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.
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.