The Remarkable Number of Factors Impacting Gun Prices

[Kynoch]

I have long wondered about today's ridiculously high price of guns compared to say the latest golf club or power tool? The canned and axiomatic response "supply and demand" really doesn't do much to explain why guns are so expensive. After thinking about it a while, I am rather amazed at the number of factors that impact the price of guns. While I'm sure there's more here is my list:

* Gun making is historically a "feast or famine" business that keeps manufacturers (and their bankers) rightfully wary about increasing production capacity during high demand periods.

* Limitations on importing certain types of guns which impacts competition.

* Limitations on importing guns from certain countries which impacts competition.

* The cost of liability insurance.

* Government requirements can materially increase the purchase price of a gun.

* Gun making is a non-PC business that keeps other sporting goods companies from getting into the business which also impacts competition.

* Business credit to gun makers is now tightening-up due to this non-PC image. This may well increase their cost of capital.

* Fund managers and other investment holders have begun to prohibit firearms stocks as part of their portfolios which will no doubt impact stock prices.

* Unlike power tools and computers, guns don't wear out for the most part. Imagine trying to build a strategic 5 year model for a product that doesn't wear out and whose sales demand is largely drive by emotions? You might well be tempted to limit investment, impacting boom-times like today.

 

[taliv]

actually, i think many factory guns are at historic lows, especially adjusted for inflation.

consider the price of bread, gas, electricity, cars, a burrito, a coke etc 10-20 years ago. all of those things have doubled in price or worse.

but street price on a colt AR is what? $300 less than it was back then? plastic wonder pistols haven't doubled in price. most modern guns are about what they used to be or less.

now granted, custom stuff like surgeon rifles and wilson combat pistols have doubled. and imported junkers have gone through the roof ever since the supply was cut off by our government.

i don't think most of your list is accurate. for example, gun mfgs are largely protected from frivolous lawsuits. their liability isn't really worse than most and it's a lot easier than some (compare to the liability of doctors or airplane mfgs like Cessna)

and most sporting goods companies DO sell guns.

 

[rcmodel]

* Gun making is historically a "feast or famine" business that keeps manufacturers (and their bankers) rightfully wary about increasing production capacity during high demand periods.

Following heroic manufacturing efforts to provide the U.S. and our allies with arms for both WWI and WWII?

Both Remington and Winchester were left nearly bankrupt when government contracts were canceled at wars end.

No wonder they are a little leery of increasing production capacity to fill an artificial bubble that will surely burst one of these days.

rc

 

[happygeek]

* Fund managers and other investment holders have begun to prohibit firearms stocks as part of their portfolios which will no doubt impact stock prices.

If they dumped stock in Sturm Ruger & Co they're a **** fool. People that owned part of that company had to be the biggest winners to come out of Obama's first term. Their stock went from ~$10 to over $50 in less than 4 years

 

[RiverPerson]

How many of you are seeing guns going for the high prices people are asking?

I keeping seeing the same overpriced guns on armslist listed over and over. One local gun shop still has extremely expensive AKs and ARs from before Newtown. Another has some WASRs that he bought at the height of the panic that still haven't sold. I see overpriced mags and ammo just sitting.

A few months ago stuff was selling quickly, but people haven't seemed to come back down to Earth and realized that they can't cash in on panic buyers anymore.

 

[armedaccountant]

I just bought a SR40c new for 403.00 . Seemed very fair to me.

 

[Kynoch]

actually, i think many factory guns are at historic lows, especially adjusted for inflation.

consider the price of bread, gas, electricity, cars, a burrito, a coke etc 10-20 years ago. all of those things have doubled in price or worse.

but street price on a colt AR is what? $300 less than it was back then? plastic wonder pistols haven't doubled in price. most modern guns are about what they used to be or less.

now granted, custom stuff like surgeon rifles and wilson combat pistols have doubled. and imported junkers have gone through the roof ever since the supply was cut off by our government.

i don't think most of your list is accurate. for example, gun mfgs are largely protected from frivolous lawsuits. their liability isn't really worse than most and it's a lot easier than some (compare to the liability of doctors or airplane mfgs like Cessna)

and most sporting goods companies DO sell guns.

Take a hard look at what goes into say a DeWalt or Makita top of the line power tool versus a 1911 -- or for that matter a Glock from a design, materials and assembly standpoint. A Glock 17 at ~$600 vs. a Bosch hammer drill at $199.99? Take it a bit deeper and see what similar tools from Milaukee, Skil, etc. cost 30 years ago. They were largely more expensive than today.

Most sporting goods MANUFACTURERS do not make nor sell guns, nor would they get into the business due to the terrible PR that would follow no matter how good the $$ was.

While the "price of bread, a burrito, a coke etc." are not comparable to guns (guns are a durable item), all three are cheaper today then they were 20 years ago. I just bought quarts of Gatorade for $.88/each. I never saw such a low price 20+ years ago. Some with bead and fast food. A Whopper is definitely cheaper today then it was 30 years ago. Why? For the same reason sodas are also cheaper -- fierce competition.

Finally, more than one gun maker has commented at how much they spend on liability insurance and legal fees in their annual reports.

 

[Kynoch]

How many of you are seeing guns going for the high prices people are asking?

I keeping seeing the same overpriced guns on armslist listed over and over. One local gun shop still has extremely expensive AKs and ARs from before Newtown. Another has some WASRs that he bought at the height of the panic that still haven't sold. I see overpriced mags and ammo just sitting.

A few months ago stuff was selling quickly, but people haven't seemed to come back down to Earth and realized that they can't cash in on panic buyers anymore.

You bring up a very good point. Not all guns sell for their advertised price -- nor do accessories like mags.

I think my point is this. Strip apart a Glock and study each and every part. If a foreign manufacturer could clone (legally -- close but different enough not to trigger a lawsuit) a Glock 17 (which it could do) and sell it under the same circumstances that Black & Decker sells power tools (which it can not) without being penalized by the stigma of being a gun maker, that firearm would cost somewhere between $100 and 200.00 at Costco once competition truly kicked-in.

 

[Kynoch]

There are many products whose final price are dictated largely by their amortized design costs, materials costs, direct labor and overhead.

Guns are not. Not right now at least. They were in say 1980.

 

[Kynoch]

If they dumped stock in Sturm Ruger & Co they're a **** fool. People that owned part of that company had to be the biggest winners to come out of Obama's first term. Their stock went from ~$10 to over $50 in less than 4 years

That depends. You're picking a cherry. What did Apple do during that exact same period? In any event, that's not the point. If the stocks of gun makers is rejected by institutional holders it could very well impact their cost of capital -- not to mention their stock price.

 

[xxjumbojimboxx]

How many of you are seeing guns going for the high prices people are asking?

I keeping seeing the same overpriced guns on armslist listed over and over. One local gun shop still has extremely expensive AKs and ARs from before Newtown. Another has some WASRs that he bought at the height of the panic that still haven't sold. I see overpriced mags and ammo just sitting.

A few months ago stuff was selling quickly, but people haven't seemed to come back down to Earth and realized that they can't cash in on panic buyers anymore.

I thankfully didn't buy anything major during the panic.. I did drop 1100 bucks on a pap92 krink with 4 mags and 1000 rounds.. it was much less then they were going for at the time, but perhaps maybe 150 more then I should have spent. I got caught up in the panic because I always wanted one. But this is where the gougers get what's coming to them... This is why I don't understand why people cry about them, because eventually they'll loose. wasr10's will go back to 500 bucks, they are almost there now. Anyone with a 1200 dollar wasr is either going to have to sell it for small money, grin and bear it, or just wait till the next panic... Which could be tomorrow, or could be never.

I did see lots of people paying astronomic prices for things... But they're not getting them anymore. The ads you see are drastic attempts of people to get their money back. And it'll happen slowly, but people will eventually sell those guns at a massive loss.. and that's where we, the savy THR user, will be, Waiting... To pray on the gougers

 

[Kynoch]

What WOULD happen if say Makita, Hilti and DeWalt were able to design simple firearms (like Glocks), manufacture them overseas and sell them without restriction (or stigma) in places like Wal*Mart, Costco and Home Depot?

A Makita Model 17 would be less than 200 bucks. Probably closer to $100.00 with two mags once competition kicked in -- presuming there was a big enough market for them to even take notice.

That in turn would put tremendous pressure (pressure that currently does not exist) on Glock, SIG, Ruger, et. al. to compete and to lower prices.

 

[zdc1775]

What WOULD happen if say Makita, Hilti and DeWalt were able to design simple firearms (like Glocks), manufacture them overseas and sell them without restriction (or stigma) in places like Wal*Mart, Costco and Home Depot?

A Makita Model 17 would be less than 200 bucks. Probably closer to $100.00 with two mags once competition kicked in -- presuming there was a big enough market for them to even take notice.

That in turn would put tremendous pressure (pressure that currently does not exist) on Glock, SIG, Ruger, et. al. to compete and to lower prices.

I would have to agree with you that without any restrictions the firearms industry would be much different than it is today. There would be more competition, more innovative designs, and most likely lower cost for the consumer. However the government unfortunately will not allow that.

 

[beatledog7]

I agree with taliv. With the obvious exception of ARs from about January to May, actual firearm prices have been only slightly higher than before SH.

Availability of most models has been down, so asking prices for guns with surging popularity have been up to reflect that, but I don't see any real across-the-board upward price trend outside of normal inflation.

If anything, firearms remain a bargain compared to the things nearly everyone buys (food, energy, health care, shelter, subscription TV).

Ammo and handloading components are way up in price, and that has driven the cost of shooting up in the same way that high fuel and insurance prices have made driving more expensive.

 

[Sav .250]

Supply and demand...................

 

[Owen]

Don't forget the distribution system, records keeping etc.

Lowe's buys direct from the manufacturer. Most gun stores can not. The retail cost is usually about 2x the manufacturing cost for the handguns I'm familiar with, and the manufacturer gets the smallest slice of the markup.

 

[itsa pain]

actually, i think many factory guns are at historic lows, especially adjusted for inflation.

consider the price of bread, gas, electricity, cars, a burrito, a coke etc 10-20 years ago. all of those things have doubled in price or worse.

but street price on a colt AR is what? $300 less than it was back then? plastic wonder pistols haven't doubled in price. most modern guns are about what they used to be or less.

now granted, custom stuff like surgeon rifles and wilson combat pistols have doubled. and imported junkers have gone through the roof ever since the supply was cut off by our government.

i don't think most of your list is accurate. for example, gun mfgs are largely protected from frivolous lawsuits. their liability isn't really worse than most and it's a lot easier than some (compare to the liability of doctors or airplane mfgs like Cessna)

and most sporting goods companies DO sell guns.

why are imports junk?? you mean like an $90 SKS that will not jam or wear out and does not need a microscopicaly inspected bolt and barrel or be a scientist to figure out buffer weight, spring, barrel twist ,carbine rifle middy length etc. a so called combat gun that has to be coddled and cleaned by a dental hygienist every day I would consider junk, accurate but junk

 

[Bubbles]

Here's another factor consider: when almost any other consumer product fails it's not potentially a life or death situation for the consumer. If a firearm fails to go bang on the range, get it fixed... unless it's your carry piece and you're being attacked. That cheap gun just became a rock.

Or let's say that handgun made overseas of cheap materials KB's in your hand. But hey, you're a price shopper, losing a few fingers is no big deal right?

Raw material prices for quality metal are up and not coming down. Oh and here's a tip - we don't even make the best steel or titanium in this country any more, it comes from Japan and Germany. Most firearms are made in the US thanks to federal law; US workers aren't cheap. Throw in liability insurance, 10-11% FAET, cost of complying with federal and state regulations, etc. and guns suddenly look pretty darned cheap.

 

[Queen_of_Thunder]

Quality guns increase in price. The rest are subject to the prevailing politcal winds.

 

[itsa pain]

there is no supply and demand when the supply is artificially manipulated by companies that pay off the govt to have monopolies. that is why Norinco who was well on it way to making classic guns cheap is banned so US companies can sell a 1911 for 1000 instead of 250 and an M1A for 1400- 2000 instead of 350 etc. I bought a norinco remake of the WW1 Winchester 1897 trench broom and it was better made then the originals

 

[tarosean]

I don't think their expensive at all compared to everything else now-a-days.

 

[P5 Guy]

What is the ratio of commercial sales of firearms to sales to agencies/governments?
Do firearms manufacturers take a loss on sales to agencies/governments that they tend to make up on commercial sales?

 

[Kynoch]

I would have to agree with you that without any restrictions the firearms industry would be much different than it is today. There would be more competition, more innovative designs, and most likely lower cost for the consumer. However the government unfortunately will not allow that.

You bring up a good point about innovation as well. Just imagine if the gun industry had the freedom, the goodwill and the revenue/profitability of other industries? Imagine if the major gun makers had designers and engineers in the same league as Honda, Apple and General Electric?

What's interesting is that when the demand for guns is driven up by the actions of government, the market acts completely different than if there weren't already preexisting government restrictions.

 

[leadcounsel]

Compared to other tools, sporting goods, etc. I think guns are 1) much more valuable and 2) much less expensive. I personally think that a gun is absurdly affordable given the potential to defend your life or hunt.

A set of golf clubs - which are simple metal shafts with a head, can easily run $1000.
A new snowboard or ski set - thin strips of wood and bindings, can easily run $1000.
A new quality power saw, which is a cheap motor, wheel, and blade can run a few hundred dollars.
A rubber car tire which is very simple is $100-$500.
A solid door for your home is $500. And that's just a cut piece of wood.
How about an aluminum baseball bat. $200.

And compared to the dropping dollar value, and other raw materials like oil, gas, electricity, etc. it's also quite affordable.

Finally, as mentioned, the cost of everything is high. A bottle of soda is $1-2. A gallon of milk is $4. Break, $3.

 

[Kynoch]

I agree with taliv. With the obvious exception of ARs from about January to May, actual firearm prices have been only slightly higher than before SH.

Availability of most models has been down, so asking prices for guns with surging popularity have been up to reflect that, but I don't see any real across-the-board upward price trend outside of normal inflation.

If anything, firearms remain a bargain compared to the things nearly everyone buys (food, energy, health care, shelter, subscription TV).

Ammo and handloading components are way up in price, and that has driven the cost of shooting up in the same way that high fuel and insurance prices have made driving more expensive.

Naw. It means nothing to compare firearms to "food, energy, health care, shelter, subscription TV" (even though food is often cheaper today than in year's past.) Guns are durable products, the balance are not except if you actually buy a house.

The best comparisons I can think of would be higher end sporting goods (like golf clubs) and higher end power tools. Though clearly not a perfect comparison they are close. Power tools are far cheaper than in years past. Even the latest and greatest cordless tools (which are not comparable to yesteryear's models) are cheap compared to guns.

You can pay big bucks for absolute top-of-the-line golf clubs from this year's catalog. You can also pay very little for what were the TOTL clubs just a few years ago. The competition amongst many golf club makers is BRUTAL -- particularly amongst the two biggest -- Callaway and TaylorMade. That level of competition simply doesn't exist in the gun world.

I laugh out loud at the thought of Callaway and TaylorMade making the statement that Ruger did -- that they were fully booked and that they weren't taking anymore orders. If either did something like that their competitors would SWARM after their customers.

In the gun world, such proclamations are treated as a badge of doing things right. They are good PR. In the golf world they would be viewed as a management failure.