Pennsylvania Firearm Owners Association
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  1. #1
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    Default Who makes all the money on a gun sale?

    If I search the web for a particular gun, I can find well-known "big" dealers offering it for well under MSRP. On the other hand, I just recently asked a local shop to order in 2 of a specific model, and their price was $80 MORE (each) than MSRP. Also, they buy from some middle-man supplier, rather than direct from the manufacturer (S&W, in this case).

    I assume you need a certain volume level to buy direct, and also understand than any middle-men also need to make a buck. I also understand that with most items, wholesale is significantly lower than retail, so on a $1000 retail item, there should be plenty of room for 2 downstream parties to make a buck. But all the little dealers say there's no money in the actual guns, and that most of their money is made on all the accessories.

    So what gives? Why does a mom and pop shop claim they are barely making a profit when they sell something for well over MSRP? Did they make a poor choice in terms of supplier, or are they just outright misrepresenting how hard it is to make any profit selling a gun?
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  2. #2
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    Default Re: Who makes all the money on a gun sale?

    Manufactures costs are probably 30% of the actual MSRP
    Distributor costs are probably 60% of the actual MSRP
    Dealer Costs are probably 75-80% of the actual MSRP

    On top of that you've got shipping costs, receiving costs, stocking costs & cost to show/sell and do the paperwork + staff costs. Considering supply is shit and demand is through the roof it's likely whoever the dealer is can't get it through a distributor or the manufacture doesn't have stock. So option B is locate a dealer with it in stock and pay whatever they're asking then mark it up. For all you know he could be paying 5% off MSRP and needs to jack it up over retail to make a few bucks.

    That doesn't even factor 2-4% transaction fees if they're using a credit card. These are not the days to expect discounts when it's hard to even get stuff to sell, expecting them is naive in this market. It's a situation where if you don't buy it someone else will and they're already doing you a favor. Not to mention if you flake and change your mind before the sale then they're stuck with something they can't return and have to sit on.

  3. #3
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    Default Re: Who makes all the money on a gun sale?

    Quote Originally Posted by widgetman101 View Post
    Manufactures costs are probably 30% of the actual MSRP
    Distributor costs are probably 60% of the actual MSRP
    Dealer Costs are probably 75-80% of the actual MSRP

    On top of that you've got shipping costs, receiving costs, stocking costs & cost to show/sell and do the paperwork + staff costs. Considering supply is shit and demand is through the roof it's likely whoever the dealer is can't get it through a distributor or the manufacture doesn't have stock. So option B is locate a dealer with it in stock and pay whatever they're asking then mark it up. For all you know he could be paying 5% off MSRP and needs to jack it up over retail to make a few bucks.

    That doesn't even factor 2-4% transaction fees if they're using a credit card. These are not the days to expect discounts when it's hard to even get stuff to sell, expecting them is naive in this market. It's a situation where if you don't buy it someone else will and they're already doing you a favor. Not to mention if you flake and change your mind before the sale then they're stuck with something they can't return and have to sit on.
    In my case, the dealer confirmed that their supplier had what I wanted in stock. A few hours later, I paid CASH, in full, for both guns, and the order was placed while I was there. They took $20 off "their price" for each gun, since I wanted two.

    Then, the day I showed up to get them, they told me there was still a balance due.

    I was originally asked to consider a store-build....."Upgraded features for the same money". I was also told that 50% down would get things going. Then, when I told them I was going to stick with the stock SKU I had originally asked about, since these were a "throw in the safe in case there is a ban and value goes way up" purchase, and I wanted to keep it simple. That choice suddenly required full payment in advance, rather than the half earlier discussed (they "meant that only for the in-house build"), though that wasn't specified.

    I told them no problem, give me the final, out the door total, and I went and got the rest of the cash. Now a week later there was a balance due?!

    I had my receipt, and they had a current printout for the transaction. After close inspection, it was discovered that their son, who processed the first transaction, first manually adjusted the price down $20, then also did a line-item discount, effectively taking $40 off each, instead of $20. Until we figured out exactly what was going on, I was VERY resistant to laying out more money, when I had clearly asked for a final total and made a second trip for the cash. During this confusion, they basically stated that if they took the hit for the disputed amount, they would be losing money.

    Once we knew exactly what happened, I had no issue paying what was still due, as they DID give the $20 off they promised, and the son screwed up the math. It just struck me as odd that while they quickly offered that discount without me even asking, now, another $20 would move them into "losing money". The whole thing just felt a little exaggerated to me.

    They left me leave with the guns, and agreed to split the difference, saying I could drop it off at my convenience. I intend to pay the full difference, because that was the agreed on price. Prior purchases at this shop had no such issue, but if there are future purchases, I will damn sure be looking things over closely.
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  4. #4
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    Default Re: Who makes all the money on a gun sale?

    I tried to find a new Henry H003T (pump .22 octagon barrel) for months. Contacted Henry itself, which assigned a case number to my inquiry but rep really just blew smoke. Henry was (probably still is) pushing levers. Near as I can see, they haven't made a pump .22 for a year or more. Rep had said they can't get needed products and materials.

    So, that unavailability raises the price of one in a rack, apparently, because a local gun store had one marked $669 when MSRP is $499.
    I wound up finding a used one in pretty good shape for $395.

    So all this suggests to me that supply and demand can adversely affect retail and it can get pretty complicated with conditions a lay consumer has no knowledge of. All you can do is shop until the deal is worthwhile.
    There are two kinds of guns. Those I have acquired, and those I hope to.

  5. #5
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    Default Re: Who makes all the money on a gun sale?

    Well that's a different story, if someone fat fingered a discount and told you a final sale price before ordering then it ended up being more I'd be upset too. Instead of "eating" their mistake, it sounds like they tried to pass it off onto you after the fact. Probably not good business, it's entirely possible that they could have also ended up losing money but sometimes you gotta lose money to make money. Once you add up all the costs I mentioned I doubt there's much profit overall in guns vs clothing and other equipment they sell.

    Each manufacture is likely different in their discount levels to dealers too. Any good salesman is going to listen to what you want and figure out what options you have available and probably lead with the gun that makes him the most money.

  6. #6
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    Default Re: Who makes all the money on a gun sale?

    Quote Originally Posted by Bang View Post
    I tried to find a new Henry H003T (pump .22 octagon barrel) for months. Contacted Henry itself, which assigned a case number to my inquiry but rep really just blew smoke. Henry was (probably still is) pushing levers. Near as I can see, they haven't made a pump .22 for a year or more. Rep had said they can't get needed products and materials.

    So, that unavailability raises the price of one in a rack, apparently, because a local gun store had one marked $669 when MSRP is $499.
    I wound up finding a used one in pretty good shape for $395.

    So all this suggests to me that supply and demand can adversely affect retail and it can get pretty complicated with conditions a lay consumer has no knowledge of. All you can do is shop until the deal is worthwhile.
    Price gouging sucks, the supply side also sucks currently. We would never charge over MSRP for equipment but there's also a lot of equipment I used to discount that I won't now due to supply issues. It's one thing for someone to say I want 10 of 'X' and be able to get more in 2-3 days for stock vs. waiting 8-10 weeks for more stock to come. In that situation it's easy to say normally I'd hook you up but I can't get these and if you don't want them someone else is going to buy them and that's the sad reality of current times. Not me being greedy just honest.

    I'm in the same boat, I can't find a FN502 for the life of me. Been in numerous shops and just want it as a cheap plinker but can't find one anywhere. I could order one off GunBroker but I'm not paying over MSRP because nobody can seem to get them in. I'll happily use my Ruger SR22 until I stumble across one in a shop.

  7. #7
    Join Date
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    Default Re: Who makes all the money on a gun sale?

    Who makes money on horses?
    If you are not part of the solution, you are part of the problem. Where do you fall?

  8. #8
    Join Date
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    Default Re: Who makes all the money on a gun sale?

    Quote Originally Posted by gnbrotz View Post
    In my case, the dealer confirmed that their supplier had what I wanted in stock. A few hours later, I paid CASH, in full, for both guns, and the order was placed while I was there. They took $20 off "their price" for each gun, since I wanted two.

    Then, the day I showed up to get them, they told me there was still a balance due.

    I was originally asked to consider a store-build....."Upgraded features for the same money". I was also told that 50% down would get things going. Then, when I told them I was going to stick with the stock SKU I had originally asked about, since these were a "throw in the safe in case there is a ban and value goes way up" purchase, and I wanted to keep it simple. That choice suddenly required full payment in advance, rather than the half earlier discussed (they "meant that only for the in-house build"), though that wasn't specified.

    I told them no problem, give me the final, out the door total, and I went and got the rest of the cash. Now a week later there was a balance due?!

    I had my receipt, and they had a current printout for the transaction. After close inspection, it was discovered that their son, who processed the first transaction, first manually adjusted the price down $20, then also did a line-item discount, effectively taking $40 off each, instead of $20. Until we figured out exactly what was going on, I was VERY resistant to laying out more money, when I had clearly asked for a final total and made a second trip for the cash. During this confusion, they basically stated that if they took the hit for the disputed amount, they would be losing money.

    Once we knew exactly what happened, I had no issue paying what was still due, as they DID give the $20 off they promised, and the son screwed up the math. It just struck me as odd that while they quickly offered that discount without me even asking, now, another $20 would move them into "losing money". The whole thing just felt a little exaggerated to me.

    They left me leave with the guns, and agreed to split the difference, saying I could drop it off at my convenience. I intend to pay the full difference, because that was the agreed on price. Prior purchases at this shop had no such issue, but if there are future purchases, I will damn sure be looking things over closely.
    How much were the guns you bought?

    $20 or less of profit seems like BS. I get they didn't want to eat the $40 for the mistake (and you didn't want them to either) but I doubt their margin is that low unless it's a sub $300 item.

  9. #9
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    Default Re: Who makes all the money on a gun sale?

    Quote Originally Posted by jthrelf View Post
    How much were the guns you bought?

    $20 or less of profit seems like BS. I get they didn't want to eat the $40 for the mistake (and you didn't want them to either) but I doubt their margin is that low unless it's a sub $300 item.
    MSRP was $788. Their "full price" was $858, knocked down to $838 without me asking.
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  10. #10
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    Richboro, Pennsylvania
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    Default Re: Who makes all the money on a gun sale?

    I don't know about a dealer buying direct but if you are a high volume customer your dealer can give you "deals". Tanners in Bucks has a very high turnover and are constantly getting large deals where they buy 50-100+ of something and can occasionally sell something under dealer cost even after their markup. I guess their distributors have things that might not be selling or things they are overstocked with and want to get rid of it. If they can sell it in one transaction it is worth it. A small store might not buy as many firearms all year.

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