Holy Markup!

[Dontchaknow]

Guilty.

Gross margin and markup are similar in terms of the actual number: Item Sale price - Item cost price. The percentage will be different as it is calculated in different ways. It's a small distinction compared to the huge ignorance of the very basics that is evident in these threads.

 

[Dontchaknow]

The more you know….

I edited my post to reflect more accurate information. Thanks.

Yep, interesting stuff, but mostly important to accountants and managers and not very important relative to the very basics of how our system works being critical for every citizen to understand (note this is not directed at you).

 

[beanbass]

 

[Sammy T]

I can't remember the last time I got a discount as small as 10% on a guitar. 15% is pretty much standard and it doesn't take much haggling to get 20% most of the time.

 

[knasky]

Wait, let me get this right. So businesses buy products wholesale, and then charge their customers more to earn a profit?

 

[Figaro]

I miss the days of getting 30% to 40% off

 

[jzgtrguy]

Just took a ride down to the local store and snagged me a guitar listed for 1499.00. The sales dude was having some trouble with the terminal and walked away to get some help and left the thing unlocked. I happen to be in IT and decided to have a look around. What I found was on average a mark up of 45%. Totally floored at what these could be going for out the door. Make sure on everything you’re at least getting 10%

I used to own retail Gem and jewelry businesses. If I bought something for $10 I sold it for $20 or a 100% mark up. After I paid my Triple net lease (per square foot against a percentage of the gross plus the owners property tax CAM costs, Insurance, Employees. Advertising etc there was nothing left. I often wondered why even bother. Plus shrinkage. Theft, shoplifting was a huge problem. Oh and they measured the square footage from the center of the demising walls and all the way to the drip line of the awning out front which I couldn't even merchandise. Hundreds of thousands of dollars would flow though the business but getting any of it to stick to me was incredibly frustrating. It was a family business. Almost like owning a boat. The happiest days are the day you buy it and the day you sell it. I don't miss retail not one bit.

 

[coltonius]

I miss the days of getting 30% to 40% off

Anecdotally speaking, GC used to give salesmen discretion on this, as long as the sale was 10% over cost.

This is, of course, bad practice for salesmen and for the business in terms of profitability. I presume this is why GC adjusted the pay structure and ability to negotiate prices.

 

[jzgtrguy]

I miss the days of getting 30% to 40% off

Never negotiate from retail down but cost plus a reasonable profit.

 

[ixnay]

I miss the days of getting 30% to 40% off

Considering those days (at least in my experience) were back when shops listed everything at MSRP instead of MAP, 30-40% is really pretty much today's MAP - 15% or so.

Now if you were getting 30-40% off of MAP on a regular basis, I'd be missing those days too...

 

[Figaro]

Considering those days (at least in my experience) were back when shops listed everything at MSRP instead of MAP, 30-40% is really pretty much today's MAP - 15% or so.

Now if you were getting 30-40% off of MAP on a regular basis, I'd be missing those days too...

Yes, it was before MAP

 

[Figaro]

Never negotiate from retail down but cost plus a reasonable profit.

Whatever gets you the lowest price

 

[ixnay]

I got one of my first eye-opening lessons in guitar pricing at a local mom and pop store back in the 90s.

I wanted a Peavey Wolfgang, which they carried and had priced at full MSRP ($2195). I had a MF catalog with the guitar listed at about $1750, and I was going to try to get them to match that price for me, out the door.

Before trying to get them to do the price match, I decided to ask the best they could do, just to see if they even got close. After the sales guy looked at the computer, he came back and said he could do $1309 + tax, which I was more than happy to accept. 40% off of MSRP and 25% off of MAP. That was at a local mom and pop store. Imagine what a big online retailer could probably afford to do.

Over the next few years, I bought a couple more from them, and those were only $1250 a piece (+ tax).

 

[RockinRob]

I got one of my first eye-opening lessons in guitar pricing at a local mom and pop store back in the 90s.

I wanted a Peavey Wolfgang, which they carried and had priced at full MSRP ($2195). I had a MF catalog with the guitar listed at about $1750, and I was going to try to get them to match that price for me, out the door.

Before trying to get them to do the price match, I decided to ask the best they could do, just to see if they even got close. After the sales guy looked at the computer, he came back and said he could do $1309 + tax, which I was more than happy to accept. 40% off of MSRP and 25% off of MAP. That was at a local mom and pop store. Imagine what a big online retailer could probably afford to do.

Over the next few years, I bought a couple more from them, and those were only $1250 a piece (+ tax).

Peavey was a salesman's wet dream back then, when they were all made in USA. Huge margin.

 

[Toffo]

Not believing this story.

But didn’t you hear him? He happens to be in IT!

 

[blacknoizemachine]

But didn’t you hear him? He happens to be in IT!

 

[nmowery]

Never negotiate from retail down but cost plus a reasonable profit.

Yea well, unless you’re snooping around in a business’ computer, you’re not going to know the cost beforehand

 

[treeofpain]

I'm actually kind of surprised at how many stores are able to stay open.

You are correct. That's the thing - they aren't staying open. How many music (and other local retail) stores have closed in your town in the last 20 years?

And buyers are fussing that they can't "try before they buy" and other services. TANSTAAFL!

 

[jaded1592]

Just took a ride down to the local store and snagged me a guitar listed for 1499.00. The sales dude was having some trouble with the terminal and walked away to get some help and left the thing unlocked. I happen to be in IT and decided to have a look around. What I found was on average a mark up of 45%. Totally floored at what these could be going for out the door. Make sure on everything you’re at least getting 10%

This very much reads like you just stepped back there and helped yourself to the unlocked terminal while the guy was away?

How is the fact that you "happen to be in IT" relevant? If anything that should make you more sensitive to how serious security threats and data breaches can be. It certainly isn't a license to "have a look around" on any computer you happen to come across.

 

[morganjj]

Grocery store foods typically have margins of about 2.2%.
Organic and specialty grocery markets have margins closer to 15-20%.

Liquor stores tend to have margins between 15-30%.

Jewelry stores have margins closer to 40%

You're totally confused about markup vs profit.

Grocery stores don't have a 2% markup. They have a 2% gross profit. The markup is minimum 20%

Jewellery stores have a 40% markup, but nowhere near a 40% profit.