What is the profit margin with guns?

Discussion in 'General Firearm Discussion' started by James1300, Dec 24, 2010.

  1. James1300

    James1300 Member

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    I'm curious. I grew-up in the retail jewelry buisness. I'm wondering if a
    hard working individual can make a living opening a gun store.
    I was even considering a combination store/range. Internet sales would be included.
    I would sell pistols, rifles, new and used. Ammo and, cleaning supplies. Safe's and case's.
    An 'in-house' Gunsmith would also be a big plus.
    I could also offer a class room for instructors to hold classes. (this would help draw new potential customers in the buisness).
  2. Ben Beckerich

    Ben Beckerich Well-Known Member

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    it's not much. i remember a guy telling me his profit on a $700 gun was only about $20.. might have been exaggerating, might have been grossly exaggerating, but might not.

    i do know that it's not much- nothing like jewelery. i also know that it's heavily dependent on volume- which is why everything is going internet, these days. no overhead, to keep your inventory locked up in your garage.

    i've often sort of fantasized about opening a QUALITY gun shop, which is rare in these parts. NO cheap crap, no BS information. but i've known a couple guys who tried to do the same, and failed... so i'm scared. i just don't think the pacific northwest is a good place to do it.

    there's my feelings on the matter, anyway.
  3. TonsOfOregonBrass

    TonsOfOregonBrass Active Member

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    3 - 5%. 10% if you are really lucky and buy when something is on sale.
  4. dobeman

    dobeman Bronze Supporter Bronze Supporter

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    I was told $20 - $30. Depends though.
  5. James1300

    James1300 Member

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    Would it not depend on what you where selling?
  6. rodell

    rodell Bronze Supporter Bronze Supporter

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    I would go with those numbers on a net basis, but, if the gross profit were 5% ($35 on $700) I can't see how you could stay in business.

    A 5% business on the bottom line is better than a lot of others.
  7. James1300

    James1300 Member

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    I'm thinking the VOLUME of buisness needed will be HUGE.
  8. rodell

    rodell Bronze Supporter Bronze Supporter

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    As long as it doesn't cost you anything, marginally or otherwise, to grow to that level. I don't know any business that has a gross profit of 5%. From that you take your operating costs, taxes, depreciation, rent, etc. There's just nothing there.
  9. Ben Beckerich

    Ben Beckerich Well-Known Member

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    well.. look at some of the local gun store- gun broker, for instance. they have 3-4 guys working in there on any given day, and how many guns do you think they sell? if i'm buying a gun, i might be there for 30-40+ minutes, and i think i've only ever seen then sell a gun once or twice. obviously they sell more than that- but you'd basically need to sell 25 guns a day just to cover your rent, utilities and 4 people salary- and that's if you're paying them like $10-12/hr. what kind of quality are you gonna get for 10-12/hr?

    so it's GOT to be more than 20-30 per gun. i'm sure some guns it's only 20-30, but on others it MUST be substantially higher, or it wouldn't be a business.
  10. James1300

    James1300 Member

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    Perhaps more can be had with sales of accessories and ammo?
    Reloading supplies?
    Starting to sound like the 'guns' may be almost a 'lost leader' to get people into the buisness.
    Quality people are the 'backbone' of any good buisness.
    Customer service is right beside that.
    I have to figure a way to make enough to hire and keep good people.
  11. MrNiceGuy

    MrNiceGuy Well-Known Member

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    New guns are 5-10%
    Used guns are 15-25%


    Before you go too far, look into insurance costs. It has scared off plenty a wealthy man.

    It might actually be cheaper to open a high end jewelry shop. :paranoid:
  12. eriknemily

    eriknemily Member

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    The trick is being the only player in town. Over here (until recently) Tillamook Sporting Goods is the only player in town. I've seen them charge well over the normal price you see for goods in other places. Like $200-300 or more on an AR. On principle I will not buy from them. Most guys I know say they usually talk them down 20-30% from their asking price. Not my cup of tea.

    The moral of the story is that I think they make more than $30 on a gun.

    I know a gun shop up in Astoria whose owner sells mostly consignment. He makes a set percentage on each sale and has no overhead.
  13. spengo

    spengo Active Member

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    Well, usually when I order things online rather than at a local gun store it is accessories/parts so I suggest getting lots of that. Oh, and no cheap crap. I don't want any nasty tapco, UTG, or ncstar stuff, gross. Get stuff like Magpul, Tango Down, Daniel Defense, Leupold, Surefire--the real deal stuff. It seems like very few gun stores cater to the practical shooting competition crowd.

    The other thing I might order online is surplus/police trade-in guns. sig p225, 92FS, CZ-82, makarovs, tokarevs, k31s, mosin-nagants... No local place has as good a price on the surplus stuff as like jgsales.com or aimsurplus.com, even when you count in shipping and transfer fees.

    Oh yeah, and another big one is ammo. It's always cheaper for me to order online from somewhere like surplusammo.com in 1000 or 2000rd boxes than buying from the gun store. Even bi-mart prices aren't as good. Get some bulk ammo in!

    Apart from that, I don't mind so much about the NEW guns you actually have in stock. I am very particular about my gun purchases. I always know what exact model I want so usually I end up asking the local store to get it from a supplier. If your price is comparable to what it would be for me to order online and pay for shipping + transfer then I'll always choose the local store.
  14. MrNiceGuy

    MrNiceGuy Well-Known Member

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    accessories and ammo are another way they make money.
    They may only make ~$30 on a new gun, but then they sell you a holster, a few extra mags, 3 or 4 boxes of ammo, cleaning kit, maybe a speed loader, and now you're set.

    And like most industries, the new products are a great way to attract people to the used products. People nowadays will spend countless hours driving, researching, and shopping to save just a few dollars off of the sticker price of a new gun. They can literally spend hundreds of dollars in time and gas to save $15 off of the sticker price, and somehow feel vindicated.

    The money is made in used guns where there is no dealer cost or MSRP. If you can get a good deal on a gun in trade, off the forums, or even off the street, you can make a premium PLUS accessories and ammo.

    Reloading supplies is really still a niche market. The percentage of gun owners who reload is rediculously low.


    I hate to brake it to you, but the practical shooting crowd is a few hundred strong in a state of hundreds of thousands. If you cater to such a small minority, you're doomed to fail. Stuff like tapco, utg, ncstar sells.... When the average person see's a $75 tapco stock next to a $275 magpul, the magpul isnt even worth inquiring about. You'll sell a dozen tapco for every magpul and your profit margin will be much higher.
  15. Silver Fox

    Silver Fox Well-Known Member

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    Profit margin on guns are slim. With the Internet and UPS stocking dealers are in competition with ever gun dealer across the U.S. Literally customer service and loyality is what is going to seperate you from other dealers. If you want to sell something like 10/22's or 870's be aware the big box stores sell them at a cost lower than what you can get wholesale.

    Ammo and accesories is where your profit margin can be found but you need stay on top of the most current pricing. If legislation goes bad you go to work and sell out but the cost of replacement has gone up 6x. Other hand the market is saturated (AR-15's for example) and you will sit on them forever.

    Your in house gunsmith, do you really want to employ him or have one come in with his FFL and personal libality insurance and sub lease the shop space to him? It would be an environment where they can profit and you don't have to answer customer issues.

    The shop you describe has been a dream of mine and what I have found to be the most profitable is to own the land your shop sits on. Rent kills you ever time.

    SF-
  16. James1300

    James1300 Member

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    For the 'Gunsmith', I was actually thinking of leasing him/her floor space.
    Thats what we did with the buisness I was in.

    As far as owning land. That will have to wait.
  17. Gunner69

    Gunner69 Member

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    Let me give you a RL example... I jsut bought a plinker plus from the Kitchen FFL that I use for all my transfers... He gest 15% below MSRP cost.. I pay 7% over cost.. Thats a slim margin and he doesnt have any over head.
  18. harveydent

    harveydent New Member

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    open a bar
  19. mjbskwim

    mjbskwim Well-Known Member

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    That's what I have been told and seen on a few of my purchases,that the store owner showed me the wholesale price.

    There are a few stores that charge more,but the gun consumer shops around too much to give them lots of business.
    I think these guys make some up with trade ins and consignments.Well they all do that way I would guess.

    But the accessories should still have the 1000% mark up that most retail has,no?
  20. Beefcake

    Beefcake Active Member

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    I have to scratch my head on this one. There is an FFL on this board that seems to sell new handguns 20-30% cheaper than the stores I've been into, so the shops must have some decent markup. Heck, the guy I'm thinking of seems to sell new guns 20% below what most of the used gun ads on this board are asking. Plus, the shops seem to offer between 50-60% of the value of guns if you trade them in. Based on these two observations, I'm guessing that most shops are trying for 30-40% margin (which is why they are getting killed by the internet). Unfortunately, that is probably the margin required to maintain a brick and mortar store.