usually that much.)

"Davek, good explanation, however answer me this one. I was in a shop looking at pistols there where two exactly the same, I don't recall what they where, I mean exactly caliber, grips everything. the only difference was the serial numbers...oh and 100 dollars. When I asked about it, they brought them out looked and looked, called over the manager. He looked, only excuse given, must have bought them from two different sources, and put them back into the case."

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Ummmmm....I was simply lying out the basic premise, not attempting to describe every idiosyncrasy you may see in any random gun shop..... :banghead:
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It's all about volume. J&G will pay less for their inventory because they buy more. They buy more than the local stores because they will sell 10 guns to the local stores 1.

Even though both stores have fixed and variable costs, J&G will charge less per gun because they sell more of them.

Ever wonder how Walmart can sell so cheaply as to literally drive the mom and pop stores out? It's because they buy inventory by the trainload and get huge volume discounts. Then they can charge less. It's all about volume.

Ever wonder how Walmart can sell so cheaply as to literally drive the mom and pop stores out? It's because they buy inventory by the trainload and get huge volume discounts. Then they can charge less. It's all about volume.

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That's part of it. The other part is, consumers are price driven and don't care. If we all wanted walmart to fail, all we would have to do is not shop there (no matter what price they set). But, we do anyway...

Local dealers set the price at a level that they think they can be profitable at. I think it's odd that so many people jump to the local gun shop's defense (as if there's some inherent "goodness") when it's clear that some are pricing fairly ridiculously. There are about 3 shops by me, one is priced fairly, the other 2 are crazy. I won't support the other 2. That's how I get to "voice" my opinion.

The point is, there is a level at which consumers will not buy from a local shop anymore. Just like there's a price level where you'll stop buying lumber at the local lumber yard and start going to home depot. Or, you'll stop buying candy at the corner shop and start buying it at Walmart. Stop buying meat at the local butcher and start buying it at the huge national grocery chains (or, again, at Walmart). We are a price driven consumer society.

The local gun shops are no different. If they price high and can still sell enough to stay in business, good for them I guess. But....they leave themselves vulnerable.

Oddly, something I learned about the MOST EXPENSIVE gun shop here locally, they are selling the same guns in ONLINE AUCTIONS (under a "non-obvious" name) at those lower prices to ramp up volume!?! So...if you win their auction, they will take the $350. If you go into the shop, they won't take a dime less then retail (or over). I suppose it's your choice.

I don't seem to notice a huge price difference either. In fact the one LGS I frequent is a small but nice place, friendly people, willing to put up with window shopping and question asking, and is usually a little better than the MSRP listed at Davidsons. 'Course this is probably while they're still in business through these tough times. I bought a pistol from Cabelas in Jan, pretty much only because I had a gift card for there. I'd rather deal with my local guys who see me as more than a number.

TheGewehrGuy: I think you should do what makes the most sense for you and not complain about it. It sounds to me like the LGS's price is a little high. At a $100 spread, I might go with the J&G price if I were in the market for the gun. If you have a relationship with the LGS, then I would ask them if they could do better on pricing. If not, I would find a dealer who will do the transfer and discuss the future transaction. If the LGS drops their price to make the sale, you have to actually buy the gun immediately, not put it in layaway or think about it for another couple of weeks.

How are the LGS's prices on things in general?

Retail is retail. People charge prices that they feel they can make a profit to stay in business. Pricing also reflects the clientel of the gunshop. Most people do not drive 100 miles to visit a gunshop on a regular basis. If everyone only purchased online, you would end up with "dealers" who essentially have three or four guns in stock and order everything. There would be no "handling" beforehand. You would look at a picture and order your gun. In general, you are paying for service. You want service or not? If not, buy your gun from J&G or whomever and when you have a problem, don't talk to your LGS.

They "jack up" prices (commonly called profit) because the government is taking a significant amount of the profits, they have high overhead, their insurance costs more than a donut shop & they have to stand behind the gun when you bring it back because you don't understand how to put it back together & you screwed it up. I'm sure I missed a few things but you get the picture.

The younger generation only knows a world where the internet is an integral part of the market place. They know that they can get it cheaper on the internet because the "shop" has no bricks & morter, no sales people, heck they don't even have to charge out of sate taxes. They don't have to carry insurance on all of that, pay for health care, business permit. The list goes on & on. Don't confuse the two. The local shop has all of those expenses. The internet shop doesn't in a lot of cases. Plus they know that you won't be walking back in tomorrow demanding your money back because they were "sold the wrong gun for them". Or demand you fix what they just broke & then get mad because they can't get a free mag for "their trouble".


There is a simple fix for this. The government can do it better & cheaper. They always do. I propose we let the feds take over the gun shops. They can buy in the biggest bulk there is. Every gun sent to or made in America would be bought by the feds. Now since they are saving sooo much money then they would certainly pass that on to us, wouldn't they? They wouldn't collect the records and keep track of every gun we bought would they? They certainly wouldn't use this information later to take them away, would they? Why of course not. Let's let the government stop these charlatans from stealing our hard earned money and calling it profit.

"We work for the government, we are here to help!" ...RUN!!!!

The gun dealers are not the enemy guys. They serve a purpose. They are sometimes gunsmiths that can repair you firearm when it breaks. If the gunsmiths you rely on so dearly couldn't sell a gun or two and make a profit once in a while he would have to charge you a lot more to do the work you wanted. Guns are cheap anyway. Think about what your getting for your money and compare that to the other crap you buy that depreciates in value the instant it leaves the store till it's worth nothing. I wouldn't begrudge a gunsmith a 100 dollar profit on a 500 dollar rifle if I knew I could go back to him and ask questions or get a part replaced if needed. These guys work like dogs as it is to eek out a living doing something they really love to do. Give the dealers a break here.

The gun dealers are not the enemy guys. They serve a purpose. They are sometimes gunsmiths that can repair you firearm when it breaks. If the gunsmiths you rely on so dearly couldn't sell a gun or two and make a profit once in a while he would have to charge you a lot more to do the work you wanted. Guns are cheap anyway. Think about what your getting for your money and compare that to the other crap you buy that depreciates in value the instant it leaves the store till it's worth nothing. I wouldn't begrudge a gunsmith a 100 dollar profit on a 500 dollar rifle if I knew I could go back to him and ask questions or get a part replaced if needed. These guys work like dogs as it is to eek out a living doing something they really love to do. Give the dealers a break here.

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But the OP is seemingly pointing out over a $170 profit on a $360 gun, no?

You could take this argument further and include used firearms. All of a sudden, you expect the local gunshop to match the price that Joe down the street is willing to sell their gun for because they need the cash NOW. Things are not always only about price. You have to look at the whole picture regardless of your personal financial condition.

Buying at LGS

I've found at my LGS, that they are within $50 of some of the brands, while others <coughSmith&Wessoncough> they are over $150 higher. I intend to purchase a Springfield XDm .45 and a CZ 452 Ultra Lux through them this summer because of this. Just an observation I thought interesting.

I don't want to be disrespectful or seem like a smarty pants but I think it is called making a profit.

When you compare local markets with someone who competes with another company that distributes on a national market the larger distributor will usually have lower prices.

IE Walmart vs anyone.

There is also the difference between companies who have to take the give price and companies who have the power to demand goods at a lower price.

IE Walmart and their suppliers

If a local gun shop can come within $50 of what I can get a gun for online I will buy from them, if they can't, I won't. I am absolutely price driven as I do all the research I need to do online and walk in the door to buy, not talk to the salesman about what he wants to sell me.

The best thing small guns shops can do is embrace online retailers, several near me have become "preferred dealers" with Buds for instance. They know more than likely when I come to get my transfer I am going to buy other stuff while I am there.