Retail Markup. How much do stores really pay for the equipment they sell us?

[Jettatore]

I'm wondering if anyone has any specific details, estimate/figures or generalized standards for figuring out the retail markup that stores put on lenses, bodies and equipment.

I'm being told by a salesmen that they basically make little to no money selling new lenses and that they only make money on used equipment and accessories.  I am certain that this is what most salesmen of cameras and lenses say and have always said.  But I don't necessarily believe them, and that is what I'm after,-how accurate is this common line, or is it a total line that many just learned to accept but is far from reality?

In most retail, electronics and computer components included, etc. etc., there is a significant markup.  Any detail, or hard evidence on how camera retail works and what the actual/estimable margins are.  Thank you very much.

[neuroanatomist]

No idea, except to state that generally, retailers don't sell items on which they cannot make a profit. 

There are a couple of camera store owners who participare here, maybe they will chime in.

[Maui5150]

Looking at Canon, both bodies and lenses, the prices seem to be fairly static across resources.  This to me either indicates a vindictive/controlled market (i.e. you publish discounted prices, you loose the distribution) or that the margins are tight.  When I look at say eBay as an example, while I see hundreds of say 7Ds sold a month, they tend to gravitate to a general defined range.  When I look at published prices, they too stay in a general range, with not much deviation except for new models and the cannibalism that causes.  Most drops in prices come over time, or via the rebate it seems from Canon.  There are some retailer who seem generally higher consistently, but over time, in take the US market, you would see a much more aggressive and consistently aggressive seller if the prices margins were greater.  There always seems to be someone happy to deal in volume

[jimmy156]

I manage a Photolab that is part of a franchise in the UK, some franchises sell camera's, we dont. This is because we cant make any money on them and still be competitive.

By the time we have bought them from our suppliers and paid the VAT on them, we have already paid more then you can buy them for from the big online retailers (amazon etc.)

So i would say the chap you were talking to is prety spot on!

[Jettatore]

Jimmy, that may well be the case if you're supplier's prices are too high, but the guys I was talking to couldn't be "spot on" in at least all they say because I caught them in too many lies and contradictions in the course of a 2 minute phone call.  That's what made me question more and come here to post.

Two of the major names I called are trying to sell me a used lens for the same price a third major player is currently selling the lens brand new for.  I wanted to trade, higher value for lesser value.

If I sell it used and then go buy the lens I want instead brand new I can make $200 or slightly better on the deal myself without breaking a sweat, I know this without question.  All 3 offered to pay me $700 for a lens I can easily sell for $1,000 to $1,100 on any equipment sale/trade forum.  And I didn't even want cash, I wanted a trade for another used lens.  And based on the crap price they offered me, they obviously already paid less for the used lens I would want to pick up in exchange, so overall there is probably at least $400-$500 profit in it for them, and I just handed them the deal and they wouldn't take it.  I was laughing, because they walked away from that, insisting that they would make more like an $800 or so profit instead if I played it their way, come on, lol...

I am leaning towards neuroanatomist on this one, I buy a lot of computer parts, HDD's, CPU's, motherboards, etc., and I know the retailers I buy the stuff from make good money on each sale they make.  The same places sell camera bodies and lenses, high end stuff, and they barely sell any accessories compared to others, and they don't sell or deal in used at all.  This idea that camera retailers who actually bother to stock the product don't profit - I think is a well oiled and perpetuated myth.  I'm just looking for the detailed facts to explode it with.  I mean, just look at Best Buy as well (not the computer retailer I use btw), but I doubt they make exceptions on selling EF-S equipment just so they can have a rack of tri-pods and bags to sell.  These people make money.

[Mt Spokane Photography]

I'm wondering if anyone has any specific details, estimate/figures or generalized standards for figuring out the retail markup that stores put on lenses, bodies and equipment.

I'm being told by a salesmen that they basically make little to no money selling new lenses and that they only make money on used equipment and accessories.  I am certain that this is what most salesmen of cameras and lenses say and have always said.  But I don't necessarily believe them, and that is what I'm after,-how accurate is this common line, or is it a total line that many just learned to accept but is far from reality?

In most retail, electronics and computer components included, etc. etc., there is a significant markup.  Any detail, or hard evidence on how camera retail works and what the actual/estimable margins are.  Thank you very much.

Its true, cameras and electronics have at most, a 15% markup.  When you consider the cost of rent, heat, lights, labor, and advertising, there is little profit.  Bigger businesses may get a incentive payment for meeting or exceeding sales targets, but thats not guaranteed income, they have to sell a lot.

Internet sellers have less overhead, so they can get by on a lower markup, but they must have a lot of volume, and sell lots of accessories.

However, the accessories like memory cards, filters, cases, etc have big markups.  Thats why they try to sell you the add-ons.

[Jettatore]

Now that I can start to buy, thanks Mt. Spokane.

15% is still pretty good.  Certainly not the same as saying (we make no money)  15% is $150 profit on every $1,000 moved.  Customer pays the sales tax, every expense is a write-off, and they more than cover the overhead on the accessories and then some.

I wouldn't be surprised to hear even slightly larger % margins from some sellers, not including those bonuses you mentioned.

What about things like price changes in the MSRP?  Aren't they guaranteed by Canon when the MSRP lowers?  I could have sworn they were.

[TexPhoto]

Profits on cameras and lenses are pretty low, and there is very little room to make deals.  Camera stores will generally make most of their money on accessories: filters, bags, cleaning supplies etc.

Don't get me wrong, that sucks, I wish I could find that one store with 50% off on the lens I'm lusting after, but it's the reality of the situation.

[unfocused]

I'm confused. Are you asking a question because you want an answer or because you want to "prove" some preconceived notion?

Frankly, the fact that a retailer offered you $700 for a lens that you think you can sell for $1,000 doesn't sound like a bad deal to me. It all comes down to the cost of money for the retailer. Every day they are in business they have cash coming in and going out the door. The cash going out the door is pretty well fixed: rent, wages, benefits, taxes, utilities, etc. etc. The money coming in the door is highly variable and they have to hope that at the end of the year, more money came in the door than went out.

You walk in with a lens and ask them to send money out of the door in the hopes that they'll be able to bring $1,000 in the door at some point in the future. But, there is no guarantee that will happen and no guarantee when it will happen. The retailer looks at your lens and calculates the risk, based on the demand for that lens among his customers (which the retailer knows far better than anyone). He decides it's worth risking $700 to possibly get $1,000. That's not an unreasonable calculation.

You decide you'd rather sell it yourself. You don't have any overhead and you are under no pressure to turn it around quickly (other than a desire to get the cash). That's why ebay has been successful – because there are a lot of people out there who want to absorb the risk themselves in exchange for getting the full profit.

Let's turn this around: what kind of a markup do most wedding photographers have on the prints they sell customers?  How many of the studio and wedding photographers on this site would be willing to sell their products for 15-30% before figuring in the cost of labor, equipment, taxes, rent or any other overhead. (Which is what you seem to be wanting the retailer to do for you.)

Not fair? Of course not. But it's every bit as fair as your question.

You are selectively choosing the factors to take into consideration, while ignoring the big picture. It's unfair and more than a little pointless.

[Jettatore]

I don't think I can sell it for $1,000, I know I can, they sell for more than that in worse shape without the box every day, my copy is flawless with every slip of paper and and bit of plastic and packaging Styrofoam it came with, I was just being conservative.  But I do see you're point.  Still like I said, I didn't want cash, I wanted a trade in, and the lens I wanted it for, they obviously raked someone else over the coals for so the net value of the trade for them was huge.  If we were talking cash alone, I would fully agree, but that wasn't the case so don't selectively re-write to be the case.  No cash was leaving the door for them in this scenario, zero, zip, nada.

[thepancakeman]

You're never going to get "fair market value" even on a trade.  Watch one of the pawn shows on History channel: guy says "this is worth $2000" and the pawn owner then turns to the customer (who heard the $2000) and says "I'll give you $1200 for it."   

If you want the $1000, then sell it yourself and you're all good.  The very reason you don't want to go thru the effort is the reason that you can't get that price from them--they have to "go thru the effort" of selling it; they're not going to do that for you for free. 

[danski0224]

I know someone that works at one of the electronics box stores.

I know someone else that bought an entry level Canon DSLR.

The competitor price match adjustment was less than the "friends and family" discount.

[Viggo]

I've been workin at photo-electronics stores for over ten years and here's a short an simple example of how much the stores make.

If I sell a 600d kit with 18-55 and a Kenko Pro1 UV-filter in addition, I make the same amount, dollar for dollar, profit on those two items. The mark up of a kit like that with competetive price is about 7-9%. Filters are around 50-60%. That's it!

[japhoto]

Looking at Canon, both bodies and lenses, the prices seem to be fairly static across resources.  This to me either indicates a vindictive/controlled market (i.e. you publish discounted prices, you loose the distribution) or that the margins are tight.

This seemed to be the case when I was working in a computer store a while back. For clarification, we did sell also cameras, televisions etc. electronics. I had access to wholesale prices via our intra network, so this is what I'm basing this on.

Not only that though, but the discount percent varied so that I got a pretty good deal on a 50mm 1.4 (same would have gone with all the non L-lenses), but all L-glass was controlled much tighter. We even tried to get a "personnel" discount from the wholesale trader just for me, but it wasn't possible for the 70-200mm 2.8 L II.

All in all the markup for retailers isn't that great for new lenses etc. because Canon (and other manufacturers) are keeping the prices "artificially" higher than their "real value" is. Of course the more you move say Canon products, the better your prices will be and that's why a business that sells camera stuff "on the side" rarely does well.

For selling old lenses, I believe the retailers "poke the ice with a stick" and offer significantly less than the real value of the lens is. Sometimes it works and they get a good deal where they can make much more profit than with new lenses. The bottom line is that they really don't "need" used lenses (since they can be a pita to sell again), so they go way under the real price so that they can make a profit. This also depends on who you are dealing with, since the "regular" seller probably doesn't have the authority to offer more than a predefined price for a lens regardless of the condition of the item where a store manager can go much higher, so that's something to keep in mind.

I also think (know actually) that it doesn't matter to them if you have the receipts, boxes and plastic bags with the lens. All they do is take up more shelve space and to them it brings little to none added value. When you are selling the lens yourself it makes a big deal and of course when buying a used lens it's an added value to the customer, but again, minimal to none to the retailer.

[iaind]

Another problem in the UK is the VAT rule. If your friendly neighbourhood camera shop bought your lens for £750 he would have to sell for £ 900 to cover VAT alone , then add cost of servicing, the obligatory 90 day warranty and resale margin and the cost will rise to well over £1000.