Fat Old Guy
Member
Again, you show that you don't know the difference between mark-up and profit.
Man am I upset!!!
- Thread starter Fackler Rebel
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Again, you show that you don't know the difference between mark-up and profit.
Wholesale on a new M57 is probably $475- $500.00. The dealer would ask perhaps $575.00 for your gun, and snap up the first $500.00 offer if sales are slow that day. Also, in some areas, the 41 magnum is considered to have a limited market, and can be difficult to sell.
Magnumdood
Member
Let me take a shot (pun intended)
'Tis not a difficult concept to grasp.
Markup is the difference between what the dealer paid for a firearm and what he sells it for. He takes all his costs of operation from the markup, and hopefully there will be some left as that is his profit on that gun sale.
'Tis not a difficult concept to grasp.
FishyOne
Member
No business can. Mark up and profit are very different. A 50% mark up will often yield a 10% profit.
Arik
Member
So what. He offered less. Big deal. Everyone is so sensitive these days. My LGS simply goes on GB to see what the market price is. If they buy a gun from you it will be for sale the next day at about $70 more (if they paid you $300 sale price is $370). Some guns move fast some dont. They take a gamble too. They have a few guns that have been sitting around for over a year. That's money spent that they have not gotten a return on yet. At the same time ove been able to pick up some nice 3rd gen Smiths for $250 or less. That means someone sold them for about $175. You win some you lose some.
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There are other aspects that most people don't realize. First, dealer discount on new guns generally ranges from 10 to 20% of MSRP. Then the dealer is always asked to discount the new guns, reducing his margin to nothing. Just maintaining an adequate inventory chews up massive amounts of money, and it just sits there until a gun sells, then most of the money that comes in has to go right back out again to replace the inventory item that was just sold. Nobody can make money on new gun sales. Where can a dealer try to make money? Used gun sales - but remember, the dealer effectively makes his money (or loses money) when he buys the gun - buy too high, with consideration to carrying costs, overhead, the time that gun will sit there until it sells, etc., and he must offer significantly below "retail/market" price, whether it is a junky old Taurus or a desirable/collectible S&W. Honestly, the offer of $350 for a Model 57 (especially with rubber grips) was quite generous, as a 57, although desirable to most of us who frequent the forum, is not going to move quickly in a typical gun shop. Most people are looking for plastic-fantastic semi-autos these days (yuck), and revolvers, other than J-frames and their competition, are anything but hot sellers. Add in the fact that the .41 Magnum has never attained widespread popularity, and ammo selection is limited, availability is poor, and cost is high (remember, the vast majority of the gun buying public does not reload), and the dealer is going to watch that gun sit in the case for months, possibly years in some areas, and every day it sits, that $350 he paid for it is being added to by a pro-rata portion of the overhead - rent or mortgage payments on the building, salaries to employees, utilities, taxes (real estate, income taxes, etc.), maintenance, and many others, and you can see how the dealer's $350 basis in that gun may very well become an effective basis of $450 to $550 within a relatively short time. If he sells it for $600, after sitting on it for 6 months, his profit margin on that gun (assuming he now has an adjusted cost basis of $500 in it) equates to a 20% profit, which isn't really all that much. Most shops would have offered quite a bit less, probably in the $200 - $250 range. The truth of the matter is, unless you absolutely must have some cash immediately, never sell a gun to a gun or pawn shop, they have to give you a much lower price than what you could get if you sell it to another gun guy - it's always been that way, and always will be, 'cause it has to be. They're not trying to do you dirt or insult you, it is just the requirement of being in the gun business.
Buying used guns at anything over 40-50% of "retail" is a sure recipe for going out of business. Sort of like a friend of mine who went into the business of buying and selling used business jets - on every deal, he "bought high and sold low," lost over $40 million in the period of one year (then he kept trying for another year or two, and the banks that had backed him kept lending more money - millions and millions - in hopes that he would "turn the corner" and be able to start repaying the money. Of course, it didn't work, they were only loaning the money in order to try to recoup a bad initial decision, because there was just so much money involved. Of course, it didn't work. He didn't take into account the expenses involved in his operation, so, on the rare occasion that he sold a jet for more than he paid for it (rather than taking a huge loss on the face amounts of the deal, which was more typical for him), he still never actually made any money, as the expenses of his office, hangar space, fuel for the jets, hired pilots, etc. just ate him up. A gun shop is no different, except for the amounts of money attributable to inventory, maintenance and overhead. BTW, just as a humorous aside, I returned from a trip somewhere in my airplane one day and refueled the airplane. My friend had been trying to get checked out in a Lockheed JetStar (a 4-engine bizjet built in the early '60s which was a major fuel-guzzler), and had been shooting touch-and-goes in it with a crew and instructor pilot. We both got to the front desk of the FBO at about the same time, my fuel bill was for about 70 gallons of 100 octane avgas (I had just returned from SoCal), his was for 5,400 gallons of Jet A. I got my bill and paid while he was standing behind me with his Amex card at the ready, and when he heard the two totals, you could just see his expression of "what the heck am I doing this for?" Of course, the ego factor overrode that consideration, and he kept on doing it. The banks finally turned off the spigot, his corporation declared bankruptcy, and he went on to fail in numerous other businesses and pretty much squander a huge trust fund set up for him by his parents.
Buying used guns at anything over 40-50% of "retail" is a sure recipe for going out of business. Sort of like a friend of mine who went into the business of buying and selling used business jets - on every deal, he "bought high and sold low," lost over $40 million in the period of one year (then he kept trying for another year or two, and the banks that had backed him kept lending more money - millions and millions - in hopes that he would "turn the corner" and be able to start repaying the money. Of course, it didn't work, they were only loaning the money in order to try to recoup a bad initial decision, because there was just so much money involved. Of course, it didn't work. He didn't take into account the expenses involved in his operation, so, on the rare occasion that he sold a jet for more than he paid for it (rather than taking a huge loss on the face amounts of the deal, which was more typical for him), he still never actually made any money, as the expenses of his office, hangar space, fuel for the jets, hired pilots, etc. just ate him up. A gun shop is no different, except for the amounts of money attributable to inventory, maintenance and overhead. BTW, just as a humorous aside, I returned from a trip somewhere in my airplane one day and refueled the airplane. My friend had been trying to get checked out in a Lockheed JetStar (a 4-engine bizjet built in the early '60s which was a major fuel-guzzler), and had been shooting touch-and-goes in it with a crew and instructor pilot. We both got to the front desk of the FBO at about the same time, my fuel bill was for about 70 gallons of 100 octane avgas (I had just returned from SoCal), his was for 5,400 gallons of Jet A. I got my bill and paid while he was standing behind me with his Amex card at the ready, and when he heard the two totals, you could just see his expression of "what the heck am I doing this for?" Of course, the ego factor overrode that consideration, and he kept on doing it. The banks finally turned off the spigot, his corporation declared bankruptcy, and he went on to fail in numerous other businesses and pretty much squander a huge trust fund set up for him by his parents.
Fat Old Guy
Member
People who don't work in retail don't realize how slim margins are on some items. For example, most brick and mortar stores that sell big screen TVs make virtually nothing on the TV itself. Seriously. Most of us wait for sales and when a TV goes on sale, the mark-up can be as little as $25 on a $1,000 TV.
Insane? Yep. But that's the world that we've built with on-line shopping. So you go into Electronics R Us and waste the time of the guy who works there and then run home to buy on line from Amazon.com. You save $50 but the guy whose time you've wasted doesn't get paid because you've denied him his commission. So where does Electronics R Us make the money to pay the salesmen and the utility bills, not to mention the rent? From the cheese on the sale.
They make money on that repair plan that they offer you. I'm sure that you'll scream "Those things are a rip off!!" Yeah, sure they are. Wait until something goes wrong (which it will) and the repair bill for your $1,000 TV is $600. Then you'll scream even more.
They also boost their profitability with cables and a DVD player or a wall mount. When you try to cheap out and buy your cables on-line what you are really doing is ensuring that the salesman whose time you've taken up will not have a job next week.
The same is true in the gun world. A gun shop sells guns but pays the rent by selling ammo, holsters, slings, etc..
Insane? Yep. But that's the world that we've built with on-line shopping. So you go into Electronics R Us and waste the time of the guy who works there and then run home to buy on line from Amazon.com. You save $50 but the guy whose time you've wasted doesn't get paid because you've denied him his commission. So where does Electronics R Us make the money to pay the salesmen and the utility bills, not to mention the rent? From the cheese on the sale.
They make money on that repair plan that they offer you. I'm sure that you'll scream "Those things are a rip off!!" Yeah, sure they are. Wait until something goes wrong (which it will) and the repair bill for your $1,000 TV is $600. Then you'll scream even more.
They also boost their profitability with cables and a DVD player or a wall mount. When you try to cheap out and buy your cables on-line what you are really doing is ensuring that the salesman whose time you've taken up will not have a job next week.
The same is true in the gun world. A gun shop sells guns but pays the rent by selling ammo, holsters, slings, etc..
Fat Old Guy
Member
A twin-engined Cessna? Are you Sky King? How is Penny?
Sebago Son
Member
Really?
Pure BS. Sounds like you work for a union. Clearly you do not understand the difference between Gross and Net profit. Dig out a balance sheet sometime and learn a few things...
Pure BS. Sounds like you work for a union. Clearly you do not understand the difference between Gross and Net profit. Dig out a balance sheet sometime and learn a few things...
Thanks Guys, looks like there is no need for me to respond...
Sometimes I wonder how one goes through life looking down a tunnel most of the time.
Sometimes I wonder how one goes through life looking down a tunnel most of the time.
scooter123
Member
IMO that off of 350 dollars was FAR from an insult, in fact it's a offer that would be made ONLY to someone well thought of. Because that offer was actually rather high for a used model 57.
First, consider the caliber. When is the last time anyone has seen either 41 special or 41 Magnum at a local Walmart. I live in a large metropolitan area and I only know of 1 single gun shop that keeps the 41 caliber in stock and it isn't cheap. So, what we have here is a reloaders caliber and you've probably eliminated 80 or 85% of the gun buying public with that caliber.
Next up is the barrel length. If you haven't niticed it yet revolvers aren't as common as they once were at shooting ranges. Those who do still shoot revolvers tend to prefer them with 4 inch and shorter barrels because the longer barrels are difficult to carry. BTW, sound familiar, our OP was selling his 6 incher because it's tough to carry. In my area a revolver with a 6 inch barrel will sit in a case until a Handgun Hunter or Silohuette shooter happens in. This means that revolver can sit in a showcase for a year or more, unless the shop gets wise and decides to dump it at it's trade price. BTW, many who find a bargain got that bargain because that particular dealer decided to "thin the herd" and get rid of stock that wasn't moving. I'll also point out that the really really smart dealers keep their customers numbers and interests on file and will actually make calls to turn over their stock faster.
Keep in mind, dealers don't made ANY profit on stock sitting in a showcase, they actually have to sell that stock in order to reap a profit. Meanwhile they still have to pay their personel, pay for the lights and water, pay taxes, and pay rent or a mortgage. That "outrageous" markup can disappear pretty quickly when a gun won't sell.
First, consider the caliber. When is the last time anyone has seen either 41 special or 41 Magnum at a local Walmart. I live in a large metropolitan area and I only know of 1 single gun shop that keeps the 41 caliber in stock and it isn't cheap. So, what we have here is a reloaders caliber and you've probably eliminated 80 or 85% of the gun buying public with that caliber.
Next up is the barrel length. If you haven't niticed it yet revolvers aren't as common as they once were at shooting ranges. Those who do still shoot revolvers tend to prefer them with 4 inch and shorter barrels because the longer barrels are difficult to carry. BTW, sound familiar, our OP was selling his 6 incher because it's tough to carry. In my area a revolver with a 6 inch barrel will sit in a case until a Handgun Hunter or Silohuette shooter happens in. This means that revolver can sit in a showcase for a year or more, unless the shop gets wise and decides to dump it at it's trade price. BTW, many who find a bargain got that bargain because that particular dealer decided to "thin the herd" and get rid of stock that wasn't moving. I'll also point out that the really really smart dealers keep their customers numbers and interests on file and will actually make calls to turn over their stock faster.
Keep in mind, dealers don't made ANY profit on stock sitting in a showcase, they actually have to sell that stock in order to reap a profit. Meanwhile they still have to pay their personel, pay for the lights and water, pay taxes, and pay rent or a mortgage. That "outrageous" markup can disappear pretty quickly when a gun won't sell.
StatesRightist
Member
Wrong, but whatever floats your boat. You have no idea what I do and don't know. The term profit can be used as a cumulative term or on an individual deal.
StatesRightist
Member
Maybe you need to take a pill this morning? You sound like you need to get over whatever is bothering you and get over venting it at me.
Ok, I'll add my two cents. I feel lucky that I have a local gun shop that I enjoy frequenting. The dealer has become a friend and I trust him. I have bought a lot of nice guns from him, all fairly priced. Would I get the best deal if I sold a gun to him? Certainly not, he HAS to make a profit. I get the best deal by selling to a collector or consumer who really wants the gun for himself, not for resale. Trading at a gun shop can be a different matter, all depends on desirability/marketability.
Yes, there are shops where the dealings aren't so honest. But my guess is most dealers are good guys who are trying to run a successful business. I can just imagine how difficult that is in today's economy and political environment.
Gun shops provide other services too. A place to hang out, a cup of coffee, friendly banter with like-minded strangers, the ability to ogle over guns you wouldn't otherwise be able to see/handle. etc etc. Where else are we going to go on a cold winter afternoon after lying to the wife that we are just running out to the auto parts store for some motor oil?
Yes, there are shops where the dealings aren't so honest. But my guess is most dealers are good guys who are trying to run a successful business. I can just imagine how difficult that is in today's economy and political environment.
Gun shops provide other services too. A place to hang out, a cup of coffee, friendly banter with like-minded strangers, the ability to ogle over guns you wouldn't otherwise be able to see/handle. etc etc. Where else are we going to go on a cold winter afternoon after lying to the wife that we are just running out to the auto parts store for some motor oil?
Sebago Son
Member
How does this response speak to your lack of understanding of the basic tenents of business?
Have you ever run a gun shop? Have you ever run a business of any kind?
C.S.63
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Well the shop I worked at for A while if the item was taken in for 350.00
and cash paid out the turn around would have been 525.00 and that would have been tax included OTD. If the item was done on a trade lets say for a handgun that was selling for 600.00 OTD you would have done a bit better and been offered about 400.00 with 200.00 being the difference to be made up. What would hurt a lot of people on a sale or trade is not having box and papers and the firearm being dirty or abused/rough, You always do a lot better on trades.
And to come up with the # for a CASH PAYOUT you take the blue book value as per condition and all items(box papers grips etc.) and offer 75% of that. The exception to this is the regular customer that does a lot of business and then you bump to 85% (LGS business 101)
Oh on new Firearms the multiplier is 1.4, Used is 1.5 = wholesale to retail tax included
Oh and the only Item that is adorned when behind the counter is a lettered registered magnum!!! Hope this helps a bit. For the owner it is all just units
Oh and the word on the street is S&W just did another Price increase, Ouch
and cash paid out the turn around would have been 525.00 and that would have been tax included OTD. If the item was done on a trade lets say for a handgun that was selling for 600.00 OTD you would have done a bit better and been offered about 400.00 with 200.00 being the difference to be made up. What would hurt a lot of people on a sale or trade is not having box and papers and the firearm being dirty or abused/rough, You always do a lot better on trades.
And to come up with the # for a CASH PAYOUT you take the blue book value as per condition and all items(box papers grips etc.) and offer 75% of that. The exception to this is the regular customer that does a lot of business and then you bump to 85% (LGS business 101)
Oh on new Firearms the multiplier is 1.4, Used is 1.5 = wholesale to retail tax included
Oh and the only Item that is adorned when behind the counter is a lettered registered magnum!!! Hope this helps a bit. For the owner it is all just units
Oh and the word on the street is S&W just did another Price increase, Ouch
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StatesRightist
Member
1. If everyone would kindly go back and read what I said, I said profit, not markup. 90% of the reactions on here on because Turbo can't read.
2. I attempted to chill out the conversation between us because, generally speaking I agree with a lot of your posts.
3. Since you want to continue in this vein. Yes, I have and I don't know how I've created and sold three businesses, run one today and got an Economics degree from a top 20 school w/o all of you guys help. You guys, your assumptions and half reading's aside, I know I actually have an iotas clue what I am talking about.
Now, do we continue the facile assumptions on many of your parts or can we back up and be civil. As I said, you are not someone on here I'm looking to get into a row with, but my patience has limits and some of the ill founded assumptions, lack of reading comprehension and the assumed pseudo superiority of some of these posts are quickly using up my patience.
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StatesRightist
Member
My point was and still is, a business has a right to make a profit on me, but I'm not taking $350 for a $600 item. I'll be fair, but that is not fair in my opinion.
C.S.63
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INFO
Wholesale on the classic 57-58s was roughly 725.00 that is with no
distributor discounts! some shops with internet sales run the gambit of quantity sales. Just look where the bidding on a bunch of new stuff starts wholesale + shipping, some manufactures discount sales with interest due the last quarter of the year, why do you see sales in some shops on certain manufacture's items in the last quarter ,move old stock or the interest bill is due which is quite pricey (19-25%) on balance sheet.
Wholesale on the classic 57-58s was roughly 725.00 that is with no
distributor discounts! some shops with internet sales run the gambit of quantity sales. Just look where the bidding on a bunch of new stuff starts wholesale + shipping, some manufactures discount sales with interest due the last quarter of the year, why do you see sales in some shops on certain manufacture's items in the last quarter ,move old stock or the interest bill is due which is quite pricey (19-25%) on balance sheet.
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