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Anyone know the wholesale price dealers pay for new guns?

Discussion in 'Handguns: General Discussion' started by cleetus03, May 8, 2009.

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  1. cleetus03

    cleetus03 Member

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    I ask for several reasons, all of which are pure curiosity.

    A NIB Glock 19 sells at the current spectrum of upper $400 to higher $500 range, so what is the wholesale amount dealers pay?


    A NIB Taurus PT111 Mil Pro at the current spectrum sells in the upper $300 to lower $400 range. What is the wholesale amount dealers pay?


    The point of my question lies in whether dealers make considerable more profit selling certain handgun models over others. Also I always wondered what the profit margin in selling guns in the 1st place was. I appreciate all the info yall can provide, and again it is just a ? of curiosity.
     
  2. Thingster

    Thingster Member

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    Shop by shop will vary on what their markup on a gun is.

    One I use marks up $50 on anything under $500 and $75 on anything higher.

    Another does a flat 5%.

    Of course, if a gun is in high demand they mark up whatever they'll sell for.

    If you really want to know what they are buying them for, ask to see their dealer catalog since you're "Not exactly sure what you want and would like the chance to browse a little".


    For the most part, dealers don't make a whole lot of money off of new guns; they make their money on the 100-150% markup on used guns.
     
  3. spudster

    spudster Member

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    One of our local guys also owns a trucking company.

    He is the cheapest guy around and that includes Walmart and Academy. He sells out of a wood cabin/trailer with a huge safe with the weapons. I assume the good prices come from not having to pay rent on the shop since he owns the land.

    Very good guys at that shop too.
     
  4. ScareyH22A

    ScareyH22A Member

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    No respectable dealer will tell their customers how much they are getting their products for. It doesn't matter what business you're in, it's just bad for business as well as the market. But even if you knew how much that Glock came in for, you probably couldn't use it as a bargaining chip. Guns will sell at market value and have excellent shelf life.
     
  5. SharpsDressedMan

    SharpsDressedMan member

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    Respectable dealer? Sheesh! It is every red blooded American's duty to negotiate a great price on a gun. Knowing the dealer price, offering a fair "fee" to order the gun (and giving the dealer the money up front) is a great way to get a good price on a gun, especially if the dealer doesn't have it in stock.
     
  6. JohnBT

    JohnBT Member

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    A quick search of the internet will turn up the lower end of the current retail price range on just about any gun.

    It's too hard - impossible? - to figure out precisely what a dealer is paying without knowing if he's getting any bonuses, volume discount, whatever, etc.

    I figure my last pistol cost me nearly $30 extra for buying it out of the display case instead of ordering it off the net and running all over town getting the paperwork and cashiers check in the mail and then picking up the gun. Heck, it would have been $2.80 just in tolls. :) The numbers are $670 vs. $640.

    Seeing that it was an FN, maybe the dealer participated in the stocking dealer program: buy 6, get one free. Maybe I bought the free one. How do you figure precisely what he paid for it?

    Here's the 2008 stocking dealer program www.fnhusa.com/le/press/detail.asp?id=28

    Also last year "FNH USA Announces Tomball Pawn & Jewelry as the winner of a dream vacation to Cheeca Lodge & Spa"

    I know, I'm complicating the calculations you're trying to do, but that's retail.

    John
     
  7. 10-Ring

    10-Ring Member

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    Also depends on a dealer's purchasing level -- ie, a 1st tier dealer pays one price and a 2nd or 3rd tier dealer would pay less -- even w/ comparable mark up, their end price would be diff't
     
  8. offroaddiver

    offroaddiver Member

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    Years ago, before the landlord ran off the gunshop, there was a gun store that was run by an older gentleman and he had stacks of catalogs and order receipts that he went by on his pricing. I asked him one day why his prices cahnged every week. He told me he did a flat % of profit over ammo, firearms, cleaning supplies, and accesories. The best deal was he wouldn't put out new stock in ammo unless down to 1 or 2 boxes on the shelf, all you had to do was ask and he had a case or two usually in back and after you bought out what was on the shelf he'd then price the ammo with sometimes the new price but still sell you at the price of the other boxes. I miss the local gun store.
     
  9. crazy-mp

    crazy-mp Member

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    Depends on the dealer, mine tells me that his cost is 25-30 percent cheaper than the MSRP. But some stores sell guns for 5-10 dollars under MSRP, so who really has a profit margin. Those big stores have to pay all their employees and all their other upkeep, while the little hole in the wall might own his building, and have little to no expense and is happy making 20 or 30 bucks off a gun.

    I don’t know what I am going to do when my local FFL dies.... I guess I will have to buy guns somewhere else and pay a lot more. :cuss:
     
  10. GRIZ22

    GRIZ22 Member

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    Knowing the dealer price, offering a fair "fee" to order the gun (and giving the dealer the money up front) is a great way to get a good price on a gun, especially if the dealer doesn't have it in stock.

    I'll agree with you in theory. However if you make X amount making my widget, fixing my car, selling me gas, or whatever, I'm sure you wouldn't take kindly to me offering you X minus whatever to sell me a gun.
     
    Last edited: May 9, 2009
  11. RockyMtnTactical

    RockyMtnTactical Member

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    If it is a respectable price, chances are, they are not making much.
     
  12. loop

    loop Member

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    Most dealers try to price at 33 percent markup. That means something most people would disagree with when termed 33 percent. It means if you pay $200 you divide that in two and add the remainder to the price you pay you get a markup of 33 percent. A gun that cost a dealer $200 will likely be priced at $300.

    It is actually a far cry from the 10 percent many gun shops claim.

    But, when you figure out profit margin you use another formula. This one includes taxes, shipping, handling (unpacking, setting up for display, necessary cleaning, etc.). It also includes sales time for the paid employee. If the owner is the salesman his time is figured at a much higher rate. Typically, a service call is included in the calculation.

    When you figure in all those costs it leaves a net in the neighborhood of 10 percent. But, that is what you will typically hear referred to as markup. Even though markup means something altogether different.

    Net means that is how much the owner actually puts into his pocket after the sale. I do not begrudge a business owner putting $30 in his pocket on a $300 sale. But, the whole process is very deceptive.

    Accessories, holsters, mags, etc., are usually at 50 percent markup. That means you take your cost and double it. That is the sale price. It is also why they want you to walk out the door with much more than the gun.

    Those items are generally figured as net 33 percent.

    A smart dealer will get a 2 percent discount on net 30, which means if he pays for the items within 30 days of ordering he gets a 2 percent discount.

    He will also, if his credit with the jobber is good, demand free shipping.

    Mail order or Internet dealers who have "good" prices on guns are getting their 2 percent net 30 and free shipping. They cut their costs with zero sales time and no service time.

    For that the buyer gets about a 10 percent discount over buying from a local shop. The buyer also usually pays shipping and a transfer fee. Fixed shipping rates on retail gun sales are usually a ripoff. When you see "fixed shipping" it probably means "I'm only getting half of what my actual cost is, but I have to pad my profit margin somehow.

    This is just how business works. If you buy a car a motorcycle or a bicycle you will pay the same - 33 percent markup. Discounts are offered when a dealer needs money to hit the net 30, it is behind in payments or it is easy seeking quantity sales to offset lower retail prices.

    Accessories is where the money is. I've bought numerous guns at dealer cost and that is 33 percent markup. I've also bought quite a few at manufacturers' cost. That is half to one-third of retail.

    I just picked up a dozen Colt factory mags at manufacturers' cost. That is 12, eight-round mags with Rampant Colt on the baseplate of the mag and on the plastic bumper, for well under $100. The retail prices I've seen have ranged from $20+ to more than $30. When you get right down to it I paid less than $8 each and somebody made a profit or I wouldn't have them.

    Profit is not a bad thing. If the maker, wholesaler and dealer did not make a profit you would not be able to buy it. How it is presented to the end buyer is kind of sleazy.

    I know these things because I've been a retailer and a wholesaler and spent many hours working for a manufacturer.

    Here is how it works. I make the gun for $100. I sell it to someone who supplies the dealers' suppliers for $150. The suppliers sells it to a distributor for $225. He sells it to a retailer for $337.50. The retailer prices it at $506.25.

    The retailer prices it at $499.99 because it is a lot easier to move if it is under $500. The federal government gets 10 percent of that sale in excise tax (it pays for all the feds' conservation programs). The dealer takes the final, and biggest, hit.

    You pay $500 for a gun that cost $100 to make.

    The closer to the end user the more that is taken away in costs and taxes.

    The real price is so low it is insane.

    Why don't you like a Hi-Point? It's worth about $30 or $40. Why do you like a Colt? It is a $150 gun!

    Ammo? I can make my own .45ACP ammo for about $7 per hundred. Why does it cost $40? Do the math! And, remember, the folks who sold me the primers and powder went through all the profit generating maneuvers as everyone else.

    My wife can bake a nice cake for $3. It would cost $15 or $20 at the bakery.

    It is just business. If I sell a million guns that cost me $100 to make I pocket $100,000. A mere 3 percentage points is the difference in me driving a Kia or a Mercedes. Or paying union workers a 10 percent raise - back to the Kia.

    This is why "trickle-down economics" works. Give me back a percent or two and I can pay more or I can live better. Either way, I like it.

    Raise my taxes, I make more by earning less. I hire fewer people. We turn out less product. The price goes up.

    Best I can do at economics 101...
     
  13. JohnBT

    JohnBT Member

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    "A gun that cost a dealer $200 will likely be priced at $300."

    That's a 50% markup, not 33%. Half of $200 is $100. $200 plus $100 equals $300.

    JT
     
  14. cleetus03

    cleetus03 Member

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    That is an excellent way of breaking it down for me LOOP!
     
  15. logical

    logical Member

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    I'm sorry, but the $100 cost to make a gun, or the "Glocks cost $62 to make" myths are just that...myths. You show 4 levels of people each adding 50% to a gun. A distributor doesn't make anywhere near that...just plain doesn't. And take sig for example...they sell direct to large retailers and a single level of distributors. There is no "someone who supplys the dealer's suppliers" or even a "dealers supplier" and in many cases no "distributor".

    How you can look at a modern auto pistol and only see $100 in manufacturing cost is beyond me. There's probably $50 in liability insurance before the first metal chips even start flying.
     
  16. Claude Clay

    Claude Clay Member

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    rather what you are willing to pay---not what he paid

    guns, furniture, food, whatever--what its value to you determines what you are willing to pay for it
     
  17. ScareyH22A

    ScareyH22A Member

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    Retailers need to make a profit because...

    1. Overhead - rent, ultities, etc.
    2. Shipping - unless they're ordering bulk, the retailers have to pay freight. Firearms and especially ammo are very heavy.
    3. Paid labor - the guys that work there take home a paycheck that has to come from somewhere. If one guy makes $2500 a month, and 4 guys work there, that's $10,000 a month that a shop keeper has to write checks for. A shop that opens 6 days a week would have to net $400 a day just to pay his 4 guys. And a lot of guys work on commission so there's even less margin for the owner to work with.
    4. Return on investment - one can reasonably assume that if you invest $1000 into something, you get a small percentage on top of that in return say 5-10%. For a shop owner to invest thousands in inventory and not get something back in return is just ridiculous. He probably has to pay banks back for loans and they charge interest.
    5. Reinvestment into the business - The shop owners have to not only make enough to cover all of the above, they need to make more to add to their inventory. Nothing like going into a shop and seeing new and interesting firearms aplenty.

    I'm sure I'm missing more. But if you think you can talk a smart shop owner into selling a $350 at cost Glock for 10-15% over and leave him $35-$50 profit, you're out of your mind. I wouldn't even do that for a friend because that would barely cover my expenses and it's definitely more trouble than it's worth.
     
    Last edited: May 9, 2009
  18. Jim K

    Jim K Member

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    At one time, the actual factory cost, materials and labor, of a well-known sporting rifle was 1/7 of the MSRP. That did NOT include overhead, profit, etc., just material and labor. I expect that is about right for many items.

    In the gun business, the dealer and the factory are usually not the only people involved. Most factories sell through distributors/importers who stock more models than any dealer could and act as a buffer between the dealer and the factory.

    Jim
     
  19. Jim Watson

    Jim Watson Member

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    Distributor to dealer markup on a gun for inventory sold just under MSRP so the buyer can feel like a real horse trader, is around 30%. If you think that is a lot, look into clothes, furniture, jewelry, etc.

    I do not understand why freedom loving gunowners think gun dealers should work cheap, relative to other merchants.
     
  20. 45ACPUSER

    45ACPUSER Member

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    First, off the reasonable whsle for a Glock is about 440.00. When you see prices thrown around like 400 the LE pricing, or what GSSF allows a member to purchase at.

    Remember that dealers have to pay frt, and lest not forget that handguns go next day air......lol. Many whsle operations run stuff on deals of buying 3 handguns get frt. paid...all kinds of deals on dating, purchase XX to get high demand items like say SCAR.....you get nailed buying some dog items......

    Let's not forget rent, taxes, salaries, utilities, and other items like insurance as pointed out.......

    People bitch about stuff......all the time. And quite frankly they have no business.....unless they are signing the front of the checks.....

    Look at the demise of Sportsmans Warehouse....they left a lot of whsler's antsy about extending credit or carrying out deals like 90 days dating.....let alone holding the bag on millions of dollars.......
     
  21. logical

    logical Member

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    Looking only at the material and direct labor cost is meaningless. You could lock me in a room with a few hunks of metal (material) for months (labor) and I wouldn't come out with a gun. Material plus direct labor does not = manufacturing cost.

    back in the day when it was easy to be a kitchen table FFL, I had a buddy who sold out of his house. He got me anything I wanted at dealer cost....trust me, it wasn't a night and day difference.
     
  22. jester_s1

    jester_s1 Member

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    I work in a gun shop and can tell you that very few people are getting rich off of selling guns. Competition is fierce and margins are tight. The only exceptions to that are AR15's, which will sell for any price you mark them at.

    When you consider the overhead and upfront investment it takes to run a real gunstore (not some backalley joint) even MSRP is not big bucks. It's profitable, but not getting rich. Most gunshops make their real profit on accessories and ammo and services. Markup on used guns is a little bit higher, but it has to be because of the greater overhead of having to check them over and stand behind them if something is broken.

    Most gunshops don't charge MSRP because they can't. They do generally get a few more percentage points in margin over a gun show table or one of the white trash FFL dealers who works out of a spare room in his house and only recieves special orders. The gunshop is still the best buy IMO, because you get to handle the merchandise before buying it and you have a selection to choose from. You also get good advice in the good shops, although in my experience few customers take advantage of that.
     
  23. loop

    loop Member

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    If you don't understand it please reread my first post. It is pretty clearly explained.

    I've been a businessman, a wholesaler, a jobber, a distributor and now I write about business. If you really do not believe look at the Sarco website. A Rock Island that sells at ????? is going for, guess what, 33 percent less. That is 30 percent markup.

    Would you really believe that no one prior to Sarco ever made a dime off that item?

    Let's bring it down to basics. I can buy five pounds of flour for a buck. I can bake 10 loaves of bread from that flour. What do you pay for a loaf of bread?

    My cost for materials is about 20 cents.

    Think about it!

    You pay roughly five times the actual value for everything you buy.

    That is because you are the fourth or fifth buyer in the chain. Every single buyer takes a markup. A 100 percent markup would be "I pay $1 and you pay $4."

    When I am done, figuring in all my costs, I am netting 50 percent.

    Back to the loaf of bread. It costs you 75 cents to $1.50. It cost me less than 20 cents to make. The jobber makes it 30 cents. The wholesaler makes it 60 cents. The retailer makes it $1.20. If he cuts his margin to the bone you pay 75 cents and he takes a couple cents on the dollar. If he makes his mark you pay $1.50.

    Now, go buy a loaf of bread from five retailers. Then tell me a Glock costs more than $62 to make.

    And if you eat whole wheat like I do, you pay a 10 cent premium because there is no chalk in your bread. White bread is dyed with chalk to make it white. Wheat bread has no chalk so it is brown. Yet you pay more for it. Whole wheat costs a lot more because they don't dye it and they don't grind the wheat to a powder.

    Business is business. I can make a grand off of anybody if I lie well.

    Why else would an Austrian furniture maker go after a military small arms contract? It isn't because he's all that patriotic.
     
  24. JohnBT

    JohnBT Member

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    "My cost for materials is about 20 cents."

    "It cost me less than 20 cents to make."

    You work for free? What about the cost of labor, rent, ovens, utilities, insurance, business taxes, etc., etc., etc. It couldn't have cost you 20 cents to make if your materials cost you 20 cents.

    What the heck kind of business do you write about?

    That's a worse problem with markup than your earlier miscalculation.

    John
     
  25. 45ACPUSER

    45ACPUSER Member

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    110 percent on target!
    Some people just never get it!

    Yeah what about the packaging? The sales staff? The distribution? Delivery....NFW!
     
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