How much should a dealer make off a used gun?

[bdj357]

What is a fair mark up?
Should it be based on a percentage or a set cash price?

Just curious, went with a friend who wanted to trade in a Model 629 S&W at a local shop...they offered him $275!!!! This gun was in really good condition.
Needless to say we walked away (I told him from the beginning to sell it here!)

As we walked out, we noticed on the wall the same gun, in a lesser condition for $625!

I know they have operating expenses, but....

 

[shooter521]

How much should a dealer make off a used gun? As much as they can.

Don't like the price? Don't buy it, and take your business elsewhere, as you did.

 

[shibumiseeker]

That's pretty typical in my experience. You only sell guns at a gun shop if you are desperate for cash or have a really good relationship with the owner or can sell on consignment.

 

[IndyGunSafety]

We set our prices based on what we can sell it for or think it's worth. You will sell it or buy it based on limits you set for yourself. Sometimes the two meet and everyone walks away happy. Sometimes everyone just walks away.

As for me... I'm not gonna pay a whole big bunch for a used gun of unknown care. Guns can look beautiful and be total paperweights. I suspect that shop owner was willing to risk 275 to make 300-400. We all have and set limits.

 

[00BlasterResto]

Yeah a big gunshop up North here runs about the same, less than half what the gun is worth. Like you guys we just chuckled and left.

 

[melensdad]

Yeah a big gunshop up North here runs about the same, less than half what the gun is worth. Like you guys we just chuckled and left.

Actually it seems fair to pay about 1/2 the value.

The dealer has to buy the gun and risk the real possibility that NOBODY wants to actually buy it from him. That ties up the dealer's cash in non-selling inventory. Inventory sitting on the shelves, that never sells, costs money to hold so the dealer, stuck with a potentially bad investment, should be compensated for his risk.

Further, if the gun was a revolver, that is going to put it on the bottom end of the 'demand' pile in terms of what most people want to purchase. A 629 may be a great gun, obviously expensive when new, but most people would rather have a modern plastic pistol and the dealer can probably sell a dozen Glocks, a half dozen XDm's and a few others before he unloads the 629 revolver.

A gun shop is a business.

Business owners do not have unlimited cash.

When they buy inventory (new or used) they are willing to pay for what sells because they know they can turn it for a profit. But if they are buying something they know will be sitting in a display case then the are not going to pay top dollar because they now have tied up cash they can use to buy a gun that will sell. If they tie up their available cash in something that doesn't sell then they don't have cash to buy what does sell.

Its really pretty simple but many people don't understand the concept of how to make money in business. Inventory does not = profit. Inventory does = expense in real terms even if the accountants say it is an asset. The faster the inventory turns the better off the dealer is. The slower the inventory turns the more money it actually costs in lost opportunity sales, higher holding costs, tied up funds, etc.

 

[dice dealer]

Most of the gun shops I have friends working in will set the price by the Blue book of gun Values ...

If you take them a gun they will look it up in the book ...
If your gun seems to be ( to make it easy for the math experts )
worth $100 ...they will give you up to 60 % of the Value ....
They will do a 40% mark up ....the next guy sees it for $100 on the shelf ..offers $90 ....they take it all is well ...

but trust me any and all shops are gonna give themselfs a lil bargaining room...

 

[bdj357]

I am not really knocking someone who has a business to sell firearms, I know they have operating expenses.

I was more curious about the norm.

 

[IndyMonkey]

Your free to not sell your guns or shop dealers. Your also free to roof your own house.

 

[shibumiseeker]

Your free to not sell your guns or shop dealers. Your also free to roof your own house.

You mean there are people out there who will do it for you?

 

[00BlasterResto]

Your free to not sell your guns or shop dealers. Your also free to roof your own house.

I finished mine last weekend.
3 layers off, cut the overhang back 2 1/2 feet, hand full of fashia board, fixed a couple spots of decking, made an old shimney dissapear, pipe boots, couple vents, drip edge, 30# and a bit of ice and water, stack of black dimensionals and a few tabs for cap and BAM a nice straight roof that I know is done right!
OH! and about 5 cases of beer, because of course that would be alot of work by yourself.
(I don't mind what the shops markup is, just stating the fact of what they will give. People are on there own as to what they want to do.) I guess that if someone dosn't know anywhere else to sell it at, they are stucking getting hosed. Just as if you don't know what you are doing or are to lazy to get out and do it, you'll get hosed paying some one else to put a roof on your house.

 

[ROLEXrifleman]

From my experiance in the bussiness using the numbers we used.

current production guns were at minimum 30% below dealer cost, less if condition was bad. Why... because, why would I pay you MORE for a used gun when I can get it wholesale for less.

Reasoning... You have to price a USED model X with a $50 or greater savings next to a NEW Model X. The customer has to be given a reason to buy used and many in my AO would rather buy NEW if the savings were not greater than $50


We sell Model X new for $700, we pay $560 wholesale. Every new gun is a straight 20% mark up.
Customer comes in with a Model X in like new condition, we offer $392. The gun goes out for $600, saving the next buyer $100. We make over 45% on used, new customer saves $100

Proving 2 things:
1) There is no money in NEW guns to a dealer, all the money is in used
2) Original owners always take a bath on trade in

Out of production guns:

Get the blue book. Look up the condition and get a match. Then as a gun shop you have to kow what he buying trend is for that gun. For example, I don't care what the blue book says. A 1960's royal Blue colt python in a box is gonna bring HEAVY premiums. where as a NIB S&W 4506 is a whatever gun.

So if the BB calls for the 4506 to be valued at $500 in 98% condition, that's it's value... NOT what you will be offered.

Here is teh Pawn Stars mentality. I'm a store, I don't buy at retail prices. I have to make a buck. The diffrences with my shop was we actualy talked to peopel and tried to come up with what was fair for both sides. And if we couldnt we always offered consignement.

And theres the in on teh gun store mentality.

 

[shibumiseeker]

markup is, just stating the fact of what they will give. People are on there own as to what they want to do.) I guess that if someone dosn't know anywhere else to sell it at, they are stucking getting hosed. Just as if you don't know what you are doing or are to lazy to get out and do it, you'll get hosed paying some one else to put a roof on your house.

Oh, dunno about that. I've built several houses and I HATE the roof. If I could afford it I'd gladly pay someone else to do it

 

[451_Detonics]

A couple things to consider..

The gun shop wants to make money and in today's economy making that monthly nut is tough.

He already had one just like the one brought in...does he need two up on the wall not selling?

It is not a high demand firearm.

Whenever a gun came into my shop I told the seller he would be better off selling it elsewhere...anywhere but a gunshop. If my money was walking out the door I would offer 50% of what I expected to sell it for, I would allow 80% in trade or if I sold it on commission. A gunshop cannot make money off new guns today, if they compete with online pricing the margins are too small.

 

[00BlasterResto]

Oh, dunno about that. I've built several houses and I HATE the roof. If I could afford it I'd gladly pay someone else to do it

I know what you mean...
My dad roofed for 20+ years and from 15-19 that's what I did too, Hated every day of it. Glad I know what I am doing, wouldn't get on a roof other that my own ever again if I can avoid it. And yes I did my own because I'm poor.

 

[Disposable Heart]

I always agree with the idea of selling privately. If one is trying to get the best out of what they have, they will always get more from a direct sale. Trades, same situation. I hate the Pawn Stars though. They will give 100 bucks for something which they personally verified to be worth THOUSANDS. Some of the items they get though are junk...

First rule of selling to a store: Is your gun actually worth a hoot to THEM? Maybe worth alot to us, but not to a store, unless they have to pay a hefty price for it themselves (M1A's, some high end ARs, Colts, etc...).
Second: Do they have new ones on the shelf? Any used ones? Is it an older model and the new model is about to be or is released? (Such as turning in a Keltec when LCPs were hot, or the LCR when the LCR .357 is about to come, etc...) If so, the dealer's interest is lower.
Thirdly, how much have you bought from them? Plainfield gives me a great deal, but only as I spend a TON there on guns and other stuff. I know Bob personally, rather than the myriad of folks that say they "know" him. To the dealer, it's not "what are you doing for me" its about "what have you done for me lately". They have all sorts of folks, everyone from JohnnyHilljack to RonnieRolex coming in trying to pawn guns off, they want to give deals to folks that come back and regularly so.

 

[SSGSAD]

How much should a dealer make off a used gun? As much as they can.

Don't like the price? Don't buy it, and take your business elsewhere, as you did.

When I've been in a shop, and someone asks, what will you give me for this, the gun shop guy, says, well I can sell it for about XXX, so I can give you XXX, usually about 1/3, less than the first price...

 

[Libertarian01]

To Bdj357 (et alia),

If the business is wise they will consider meeting both their fixed costs and their variable costs.

Their variable cost is easy: The price (or value) that they give to the used gun that they are selling. For example, say you go in to sell them a firearm for $200. So right now they are out $200. Or they give you $200 toward a trade in. Either way (to keep things simple) they are out $200 in value. The $200 is their variable cost, or the actual cost of a single widget, in this case a firearm.

So it would be easy to say that if they turn around and sell that same firearm for $201 they have just made a $1 profit. Except that they have not.

For them to stay in business they must also cover their fixed costs. These are costs the business must pay with our without selling a single thing. Their fixed costs would be (but not limited to):

#1) Insurance;
#2) Utilities;
#3) Rent/Mortgage+property taxes;
#4) Salaries;
#5) Telephone lines;
#6) Employee benefits;
#7) Security System;
#8+) etc, etc, etc...

Say that their total fixed costs per month are $1,000.

So during each month on every single firearm they sell they must meet the variable cost of each firearm that moves through their store AND somehow make an additional $1000 just to stay in business.

An easy way to do this would be to average their fixed costs per number of firearms sold per month. If they sold an average of 100 firearms per month they would have to add $10 per firearm to break even ($1,000 fixed costs / 100).

In the previous example that means for that $200 gun they would have to turn around and sell it for $210 just to break even. Note that this generates $0 in profit, so at this cost there is no ability to expand their inventory or grow. They are simply meeting their costs and staying in business.

This doesn't factor in their "goodwill" toward their customers in an attempt to generate referrals and repeat business.

Consider that my use of $1,000 per month is an extremely low number to use.

Hope this helps.

Regards,

Doug

 

[melensdad]

Consider that my use of $1,000 per month is an extremely low number to use.

Doug, excellent points all. But for those not involved in trying to operate a small business, let me suggest that a more realistic number for a VERY SMALL business, is probably no less than $1000+ per week for the costs you list. Heck I know of SMALL shops in Schererville/Dyer/Merrillville where rent exceeds $1000 per week, not including labor, phone, taxes, security, utilities, etc, etc, etc

 

[ROLEXrifleman]

I'm surprised no one has said it yet, so I will..

Guns are like cars.

When you buy new and drive off the lot you just lost about 50% of the value, no questions asked

When you try to sell outright, you will be rapped

If you go to trade in they still get ya, they rapped the guy that brought in teh gun your buying and they're gonna rape you on teh trade in, then their gonna give the next buyer of your trade in a nice big sfat as well.

Vicious circle that is just the nature of the beast.