Markups

scubaman2151 · 03-16-2007, 03:33 AM

Well I just got my job at the local dive shop and I was doing inventory and they had the price listed on what the store paid for the item and what they were retailing it for. Man most of the markups were like 200%, They had a XS mask costing the store $21 retailing for $75, just kinda surprized me thats all.

**glynneco** · 03-16-2007, 03:06 PM

Retail use to have a concept called "keystone". It was a markup used by jewlers to set a retail price. The idea was to take an item that cost $21 and retail it for $42. Which by the way is a 50% mark up NOT a 100%. The concept lets you mark down from retail. So when you see 40% discount you know whats happening. That said the rise of discounters and the internet has narrowed keystone to much smaller percentages. So you're really looking at a 72% mark up not 200% but still higher the a jewler! My children refer to my dive equipment as "dive bling" mabey they're right! Still that is why many people shop the internet for individual items. Now you can see why retailers are happy to discount a package deal. You also have to keep in mind the volume the shop is doing. Usually more volume allows a better price. It's the ultimate chicken and egg thing. Volume vs. margin.

**dalehall** · 03-16-2007, 03:07 PM

LOL.. I hope they don't read this forum.

scubaman2151 · 03-16-2007, 03:40 PM

LOL, i want to talk to them to see if i can buy my gear at what it costs the store to buy it.

**MgicTwnger** · 03-16-2007, 03:54 PM

And people get on my case because I buy online.........

**Scuba Mama** · 03-16-2007, 06:14 PM

Let me add a few additional thoughts. The store also paid shipping for the item. They are brick and mortar as the saying goes, they need to pay for you to work there, lights, heat, air conditioning, compressors, insurance, employment tax, rent and a cost of having an inventory.

I don't care what retail business your running, there are hidden costs involved. Yes, that cost is pass on to the consumer, its called a profit, with out the profit your store and job would not exist.

If more people bought goods from the shop not from the internet, the shop could carry a better inventory and lower the p.o.s.(point of sale). Why, because they would be hitting there target for expenses and moving into profit.

As far as buying on the internet, its not a perfect system. There are pit falls to the so called price savings (be careful). If enough people buy from the internet and do not support your local shop, don't be wondering why did they close.

If you work for a shop I am sure you were offered an employee discount, also as a professional you are sometimes offered Keyman specials. Take advantage of the pricing when you can.

My rant and rave is over.

**glynneco** · 03-16-2007, 07:45 PM

Many times on the internet when you add "s&h" the difference gets minimal. If it's even close to a push I go for the LDS. I am in the "I want it NOW" crowd. You know....immeadiate gratification. Must be a male thing. My mother used to say:

Patience is a virtue
posess it if you can
seldom in woman
but never in a man!

She use to tell me that just before she hit me. You can tell since I have it memorized I was hit a lot! To no avail as it would appear.

rcontrera · 03-17-2007, 07:01 AM

Quote:

Originally Posted by glynneco

The idea was to take an item that cost $21 and retail it for $42. Which by the way is a 50% mark up NOT a 100%.

Almost. It is actually a 100% MARKUP which translates to a 50% MARGIN. Dive store owners regularly mistake these rather basic business terms. If you only mark up 50% then your margin is 33% ... the standard for sporting goods stores.

Dive stores average $300,000 per year in sales nation wide and that ain't much!! For some products (like my compressors that dive shops sell) they only make a 10 to 15% margin so the higher margin products are the ones that pay the rent, the flooring costs for the inventory, compressor and also pay for employees that should never tell anyone what stuff costs.

And as far as buying your gear at what the dive shop buys for ... SURE YOU CAN!! Just buy it the SAME WAY the shop buys it. Make an initial investment of several thousand dollars in products, compressor (see what I am pushing

), store front, etc and then you get all your stuff wholesale.

**glynneco** · 03-17-2007, 01:16 PM

You're right. Margin is the word but we're talking to divers here. Folks who stap on tank of comressed air and dive into an alien world. Most people consider us daft. Swim with the sharks? That's a Tony Saprano line. Just tring to keep it simple. We don't even want to get into Terms, ad monies, spiffs, show specials, closeouts well YOU know. Services...that's where the margin is. Can't get an air fill on the internet. While I'm in there waiting hmmm look at all these cool accessories; hooks, weights, clasps. Gee you've been soooo helpful have you seen the new (fill in the blank), trip to (fill in the blank), and our training program..... I'm always amazed at how I'm treated at most dive shops. So many opportunities are lost. You sound like you got it goin' on. Next time I'm in WA I'll stop in and buy a set of docs!