What is the profit margin with guns?

[glockguy]

where's cocktailer when u need him

 

[2506]

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.

Most everyone in the restaurant business is playing at about 5%. Last I checked, there where a few more restaurants than gunshops.

 

[harveydent]

if you looked at a bar operation..in wa. state a liq license is roughly 2.700$
bottle of well vodka is about 9$....first two drinks pay for the bottle..that number changes when you buy more expensive product you pay more and it takes few more sales to pay for that bottle.. stiil gotta pay taxes and rent and payroll ect..but a good buisiness to be in

 

[Velzey]

Being an FFL holder you can buy, well lets just say the average Glock for around $370-$400 NIB, and resale on it would be right around $500 - $525 or so. And this is from one of the smaller wholesalers around. Much better than 5%

Once you get established you can buy 10k or 20K worth at a time and the discount is much better.

 

[Swedish K]

The thing to remember is that the guns aren't where you make your bread and butter in a gun shop - its the accessories. A great selection of guns will draw in your customer base but the ammo, mags, cleaning equipment, holsters, gun bags, etc are where the profits are - especially if you have much competition in the area. One friend was telling me that when they ran specials on 870's they would actually sell them at cost or even take a 2% loss expecting the buyer to also purchase ammo, a gun bag, maybe a gun lock, cleaning kit, etc. One thing to consider if you are going to start a store front business is to plan well ahead. One thing that saved a friend some setup costs was making a deal with a local gun safe company - they provided him with 4 or 5 floor samples free of charge in exchange for selling only their safes and as a bonus he used them to store inventory at night. Around here I've seen dealers that provide transfers for as little as $20 - much better than in Sacramento where most shops would charge $80 - $120 for the "service". The profits on used guns can be much higher than on new but insurance costs can be higher if you are dealing in used also. I've known some that did consignment sales also for a piece of the sale price and the added bonus of fluffing the inventory selection. If you go through with opening a shop you might do well to specialize in stocking something the competition in the area doesn't. I've noticed that there aren't many shops locally that have much in the way of reloading equipment and supplies. Know your market - if you have local cowboy action shoots you might do well to stock the popular reloading supplies for that group.
Good luck.

 

[James1300]

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

What accessories have 1000% mark-up?(typo, maybe)? 100% maybe on the small stuff.
Under $10.00 odds and ends?

 

[ajw45]

I picked up a LCR at Fred Meyer last month and was $50 off at $459. Three weeks later it was on sale for $429 ??? Is a sale truly a sale? On Tuesdays anyone 55 or older gets 10% off any firearm.

 

[James1300]

"1000% mark up"

Nothing like the gems and jewelry business!

Thats for darn sure!

 

[James1300]

I picked up a LCR at Fred Meyer last month and was $50 off at $459. Three weeks later it was on sale for $429 ??? Is a sale truly a sale? On Tuesdays anyone 55 or older gets 10% off any firearm.

Your lucky. Our 'Fred Meyer's' does not sell guns.

 

[coop44]

I worked retail/wholesale guns at B&B sales in socal for a few years, and yes the margin is low. The only advantage is being to be able to cut deals with importers and manufacturers for volume. Even then you count on being able to sell ammo and accessories with the gun purchase to boost your margin.

 

[James1300]

Accessories in a gun shop? 30-60% and that is if you can sell at retail.
Pricing and dating programs can help if a store can buy in larger quantities.

That makes sense.
However there is a local retail gun store that sells alot of hand guns and rifles.
Yet they don't stock many accessories.
I was suprized when I purchased a gun.
It wasn't even suggested that I may need a cleaning kit, ammo, soft or hard case. They only charge $25.00 transfer fees. (I figured that was to get people into the store).

I love the shop. The people are nice. But I can't help to think they could be doing way better.

 

[James1300]

I can understand that dealers attitude.
When I was in the Retail motorcycle buisness right out of high school. We had people shopping us. Cataloge sales had just started.(this was pre-internet). People without store fronts where selling choice items at discount.

I changed the sizing labels on our helmets. (We stocked every size and color ARAI brand helmet made).
People would come in and try our stuff on. Take up as much as an hour of time.
Then go buy it out of a cataloge.
We didnt see a dime. Yet we took the time to size them correctly, explain the construction, stocked replacement parts and stood behind every product we sold.

Funny how they would bring in helmets and complain to me that they didnt fit.
I'd ask did we sell it? I'd explain, "Everything we sell you is guarenteed right here. You got a problem, we make it right with you". Most of the time the same day your in here.

You mail ordered it? YOU have to re-box it and wait for a return authorization. Then wait for the replacement. Had you bought it from us, I'd hand you a replacement over the counter.

TIRES, well thats another story! We can talk about tires another time.

 

[James1300]

Transfer fee on a gun they sold you? That usually only happens if they are doing a transfer for you for a gun you bought off the Internet that they have not sold you directly.
QUOTE]

No, not on sales to their walk-in retail customers. FFL to FFL.
Another dealer in town charges $35.00. Unles its an AK. Then they want $130.00!! Insane. They say its because of the type of gun it is. I don't usually buy anything from them.

 

[Correctthought]

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.

They don't only sell new, they sell used, so I gotta believe they make a little more on those. Still I don't see how they can stay in business at those profit levels.

 

[olyshoots]

Even before the internet the Gun business was a low margin, high volume business. That's just the facts of the business. It is even more so with the presence of the internet. Yes, the accessories are the keys to profit. Think of yourself - you go to a gun shop and drool on the cases and racks for a while, then you pick up a box of ammo or some trinket for $20.

I had a FFL and general sporting goods store in the late 70's and early 80's. We were profitable but not because of the gun business. That just got them to the store.

Also, you need to be really well capitalized. Put another way, the easiest way to make a small fortune in the gun business is to start with a large forturne.

 

[Chee-to]

The shop I frequent makes 10% on new, 50% on used, he told me "used" is his bread and butter..

 

[James1300]

Even before the internet the Gun business was a low margin, high volume business. That's just the facts of the business. It is even more so with the presence of the internet. Yes, the accessories are the keys to profit. Think of yourself - you go to a gun shop and drool on the cases and racks for a while, then you pick up a box of ammo or some trinket for $20.

I had a FFL and general sporting goods store in the late 70's and early 80's. We were profitable but not because of the gun business. That just got them to the store.

Also, you need to be really well capitalized. Put another way, the easiest way to make a small fortune in the gun business is to start with a large forturne.

I'm starting to see what you ALL are saying. It sounds like a alot harder way to make a buck, than where I came from.

Your right. I do look for the sake of looking. Then buy something I realized I needed before leaving the store! A goodie, not a gun!
But darn! Half the time my gun store don't sell it! I have to order it from them.
I do try and wait for the item. So they can put it on a 'stocking order' to save freight.

 

[James1300]

The shop I frequent makes 10% on new, 50% on used, he told me "used" is his bread and butter..

Ouch! Sounds realistic.

 

[James1300]

Yes, the large fortune that has to sit there on the shelves.
Dead inventory that does not move, lost leaders, the $$$$$$ in general inventory that you have to keep up to stock and you have a whole ton of money sitting there, i.e. that large fortune you speak of
Lotsa folks really do not understand the type of $$ and effort it takes to clear even 10% net.

Yikes! Cost code that stuff. Put a in stock date on it. If it don't move in 90 days, get it sold and out of inventory! Keep new inventory moving in and out of the buisness. People always want to 'Stop in and see whats new'!

 

[rodell]

And out of that he has to pay his entire cost of operation, and his taxes before he even takes a dime for himself

The plus side of the business is you probably don't have to pay much income tax. If you're in a B&O state, though, it has to hurt.