Retail Gun Markup

[Handyman 5,682]

Just out of morbid curiosity, does anyone know what the ballpark markup range is at an "average" gun store? That is, if they sell a gun for $500, they got it wholesale for around ____?

 

I had thought the margin is pretty small, but most gun stores do no seem to move a ton of inventory so I am thinking they must be making some decent money on each unit. Would a store generally set their transfer fee equal to their profit they would make selling a new unit, or will they always make more money selling new?

[mcm308 0]

I dunno man but I get my guns a helluva a lot cheaper online via gunbroker and such. LGS are like a couple hundred more plus tax so fuck em... Sorry but thats the way it is....

[1LtCAP 4,264]

I dunno man but I get my guns a helluva a lot cheaper online via gunbroker and such. LGS are like a couple hundred more plus tax so fuck em... Sorry but thats the way it is....

and that's what's gonna kill the brick and mortar gun shops.

[Kevin125 4,772]

I would take a guess at gross margin of 15 to 18 percent for the more competitive shops. 20 to 25 for places like Dick's. From that they pay salaries, insurance, rent and net less.

 

I have no problem with local shops making money. I feel more comfortable buying from local shops than some online dealer. I find them helpful and I usually learn something when I'm there.

[Handyman 5,682]

and that's what's gonna kill the brick and mortar gun shops.

 

That's what I am wondering, but there will always have to be someone around to do the transfers. Do shops make all their money in new sales? Transfers? 50-50?

[MidwestPX 172]

Gross margin on new, run-of-the-mill guns is 6-10%. The bigger stores that are in buying groups might get another 2-5% but new guns are really terrible for making money. Harder to get guns like CMR30s bring more money because they aren't available in huge numbers and there isn't a race to the bottom. Manufacturer MAPs (outside of Glock) are also loosely enforced which doesn't help matters.

[1LtCAP 4,264]

That's what I am wondering, but there will always have to be someone around to do the transfers. Do shops make all their money in new sales? Transfers? 50-50?

that could eventually make a problem i think. they don't charge much for transfers.......but how many would they have to do in a day to keep their doors open?

[Golf battery 1,223]

From what i understand. 10 percent is about it. The real money is in the used firearms. Up to 50 percent.

[Kevin125 4,772]

That's pretty slim. $60 on a $750 gun . Based on 8%.

 

I suppose thats doable operating out of a residence, but I can't see that sustaining a business with a retail store location. Margins on accessories might be higher but that's still a big nut to cover for retailers.

 

I'm thinking why get out of bed for less than 10%.

[mcm308 0]

and that's what's gonna kill the brick and mortar gun shops.

Well thats a damn shame... A gun is a hunk of steel. Or whatever and it dont matter where it comes from. If the LGS can't compete with online sales... Sucks to be them. I dont care where it comes from...

 

If you need input from an LGS just looking to make a sale.. You best do your homework first.

[Golf battery 1,223]

You got to understand. The money is not in the sale. But the extras. Thats the secret.

[mipafox 438]

From what i understand. 10 percent is about it. The real money is in the used firearms. Up to 50 percent.

^This (bolded section). I find 10% a little too low to believe if we are talking strictly the markup, but it certainly isn't much. Used guns are money makers if you can sell them. At least that's what they say when it comes up. And it's certainly the experience of people selling guns to dealers for whatever reason and see the price on the shelf the next day or a week later.

 

I'm totally cool with that, there isn't a lot of money in this. And no dealer forced you to sell a gun at a price you wouldn't agree to.

[son of sam 9]

I have the price lists from the distributors. It really depends on the store and the gun. In most cases its 10-15% over wholesale. But, there are many incentives. Such as buy 5 and they throw in a 6th, or price level changes once you purchase over a min quantity. Shops generally dont make much off of ammo either. Used guns can be a big money maker for the shop and a nice savings for the customer. Often times the used stuff is bought as part of an estate or by desperate individuals for pennies on the dollar.

[A-Tech 8]

Well thats a damn shame... A gun is a hunk of steel. Or whatever and it dont matter where it comes from. If the LGS can't compete with online sales... Sucks to be them. I dont care where it comes from...

 

If you need input from an LGS just looking to make a sale.. You best do your homework first.

Millenials.....

 

 

 

How many gun shops only sell guns?

How many sell tons of accessories, gear, cleaning supplies etc etc?

I think the firearms act as more of a gateway product than a profit driver.

[mustang69 505]

I dunno man but I get my guns a helluva a lot cheaper online via gunbroker and such. LGS are like a couple hundred more plus tax so fuck em... Sorry but thats the way it is....

This hasn't been my experience with the LGS's I've used.  By the time I factor in shipping and xfer fees, buying local has been about the same - sometimes a bit more, sometimes a bit less.   I bet if you shopped around you'd find you can get the same deal locally, all things considered.  I've also found that building a relationship with a local store pays dividends too, like when ammo was scarce I had no problem having them set aside a few boxes for me, or when something nice used comes in I get a phone call and a decent price.

[DSD1026 48]

Really depends on which LGS and which guns..  ive seen some guns locally that are a good 20% higher than online transfers (with NICS)..  I've also seen plenty that end up costing around the same if not less than online once you factor in shipping, tax, transfer, etc.  All depends on where you go, who you know and what you're looking for. 

 

Sometimes asking a couple FFL's for prices on a specific gun will get you good results and they will be competitive with online prices. Full B&M LGS's have more overhead, so their prices may be a bit higher..  but the convenience factor and the "take it with you now" factor comes into play as well.  Some people really need to just handle/feel the guns before they buy them, so LGS is great for that. 

[Kevin125 4,772]

I get 1000 round cases of 5.56 as cheap or maybe cheaper than I can get anywhere I've seen online. And they had just about the best price I could find on the last three long guns I bought. For ref... About 6 or 7 percent cheaper than Cabela's. My estimate of margin above was probably high, but I think they do around 10% and maybe slightly better on some guns.

 

Not that I really care what their margin is but I'd rather have local gun shops than not. So I hope they make some money. And yeah, they make more on accessories.

 

Bananas are Walmart's highest profit margin item among everything they sell. Produce in general is their highest markup dept. if I told you what the markup was, you might not believe me.

[WhiskeyTangoFoxtrot 358]

I think the money and margin is in accessories.  It seems the only way to run a profitable, full-time LGS nowadays is to have an attached shooting range.

 

From what I understand, there are only a couple distributors in the business so basically every retailer gets their guns from the same place.  In fact, I think some internet sellers are virtual and just have the gun drop shipped to the customer directly from the distributor.  No inventory and overhead.  Tough to compete against that.

 

Anyway, they say Best Buy is Amazon's showroom.  It seems people use their LGS as Bud's showroom...

[bhunted 887]

I've been saying this like forever.... So here is a lesson....

 

Let's start with local gun shops or any small retailer. Most LGS are small retailers in my opinion. You can no longer call most of them your big one stop shops. That is because of mostly the internet and retailers that have large multi-item products like Ganders, Dicks or any of the well known ones. Now back to my analogy. I had 5 online stores years ago. I dealt directly with the manufacturers, (usually the owners of the companies)... That means I left out the middle man, ie;, the distributors.

 

When you deal with the main company, (or that matter even some distributors), you have guidelines which are restricted. They may give you about 3 different scenarios depending on their policies and they will NOT deviate just for you. So choices may be, Tiers, Bulk Buys, -OR- pay full wholesale no matter the cost.

 

- If you are in tiers, they may start you out and the most expensive tier and say to you, "when you show significant sales, we will move your profit margins up to the next tier. That can take time unless you have a product that people will rip your guts out to get to.

- Bulk Buys are just that. You want to sell 'their' products, you must possibly buy thousands of dollars in product. For example: 50 models of 3  of their most popular guns. Most new stores whether online or brick and mortar may not be able to do that unless that's the only product they will sell which is hardly the case.
- Then there is pay their highest wholesale price and like it.

 

On top of all that, you have MAP pricing that they may not let you post. That is even if they let you do MAP pricing. These are the goings behind the scenes. Now referring to big box stores vs. you as a merchant.

- Example: I use to sell online, expensive BBQ grills not normally found in big box stores. Normally small authorized specialty stores.Some of these grills wholesale each, were in the thousands easy. The companies were popular and these stores sold tons of them. So I was able to make a decent profit and still offer good prices even being guided by their wholesale prices. They wanted you to make sales and make money so they catered to you. I did pretty well.

THEN! Big name stores like Sears and Fortunoffs to name a couple started selling them. My profit margin went down, they no longer let me post low prices. When I asked why, they said because we don't want to lose a national account like Sears or otherwise and you are their competition. Gawd forbid little old me with my small business will hurts them, but that's their mentalitiy. Hence, I was no longer special.

 

Now, regarding local gun shops as a merchant. (This applies to any merchant)...

There is overhead. Just to name one overhead item because we all know they pay rent or pay mortgages on their buildings, is MERCHANT FEES.

While Visa and Mastercard are not the worse, you have Amex which will protect the consumer, but they kill the merchant in fees because their is no interest in their regular cards. So they have to make money somewhere.

I've been out of it. But I was paying for Visa and Mastercard, a fee of about 2.2% per charge plus a fixed fee. I never charged credit card fees to the consumers because most products gave me a decent margin. So I ate the fees. IF company wanted me to sell their product, if I couldn't make a decent profit or they forced me to post suggested retail prices while the big guys discounted theirs, I turned them down. And there were quite a few I turned down.

 

So let's wrap this up. Going by what is posted above in what vendors say gun markups are. If they are making only a small margin on new guns and paying fees, then John Q Public cheapskate comes in, presents a credit card and demands a nice discount, forget it. They will tell you that they can discount it IF you pay cash. That may mean they are not making much money on it already. So you see, it's not about just fees, but rent, insurance, you name it, works into every product they sell. Profit may be nil at some points if they give you the deal of the century. Thinking that they are ripping you off is not impossible, but you need to weigh the differences yourself.

How? You ask yourself, is this a new store, are they small, are they older mom/pop, etc... Look at the store itself. Is it big, well stocked. Do they only have a few models compared to others. If so, they may be locked into a wholesale groove they can't move from. OK, and for accessories. Just like the cell phone market, they give away a lot of phones for free with a plan, but they also sell accessories. That's where most of their profit is. Most made outside the US. You might by a cheap bumper for your iphone that costs 10 bux, but costs .25 cents wholesale. The retailer can afford to buy 100's or so if they know they'll move and not worry if they get stuck with them. So yes, they make profit that way.

 

I can go on and I'm already long winded here, but you get the gist of it. Bottom line: The FU attitude about LGS is what kills them. I closed all my stores down because sales plummeted in lieu of the bad economy at the time and competition from the big stores. It can happen to any retail business especially when you have unique items. Yes, guns are unique items. You can't buy them in a lot of places. So you hopefully as with any product, find a location that will buy your products.

 

My take is this. I pay cash when I can. Even if I save up for it. A LGS may even let you make payments on a layaway basis. Especially if you frequent them. But I draw a line too. What hurts sometimes more than anything is the effing Tax. That's on Uncle Sam, not the stores. Don't blame them. But even if I get a discount at a LGS and the savings are no where near what an online sale will get me, then the old rule, money walks, yadda yadda. If I can save hundreds elsewhere and avoid paying shipping and tax, I'm there. But if I only save 25-50 bux, I will give the sale to my LGS. As others have said, I'd rather have the hands on and personal treatment then not. One ast thing, I don't do this and retailers hate it. Go there, drive them nuts with a million questions, then come back a few more times and do the same thing, then go buy online or elsewhere. I'm shouting this: YOU ARE WASTING THEIR FOOKING TIME AND YOU ARE A SCUMBAG! You want cheap prices? Take the chance and buy sight unseen.. You either sacrifice knowledge and hands on for prices, or you support the little guy! Can't make that any clearer. My conscience will not let me do that because I know companies that suffered shit like that as well as myself. I may help you the first time for a few minutes, but if you keep coming back over time, I will tell you, sorry, no time for you today.

 

...:: Hopping off my soap box! ::....

Sorry for the rant, but I'm tired of people's BS when it comes to this type of crap.

[Shawnmoore81 623]

different brands have different mark ups. Glock isn't much while sig there is room to play. Some companies and say you can't sell for under this price. A lot depends on the dealer. Like my dog ar I found out once I saw wholesale the shop made $500 on that gun. I was pissed

[AlDente67 563]

I get 1000 round cases of 5.56 as cheap or maybe cheaper than I can get anywhere I've seen online. And they had just about the best price I could find on the last three long guns I bought. For ref... About 6 or 7 percent cheaper than Cabela's. My estimate of margin above was probably high, but I think they do around 10% and maybe slightly better on some guns.

 

Not that I really care what their margin is but I'd rather have local gun shops than not. So I hope they make some money. And yeah, they make more on accessories.

 

Bananas are Walmart's highest profit margin item among everything they sell. Produce in general is their highest markup dept. if I told you what the markup was, you might not believe me.

Can you hook me up on the 5.56 cases?

 

Speaking of markups, when I was young, I worked at K-Mart in the days before UPC scanning took over.  My job was to walk around with one of those price sticker guns and mark every item.  We used a big book that had the prices listed for every item in the store.  Each item was exactly 2x the cost, except in Jewelry and Camera where each item was 4x the cost.

When they closed that store (Mercer Mall), people were going crazy snatching up everything in sight because of their 30% off liquidation sale.

[Alex V 99]

I dunno man but I get my guns a helluva a lot cheaper online via gunbroker and such. LGS are like a couple hundred more plus tax so fuck em... Sorry but thats the way it is....

Though I have bought guns at LGS, as a general rule of thumb now, I agree with you.

 

Gross margin on new, run-of-the-mill guns is 6-10%. The bigger stores that are in buying groups might get another 2-5% but new guns are really terrible for making money. Harder to get guns like CMR30s bring more money because they aren't available in huge numbers and there isn't a race to the bottom. Manufacturer MAPs (outside of Glock) are also loosely enforced which doesn't help matters.

I find that hard to believe. The average cost of an MP9 FS that I have seen is $539 ($579 at a store that rips u off) online I can order it for $430. Are u telling me the online retailer is loosing money? No way.

 

I think NJ stores charge way more than stores in normal states as well.

 

I get 1000 round cases of 5.56 as cheap or maybe cheaper than I can get anywhere I've seen online. And they had just about the best price I could find on the last three long guns I bought. For ref... About 6 or 7 percent cheaper than Cabela's. My estimate of margin above was probably high, but I think they do around 10% and maybe slightly better on some guns.

 

Not that I really care what their margin is but I'd rather have local gun shops than not. So I hope they make some money. And yeah, they make more on accessories.

 

Bananas are Walmart's highest profit margin item among everything they sell. Produce in general is their highest markup dept. if I told you what the markup was, you might not believe me.

You can get a case of 5.56 for $349 online now a days. Point me to the LGS that can beat that!

[Kevin125 4,772]

I believe when they have it..and they often do. Howell Gun Works is doing it right around that price. Call them first though. They go through it fast.

 

Sent from my XT1254 using Tapatalk

 

 

[PD2K 115]

I dunno man but I get my guns a helluva a lot cheaper online via gunbroker and such. LGS are like a couple hundred more plus tax so fuck em... Sorry but thats the way it is....

Same here. Sorry but I'd rather save a few hundred bucks...money talks especially in this economy. LGS needs to match the out the door price of buying it online.

[PK90 3,570]

... I find that hard to believe. The average cost of an MP9 FS that I have seen is $539 ($579 at a store that rips u off) online I can order it for $430. Are u telling me the online retailer is loosing money? No way. I concur with MidwestPX. Markup is about 10% and my CC fees are absorbed in that, although I have a minimum markup for those cheap guns. As to your example, I'll assume that you are referring to THIS. Dealer price is $425 minimum plus S&H for some. I would sell it for $470 to $500 depending on where I get it. You should shop somewhere else as your quoted prices are outrageous. Remember to compare apples to apples, ie. SKUs to SKUs. If you can get it for $430, the seller is looking to get rid off it at cost. That deal won't last.

 

I think NJ stores charge way more than stores in normal states as well. I disagree. I think it is in the urban areas that are higher, and that goes for all states.

 

 

You can get a case of 5.56 for $349 online now a days. Point me to the LGS that can beat that! Ammo is generally cheaper to buy online, especially in bulk and without the sales tax.

[PD2K 115]

and that's what's gonna kill the brick and mortar gun shops.

So I guess you don't use Amazon.com?

[Shawnmoore81 623]

Wait till you see transfer costs jump up. They are already jumping in philly drastically. $75 is common

[PK90 3,570]

The prices would be more equal if there was an internet tax.

[bhunted 887]

Though I have bought guns at LGS, as a general rule of thumb now, I agree with you.

 

I find that hard to believe. The average cost of an MP9 FS that I have seen is $539 ($579 at a store that rips u off) online I can order it for $430. Are u telling me the online retailer is loosing money? No way.

Did you read any part of my post or just ignore it? Read the facts and stop guessing.

Do you know how big that online retailer is in square footage and stock? Take a guess why some are cheaper.

 

 

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[MidwestPX 172]

I find that hard to believe. The average cost of an MP9 FS that I have seen is $539 ($579 at a store that rips u off) online I can order it for $430. Are u telling me the online retailer is loosing money? No way.

 

I think NJ stores charge way more than stores in normal states as well.

If I sold a full size M&P9 for $430, I'd lose about $35 after free shipping and CC fees. Dealers buying in buying groups might break even and hope to cost average out a free gun or two to make $400 on a 10 gun buy-in. 10%.

 

My favorite saying about the gun industry is, "How do you make a small fortune selling guns? Start with a large one."