The cost of guns

[Seattleimport]

I recently bought a revolver, paying about $800 for a Beretta Laramie. I'm happy to pay this price--I love the look of the gun--but I got to wondering: what was the manufacturing cost of this weapon? What kind of margin is Beretta making?

As a single-action revolver it's a very simple device, made of just a few parts, all of which can be stamped or cast in a factory. I figure Beretta's materials & labor cost per gun is less than $50, but that's just a wild guess.

Does anybody have any hard data on the manufacturing cost of guns? Specifically, revolvers?

 

[The Lone Haranguer]

Don't forget the gun shop's markup in the equation. At $800, I suspect that played a large part in the price.

 

[eye5600]

Back in elementary schools, they told us all about Eli Whitney and interchangeable parts. It was a bit of an exaggeration. Many guns are still are built with hand work, and hand fitting, though I don't know about yours.

 

[elrod]

I figure Beretta's materials & labor cost per gun is less than $50, but that's just a wild guess.

O.K., how about freight, capitol costs (buildings, machines, furniture, etc.), profit, salary expense (management), insurance, opportunity costs, license costs, tariffs, or any of the other thousand or so hidden costs behind that purdy Laramie?
I often ask myself if I could make something similar, or to serve the same purpose for 10 times what the retail price is of that product. Most of the time, the answer is no.

 

[Seattleimport]

Oh, I understand that the price has to cover a lot more than materials & labor. I've got a business degree.

There's no hidden agenda here, or an angle to "prove" that guns are outrageously priced. It's just simple curiosity about the direct, per-unit cost of manufacturing.

 

[Duke of Doubt]

Materials and machining.

You can pour a plastic water pistol for pennies.

Forging, machining and tempering a titanium or scandium alloyed revolver is somewhat more involved.

Assembling the parts isn't all that expensive. Timex wristwatches were cheap.

 

[logical]

I think you mean you "have" a business degree.

The cost of a 3 carat diamond is 2 cents worth of coal and time.....

It is very common for direct raw material plus direct labor to be only 20-50% of a product's selling price, but that has very little coorelation to how much profit is in the job. Sooooo..direct cost (if that is really what you want to know) is really a meaningless number. "Direct cost" by definition does not include capital equipment, management overhead, marketing cost, shipping cost, profit, commissions, royalties, etc. Is the plant operating at capacity?, is it operating at peak efficiency, what are scrap rates, is the equipment brand new or fully depreciated? and on and on.

Saying the material and cost is $50 is meaningless without discussing how far back in the raw material chain you go and not including all the other costs of manufacturing. Beretta may be a respected name but if it was possible for someone to make that gun for even under $400...somebody would and they would price them at $500 and Beretta would never sell another gun.

It is very easy to take $100 in raw material, add $30 direct labor, sell the result for $350 and lose money......we do it every single day here in the automotive business.

 

[Duke of Doubt]

The history of the gun which eventually became the XD is a wonderful case in point. They were $299 when they hit the U.S. market under another name, AND they were better made, with wooden grips.

 

[Tirod]

It's not the cost of labor and materials. It's not even the dealer markup, which many dealers here have explained as bordering on starvation, down to "not worth my time to order."

Firearms require the maker to engineer a lot of failsafe and idiot prevention into the product. Even a simple Single Action revolver needs to be held to a high degree of performance. Most are designed to operate without wear, handle severe abuse, and still be as practical in cost as possible.

About the only tempered parts are springs - anything in contact with the chamber has to be designed to handle proof loads at the limit of it's highest temperature capacity, and that capacity is carefully spelled out. We may not like the idea our latest supergun is machined out of dead soft materials, but it's necessary after someone runs 10 18 round mags of +P+ through it as quickly as they can. Tempered steel loses strength over 450* and fails.

Government requirements for liability insurance also figure in. I have seen figures as high as 35% for each gun shipped out the factory door. With that in mind, maybe it's cheaper for Ruger to issue a recall than make us pay even more for the stupidity of a few shooters.

There is also the cost of shipping and transportation, paper work requirement, import and excise taxes, the Pittman-Robertson tax, advertising, and the intelligent assessment by marketing about how much the market will bear. Obviously, when Glocks sell bulk for $400 on contract bid, and HK's for $850 one at a time to a dealer, volume also effects the price.

The gun market is pretty stable on the manufacturing side - things aren't going to change much as we wait for the next improvement, like polymer frames. It's not like HDTV's, which have come down 50% in price over the last 12 months. The tooling on them is paid for now, so they can be cut to the bone. Tooling for firearms may last for decades, but the actual profit doesn't get better over the years because of all the overhead.

 

[Duke of Doubt]

Still, the HS2000 was a lot cheaper before it became the XD. Cheaper still before it became the HS2000. Same gun.

 

[owlhoot]

I hate to rain on your parade, but you paid too much by $250 to $300.

 

[Seattleimport]

It is very common for direct raw material plus direct labor to be only 20-50% of a product's selling price, but that has very little coorelation to how much profit is in the job.

I didn't ask about profit. And I'm not interested in how Beretta recoups its investment in property, plant, equipment, or anything else on the balance sheet. All I am curious about is direct cost of goods sold for one revolver.

Anyway, I found an answer from a 2002 post on thefiringline:

"I'm in the industry, and I can say that a revolver costs much more than a polymer pistol. The lower half of a polymer pistol costs around 60 bucks, assembled. That's less than the frame (without the sideplate) and cylinder of a S&W revolver cost, with no handwork applied.

I'm guessing that the frame of a G17 with the rails insert molded is costing Gaston about $18. A S&W revolver frame is somewhere around $40.

I have no experience with manufacturing an all steel pistol, so I'm not sure how much the frame of, say, a 1911 cost to make, but it is probably around $35 or $40, if its made in volume.

As far as the tooling being paid for, industry never stands still. Most of the old tooling is long gone, and the companies that haven't made the effort to modernize are on their way out. Ever priced a Colt SAA? I'm sure alot of that cost is the result of using old machinery."

 

[Seattleimport]

I hate to rain on your parade, but you paid too much by $250 to $300.

Oops! Well, I am interested in getting another one. Please post the link to that $550 - $600 6.5" Beretta Laramie!

Thanks!

 

[The Deer Hunter]

I work at a company that has a huge machine shop. They make a lot of seemingly mundane items, like thrust pads (round cylindrical objects), which are very expensive and time consuming in itself.

You have to figure all the expenses; machining each piece, labor for the guy working, all the different hand that touch the parts. Then, they of course mark it up, and it's marked up again at the retailer.

I know that's not scientific at all, but when you consider all of the different expenses, they probably aren't making a whole lot.

 

[scrat]

Years ago my brother in law and i went in to get a machine shop an automotive machine shop. My brother in law was an expert machinist both of us had years of experience. We purchased a machine shop that someone else tried to start up. We even had all the hookups on parts as well. So we knew we could do it rather in expensive. The problem was the cost of the machinery. After about 6 months we had to sell it as well. The previous guy had bought all brand new lathes and equipment. In the end it was like we were working for about 9.00 an hour. After paying off all the equipment. Ya we could have refinanced and i am sure that would have helped our bottom line. But same time this was in the mid 90's and engines were changing. The 100 thousand mile chevy that needed a new engine was going away. A lot of imports were lasting a lot longer. Seemed most of the work that were were doing were repairs and head jobs. We tried the performance market and the marine market but it has all changed. Heck in my garage right now i have a bmw with over 237000 miles on it and it runs like new. Maybe that will change today as people do not have the money to be buying new cars but at the time for the past 15 years or so its a dying business to rebuild engines when most people just dispose of the car. Then the cars run a lot longer than they used to. So with that i am sure its possible to make a gun. I am sure if i had a good lathe and mill i could make one up. I for sure have the experience in it. Possible yes. Practicle no. Then like others have mentioned if your going to go into business to do that the cost of machinery, skilled labor, workers comp will surely drive the cost of the final product up. In the end you wouldnt be able to sell enough quick enough to make a profit and keep the company a float especially in a time when people are just not spending money.