October 01, 2014, 09:21:30 PM

Author Topic: Retail Markup. How much do stores really pay for the equipment they sell us?  (Read 9797 times)

Canon Rumors

  • Administrator
  • Canon EF 300mm f/2.8L IS II
  • *****
  • Posts: 2672
    • View Profile
    • Canon Rumors
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.

Retailers make next to nothing on camera lenses and camera bodies. He's not lying. I worked a long while in retail, and there was rarely a double digit margin. That usually only happened at launch, and when things were hard to come by.

Here's a few true story examples. (Canada)

--------------------------------------------------------------------------------------------------------
Christmas Situation
Canon G9
Dealer cost $464
Sale price: $449 (Price Match on say Staples)
Visa @ 1.2%: $6.09 (after tax)
Total Cost: 470.09

Canon Provides 2% volume discount from a large Christmas order.
+ Another $15 sell through rebate claim.

$24.28 Back to the retailer.

Dealer sees both of these credits 6 months down the road.

Total raw profit on the G9 sale: $3.20

100% factual true story. This isn't an anomaly. This is why your local camera retailer spends most of the Christmas season crying over loss leader flyers from Wal-Mart and Staples.

So when they say, "no you can't have a free bag or memory card"... there's a reason.

There's a reason the local camera store is a dying breed.

--------------------------------------------------------------------------------------------------------

Canon EF 800 f/5.6L IS

Dealer Cost: $10,480
Merchant Account Cost: $149
Sale Price: $10,999

Raw Profit: $370

You get the idea.......

These examples were at various different times, prices have changed since then.

CR


canonrumors.com

canon rumors FORUM


Jettatore

  • Guest
You guys are all awesome, thank you for you're posts.  I love this bag of worms.

I'm going to devil's advocate.  But why would someone who works for a store, especially in this day in age, have the real access to what the owner paid for it...  I wouldn't be surprised if one has to sign an NDA that they will never mention "inside information" even to long-time employees.

If I was a store owner, I would have 2 books, one for me, and one for my trusted employees.  Just because if he knew how much I was making, it would be harder for me to deny him a raise.  Lol.

canonwhore

  • Guest

There's a reason the local camera store is a dying breed.

--------------------------------------------------------------------------------------------------------


CR

I always have and always will continue to shop at my local camera store. These big box store employees don't know S___ about the high-end cameras & lens, let alone know their differences.

awinphoto

  • Canon EF 300mm f/2.8L IS II
  • *******
  • Posts: 2000
    • View Profile
    • AW Photography
I'm worked at a camera shop back in the day and applied at others... What I know is 1), camera stores make profit, sort of, on used gear... Many of times I've tried to trade my used gear in stores and reps told me in whisper "sell it on ebay/craigslist"... The camera store I worked at over a decade ago had a blue book type book to rate prices on used gear... they offered lowball prices and went off the suggested retail based on the book.  2) one store i applied at once told me as an employee, they are eligible for 20% off all gear... that tells me there MUST be some padding in the price to be able to absorb that rate... and lastly 3), another store I applied at said I would make 30% commission on all warranties and accessories I could sell... When you buy from stores and they push warranties/filters/etc... that's why... there's commission.  That one store in particular said the base pay was near minimum wage but with commissions, it was possible to make double/tripple that in commission (i turned that job down).  Frankly my local stores near where I live cannot compete with the likes of Adorama/BH Photovideo so I would garner their prices are probably a hair over cost because they move so many units, all the profits as little as they may be rake up...
Canon 5d III, Canon 24-105L, Canon 17-40L, Canon 70-200 F4L, Canon 100L 2.8, Canon 85 1.8, 430EX 2's and a lot of bumps along the road to get to where I am.

jcns

  • PowerShot G1 X II
  • ***
  • Posts: 74
    • View Profile
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.

expenses are not write-offs. Expenses are deductions.
both write-offs and deductions will be paid from the gross margin.
15% margin (any margin) on the item needs to pay for all other expenses. Which means, if you have a profit of $150 from a $1000 camera, you still need to pay rent, taxes, fees, employees, advertisement, etc, etc.

Jettatore

  • Guest
Fair enough jcns, but if anyone expects me to believe these major superstores can run in a building 1/3 the size of one of the larger style blocks in one of the most expensive cities in the world, and they run the whole profit end of the business off the back of filters and camera bags, and that they aren't making money on the actual expensive products they sell, I'm just going to nod and smile.  They must sell a massive amount of filters and fanny packs, lol.

Hillsilly

  • 1D Mark IV
  • ******
  • Posts: 770
    • View Profile
To find the cost of a product, look for the lowest possible price on eBay.  No matter what the item is, there will be someone out there trying to sell for only a small fraction over cost (hoping, usually erroneously, that increased volume will lead to increased profits).  You can then use that cost to work out the margin from the retail store.  For fun, compare HDMI cables on eBay vs retail shops.

Jettatore asked why a store owner would give their employees access to the cost of the item.  Smart retailers and wholesalers run stock systems that list the retail price, the purchase price and their lowest possible sale price (which factors in overheads and a nominal profit).  This allows the sales staff flexibility when dealing with customers who are shopping around and tells the staff member how low they can drop their prices without incurring a loss.  Good retailers arm their staff with as much information as possible.

It also allows them to upsell customers more effectively.  For example, they might bundle a memory card, extra battery and a filter and "drop" $50 off the overall price to secure the sale.  Good retail people can think on their feet and come up with solutions quickly that allows them to appear price competitive.

Of course, the sales people are also accountable.  They would have their own performance and profit targets to meet.  If they gave everyone a discount, they probably wouldn't have a job for much longer.

Sadly, good retailing is a dying art.  I doubt there will be too many retailers selling high end camera gear in future years.  Most of the good camera shops I know are already located in industrial areas and you choose your items over the internet before turning up to collect it.  Nowhere near as much fun.  Plus no haggling.
1000FN | 7E | 3000 | 3 | LS-100TS

canon rumors FORUM


Zuuyi

  • Guest
Fair enough jcns, but if anyone expects me to believe these major superstores can run in a building 1/3 the size of one of the larger style blocks in one of the most expensive cities in the world, and they run the whole profit end of the business off the back of filters and camera bags, and that they aren't making money on the actual expensive products they sell, I'm just going to nod and smile.  They must sell a massive amount of filters and fanny packs, lol.

Best Buy makes little money on most major electronics.  Or even video games.  But they make tons of money on accessories.  I remember when I got certain popular accessories at 90% off and video games were at best a couple dollars off.

They carry the popular electronics so that you buy the accessories.  Go to Best Buy and look at the price of cd/dvd holder and then look at similar one on eBay, you will see where their profits come from.

J. McCabe

  • Guest
another store I applied at said I would make 30% commission on all warranties and accessories I could sell... When you buy from stores and they push warranties/filters/etc... that's why... there's commission.

Reminds me the time I bought a 1.4x EF extender, and the guy asks me whether I want a filter to protect it's front element from scratches.

Told him no thanks, I have a whole lens to protect the extender's front element.

JackSw1ss

  • Guest
This is an interesting thread.

I'd like to share how is the situation where I live (Switzerland) and perhaps get some feedbacks from you guys

Ok, let start saying that suisse is not as other countries, we have free traffic of materials, meaning that we don't have banned items or stuff.
Though since we are "closed" everything is applied to the Swiss Franc value, so everything imported must be converted to our value and it seems that sometimes people make a real big crest (markup) at this step.
The big thing chopping our leg is that all is value converted so if Euro goes S*** we gain as consumer (but as export country we are in deep S) and vice versa.
Example. With the crisis of euro (and consequential reinforcement of the franc) all the prices of imported stuff had to be re-made and re-valued.

5DII back in may/june still was at about 2740 Dollars...today is 2045 circa. (I'm pulling the trigger btw LOL)
this because the leveling of the prices to the change of the value is approx on a 6 month period basis (when the dealer bought the 5D and how long stayed in stock...if he bought it back in january he bought it from importer at a higher price)

though the biggest problem here is that, those prices above are from a website called toppreise (top prices) which is a website that shows the best prices for a specific item from the cheapest to the more exp from all the online/fisical shops of the Switzerland. this is great
but if I go to a local shop, curious how much a 5D is? today is about 3100 dollars BODY ONLY....yes you read it correctly.
That is a completely different story....local shops are crazy, really and cant understand why.
on the website i find a 50 1.4 canon for 330 dollars....local shops sell it for aroun 480 dollars.

how do you explain that???
there are some market flows that I really don't understand...

But the king of the examples is....you know elinchrom is suisse right?
well I bought a set for about 1400 dollars....buying it from BH, same set would have been about 900 dollars, saaaame set...ok this is related to different condition of life in different country but geez, it's made in CH stuff LOOOL.

Cheers
« Last Edit: November 23, 2011, 06:21:21 AM by JackSw1ss »

scottsdaleriots

  • Guest
I think it also depends on the retailer; if they're a franchise or not/well-known store or a bunch of family members starting up a business and buying imports then reselling you them. I thin obviously the more well-known stores have a high mark up price. For example two camera stores here selling the 7-200 2.8 IS II have a signigicant gap (IMO anyway, always trying to get a good/cheaper price for any camera gear I buy) between their retail price. Up to $250 difference.

But yeah stores won't sell you something that they wouldn't see getting them a profit (if that makes sense, busy day today for me, I'm tired).

mreco99

  • Guest
just for info, i recently traded in 3 canon lenses to our local UK camera store.

£200 70-300mm non L
£150 60mm macro EF-s
£150 Tokina 11-16mm

Sure i probably didnt get top dollar, but i got a no hassle instant sale, supporting my local camera store.
Im happy, and i guess they are else they wouldnt have traded.

JackSw1ss

  • Guest
Sure i probably didnt get top dollar, but i got a no hassle instant sale, supporting my local camera store.
Im happy, and i guess they are else they wouldnt have traded.

I would love to support local shops myself, too. But hey, if you read my above post look at the price difference.
I mean, I'm about to purchase a 5DII at about 2000 dollars only body, but at local shop they want almost 3000!!!
I mean seriously, I get the fact that they have a different flow of money and of business but this is almost like robbing, geez.
The only thing I bought from them was a used 24-105. I was on the market for a used one, seeing prices of about 800-900 dollars exactly one year ago. I entered their shop (as always to try to sneak for some good affairs, lol how i deceived I am) knowing it was not a good economical period for them (wonder why LOL). I saw it and ask the price...they told me about 1300 dollar used...LOOOL...I told them "guys I can buy it new for around 1200 (on the website mentioned in the prvious post), c'moooon". after some debates they were firm on their decision, makin some discount but not enough...I ended up leaving with angry and saying well ok, I prefer spending 1200 on a new one than 1100 (their max discount on the used one after hours of dealing LOL), goodbye.
as I was at the entrance, opening the door, they was like "ok ok ok...c'mon let's deal more"
Long story short, I ended up paying about 920 dollars for it, with 1 year shop guarantee. but c'mon, it's crazy.
this shows you that at least for where I leave the local shops are ridicolous and they try everytime to make the crest on prices, not markup, real huuuge markups.
because if it was because of their money flow the dude would have never dropped the price to 920 dollars. that shows the bad attitude.

I tried month ago to fight for a 5DII in the same shop...but as said above, they want about 3000 $, and with new equipment they are firm on their prices...I told them, sorry I will buy online, I won't support the local shop that's 10 mins away from me, spare about 950$ and have the same exact product...bye bye

that's really ridicolous.


other locals are same as far as prices go, i dunno really why, maybe it's because of their smaller economic/money flow.
And when we speak of our lovely big whity lenses the things start to get crazy.
Listen up, if you are able to find a lets say 400mm 2.8 (talking version I, not the mark II) that in US is about 8100, $ here they go nuts.
they charge, listen up, about 11500 $ for it....I'm speaking of local shops...LOOOOOOL
on the website where I buy it's inline with your prices of US and rest of the world.
No comment

« Last Edit: November 23, 2011, 08:03:28 AM by JackSw1ss »

canon rumors FORUM


mreco99

  • Guest
Jacksw1ss i understand your position totally, and im the same, i wont (cant justify) paying over the odds when i can get it cheaper.
I was fortunate that my local store supplied me with my 5dII +3 lenses+bag a few weeks ago for a good price (and i am a keen/skilled internet shopper)
The 5DII+24-105lens was about £200 over the cheapest i could find online, but to make me happy he gave me a spare canon battery and a 16gb 400x compact flash. Yes i paid a few pounds over the cheapest ever deal online, but i got personal service and a face i can take stuff back to if i need to. I agree though i wouldnt pay the difference you are talking about just for a personal service, we all have our limits.
In my experience smaller independant stores are more likely to offer you a good deal. A well known store here in the UK beginning with J wouldnt budge an inch and when i mentioned online prices he got decidedly annoyed at me. I wont be going back to the J shop.

MK5GTI

  • Rebel T5i
  • ****
  • Posts: 149
    • View Profile
I used to believe all these sample posted above, but not anymore after i read a deal thread from a Canadian forum:

this is thru pricematch, easily 18% off


shock? wait till you see this:
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
cost + 10% for eomployee's friend, employee pay only cost +5%


so yeah, cost is $1350, but thats obvious is without overhead cost

canon rumors FORUM