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How much does it cost companies to create popular firearms?

Discussion in 'General Gun Discussions' started by Sobel, Jan 6, 2012.

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  1. Sobel

    Sobel Member

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    I've always wondered how much it costs them to create the things we buy. I'd like to know how much profit they make off some of the most popular weapons. Could it really cost hundreds of dollars to make a glock,beretta,or smith & wesson?
     
  2. Sam1911

    Sam1911 Moderator

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    Do you want to know how much the cost is when the investment of money into development, testing, tooling, insurance, company overhead, licenses, etc. is ameliorated into the price of each handgun, or are you just looking for strictly the raw materials, labor cost, energy costs, and other direct costs of each unit?
     
  3. Shadow 7D

    Shadow 7D Member

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    lots
    the manufacture isn't all that expensive, but then into the profit margin you have to look at advertisement

    Consider Springfield Armory is JUST a marketing company (relabeler, and for the M1A and assembler) Or EAA, a company that sell a good product (the Tanfoglio TZ line and subsequent versions) but has crappy CS and little marketing
     
  4. Sobel

    Sobel Member

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    The raw materials, labor cost, energy costs, and other direct costs of each unit if you will. I wouldn't want to ask for all the info. But, if your willing to share I'd love to know.
     
  5. signalzero

    signalzero Member

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    I'd wager that you'll have a difficult time finding that exact information due to a variety of reasons (companies protect this kind of data). But as an example, I believe the average Glock pistol costs around $60 to produce.
     
  6. Sobel

    Sobel Member

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    Wow and they charge 400+ thats a nice profit margin.
     
  7. Slamfire

    Slamfire Member

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    Break it down.

    Facilities cost. How much does it cost to own a chunk of land, put machinery on it, water and electricity, and taxes.

    Non Recoverable Engineering. How much did it cost to design the thing?
    Test: How much did it cost to test the prototype design?

    How much for the touch labor?

    I met in the pits at Camp Perry, the production manager for a Chrysler transmission factory. He said it cost $800 million to seamlessly change 13% of the parts in one transmission.

    I don’t see how you can buy a small firearms manufacturing plant for less than $100 million, at least.

    And that development of a new firearm will cost at least $30 million.
     
  8. Sobel

    Sobel Member

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    Very true, on higher level of running the entire business and such it seems kinda small of a profit but on a I have all the parts and stick em together for 60$ and charge you 550$ I would be a bandit. Can't forget you pay for the brand too which is the same across all sales. Nikes will always be expensive compared to a less known brand.
     
  9. JustinJ

    JustinJ Member

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    Profit is money after all costs, including all those mentioned in post #2. Not just difference between cost of parts and retail price. Also remember that the retail price is not what the maker gets for the gun. Also, the maker does not get anything near what you pay in the store per unit. They sell it to a distributor who sells it to the stores. Sometimes there are importers/exporters in there as well. Each has marked the gun up along the way.
     
  10. 45_auto

    45_auto Member

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    All you have to do is pay a couple of dozen engineers 100K/year, a dozen CNC machine operaters 70K/year, a dozen techs about 50K/year, half a dozen managers 200K/year, a dozen admins about 50K/year, buy 8 or 10 CNC machining centers for $1,000,000 or so apiece, buy some buildings or pay some rent to the tune of $20K/month, come up with about $5K/month in utilities, spend several million on advertising each year, then you can probably produce handguns for about $60 each. Don't forget to add the lawyers fees for complying with federal and local laws and lawsuits into your costs too.

    Dealers sell them for $400+. Glock wholesells them for around $300. Figure a couple of hundred per gun goes into supporting all the Glock infrastructure, and Glock probably makes a profit of $30-$40 per gun.

    Just found this:

    If Glock makes guns for $60, and makes 68% profit per pistol, that's about $40 per pistol.
     
    Last edited: Jan 6, 2012
  11. jmr40

    jmr40 Member

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    It is quite possible they have less than $60 in raw materials. It is also quite possible that the 1911 someone pays $1,200 for only cost the manufacturer around $200 to make. That is until you factor in the millons spent on R&D, advertising, insurance, taxes, shipping, employee wages, etc.

    A gun or any other consumer products value has no connection to what it costs to manufacture it. With many items we regularly buy will cost the manufacturer less to make, than the price of the package it comes in. Software that costs the consumer $200 only costs pennies to produce.
     
  12. Skribs

    Skribs Member

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    Not to mention the price of any support staff they have for customer support.
     
  13. Bubbles

    Bubbles Member

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    Don't forget 10-11% FAET is rolled into that retail price.
     
  14. danez71

    danez71 Member

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    Ruger's gross margin was 32.9% in 2010 if that helps.
     
  15. PLRinmypocket

    PLRinmypocket Member

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    The first gun of a new design costs about $250,000 to $500,000 and 1-2 years work to develop.
    The guns after that cost $100-$1,000 each to produce, depending on the complexity.

    just a rough estimate though, and based on designing a gun for mass production. Designing and building a one-off custom gun would take much less.
     
  16. PT92

    PT92 Member

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    Not to oversimplify, but I am quite certain that the general rules of Capitalism permeate every industry including firearms--meaning there will be some fine reputable companies that operate fairly within the general regulations/principles of supply and demand and those companies that try and gouge customers as well.

    -Happy New Year
     
  17. simonm2211

    simonm2211 Member

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    If you mean by gouging that they charge the maximum amount the market will pay, that is capitalism. It's the whole point.
     
  18. PT92

    PT92 Member

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    Doesn't mean I like to bend over and grab ankles at the gas pump for example.

    -Happy New Year
     
  19. devans0

    devans0 Member

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    IMO, the cheap guns are AK's. The Kalishnikovs were a "people's gun" that were low-technology stamped metal parts on a tough but not as accurate rifle. Even a third world country could pound them out, they are cheap to manufacture, thus they are favored by developing countries.

    If you think that Glock is making an obscene profit, buy shares in their company and become rich.
     
  20. Sobel

    Sobel Member

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    Well I only used glock as an example. I've seen some pretty expensive ak's as well.
     
  21. captain awesome

    captain awesome Member

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    i once contacted magnum research with an idea for a new revolver, and was quoted something like 300k to get one in my hands. and that is with them already owning he plant and machinery to do it. R&D is very expensive.
     
  22. simonm2211

    simonm2211 Member

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    The domestic gun market is so fractured and so diverse, it is difficult to see how any manufacturer could be making large (percentage) profits. There are so many suppliers competing for the same dollars that if someone comes out with a hit product, another manufacturer will surely try to replicate the success. Costs that go into running the business that are not always considered but are usually very significant include inventory holding costs, marketing, administration and depreciation of property, plant and equipment to name a few. There is also the cost for product obsolescence and covering the costs of product lines that lost money. Throw in payroll taxes, intellectual property protection legal fees and the list grows. The cost of raw materials, labor inputs and CNC machining centers (amortized over perhaps 10 years) is just a fraction of it.

    A gross margin of 68 percent on a cost $60 means that the price achieved by Glock would be $187.50 ($60/(1-0.68). Their net margin would be significantly less with many costs coming out of the $127.50 difference.
     
  23. Sobel

    Sobel Member

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    Never looked at it like that. Even tho they aren't making tons on one product I'm fairly certain they are doing fairly well in the grand scope of things.
     
  24. Sobel

    Sobel Member

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    holy cow, that is an astonishing amount to get it to you. Tho it seems kinda nice that they would put that much into their service.
     
  25. Shadow 7D

    Shadow 7D Member

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    well consider you are paying a machinist and his union dues and the COST of him NOT working on production (so his wages and the cost of him NOT working on the line)

    and the engineering to make sure it won't blow up in your face, the hand mating,
    AND here is the kicker, the testing, proofing the gun, accuracy, and then you have to think of what happens to improve the prototype.

    You could probably cut the parts at a local machine shop if you had the blueprints already made at a local shop (esp a CNC, but realize that will cost lots more than a friend doing on his off time when the shop is closed)

    You can off shore it to places like Zastava, the other CZ, makers of the Mini-Mauser and the M48, and the M57 tokarev, and the EZ line (sig P6 clones) of EAA, or FEG (doing walther contract production and military) or the Bulgarian firms (don't recall thier name)
    Radom will do contract production as will CZ

    the point is this, ANY place that you use will charge LOTS, I think Zastava will sell R&D on thier CNC with 'engineering' technical assistance' for something like a 100 hours for 200k (from a web page on their site about 2 years ago, no longer there)

    And you are buying time on a machine that can mill a forging every 30 seconds to run a one off.

    Kinda puts a custom build by a local gunsmith in perspective
     
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