What is the profit margin with guns?

[coop44]

Most gun store employees couldn't sell their way out of a paper bag, that being said most gun store owners don't appreciate the level of marketing and sales skills to make a business successful. I sold guns for more than the competition and customers were happy to pay because of the level of customer service and skill I (we) provided them. salesmanship doesn't mean giving your product away. I am still shocked when I see the lack of professionalism at most gun stores.

Why do you think Cabellas stays in business? Professional sales staff, and a clean well laid out professional looking establishment. Factory representatives who stop by and educate the staff and regular meetings to reinforce good sales practices.

I stocked, ordered, and used a variation of the Armys TAMMS system where on hand inventory was based on frequency of use (sales), suprisingly it worked.

It was in many instances cheaper to send old inventory back to the supplier than discount it below cost, sure we still lost a bit, but, it kept us from being a bottom dollar retailer in the minds of patrons.

(BTW it is a violation of federal and state law to give tax advice to anyone unless you are a licensed tax professional)

 

[James1300]

Customer servise IS what its all about.
That means taking time and money to TRAIN your people.
Your people are 'in the trenches'. They are the first contact the customer has when they are greeted in the store. They hear and see whats going on.

They MUST be trained to a professional level. They Must be professionals.
Its that way with any retail buisness. Failure to train your employee's is,
'training to fail'.

The more they know, the better to serve the customer and, the more willing they are to approch a customer. They KNOW what they are talking about.

When we closed our buisness our people where 'snapped-up' by our competition. Their new employer's knew they had the training.
Our people where able to walk into their buisness and start producing.

 

[coctailer]

where's cocktailer when u need him

Here I am.

 

[mpmarty]

If you take the plunge and open a store make sure to link up with Ellett brothers or some other reputable distributor. Get set up with dating (no not a girlfriend) where they ship you hunting stuff in May or June and you pay for it after hunting season in December or January. This way you can use their capital and not have to borrow for inventory.

 

[James1300]

We used a similar system in the motorcycle buisness.
With good results.

 

[coctailer]

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.

Seems simple to me......however, I will let everyone on the board know that dealer cost on the cheapest Glocks (17,19,22) is well over the higher price you posted. Some Glocks cost the dealer over $500.
The only way to get it (as a dealer) for $20 less than that is to have a storefront, and do a huge buy in. (Glock will come to the store and check out the operation to see if you qualify)

All dealers get the same price on Glocks unless they do the big buy in, and it's not much of a discount.

If a dealer can clear 10% on average, after his expenses, he is smarter than 90% of them.

The key for a small time dealer is to specialize in one brand of gun. That way you can buy enough to get a decent discount.

I could never touch the price that Oregonbrass sells his Springfields for, or the price that JC Weaponry sells his Sigs for.
I wouldn't even think of trying to compete with these products. I would be way higher.
I think JC PURCHASES $300,000+ in Sigs per year. How much would he purchase if he stocked Glocks, S&W, Springfield? How many favors would Sig give him if he purchased 1/4 of that? He surely wouldn;t get the hard to find Sigs. The reps save those for their "high volume" dealers.

Used guns you can make some money on, but you do get stung with broken parts often. You have to buy at a ridiculously low price, so you can fix or clean, mark up, and sell for a profit.
You can sell a used Glock for ??? Kieths sells them for $349. How much did he pay???? Likely under $300.

I know that he pays well above $400 for a new one, and for some models he will pay more than $500.

Want to go in the gun biz and stock KelTec RFBs? Not going to happen. Distributors will sell one to Kieths because he spends $1,000,000+ with them. They won't give this hard to get item to a "Kitchen Table" dealer.

I would encourage anyone to get their FFL, just go slowly at first, and don;t get over your head. A sale item may seem like a sweet deal at dealer cost, but you could get stuck with a product that a stocking dealer can get cheaper.

 

[mjbskwim]

Smith is big on this.A cabinet JUST for them.And all their advertisements.
Some dealers got a little pissed at S&W a while back.
They really had to decide if it was worth their time and money.

Not to be discouraging,but times are tough.And starting a gun store is always a gamble.(above some other type stores)

I wish you luck if you decide to try it.

 

[Rangemaster]

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.

If you're talking new try $440 cost plus 40-50 bucks UPS (air shipping only on handguns) so now you're into it for 480-490 dollars and you are lucky to get $535 for it.
You get to wrap up 500 in a product so you can make 50-60 bucks. Roughly 10%.
Anyone who has never owned a small buisness would be FLOORED to see all of the cost involved when everything is going RIGHT, when it goes wrong it's a living NIGHTMARE!

That 10% you made gets divided up about 30 ways before you get any of it.
THAT IS NOT AN EXAGERATION!

 

[spengo]

He could try the "mark everything up to 150% (at least) of MSRP and yell at and berate anyone with slightly different taste than yours in guns" strategy.

The Gun Room is still in business so it must work...

 

[coop44]

He could try the "mark everything up to 150% (at least) of MSRP and yell at and berate anyone with slightly different taste than yours in guns" strategy.

The Gun Room is still in business so it must work...

isn't it funny how opinionated asholes seem to do well? Why the heck haven't I?

Oh well,

Might as well open a mexican/scottish/french restaurant.
Looking for partners, anybody game?

 

[James1300]

Well, Thats one place I won't darken their doorway with my presence.

 

[centerfire]

I can understand the mom & pop stores being pissed off at the internet shopper.
It is the same for a lot of businesses.
I have quite a few years of Honda dealership parts experience.
People would shop the internet and find factory accessories for a tiny bit over cost.
Then they would call or come in and ask if we would sell said item for the price shown online.
Most times it was about making a little profit but moving the item.

 

[mjbskwim]

I don't particularly like shopping on line.
I like to feel the merchandise.I want to look the guy in the eye,so when something is wrong,I have someone to come back to.
And something does go wrong,once in a while.

Plus I don't deal with banks at all.so I can't buy on line

 

[pogi]

10% would be a high-end number (guessing). Sub 10% is more the reality I bet. The old man (who use to run businesses) always said if your business is making 10% you are well ahead of the game.

 

[Scott]

Well I am lucky enough to know people who work at firearm stores. I get to see what they pay and sell for. It is quite interesting. But I do know this and it all depends on the quantity of guns you buy and how many you sell. Just look at prices. Store A has this gun for 800 and store B has it for 875 and Store C has for 915. We all see that. I have seen stores with 25% mark up. You don't know until you see what they actually bought it for. I say 10% is way to low.

 

[crosse]

I've been told by a couple gun store owners that 11% is super slim margins on Used guns. I imagine the margin on new guns is approximately on standard 15-25% and Used 30-35% based on what I've been offered and seen put on sale at local gun stores.

One good example is the POF rifles which can be had for apprx ~$1600 online but sold at local gun stores on sale for $1800. Regular priced $2200

 

[James1300]

The 'little guy' can usually compete with the bigger stores.
Here's how.
Little guy offers 'service after the sale'.
In retail there will always be someone who shops by price only. Thats fine.
The rest, the majority can get a good fair deal from the little guy, and know if theres a problem they can bring the merchandise back for help. Including contacting the maker and, shipping both ways.
Example: Guy buys tires on the internet. $25.00 over what I pay for them.
Then he has a problem. Well, because he didnt purchase them from me.
I charge to mount them. Then dismount them. Then the internet shopper has to contact the people where he bought them from. Wait for a UPS call tag. Box them up, take them to a shipping facility and, wait for a replacement.
No tire on the bike. The bike sits. Then he has to bring the tire back to me and pay to get it remounted.
Had he purchased from me, I take care of him same day. No waiting. No shipping, he's in/out and down the road. I use a tire out of my inventory.
There will always be the 'shopper'. But, good , friendly service will over come the 'lowest price'.
Ya can't get ALL the buisness. Tires or diamonds. But you can develop a rep. for fast, quality service with a caring attitude. THAT keeps people coming back and telling their friends.

 

[Rangemaster]

You're totally right,
Unfortunately way TOO many customers don't follow these rules. All they care about is price, period.
They don't seem to realize if they run all of us LOCAL, INDEPENDENT dealers out of buisness they won't have anywhere to pick up their internet purchased guns. The ATF doesn't really like the idea of inter-state internet sales anyway, especially handguns, so I wouldn't be suprised if they figure out a way to virtually shut it down. If "gun shops" turn into "internet transfer sites" I don't think the ATF will smile on it.
I also think the fee for transfers will go up significantly when it's the shops ONLY source of revenue. Every customer will be paying the "web seller" a fee/profit AND the transfer site owner a profit.
My gunsmithing might go up in volume because these guns are still going to break and I won't have to stand behind the guns because I DIDN'T SELL THEM to the customer, only did the paperwork.
Basically there will be wholesalers selling directly to the customer.
This all might actually be better for me PARTICULARLY in the long run as I can reduce my overhead, tax burden, paperwork, storage, inventory and it's tracking and maintainence etc. I'll be able to concentrate on transfers and gunsmithing and probably increase my profit margin.
But just like Obama getting elected, just because it's good for buisness doesn't make it better over all.

I don't understand many people's rationale of giving their money to a big company that just takes that profit and adds it on top of the profit they are already making instead of LITERALLY putting food on the table for the little man.

 

[spengo]

I only bother to buy online if the price difference after shipping + transfer fees is significantly different. If the online store is $50 cheaper than what's in stock at the local place, it totally isn't worth it to buy online. After shipping and transfer fees that's probably only a $10-20 difference anyway. I'd rather have the gun today and get to go shoot it immediately. Also if it doesn't work or I have some problem I can go right back to the local store and get it taken care of instead of waiting a week or two for emails and shipping.

Now, if the price difference is $100+ (as it occasionally is with surplus guns) I may be more inclined to buy online.

That and high quality parts and accessories as I mentioned before. I suppose it is true that more people buy the cheap stuff but I don't have to like it! I do plan on getting some of the stuff for the AR I'm building now from that new GUN STORE place on Beaverton-Hillsdale since they seemed to have a lot of what I want in there (ACS stock, XTM panels, MIAD grip). I'll still probably have to order things like a surefire light, aimpoint t-1, and troy buis online though, but we shall see.

 

[RLW]

The profit margin on new guns is pretty low. There is money to be made in guns as there is in any business. But if you are going to sell the same guns as everyone else online your are not going to make any money as there are guys selling guns online at virtually no profit.

If you have a store you sell for more, but your expenses are much higher. In a store you have the advantage of the customer being able to hold and look at the gun and the fact that they can take it home that day. There are many advantages to having a retail shop or not, but either way if you sell the same thing everyone else does then you have to provide better service.

Your other option would be to provide something that others don't, but that is not easy as your not the only one trying to make money in the gun business.

Ryan