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A thread classic revisted: Why are your lowers so expensive?

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  • #46
    tenpercentfirearms
    Vendor/Retailer
    • Apr 2005
    • 13007

    Originally posted by odesskiy
    I'm sorry to say, but your math goes off on a tangent every time. I hypothetically suggested $50K/day sales to demonstrate that a 6.4% margin isn't always bad. I didn't say anything about fifty grand worth of Glocks - that's insane. What if it was two $25K shotguns? You can handle two DROS's per day by yourself, can't you? Still plenty of time for a lunch break What if you were selling jewelry, not guns? You could sell a single item worth that much. Once again, I'm not a retard. I perfectly well understand that the margin does not determine net income - you have to figure in various costs associated with sales.

    As another example, the good ole' B&B in their days of glory claimed to have sold everything at cost + 5%. I bought my first gun from them (a Glock actually )for something like $429.00. I still have the tupperware, I should dig it up. I'm sure dealer cost on Glocks was way lower back then then it is today, but I remember prices for every single item in the store were way lower than let's say Turner's. I know that B&B is long gone, but from all the different things I've heard they had to close because of two brothers (owners) fighting with each other plus all the legal trouble that they had from the feds, the state and LA.

    As far as retail operations in general, stores that sell higher volume at lower margin always have a much higher chance of success for multiple reasons. A) Their purchasing power goes up because of volume. Hence lower costs and even lower price to the consumers. B) The more customers the business serves, the greater the exposure via word of mouth, etc. C) The overhead to sales ratio drops thus allowing for lower prices yet again. D) Because of much larger and more diverse customer base the business is not affected as much by swings in overall economic health. This is all pretty basic stuff.

    It's good to see that you have so many loyal customers that are ready to jump in and defend you even though it's completely unnecessary because no one is attacking your integrity or your business ethics.
    My math was off on a tangent? Why because I pointed out I wouldn't be happy if I sold $50K of merchandise in a day at 6%? Sure if I special ordered two shotguns for $50K, we could agree that might be good. Money up front.

    If I am selling 50K of my stock for only 6%, I still don't see that as being a very smart deal. I could invest for more than that.

    Don't compare a gun shop to some other retail business, they aren't the same. As far as B&B goes, I think you are making some big assumptions there as far as what they really charged. Just because they are less than everyone else around, doesn't mean they are making 5%. I tend to have lower prices than everyone else too, but some items I make 15% on, most around 20%, ammo around 30-40%, and some as much as 100% or more. You make money where you can and I am sure that is what B&B did.

    However, you again use a bad example of an example by using B&B. You don't talk about a store that went out of business to support your theory of cheap gun shops. Sure you heard it was due to something else, but without proof, it leaves doubt in the reader's mind. Or it was the fact that the brothers fought all the time because they spent so much time at the shop with little to show for it. I bought a M1A from B&B and I don't remember it being that far out of line of most other M1As at the time. I seriously doubt they only made 5%.

    Yes in theory it would be nice to have a large amount of capital for start up costs and enter the wholesale crowd. Most gun stores don't. However, you asked why gun shops charge more than some guy operating out of his garage out of state. I gave you an answer, was it sufficient?

    And yes I do seem to have guys who like to defend me when it isn't waranted and I do appreciate it. You will notice, I stuck to the topic and am not taking this as an insult to my business, I am just have a good debate.
    www.tenpercentfirearms.com was open from 2005 until 2018. I now own Westside Arms.

    Comment

    • #47
      SemiAutoSam
      Banned
      • Apr 2006
      • 9130

      About 500 miles north of you in a town called Paradise. If you ever get up this way PM me Ill give you the tour.

      Originally posted by MrLogan
      Wow, that's a great price for transfers. I'd like to know where this is.

      Comment

      • #48
        Scarecrow Repair
        Senior Member
        • May 2006
        • 2425

        Originally posted by SemiAutoSam
        About 500 miles north of you in a town called Paradise. If you ever get up this way PM me Ill give you the tour.
        Is Hell still there down in the canyon off the road to the covered bridge?
        Mention the Deacons for Defense and Justice and make both left and right wingnuts squirm

        Comment

        • #49
          SemiAutoSam
          Banned
          • Apr 2006
          • 9130

          I haven't been down honey run road in many years, As im sure you remember there are a lot of twisty turns and switch backs not a friendly road in anything over the length of a VW.

          But are you talking about Centerville ?

          I honestly dont remember a area that anyone local called hell.

          Originally posted by Scarecrow Repair
          Is Hell still there down in the canyon off the road to the covered bridge?

          Comment

          • #50
            WokMaster1
            Part time Emperor
            CGN Contributor - Lifetime
            • Mar 2006
            • 5436

            Just a suggestion.

            Odesskiy, since you have a background in accounting, why don't you draw up a P & L statement. FFLs here can plug in the numbers, fixed costs, variables, prime costs, taxes, etc. I think one can get a better understanding of what an FFL business is like in California if they can see the numbers.
            "Good friends, good food & good wine. Anything else is just a waste of soy sauce.":)

            Comment

            • #51
              odesskiy
              Banned
              • Aug 2007
              • 3035

              Originally posted by CRTguns
              Geez- never boring here.

              Odesski- Fact is, we're the guys with guns, and 'yer the guy who wants them. That's our relationship, and I suggest you make peace with that. I've never met a truly happy person who sweats the really small details and counts his pennys. Buy the gun you want and get on with your life.


              Tenpercent- I gotta say, You're sharp- and I always get a kick from your retorts. I've argued with you before, to my own detriment, and must again, say, I'm sorry. You are a level headed individual and a true American.
              Where exactly did I come off as a guy who counts pennys? I definitely do not consider myself a penny pincher. I'm an excellent tipper. I enjoy life, I buy toys (guns)...life is good.

              You guys are such a weird bunch. All I wanted to know was the reasons for rather large discrepancies in prices and you act as if I'm trying to haggle with you over ten bucks.

              When I wanted a Stag lower I simply went to my local OLL-friendly dealer (Fort Courage Armory) and bought one, simple as that. My rifle is rapidly approaching $2,500 - why would I care about $20 difference?

              Comment

              • #52
                odesskiy
                Banned
                • Aug 2007
                • 3035

                Originally posted by Franksremote
                Yah know, when your SO runs her 1.5m a year sales org with her own cash, your shop talk will make a lot more sense to you and the rest of us...
                Wow, did you come up with that one all by yourself? I wish your sentence made some sense.

                Comment

                • #53
                  odesskiy
                  Banned
                  • Aug 2007
                  • 3035

                  Originally posted by tenpercentfirearms
                  My math was off on a tangent? Why because I pointed out I wouldn't be happy if I sold $50K of merchandise in a day at 6%? Sure if I special ordered two shotguns for $50K, we could agree that might be good. Money up front.

                  If I am selling 50K of my stock for only 6%, I still don't see that as being a very smart deal. I could invest for more than that.

                  Don't compare a gun shop to some other retail business, they aren't the same. As far as B&B goes, I think you are making some big assumptions there as far as what they really charged. Just because they are less than everyone else around, doesn't mean they are making 5%. I tend to have lower prices than everyone else too, but some items I make 15% on, most around 20%, ammo around 30-40%, and some as much as 100% or more. You make money where you can and I am sure that is what B&B did.



                  However, you again use a bad example of an example by using B&B. You don't talk about a store that went out of business to support your theory of cheap gun shops. Sure you heard it was due to something else, but without proof, it leaves doubt in the reader's mind. Or it was the fact that the brothers fought all the time because they spent so much time at the shop with little to show for it. I bought a M1A from B&B and I don't remember it being that far out of line of most other M1As at the time. I seriously doubt they only made 5%.

                  Yes in theory it would be nice to have a large amount of capital for start up costs and enter the wholesale crowd. Most gun stores don't. However, you asked why gun shops charge more than some guy operating out of his garage out of state. I gave you an answer, was it sufficient?

                  And yes I do seem to have guys who like to defend me when it isn't waranted and I do appreciate it. You will notice, I stuck to the topic and am not taking this as an insult to my business, I am just have a good debate.
                  Wes,

                  How does this statement make sense?

                  "If I am selling 50K of my stock for only 6%, I still don't see that as being a very smart deal. I could invest for more than that."

                  If you order an item and it comes in a week later to be immediately purchased with a 6% mark-up that would come out to 52*6 = 312% return on investment. Are you telling me you could invest for more than that? I think you are confusing Margin and ROI. That's what I mean when I say that your math goes off on a tangent. What's funny is that everyone else is sitting in a circle around the fire nodding their head.

                  You've mentioned that you were a teacher before, hence I am not surprised by your very skillful reasoning. The problem is that your arguments sometimes start with wrong assumptions, that most people choose not to or simply cannot see.

                  When I brought up B&B, I said that they "CLAIMED" to have operated at cost+
                  5. I clearly have no direct knowledge to either support or disprove this claim. What I said I did remember was them being much cheaper than Turner's (doesn't take much) and they were always super-busy. I clearly can't speculate as to the reason of their demise. Again, I simply said what I've heard, we can guess all day long whether it was financial troubles or legal troubles. All I know is that in the days of their success they had two vital components of a retail business - competitive pricing and great customer service. It sounds like you have both - you are certainly competitive with other local dealers as far as pricing, and I only hear good things about your service.

                  Having said that, I wish you all the best in your business. The more successful FFL's we have in Kalifornia, the better. If I'm ever up in your neck of the woods, I will certainly stop by and buy you lunch (is beer considered liquid lunch?)

                  Comment

                  • #54
                    odesskiy
                    Banned
                    • Aug 2007
                    • 3035

                    Originally posted by WokMaster1
                    Just a suggestion.

                    Odesskiy, since you have a background in accounting, why don't you draw up a P & L statement. FFLs here can plug in the numbers, fixed costs, variables, prime costs, taxes, etc. I think one can get a better understanding of what an FFL business is like in California if they can see the numbers.
                    That's what QuickBooks are for

                    Comment

                    • #55
                      PIRATE14
                      Veteran Member
                      • Dec 2005
                      • 3189

                      Originally posted by 1911 in 916
                      If you want to buy guns cheap, move out of state. You can buy complete ARs for 600 bucks.
                      Another Myth.....what type of AR.........
                      CHECKOUT...http://cwstactical.com FOR ALL YOUR CALIFORNIA LEGAL AR-AK-HK RIFLES and BUILDS...

                      CWS....WE CAN GO HOT ANYTIME....

                      CALIFORNICATION AT IT'S BEST...

                      BRD....BLACK RIFLE DISEASE.......SPREAD IT!!!!!!!!!

                      Comment

                      • #56
                        mblat
                        Veteran Member
                        • Oct 2005
                        • 3353

                        I think odesskiy has some ground to stand on. I didn't see where he questioned anybody right to charge whatever they want for products they sell. I don't see where he said that CA prices have to be the same as other states.

                        All he asked is WHY guns in CA cost more than majority of the nation. A lot of large store with the store fronts do have lower prices on guns than we have here in CA. This is the fact. Question is WHY?

                        I think answer is pretty simple. Yes CA FFL do make more profit on sale than let' say Montana one. But they HAVE TO. Everything is more expensive in CA starting from cars, houses, food and ending up with guns.

                        BTW. I am sure that Home Depot or Macy's or Ralphs would kill for 6.5% profit. They have enough quantity to live on that. Small store - not so much. To get decent living in LA you need to clear close to $100.000. At 6.5% that makes what 1.5/1.6 mil in sales? You know how many guns you need to sale for that? I know that numbers are lower in Taft :-) , but point is still the same - unless you are selling in tens on millions you have to make profit in double figures to survive.

                        One more thing: Wes - very nice response to customer.
                        sigpic
                        The essence of Western civilization is the Magna Carta, not the Magna Mac. The fact that non-Westerners may bite into the later has no implications for their accepting the former.
                        S.P. Huntington.



                        EDIT 2020: To be fair that seems to apply to many Westerners also.

                        Comment

                        • #57
                          PIRATE14
                          Veteran Member
                          • Dec 2005
                          • 3189

                          True everything cost more in CALI and it is tougher to stand up a FFL in that state..........ask me how I know.....CITY/COUNTY/STATE and the FEDs don't want you in business.....makes more work for them....

                          GLOCKs are a terrible gun to try and make a buck off....here you've got wholesalers/distro Bachman and Acusport selling straight to the GP at 20 bucks over dealer cost......cause they don't pay dealer.......all glocks cost the same from any distro....You might see Glocks for 340-380 but those are LE guns w/o the FEDEX tax and only available to LE w/ letter....which should only be sold LE.

                          GLOCKS are stocked up at all the distros right by the hundreds......hhhmmm...wonder why...

                          52 times 6 is 312 but you can't make a go of a business at that rate....you can't expand/grow or get a bigger line-up which makes you more competitive against the chain stores.......probably why some of those 30-35K FFLs fold each year.....going to business school doesn't make you a businessman.......

                          When I first met WES....he was all about 10 percent....I told him he probably wasn't going to make it.......but wished him good luck.....he's a better businessman today......

                          Most guys will quit after their first DOJ or ATF audit.....cause it's not worth it....you've got to be passionate about owning your own FFL business........
                          Last edited by PIRATE14; 09-06-2007, 9:32 AM.
                          CHECKOUT...http://cwstactical.com FOR ALL YOUR CALIFORNIA LEGAL AR-AK-HK RIFLES and BUILDS...

                          CWS....WE CAN GO HOT ANYTIME....

                          CALIFORNICATION AT IT'S BEST...

                          BRD....BLACK RIFLE DISEASE.......SPREAD IT!!!!!!!!!

                          Comment

                          • #58
                            odesskiy
                            Banned
                            • Aug 2007
                            • 3035

                            Originally posted by PIRATE14
                            Another Myth.....what type of AR.........
                            Ain't that the truth! I don't think I want to own a $600 AR.

                            Comment

                            • #59
                              odesskiy
                              Banned
                              • Aug 2007
                              • 3035

                              Originally posted by PIRATE14
                              True everything cost more in CALI and it is tougher to stand up a FFL in that state..........ask me how I know.....CITY/COUNTY/STATE and the FEDs don't want you in business.....makes more work for them....

                              GLOCKs are a terrible gun to try and make a buck off....here you've got wholesalers/distro Bachman and Acusport selling straight to the GP at 20 bucks over dealer cost......cause they don't pay dealer.......all glocks cost the same from any distro....You might see Glocks for 340-380 but those are LE guns w/o the FEDEX tax and only available to LE w/ letter....which should only be sold LE.

                              GLOCKS are stocked up at all the distros right by the hundreds......hhhmmm...wonder why...

                              52 times 6 is 312 but you can't make a go of a business at that rate....you can't expand/grow or get a bigger line-up which makes you more competitive against the chain stores.......probably why some of those 30-35K FFLs fold each year.....going to business school doesn't make you a businessman.......

                              When I first met WES....he was all about 10 percent....I told him he probably wasn't going to make it.......but wished him good luck.....he's a better businessman today......

                              Most guys will quit after their first DOJ or ATF audit.....cause it's not worth it....you've got to be passionate about owning your own FFL business........
                              You definitely make sense in all your statements. I think I am to blame here for the direction this thread took. I happen to like Glocks and I own a few of them, so that was my go-to brand when I decided to ask my original question. Perhaps I should've used Sig or Kimber as an example, because price differences would be illustrated much better.

                              I clearly did not try to suggest that 312% ROI is easily attainable or should become the goal. All I was trying to do was to demonstrate a flaw in Wes's math (which I think I did successfully). Neither did I suggest that Wes should change any of his business practices.

                              Surely, going to business school does not make you a businessman, but neither does being passionate about your business. It's a careful balance of both that can make you successful. The reason why so many small businesses fail is because they are started with no preparation or research by people that are somehow affiliated with the industry and decide they know enough to be self-employed. Cooks that think they can run a restaurant, janitors that think they can start a housekeeping business, etc.

                              Once again, I don't even understand why I should be writing this, as it has nothing to do with my original question.

                              Comment

                              • #60
                                PIRATE14
                                Veteran Member
                                • Dec 2005
                                • 3189

                                Originally posted by odesskiy
                                I clearly did not try to suggest that 312% ROI is easily attainable or should become the goal. All I was trying to do was to demonstrate a flaw in Wes's math (which I think I did successfully). Neither did I suggest that Wes should change any of his business practices.

                                Surely, going to business school does not make you a businessman, but neither does being passionate about your business. It's a careful balance of both that can make you successful. The reason why so many small businesses fail is because they are started with no preparation or research by people that are somehow affiliated with the industry and decide they know enough to be self-employed. Cooks that think they can run a restaurant, janitors that think they can start a housekeeping business, etc.

                                Once again, I don't even understand why I should be writing this, as it has nothing to do with my original question.
                                I think it is just a good debate thread that comes up every couple wks or months.........

                                You are correct.....you have to strike a balance w/ business/passion....price/customer service....etc.....this is w/ everything in life as well.....

                                Right now it's taking about 6-12 mos to get a new FFL going....it's tough in CALI, especially in one where your city won't allow a home business.....cause you've got to come out of pocket 2-4K per month to lease a spot....if you can find one...so do the math on that one....
                                CHECKOUT...http://cwstactical.com FOR ALL YOUR CALIFORNIA LEGAL AR-AK-HK RIFLES and BUILDS...

                                CWS....WE CAN GO HOT ANYTIME....

                                CALIFORNICATION AT IT'S BEST...

                                BRD....BLACK RIFLE DISEASE.......SPREAD IT!!!!!!!!!

                                Comment

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