How Much Mark Up Really On Scuba Gear???

[SkimFisher]

Running a successful business is not easy. I think we can all agree on that. But this mindset that the LDS is this endangered species that needs me as the consumer to save it by agreeing to pay for exorbitantly priced gear is ridiculous. I can't speak for all shops, but in my case the shops that get my money and loyalty are the ones that sell good gear at a fair price.

It's the first industry I've ever run into where I feel like I'm being told that it's my responsibility to keep you in business. Get real. If there's no money to be made in it honestly, then pick another product to sell.

 

[Peter Guy]

As my father instructed me, it is NOT a 100% markup -- but, to the contrary, 50%, out of which must come all the adjusted gross revenue to pay for staying in business.

Now, how does it get to be 50%? Well, if I buy it at $50, sell it at $100, then $100 is twice $50 so 100%; but $50 is just half of $100 -- thus only 50% because the markup is just half of the total price! As with so much in life, one's point of view depends on where one looks.

 

[RJP]

You don't need to know with McDonalds because if the menu says the burger meal is $5 then it's $5. No matter who you are, how bad you want it, how much you've searched around, or what Joe's is selling it for. They aren't interested in your offer of $4 or matching Joe's $4 deal. .

But why don't you haggle with McDonalds? And don't say "because it's only $5" as that's a red herring...we could easily change it to $100 bottle of wine at a restaurant, or anything else.

But knowing a dealer's cost is important when you are haggling because you know what he has to work with.

Do you divulge your net worth to the dealer? Doesn't he have as much right to know what YOU have to work with?

 

[mathauck0814]

I see from you profile you are a corporate marketing consultant.... how about sharing the plans of your clients with us first?

Not quite analogous. In fact, if you wanted to draw the parallel. It is public domain for folks to know what networks and media sources charge for ad-space. It is up to the individual organization to determine their strategy for utilizing those prices and media to optimize their profitability.

I see no reason why this can't be applied to dive shops. A shop educating its consumer will build trust and get more long-term spend from loyal customers (customers which, by the way, have a lower cost of acquisition). Profitability can come from any number of places, not just margin on inventory.

Example: a thoughtful dive shop operator might consult with me to understand my year-long budget for diving and help me plan my purchases in a way that makes sense for the vacation schedule I have and the seasonal releases of goods whilst considering when manufacturers enable them to lower prices on specific items I'm interested in.

Wouldn't it be great if the dive shops felt like they were providing you a service rather than hawking their gear at you for the max one-hit profit?

It occurs to me that there is far more opportunity for reoccurring sales revenue in the former model than the latter.

 

[ReefHound]

But why don't you haggle with McDonalds? And don't say "because it's only $5" as that's a red herring...we could easily change it to $100 bottle of wine at a restaurant, or anything else.

Because McDonald's doesn't entertain haggling. The tone is set by the retailer. The consumer knows that Target, Walmart, Kroger, Home Depot, etc. don't negotiate. They display their product, they list their price, end of story. In my observation, the consumer generally does not haggle unless he thinks it is expected of him.

Do you divulge your net worth to the dealer? Doesn't he have as much right to know what YOU have to work with?

Right? Nobody has a "right" to know a seller's cost or a buyer's income. But it can be helpful for them to know it and you should not be surprised if they attempt to learn it. Why do you think your car dealer wants to get your SS# and run a credit check on you when starting the price negotiation?

You asked why a consumer would want to know what a LDS dealer's cost was. My reply was that in a haggling situation it is helpful to know the seller's cost. So does that satisfactorily answer your question? If not, do you disagree that knowing the other side's cost is helpful or do you disagree that LDS owners often will haggle?

 

[PhilEllis]

Because McDonald's doesn't entertain haggling. The tone is set by the retailer. The consumer knows that Target, Walmart, Kroger, Home Depot, etc. don't negotiate. They display their product, they list their price, end of story. In my observation, the consumer generally does not haggle unless he thinks it is expected of him.

Dive retailers who attempt to follow the Target, Walmart, Kroger, Home Depot, etc business model and who refuse to "negotiate" routinely get pilloried on on, where else.....Scubaboard! Isn't life crazy?

Phil Ellis
www.divesports.com

 

[RJP]

Dive retailers who attempt to follow the Target, Walmart, Kroger, Home Depot, etc business model and who refuse to "negotiate" routinely get pilloried on on, where else.....Scubaboard!

Phil Ellis

There's a definite "punitive" aspect to the purchase of scuba gear: for some reason many folks have a specific desire to minimize the profit that the dealer makes. And it's obvious from the attitude expressed by many that this goes beyond the simple relationship with wanting to save money.

Other than automobile sales, I can think of no other industry where any dealer who tries to make more than a few pennies in profit is automatically seen as "screwing" the customer.

 

[ReefHound]

Dive retailers who attempt to follow the Target, Walmart, Kroger, Home Depot, etc business model and who refuse to "negotiate" routinely get pilloried on on, where else.....Scubaboard! Isn't life crazy?

Phil Ellis
Discount Scuba Gear at DiveSports.com - Buy Scuba Diving Equipment & Snorkeling Equipment

I disagree, somewhat. Those that get jumped on are those that don't promote price matching yet whine about not being given the "chance to compete", or those that price high and then jump on or even punish buyers when they buy elsewhere. Show me where a LDS was jumped on for having a set posted price that did not fall into one of those.

 

[ReefHound]

Other than automobile sales, I can think of no other industry where any dealer who tries to make more than a few pennies in profit is automatically seen as "screwing" the customer.

And why is that so? Maybe it's the tactics that these dealers often use? I don't think anyone is born hating their LDS. Most new divers walk into their LDS for the first time seeing it as a retail store like any other, then get turned off by sales tactics and the "loyalty" demanded and the pleas to "support your LDS" and the lectures for buying elsewhere, esp. online. Later, as they become experienced divers, they recall those initial scaremonger tactics when they didn't know any better, the "you're a fool to buy life support online" warnings, the "where ya gonna get air" and "don't bring your online gear here for service" threats.

People are flocking to online vendors to buy gear and I think price is only a part of the reason. Another is that the online vendors treat you straight up, don't try to trick you or intimidate you or scare you, don't badmouth the competition, and don't give you grief because you bought elsewhere.

You reap what you sow.

 

[PhilEllis]

Perspective is INDEED extremely important.

I resale a particular dive mask for $27 each. This IDENTICAL mask (same mask, same molds, same manufacturer) sells in most places for anywhere from $49.95 to $69.95. I purchase this mask in case quantities (30 masks per case) for $13.65 each. Inbound freight for a case of the masks on UPS is $31.85, plus a C.O.D. fee of $9.00... or $1.36 per mask. If purchased as a single product, the consumer pays the actual UPS shipping charge, but I experience a real packaging cost of about $0.71 cents per mask. I four of these masks are purchased by one customer, I experience a shipping cost (so-called free shipping) of about $9.85 for the shipment....or $2.46 per mask, plus a real packaging cost of about $0.31 per mask. So, my COST OF GOODS SOLD AND DELIVERED ranges from $15.72 for a single mask sale to $17.78 for a 4-mask sale.

I am sure the markup seems pretty high to some, and I am often asked to offer a "volume" discount for the sale of 4 masks. However, if you look the the gross $$$ profit on a single mask, or the gross $$$ profit on a shipment of 4 masks, it is certainly not gigantic. Of course, from this gross profit, I must also deduct are pretty large and constantly increasing fixed cost of operations.

I would also say that this example is representative of most of the products I resale for under $100.

Phil Ellis
www.divesports.com