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Another reason I loathe most gun shops

Discussion in 'General Gun Discussions' started by rock jock, Aug 22, 2003.

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  1. rock jock

    rock jock Member

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    As I have related on another post, I won a NIB Springfield Mil-Spec last night at a Friends of the NRA dinner. Well, I am not a bog fan of the mil-spec features, so I'm thinking to myself that I might trade it. Now, the gun shop I picked it up from deals almost exclusively in used guns (they just handle the transfer for the prizes) and they don't really have anything I'm looking for. Anyway, 30 minutes after I picked the gun up I went to another gun dump and asked what they could do for me on a trade-up for a new loaded Springfield. Now, as I am asking the guy this and he is looking over my obviously NIB gun with the tag still hanging off it, I look down and see the exact same gun for $479, with the same box, same accessories, etc. I figured "hey, these guys will offer me $450, make $29 off my gun, sell it for $479 just like the one in the case (so it essentially like giving them $479 in cash), and then make a decent profit off the new loaded version I want to trade up for. All in all, a pretty good deal for them. This kid heads to the back to talk with the owner and comes back in a couple of minutes. "We'll give you $350 for it." I am astounded. "What??!! You have the exact same gun in this case for $479, plus you would be making profit off the loaded version." He just stares back, unblinking, and says nothing. I say no thanks and leave. What in the world are these people thinking? Do they actually not want to sell guns?
     
  2. 2nd Amendment

    2nd Amendment member

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    Well, the "logic" is that they'll tell you they must sell it as a used gun. Technically true, of course. Thus they offer a low trade because they "won't be able to get new price for it". Of course the whole truth is they will tell any purchaser your exact story, that it actually IS a new gun, and ask new price or within a few dollars. It hinges on your believing they can't get new price for it, which most people will accept. You, wisely, didn't.
     
  3. jsalcedo

    jsalcedo Member

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    $350 sounds generous compared to the lowball fire sale deals I've seen offered for NIB guns.

    Some gunshops like to turn a profit more quickly than is deemed reasonable. A NIB gun would probably not be sold as used even if it was
    2nd owner.

    You would be much better off with a private sale
     
  4. Redlg155

    Redlg155 Member

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    I'm with jsalcedo on this in saying that the price they offered you is a generous one. I've seen them on Gunbroker.com for 400'ish, so you know the dealer cost is around $325-$350 max.

    Actually I'm surprised that he offered you that much. How much he is selling the one in his case makes no difference. What does is how much he gets them at his cost. He definitely will not offer more than his cost for a new one.

    That's where private sales come to the rescue.

    Good Shooting
    Red
     
  5. C.R.Sam

    C.R.Sam Moderator Emeritus

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    Red nailed it.

    Why should he pay more than usual for an item to put in stock ?

    Sam
     
  6. El Tejon

    El Tejon Member

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    I am outraged! How dare a gun shoppe even attempt to make money. Report this outbreak of free marketism at once!

    It is widely known that gun shoppes are extensions of hobbies, not businesses. As such gun shoppes are required to crater to our expectations, not their bottom lines!

    Do not put an ad in the paper and attempt to sell it for the asking price. Run into the nearest gun shoppe and demand that they lose money on a deal.

    Prices are determined by what a centralized committee determines them to be, not the free market of a buyer and seller.
     
  7. tommytrauma

    tommytrauma Member

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    So, you're upset that he only offered you wholesale price instead of retail? Why should he pay you MORE for a technicially used gun than a new one would cost him from his distributer?
     
  8. Beav

    Beav Member

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    Depending on how desperate you are its always best to skip the middle man and just do a private sell otherwise you're sure to get gouged.
     
  9. Futo Inu

    Futo Inu member

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    Wait a sec - you guys who say that "why should the shop pay more for this gun then their cost?" are partially right, but not taking into account the fact that it would lead to a SALE which they might not otherwise make on a fully marked-up Springfield loaded, making more profit. I agree that the gun shop does not have incentive to pay MUCH more than their cost, but a little more, partially splitting the difference, would be in order, IMO, given that this would lead to a sale with full profit. How much over cost depends on how laggy sales are on that particular Loaded model. Maybe paying $25-$50 over their cost would make sense, because of (1) the new sale it immediately leads to, and (2) saving shipping costs etc. on acquiring the other one. Dunno if what they offered already represents such an increase, but probably not. If they said "$350 if you want cash, but $390 as trade-in credit", that might make sense. Are you SURE it was clear that what you wanted included an agreement that it's only as trade in credit for the new one, or just essentially a cash transaction? Because big difference - how do they know for sure you'd turn right around and buy the new one?
     
  10. rock jock

    rock jock Member

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    Yes, Futo, I made that very clear. I told the guy exactly the gun in their case I was interested in, which listed for $649. Now, I know for a fact that they mark up their guns 20%. So, even if they offered me $425 and then resold the gun as Unfired/LNIB for $465 or thereabouts, that's $40 profit off my gun and $130 off the new gun. However, even if they sold my gun for exactly what they paid me, that's still $130 they would make off a new sale. I think the problem comes down to either they are too greedy for their own good (and thus missed out on selling a gun), or they don't understand basic accounting.
     
  11. Graystar

    Graystar Member

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    That depends on the desireability of the item you are trading for. The Springfields loaded seem pretty desireable, so if he didn't buy it someone else will. At that point, if doesn't make any sense to throw money away to make a sale.

    I think $350 from a dealer is a good price. Clearly he viewed the gun as NIB.
     
  12. Brad Johnson

    Brad Johnson Member

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    I'm halfway in between on this one. I think it's way out of line to expect a dollar-for-dollar trade on a gun unless it's between you and a buddy, but I also think this particular dealer is trying to pull a fast one.

    The dealer cost on a Springfield 1911 Mil-Spec is appx $419 plus freight which is an estimated $15-$18. The dealers that I do business with will usually offer you cost less 5-10% on a gun that is NIB (it has to be obviously NIB, just like the above example). The bottom line is they are getting a display gun for a little less than their regular cost, and they are still able to give me a decent price for the trade. We both win and everyone goes home happy.

    Brad
     
  13. Old Fuff

    Old Fuff Member

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    O.K. - The trade-it-in-at-the-gunshop idea didn’t work out. Rather then having a fit consider the second option you mentioned in your previous post. Pick out the accessories you like and rebuild the gun you have. Whoever you buy the after-market parts from may buy the old parts that you replace. If not, someone else will. I wouldn’t trade the gun until I worked out the numbers to see what it would cost to make it like you wish it was. If that number’s too high I’d sell the gun to a private buyer and go on from there.
     
  14. Art Eatman

    Art Eatman Administrator Staff Member

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    If you want retail or near-retail, find a retail customer. If you want to deal with a shop--or a table at a gunshow--you better know the prices in Shotgun News. The most a NIB critter is worth to a dealer is the Distributor price.

    Philosophically, if my investment in something is near to zero, whatever I get is profit--so I'm not prone to complain that it's not as big a profit as it might have been...

    :), Art
     
  15. jacketch

    jacketch Member

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    The obvious answer is that you should never disinventory anything from your gun collection. Acquire, yes. Sell, no:D
     
  16. SteyrAUG

    SteyrAUG Member

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    Yes how dare those gun shops not offer you more than dealer price for your gun. Most reasonable gun shops would prefer to obtain their inventory from private individuals at a higher price than from wholesale suppliers.

    Funny part about guys like you is when you sell your guns on the net or at gunshows you try and get full retail value.
     
  17. GinSlinger

    GinSlinger Member

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    What if....
    ...You had asked the shop to cosign it for you? After they took thier 15-20% cosign what would you have gotten? Just a thought. I spent almost 30 minutes with a customer at my last job showing the false economy of buying somethings off the internet. The customer was going to spend 15% over our prices after fees and services; yet he just didn't get it...:banghead:

    GinSlinger
     
  18. rock jock

    rock jock Member

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    How are they throwing money away??? Folks, this is simple math. Even if they sold my gun at the EXACT SAME PRICE they paid me and make zero profit from that transaction, they still get 100% of the profit from selling the loaded Springfiled to me.
     
  19. Keith

    Keith Member

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    If he's selling the same gun for $479, he probably bought it for $350. So, why would he buy a used gun for $100 more than he can buy a new gun?

    And it IS a used gun, with all the warranty issues and "buyer beware" alarms that that implies.

    Dealer: "It's never been fired!"
    Customer: "Oh yeah, sure..."

    Does the warranty cover the second owner? I doubt it.

    Even with the trade up to the loaded gun, he's still out that initial $100. In effect, you were asking him for a $100 discount on a new gun. Or, asking him to pay retail for a used gun he can buy at wholesale cost.


    Keith
     
  20. Okiecruffler

    Okiecruffler Member

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    I don't think people realize how slim the profit margin is in any retail business. Making $29 on a $475 dollar item isn't worth the hassle of paperwork. I used to tell people bring guitars into my shop to trade that they would be better off selling it personally or letting me put it on consignment. But most people don't want to wait for their stuff to sell to get their money. Well, guess what, the merchant has to wait for the stuff to sell before they see their money, and as long as it's in the shop unsold, it's just more merchandise you have to pay taxes on.
     
  21. El Tejon

    El Tejon Member

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    Okie, you can't fool us. Transaction costs do not apply in the Worker's Paradise. Overhead does not exist.

    Retailers do not recieve their money from customers, but are paid by the People's Committee on Profit. The check arrives on the 15th of each month.
     
  22. rock jock

    rock jock Member

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    OMG. I can't believe the mathematical illiteracy on this thread. Absolutely frightening. **Sigh**

    OK, folks, I'll break it down for you:

    Let's say they offer me $450 for my gun. I agree and they take possession of the gun and give me $450. Right next to me is another customer who sees this take place and says "hey, I'd like to buy that gun." As a matter of expediency, the gun shop flunky says "fine, I'll sell it to you for cost - $450". The guy looks at it, sees the tag hanging off it, sees the plastic bag it is in, sees the warranty card, and says to himself "that's a great deal since its $29 less than the identical gun in the display case that is in the same condition." (BTW, Keith, the warranty would apply because I had not filled out the warranty card. As far as Springfield is concerned, the second customer is the one who took initial possession of the gun) So (keep up with me here), the customer gives the gun shop $450. NOW, what has occurred? The gun went from my possession to the gun shop's possession to the customer's possession. $450 went from the customer's hands to the gun shop to my hands. The customer has a new gun at a good discount and I have $450. The gun shop has lost NOTHING, except for the 5 minutes it takes to fill a yellow form out for the second customer and to record the serial no. in their logs. They simply have been a middle man. At this point, they have made zero profit, but again, they have lost nothing. NOW, immediately following this, I take $199 out of my wallet, combine it with the $450 the gun shop just gave me, and buy a new loaded 1911. The gun shops records this as a profit, just like any other profit they would make from any other gun they sold. The net total from this entire series of transactions is 100% profit from selling a new gun.

    The above scenario represents worst-case for the gun-shop, i.e., they make only 100% profit from a new gun. In this scenario, I am assuming that the gun shop sells my gun immediately. I think this is a very reasonable assumption since they can put it in their display case showing the gun with the tag, warranty card, etc. and sell it as LNIB with a $29 discount over the exact same gun in the New Gun display. If they do not, they lose the time value of money, which is very slight for a large store like this. They also incur the opportunity loss of not selling their own new Mil-Spec (and thus realizing full profit on that gun) the next time someone walks in and wants to buy a Springfield Mil-spec. However, two factors mitigate against those being really big issues. The first is that this store sells a lot of guns and they get a pretty quick turnover on their inventory. The second is that Springfields are, as Graystar points out, fairly popular items. So, they will sell their own Mil-Spec at full profit, it just may take them another week instead of three or four days. However, I realize this and, given the above risks assumed by the gun shop, I am perfectly willing to have them offer me, say $415-425. That way they can sell it for $450-$460 and still make at least $25-$45 profit. Under this scenario, they make the 100% profit off the loaded 1911 PLUS $25-$45 off my gun.

    The real net result of all this is they would sell more guns. However, that makes entirely too much sense for a gun shop.
     
  23. Brad Johnson

    Brad Johnson Member

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    Exactly. Next question?

    Brad
     
  24. Keith

    Keith Member

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    OK, then the dealer makes $29 on a gun that he could have made $100 on if he'd just bought it wholesale. And in reality, he makes nothing after the time put into two transactions, overhead, etc, etc.

    From your point of view it's a great deal. From his point of view, it's paying retail for an item he can buy wholesale. Even considering the purchase of the new gun you're buying - from his point of view, it's a gun he'll sell anyway and without offering somebody a "deal" that eats up most of the profit.

    Wrong! He lost the sale of the other gun he has in his inventory - the one he bought wholesale with the comfortable profit margin - the one the customer would have walked out with if yours wasn't there! And when he sells that he can order another at the wholesale price.
    He's not in business to break even or facilitate trades for his customers. He's in business to buy wholesale and sell retail - and that's the only way he can stay in business!

    Trust me, I've been on both sides of that counter. From the dealer side, I've had to turn down a lot of such "deals". And the customer can never appreciate the fact that a gun store (or any business) can not afford to buy at retail. Open a copy of the "Book of Gun Values" and see what a used 100% condition Springfield Milspec is worth. Now knock 1/4 to 1/3rd off that price (so you have a profit margin) and see what you have left to offer the customer. Now watch the customer walk away mad because he didn't get offered what his gun is worth...

    If you want retail value for a gun, a car, a set of golf clubs, then put an ad in the paper and sell it. You can't expect a business to pay you that price.

    Keith
     
  25. cordex

    cordex Member

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    At about half the profit each, all told.
    More work with less profit == not as good of a deal.
     
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