What is a fair markup for a firearm?

[Michiana]

What do people consider a fair markup on a firearm from a dealer, both storefront and home based FFL? For talking purposes lets say the wholesale price to the dealer is $400 and the suggested retail is $520. Shipping cost to the dealer is $10. Where should this firearm be priced at to be fair to both parties?

 

[Disposable Heart]

Every FAIR dealer (to stay not only competitive, but also help out buyers) that I have either worked for or dealt with is 10% on a new gun.

MSRP can vary HUGELY and given that you have fierce competition in the local area (by those charging 10% over cost), I would stay away from MSRP. My two cents BUT your business! I would probably say that a home based operation requires FAR less overhead than a store, which can give you some interesting room (and potentially more profit than a larger store).

 

[snorko]

I do not think the concept of fair comes into play here, because there are alternative outlets for consumers. Having said that, I frequent two independant shops primarily.

One does high volume and stocks a lot of common accessories but has no real gunsmithing or repair service. The second does a much lower volume, stocks similar common accessories as well as less common and older parts and provides gunsmithing and repair services. High volume guy is 10% markup on cost and lower volume guy is 20%.

To me, when other costs are factored, they are about equal.

 

[hemicharger]

As long as you are cheaper than Don's guns, i think you are doing ok.

 

[MoparMan]

Id say a 10% markup on what a FFL has into it is fine by me. A repeat customer you might get more of a discount though.

 

[cosermann]

The above jives w/my experience. Usually, it's the accessories and other things that most of the money is made on. Many folks get all worked up about what they pay for a firearm and don't stop to think that they'll spend more on accessories and ammunition than they did on the gun - and fairly quickly in some cases.

Most dealers aren't working with a big margin on the firearms themselves.

 

[Turtle]

Heres my opinion. If your working out of a shop then a higher price is "OK" because you could afford to hold out for someone willing to pay what ever you are asking. But shops also have employees to pay, operating costs, insurance and so on.
But if your working out of your home then your expenses will be smaller and buyers less frequent. So a lower price could actually make you more "PROFIT" and bring you more word of mouth business. As everyone loves to save money.

 

[Jack Ryan]

What do people consider a fair markup on a firearm from a dealer, both storefront and home based FFL? For talking purposes lets say the wholesale price to the dealer is $400 and the suggested retail is $520. Shipping cost to the dealer is $10. Where should this firearm be priced at to be fair to both parties?

There's no such thing in a free market capitalist society. Even if there is, it doesn't matter.

It's worth what ever the market will bare, what some one will pay, is what it's worth. Don't matter what any one thinks is fair, how much one or the other earns or how much they owe. All that matters is what some one will pay and what the other will take.

 

[PappyD]

Dealers not getting rich...

Something else to consider is the $$$ to get the gun in the first place. I don't know exactly, but I would think the wholesalers terms would be 30 days net, which means they want the $400 in 30 days. So maybe the dealer (either situation) orders the gun you want and you pay on delivery. Dealer pays within 30 days and everyone is happy.

Like any other business, if you have $$$ of inventory sitting around that is gonna cost you. Maybe you can make it up on other stuff, maybe not. I like to think that the bricks and mortar guy is providing me with a place to go fondle all the goods before I buy. That has to be worth something. I don't want to get scalped anymore than the next guy, but I am willing to pay whatever is fair and will keep the doors open.

For lunch today I spent $6 and some change at McDonalds, so somebody doing an FFL transfer for $15 or $20 looks like a steal. I pay that $15-$20 and maybe the dealer can take his honey out to, well, maybe Applebee's. (No drinks, no dessert, split an entree!)

I think what would be a little unfair would be spending a lot of time checking out a new/used weapon at a shop and then going elsewhere to find the absolute cheapest place to buy the same model. I would like to think I'm paying maybe a little more from a shop, but down the road I might need a favor or whatever. But that's just IMHO.

I have a gut feeling that the buying of weapons is gonna get real tight in the coming months, if not years. I doubt that my kids will have the freedom to buy as easily as we do now.

Maybe in the future only the real good deals will be on the streets of Mogadishu.

 

[indykid]

I have talked at length to Bob at Plainfield and his idea of doing business as fairly as possible to both keeping himself in business and providing a good price to customers is a 10% markup over dealer cost, plus shipping.

 

[kludge]

Bob does have good prices. Not always the best on a particular model, but on average he's $20 lower on a $450 handgun just perusing tables at the 1500; probably $100 -$150 lower than Gander Mountain.

He has been in business as long as I can remember, gets a lot of word-of-mouth business, and has a lot of loyal customers. He will deal with you a bit on used guns, but I've never asked him to on a new gun - I already know that his new gun prices are usually lower than what some people on INGO want for their used guns. I have also heard he works on a 10% markup. AFAIK he is the highest volume hangun dealer in central Indiana.

As a new dealer, the best thing you can do is work on your client base. If they feel got taken care of, both in service and price, they will tell their friends.

FWIW the overhead of a store like Gander or Cabelas means they are having to mark up their stuff ~30-40%

In the Indy area you have some stiff competition - not just from Bob, but from AAC, who runs on similar margins... now up on the NE side your prices will most certainly look good compared to Gander, and probably Pop's.

You are close enough to me that the next time I'm looking for something, I'll give you a shout.

 

[BE Mike]

20% is a good average for markup on guns, however if you get a very good deal on a trade-in you may make more. You may also want to make more on a really hot seller as long as you don't gouge. OTOH you may sell a "pig" for less. Most gun shops make more markup on accessories and used guns than new guns. 40-50% isn't uncommon. I can't imagine that anyone can stay in business marking guns up by only 10%, when you consider the costs of your time, phone bill, electric/ gas bill, cost of license, computer costs, etc. There are a lot of other hidden costs that the consumer doesn't think about in a firearm sale like inventorying, keeping books, doing the NICS check, filing 4473's (forever), dealing with ATF and/or local police, collecting and paying state taxes. This doesn't take into account spending a lot of time with customers.

Don't you guys get your panties in a bunch with these suggested markups. You would be shocked at how much markup there is in clothing, jewelry, shoes, and other consumer items, and most of these are necessities!

Even at these suggested markups, most gun dealers don't get rich. Most are in it because they like it. Over the years it does wear on most gun dealers, though, hence the complaints about surly attitudes from dealers.

 

[Old Syko]

20% is a good average for markup on guns, however if you get a very good deal on a trade-in you may make more. You may also want to make more on a really hot seller as long as you don't gouge. OTOH you may sell a "pig" for less. Most gun shops make more markup on accessories and used guns than new guns. 40-50% isn't uncommon. I can't imagine that anyone can stay in business marking guns up by only 10%, when you consider the costs of your time, phone bill, electric/ gas bill, cost of license, computer costs, etc. There are a lot of other hidden costs that the consumer doesn't think about in a firearm sale like inventorying, keeping books, doing the NICS check, filing 4473's (forever), dealing with ATF and/or local police, collecting and paying state taxes. This doesn't take into account spending a lot of time with customers.

Don't you guys get your panties in a bunch with these suggested markups. You would be shocked at how much markup there is in clothing, jewelry, shoes, and other consumer items, and most of these are necessities!

Even at these suggested markups, most gun dealers don't get rich. Most are in it because they like it. Over the years it does wear on most gun dealers, though, hence the complaints about surly attitudes from dealers.

Finally! A voice of reason. Anyone here that thinks he can run a business and actually stay afloat on a 10% base margin should jump in with both feet and give it a try. You'll get a wide awakening really quick. What Mike has stated is fact.

Take into account the purchase of a building or cost of a lease, the cost of security that is required, insurance, taxes, etc. and then do the math as to how much product you have to turn over at 10% just to break even. Even with a hobby business run out of your home there are expenses most here haven't even considered if it is run legally and with the intent to last.

 

[theweakerbrother]

I think the internet makes it especially hard for FFLs to make as much money as what they did even a few years ago. Why buy a Remington 870 from the local shop who overcharges when I can order it for almost a hundred dollars less from Budsgunshop.com, NOT pay tax, and get the same firearm for much less?

I am not saying this mentality is right or proper but is what happens. Some people will pay the extra to feel like they have a relationship or "know a guy" locally who deals in guns.

I generally have about a 30-50 dollar wiggle room on what I am willing to pay at a few specific gun shops because I am also paying for their reputation.

Specific example: Nearly every purchase I've made has been done through Ron (He no longer works there but sold me a gun off the clock as he was helping behind the counter and one through Mark... nods to you, Shooter) at Bradis Guns. I found the same gun for about 40 dollars cheaper online but I'm willing to forego the 40 dollars for the peace of mind that I get from buying from a shop who I know will take care of me if something goes wrong with the gun within a reasonable amount of time. Why? Because that is what my experience with them has been. The staff there is professional, nice, and they acknowledge my wife and make her just as feel welcome as I do. I also like to support local businesses.

10% - 20% mark up isn't what is just reasonable, it is necessary. Why? Capitalism and competition.

My two cents!

 

[rockydog]

Interesting...

I think most small shops I know are making between 10-15% on thier guns BUT much more on the "good trades" they've made and the accesorries. Same as a lot of busineses (like gas stations, small mark up on gas and huge on pops, mojos, and candy)

Even at only 10% they have a hard time competing with the big box store's buying power on guns, and that's where the "Good-Ole-Boy", "Gun Genius", "Buddy" comes into play. I think a lot of these guys (at least locally) run out of "frendly customer service" too early in the day. I don't typically have problems with any of them but I have seen most of them be rude, or short tempered with customers before. I mean come on, everybody knows walmart has that $310.00 10-22 for 196.00 bucks It shouldn't surprise or make anyone mad if some newbie points it out

I always try to buy off of a local guy if possible BUT let me define possible...

(1.)I go to or call my local guys first and see if they have what I'm looking for.
(2.)If they don't are they even interested in messing with it.
(3.)If they are or they have it in stock, is it in the same price range as I can get it somewhere else (within 5-15% depending on price) the extra is worth it to me to have those type of guys around.
(4.)If not, I buy it online or at a Big Box.
(5.)I never buy from gougers... ever again. I don't care what their excuse is. (I still will not buy gas a stations that gouged people the day of 911, and I hope all the guys who bought out wal-mart ammo for 6 months just to resell at twice the price, chokes on them )

 

[shooter521]

Nearly every purchase I've made has been done through Ron (He no longer works there

Some weekends I miss ole' Spanky.

nods to you, Shooter

I found the same gun for about 40 dollars cheaper online but I'm willing to forego the 40 dollars for the peace of mind that I get from buying from a shop who I know will take care of me

First, thanks for your repeat business; we try to take care of our customers the same way we'd like to be taken care of AS customers. Second, by the time you actually got the gun from Bud's in-hand, you'd probably be looking at something less than $40 difference, given that you'd have to pay shipping fees plus whatever your local FFL charged to receive it for you.

I've heard that a few shops in town operate on a 10% margin, but I don't know if I believe it. Ask the dealer to show you his invoice or price lists and see what happens! If they ARE only making 10% on new guns, they are either operating on an absolute shoestring budget (one or two employees, building is paid for, etc) or are marking up everything else by a TON to make up for it. The money has to come from somewhere, and it isn't all through volume...

My (after markup)

 

[theweakerbrother]

First, thanks for your repeat business; we try to take care of our customers the same way we'd like to be taken care of AS customers. Second, by the time you actually got the gun from Bud's in-hand, you'd probably be looking at something less than $40 difference, given that you'd have to pay shipping fees plus whatever your local FFL charged to receive it for you.

I've heard that a few shops in town operate on a 10% margin, but I don't know if I believe it. Ask the dealer to show you his invoice or price lists and see what happens! If they ARE only making 10% on new guns, they are either operating on an absolute shoestring budget (one or two employees, building is paid for, etc) or are marking up everything else by a TON to make up for it. The money has to come from somewhere, and it isn't all through volume...

My (after markup)

If it isn't 10-20% markup, whatever you guys and Plainfield charge. I think those are very fair market value prices. The only thing that pains me the most is the drive. I'd probably be in the store every day if you guys were within 15 miles! Or do my best to get a job there to fund my EBR habit.

I'll probably see you guys soon. HARHAR! and YARRRRRRR.