Retail Margins On New Guns and Used Guns.

[arakboss]

Any business buying second-hand goods will want to pay the least they can bargain for, and sell for the most they can get; that's just business, so I assume that the typical markup varies widely depending on what they had to pay. On the other hand, if I screwed a customer out of a $700 gun for $20, I'd have a hard time sleeping at night.

I tried getting the boss to give me a target margin percentage to aim for and he won't do it. His answer is, he wants to make as much money on each sale as the market will bear. To him it doesn't matter how little he paid for an item, he wants as much as he can get, when it sells.

I could sell almost every used firearm he has in stock if he would settle for a few hundred percent margin. He won't, so most of the firearms sit until the right buyer comes along.

The like new Ruger-5.7 I bought for a buck would have a 10,000% margin, even if it sold for $100. It will likely go for $400+.

The buy deals that come through the place are ridiculous and it always surprises me what people are willing to accept for their firearms.

 

[Camelfilter]

Pawn shops are different than local gunshops.

 

[arakboss]

Pawn shops are different than local gunshops.

Maybe but free market proponents tend to share the same goal.

"The underlying sentiment is positively spot-on. We should set prices based on what our customers are willing to pay, not based on our costs. However, what is "the market" and how much "will it bear"?"


Source: https://www.linkedin.com/pulse/what-market-bear-mark-stiving-ph-d-

 

[Hayharnel]

Let me know if you get another 5.7 for $1, I'll buy it and make your shop some money too!

 

[Camelfilter]

Maybe but free market proponents tend to share the same goal.

"The underlying sentiment is positively spot-on. We should set prices based on what our customers are willing to pay, not based on our costs. However, what is "the market" and how much "will it bear"?"


Source: https://www.linkedin.com/pulse/what-market-bear-mark-stiving-ph-d-

Pawn is not retail.

 

[arakboss]

Pawn is not retail.

They sell new guns, they sell used guns, they do transfers, they can order guns for people. I guess the retail line is blurred these days.

 

[Alexx1401]

They sell new guns, they sell used guns, they do transfers, they can order guns for people. I guess the retail line is blurred these days.

Many Pawn shops have an FFL since guns can be HUGE money maker for them. LOT's of people will use a gun to get a loan. Lot's of those guns end up being never picked back up and the shop can get them for cents on the dollar to what they are worth. That is where real money can be made. I have over my life gotten several really great deals at a Pawn Shop on used. Which meant the shop got the gun at one hell of a good deal. Even for the guns that are picked up the interest rate on the loan makes credit cards blush. So the shop wins no matter what as long as the gun does not come back stolen. They lose a few this way but its still a HUGE money maker for them.

 

[Lazyfaire]

Impulse buys aside (admit it! We are all guilty of hearing a voice that calls out "Buy Me"!), if you have done some research on a desire you have an idea of what others are paying for a pistol/rifle/shotgun. Some big store FFLs are inflexible on their pricing but smaller FFLs can make $30-50 per sale. For me, it always comes down to customer service-- every time.

Have an FFL friend that has always done right by me over the years. He always comes up with a very competitive price that I am happy with.
He handles transfers and shipping for me when needed, and researches his distributers for me to get me his best price. I never quibble with him, as he has every right to make a profit. And if I'm happy w/ the price then it doesn't matter. He doesn't make a profit then he goes under. Not good for me, or him.

My advice is to find a vendor that will give you good pricing and better service that makes you want to return and buy again! An FFL with no honor should go under. Charging +40% MU guarantees that to be only a matter of time.

So if you are ever out Banks OR way ...........

 

[Camelfilter]

They sell new guns, they sell used guns, they do transfers, they can order guns for people. I guess the retail line is blurred these days.

Yes, however can't be truthfully correlated with a regular gun shops margins. Because of the pawn side. A regular gun shop won't be able to purchase a 5.7 for a dollar, and turn around and sell it for $500.

Not knocking such (pawn business), simply pointing out such for your thought process.

The margins do not equal each other, is all.

 

[arakboss]

Yes, however can't be truthfully correlated with a regular gun shops margins. Because of the pawn side. A regular gun shop won't be able to purchase a 5.7 for a dollar, and turn around and sell it for $500.

Not knocking such (pawn business), simply pointing out such for your thought process.

The margins do not equal each other, is all.

That is probably true as far as margins go. The diversified income streams also help to buffer them during slow gun sale periods like we seem to be heading into.

 

[pogi]

If a business is making 10% profit it is doing pretty well as a business. Source: a gentleman who ran 13 businesses and had 11,000 employees.

 

[arakboss]

Many Pawn shops have an FFL since guns can be HUGE money maker for them. LOT's of people will use a gun to get a loan. Lot's of those guns end up being never picked back up and the shop can get them for cents on the dollar to what they are worth. That is where real money can be made. I have over my life gotten several really great deals at a Pawn Shop on used. Which meant the shop got the gun at one hell of a good deal. Even for the guns that are picked up the interest rate on the loan makes credit cards blush. So the shop wins no matter what as long as the gun does not come back stolen. They lose a few this way but its still a HUGE money maker for them.

You are spot on about this source of cheap to free inventory. A customer will come in and get a loan against a firearm. That loan incurrs the standard fees plus an additional firearm fee (all regulated by the State) along with interest. If the customer defaults on the loan that firearm goes into the stores inventory and will get put out for sale. Often times a customer will renew the loan a few times (occasionally many times) before defaulting. I have seen a few firearms with a thick stack of renew stickers on them go into default. Those customers likely paid more in interest and fees than the firearms were worth. Once the interest and fees paid during renews exceed the loan amount that firearm is essentially free inventory, if defaulted on. There have been numerous defaults on firearms in every month since I have been helping out there.

The pawn part of the operation is depressing to me. I would rather stick to helping with gun stuff but they are understaffed so I am forced to help with it all.

I don't understand why people get pawn loans rather than use credit cards. It seems like anybody who can fog a mirror can get a credit card these days. The interest on the highest rate credit cards would be cheaper than a pawn loan.

 

[Croat]

No doubt some guns are over-priced, but I generally don't balk at the price of a gun offered by an LGS. Ammo and especially primers, that's another story. A jerk-water in Ontario was recently selling primers over $20 per hundred. For perspective, just obtained CCI small pistol at Bi-Mart two days ago for $7.99/hundred, which ain't cheap but certainly puts the shame spotlight on that jerk-water in Ontario. And if you really want to see over-priced all you need do is buy clothes. Had a friend who was a purchasing agent at Macy's long time ago who said even when they have a 50% off sale the store's profit on clothing is over 100%. With supply chains from Asian sweat shops that profit percentage may be even greater now, don't know.

 

[Certaindeaf]

What do you guys think the average retail margins are, on new and used guns?

We talking neckbeard or rch?

 

[Alexx1401]

You are spot on about this source of cheap to free inventory. A customer will come in and get a loan against a firearm. That loan incurrs the standard fees plus an additional firearm fee (all regulated by the State) along with interest. If the customer defaults on the loan that firearm goes into the stores inventory and will get put out for sale. Often times a customer will renew the loan a few times (occasionally many times) before defaulting. I have seen a few firearms with a thick stack of renew stickers on them go into default. Those customers likely paid more in interest and fees than the firearms were worth. Once the interest and fees paid during renews exceed the loan amount that firearm is essentially free inventory, if defaulted on. There have been numerous defaults on firearms in every month since I have been helping out there.

The pawn part of the operation is depressing to me. I would rather stick to helping with gun stuff but they are understaffed so I am forced to help with it all.

I don't understand why people get pawn loans rather than use credit cards. It seems like anybody who can fog a mirror can get a credit card these days. The interest on the highest rate credit cards would be cheaper than a pawn loan.

I have never pawned anything so I have to "guess" its people who just can't get a loan any other way??

 

[arakboss]

I have never pawned anything so I have to "guess" its people who just can't get a loan any other way??

I know you can't always judge a book by it's cover but most of the people I see, seem to have it pretty well together. The rougher looking customers rarely want a loan they just want to sell their stuff.

 

[Croat]

I have never pawned anything so I have to "guess" its people who just can't get a loan any other way??

You'd be surprised how many people are living on the edge these days. Credit cards get maxed out. The average credit card debt now is $6,469, which just seems irreal: https://www.creditkarma.com/insights/i/average-credit-card-debt
If you think carrying that much credit card debt is crazy (and it is), the number of Americans living paycheck-to-paycheck is currently estimated at 53%: https://www.zippia.com/advice/how-many-americans-live-paycheck-to-paycheck/.
Is that not frightening? More than half the people in this country are so close to the edge that they struggle to live paycheck-to-paycheck. Not good. When people are on the financial edge to that degree, coupled with the extraordinary Bidenflation we've experienced just to buy food, gas, and similar necessities, I can see how some people get desperate enough to resort to a pawn shop loan.

 

[Aero Denezol]

I always though the paycheck to paycheck figure was higher than that, like 75% or something. The $6469 avg. credit card debt, man that is stressful. I don't know how people do it.

People make a lot of bad decisions. I watched how people handled their Covid bailout money, most of them squandered it on trash, instead of paying off debt or saving for a rainy day.

 

[Longwalkhome]

Just a point of view but the market on guns made a big change when it was no longer open free trade. Gunshows used to be where a man could go to buy, sell or trade and get his best deal. When government interference moved into the gunshows it changed the entire market, restraint of trade kills markets.

Mr negative here sees a time coming that Oregon will be just like kali when it comes to gun sales, few and far between.

 

[Kruel J]

People should stop buying stuff they don't need and can't afford.