Thoughts 0n Middle man mark up

[Clancy]

It could be work ethic?

Nothing wrong with everyone having a job and getting a little piece of the pie.

But you get those guys that would rather sell 1 or 2 and go golf than sell 8-10 and have to work.

 

[cavedweller60]

There is also a misunderstanding of profit, mark up, and discount.

If I buy and item for $50, mark it up 100% to $100, then discount it 50% to $50. I haven’t even broke even if you count the costs of labor and flooring.

Same thing $25 purchase, 500% markup to $125, 10% discount to $108, ends up 75% gross profit before any other associated expenses. Pretty soon that 500% mark up ends up 60% profit if you’re lucky. Not a bad margin, but not nearly the 500% people think it is.

Realize the difference between mark up and profit. A 100% mark up, is never 50% profit after expenses.

You beat me to it.

 

[Jr solocam]

I think the direct marketing to the consumer will only increase over time. There is a fine line between supporting local jobs and priced paid and customer service. I try to buy local if I can, for example all the lumber and concrete for my out buildings was sourced in my home county. I only fill gas in my home county.

Getting back to prices and CS, I won't pay $2800 for an item if Amazon has it for $2000. CS, take a defective item back to Scheels or Best Buy and they want nothing to do with it, send it back to the manufacturer. I have yet to meet a sales person at Scheels or Cabelas who actually provided any expertise....The only thing I gain is getting to see an item and put my hands on it. Small mom and pop stores are better, but they are going extinct.

So while I don't like Amazon's liberal CEO, they are a real godsend for people like me who live in BFE. Have a problem with a product? Just send it back and they deal with it.....

 

[Alex Wheeler]

You can feel good knowing the gun world is not that way. 10 to 15%. 20% is huge. Thats why I dont supply parts.

 

[243winxb]

I need a 5AH battery for my Dewalt saw. At the local Lowe's the battery (1) is $129 and tax. I can get a two pack on Amazon for $63

Counterfeit? According to Amazon's 2024 Brand Protection Report, Amazon identified, seized, and disposed of more than 15 million counterfeit products worldwide in 2024.

Thoughts 0n Middle man mark up......
Example- Cost to manufacture $100. Manufacture mark up 100% to $200.

Middle man/distributor, sells it for $280. At 40 % markup. Retail has 40% mark up to List Price.
But deep discounts are available at both levels.

Large companies skip middle man. Factory direct shipping . This is how retail outlets sell gun/items at 3% above dealer price.

In the 70s, a local store got Remington firearms direct from Remington. Their sell price was just a few dollars above dealer pricing.

The Remington ammo was shipped to them by Train/rail. Super prices on 22lr Target ammo. I bought cases of it for resale & to supply shooters at the indoor range.

 

[David Milisock]

Flip side of that coin is when manufacturers under cut their own dealers and run their dealers out of business... Which is the customer support arm of that equation.

Consolidation is NOT a good thing. IMHO.

It's a depends on the circumstances. In my sign business when it came to basic supplies on line ordering for adhesives such as RTV and hardware such self tapping screws and tapcons it worked well.
However print and cut vinyl requires real vendor support, the higher quality you prints the more so. Same can be said for lighting, power supplies, aluminum, steel and light box kits.
Having vendors nearby also allowed me to improve my service. Not to mention that manufacturing vendors could sometimes deliver standard sign cabinets assembled and warranted for about my cost of materials.

 

[243winxb]

The 1970 High Standard company made a direct factory offer to dealers. Buy 2 handguns at distributor, wholesale prices.

Problem was, the same price was available at my whoiesale distributor. The company folded soon after.

 

[tommeboy]

Last place I worked at they made automotive air fresheners that you hang on your mirror. Each one out the door cost them $0.25/ea out the door. A good price is about $0.75 ea if you shop around

Another factory I worked at made the wheel nuts for semi tractors. They had the washed attached to the nut. They were $0.75/ea out the door. Cheap knock offs are $2.25 ea

 

[davidjoe]

We need to remember the middleman is actually the first buyer of all this, and laid out real money.

The middleman takes a risk that:

1) the product is about to be surpassed;

2) the manufacturer can’t or won’t back up any problems encountered;

3) the middleman isn’t capable of perceiving realtime demand shifts and will tie up all his money and space.

I’d like to buy cars direct, but imagine if GM had to come up with the equivalent space of all the dealer lots in the United States to store output while the market slowly absorbs it. If the product is phonograph needles, then it’s a different story. But goods are deceptively large and bulky and the retailer not only finds customers for the manufacturer, but serves as a free storage facility while doing so.

 

[ebb]

Or you could be a John Dere dealer and charge $500 just for plugging into the computer port.

 

[CJ6]

Or you could be a John Dere dealer and charge $500 just for plugging into the computer port.

Sad...But true.
I do believe JD lost the lawsuit though, enabling the farmers to "fix" their own.
But guess where they need to get parts from...

 

[k260]

Rural King sells a case of bottled water for $2.89. That's 24 bottles of water for $2.89. I can't imagine what they pay for a case to be able to sell it for that. I have 2 pallets of RK water in my garage....

 

[Dgd6mm]

Our Church buys Rural King water by the pallet.

 

[243winxb]

Rural King

Spaceship drinking water in made pure by Reverse Osmosis. Same method used by Rural King.
The water recovered from urine and other wastewater is often cleaner than what people drink on Earth.

 

[Knotwild]

Or you could be a John Deere dealer and charge $500 just for plugging into the computer port.

But, it also buys you a chance to have them book you for a second service call to come back and fix what the computer said was broken. That way one break down always nets them two service calls.

A Deere service man told me that even if they could guess what was wrong before they came to plug it in, they were not allowed to bring the necessary parts on the first call. Corporate said if they were wrong it was too expensive to return the part to inventory. Thus, you get billed for a second service call, mileage and all.

I have a friend who quit Deere because they took his bonus away (Make less for the same amount of work on his end, raise profits on Deere's end). He immediately quit, bought some software and a service truck. Now he has more work than he knows what to do with.

I do know first hand that if you have legitimate problems with Deere's service - get on the Deere website and detail your complaint, how much the downtime cost you along with threats of buying other brands of equipment. Corporate will ream then a new rear opening.

 

[ebb]

I don't know if it's true but watched a U tube that Mexico is holding up JD tractors for a safety inspection at the border. Kabota, Case IH, and New Holland have come out with all kinds of ways to make it easier to repair their tractors and JD stocks are plummeting. Lots of whistleblowers have released documents showing JD intentionally making it impossible to fix a JD yourself, and making it way more expensive to fix one that is broke during harvest season. Mexico has sued on behalf of a bunch of farmers who had ordered JD tractors that never showed up and they lost the whole season. Seems like they have the same approach as Harley Davidson, and are close to running the business in the ground.

 

[Shooter13]

Well, I'm sorry, I owned 2 NAPA stores and profit margin was no where near 80% on anything, we tried to average 35 to 40% , don't get me wrong we made money but not like your friend was saying. Bought the 1st store in '86 and the last one in '99
The delivery fees were getting so expensive you had to make a good margin. Let's talk paint for a minute, I mixed it and you would have 40 to 60 gallons of colors to make most current colors for cars, a lot went unused and was a total loss. So there is a lot more to "profit" than meets the eye.