How Much Mark Up Really On Scuba Gear???

[PhilEllis]

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.

Wouldn't argue with you a bit. However, adopting a business model based on low volume with large markup is the typical place most dive stores find themselves. Oh, and it is not necessarily their fault....it is a problem of GEOGRAPHY.

As you WELL know, I have been a long time advocate of local dive stores changing their business model. However, it is IMPOSSIBLE for a local dive store to match the prices of volume internet sellers if such matching does not result in a considerable increase in gross sales. And for most who do attempt to match the price of the highest volume sellers, it will not increase annual sales volume nearly as much as you might think.

Phil Ellis
www.divesports.com


Phil Ellis
www.divesports.com

 

[mike_s]

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

you forgot to mention the costs of the :

1.) warehouse you keep the masks in
2.) The electricity, alarm system, phone lines, heat/hvac, insurance costs. etc.
3.) the employee who unpacks in the coming order and puts it in the warehouse.
4.) the employee who enters it into the inventory system.
5.) the employee who puts it on your website for sale
6.) the employee who either takes the order over the phone, or goes and accesses it over the online sales system
7.) the employee who packs up the order, prints out the UPS label, etc.
8.) the employee who orders more when you run out.
9.) the employee who has to deal with customer who clicked on the wrong color on the mask order and has to return it back into inventory and start the order all over again.

 

[RJP]

However, it is IMPOSSIBLE for a local dive store to match the prices of volume internet sellers if such matching does not result in a considerable increase in gross sales. And for most who do attempt to match the price of the highest volume sellers, it will not increase annual sales volume nearly as much as you might think.

Most people never bother to do the simple math, which would reveal that if you discount a product 25% you would need to increase your sales volume by 100% in order to make the same profit. And as you point out, that ain't gonna happen.

 

[PhilEllis]

you forgot to mention the costs of the :

1.) warehouse you keep the masks in
2.) The electricity, alarm system, phone lines, heat/hvac, insurance costs. etc.
3.) the employee who unpacks in the coming order and puts it in the warehouse.
4.) the employee who enters it into the inventory system.
5.) the employee who puts it on your website for sale
6.) the employee who either takes the order over the phone, or goes and accesses it over the online sales system
7.) the employee who packs up the order, prints out the UPS label, etc.
8.) the employee who orders more when you run out.
9.) the employee who has to deal with customer who clicked on the wrong color on the mask order and has to return it back into inventory and start the order all over again.

All these things are covered in that "large and ever-increasing" fixed costs I mentioned.

Phil Ellis
www.divesports.com

 

[cerich]

some days I feel like there has been a war declared on dive shops...I swear to God

 

[dmoore19]

It is amazing to me that some would consider 100% mark up as extreme. After calculating "cost of goods" it is considerably less than 100%. If after everthing is all said and done a business can say they made 15% the owner would be overjoyed. The average consumer has no idea what it takes to make a buck as a retail businessman.

 

[mathauck0814]

some days I feel like there has been a war declared on dive shops...I swear to God

At times I feel like dive shops have declared war on their customers!

I don't mean all dive shops, but there are those in the area that are downright terrible business people (if not terrible people themselves). I completely understand (and really appreciate) the example that was laid out, that gives us some concrete ideas around what the operating constraints are on a vendor and frankly makes me more likely to do business with them - operating transparently builds trust and facilitates frank and honest conversation.

If a customer is in immediate need of product X and is looking for the best price around, I don't expect that a LDS would facilitate that. The internet vendors can offer a better price and have a wider umbrella of influence for distributing their sales creating volume and deals.

However, I maintain that a smart LDS operator would have the intelligence to work with a customer to plan purchases and to identify opportunities that optimize the consumer goal to spend less and the LDS goal to increase margin. There is a level of partnership that can be attained in any vendor transaction whereby a potential buyer outlines their needs and budget and the vendor proposes a creative solution to meeting those needs.

I frankly would pay slightly more to have that type of relationship (and would have good reason to because I'd understand their constraints better and would be more understanding of them) with a LDS but have struggled to find one with the skillset to function in a manner other than the coin-operated slimy retail sales model.

 

[OldNSalty]

some days I feel like there has been a war declared on dive shops...I swear to God

I agree, when I originally said that the average mark up was somewhere around 100% I wasn't trying to imply that the LDS was making $400 off of ever $800 reg they sold. Gross profits, yes, but those count for nothing really. It is the Net that is important.

I do admit that I almost always feel a little taken when ever I spend money at a LDS but then again, I'm cheap and diving is expensive.

 

[cerich]

At times I feel like dive shops have declared war on their customers!

I don't mean all dive shops, but there are those in the area that are downright terrible business people (if not terrible people themselves). I completely understand (and really appreciate) the example that was laid out, that gives us some concrete ideas around what the operating constraints are on a vendor and frankly makes me more likely to do business with them - operating transparently builds trust and facilitates frank and honest conversation.

If a customer is in immediate need of product X and is looking for the best price around, I don't expect that a LDS would facilitate that. The internet vendors can offer a better price and have a wider umbrella of influence for distributing their sales creating volume and deals.

However, I maintain that a smart LDS operator would have the intelligence to work with a customer to plan purchases and to identify opportunities that optimize the consumer goal to spend less and the LDS goal to increase margin. There is a level of partnership that can be attained in any vendor transaction whereby a potential buyer outlines their needs and budget and the vendor proposes a creative solution to meeting those needs.

I frankly would pay slightly more to have that type of relationship (and would have good reason to because I'd understand their constraints better and would be more understanding of them) with a LDS but have struggled to find one with the skillset to function in a manner other than the coin-operated slimy retail sales model.

oh, please don't get me wrong, there has been some excess taken the other way for certain. I think it was despair that everybody seems to be getting painted with the same brush. I had a "bad momemnt", I'm over it

 

[redacted]

Most people never bother to do the simple math, which would reveal that if you discount a product 25% you would need to increase your sales volume by 100% in order to make the same profit. And as you point out, that ain't gonna happen.

That is simple retailer math. I don't much care.

Simple consumer math is store A sells a product for $500 and store B sells that product for $300. Where should you make that purchase?