It depends on the item. Produce/Food has a much lower margin but significantly higher volume so its all about the turnaround. Gasoline (if the store sells it) has an even lower margin. Store brand items will have a much higher margin. So it really depends on what you are looking at. You can't really look at an average across the store b/c that wouldn't make sense.
IME, expensive high tech items are generally not profitable. There is a short period of time where it is profitable followed by a period of time when the retailer needs to exhaust their inventory. This is why the stores resort to selling extended warranties and $100 cables. The extended warranties and cables make it worth it for them to sell the high tech products at such cheap prices.
idohair
Among other things
posted: Jul. 3, 2009 @ 1:07a
items like professional hair products have 100% mark up. you pay the same price as in a salon.
idohair said: items like professional hair products have 100% mark up. you pay the same price as in a salon.
Products like Nexus and Paul Mitchell you could only get in salon. I miss the gallon size apple pectin shampoo mom used to bring home.
My goodies as a kid were samples from hair wholesalers. Foldable Paul Mitchell mini-brushes, combs, files, pocket mirrors.
idohair
Among other things
posted: Jul. 3, 2009 @ 2:37a
FrugalFreak said: idohair said: items like professional hair products have 100% mark up. you pay the same price as in a salon.
Products like Nexus and Paul Mitchell you could only get in salon. I miss the gallon size apple pectin shampoo mom used to bring home.
My goodies as a kid were samples from hair wholesalers. Foldable Paul Mitchell mini-brushes, combs, files, pocket mirrors.target and grocery stores get them now because of diverters. who knows if they are the real thing though?
ridn4free said: having worked in the letter of credit business for years, margins can very greatly. much larger than people realize
Yup, especially when the retailer gets back end spiffs for selling X amount of the manufacturer's items for a specific amount of time. I know this to be true in retail computers and computer accessories industry.
I vaguely recall reading somewhere that the business model of stores such as Sam's/Costco/Lowe's is to make a profit of roughly 7%. Of course this margin is not uniform over all lines of products.
A friend of mine worked at a Best Buy years back, and their employee discount used to be something like cost + x%. He said their were some items where the employee discount price was actually higher than the retail price, like low-end dvd players that they sold as a loss leader. OTHOH, the price difference on stuff like cables and accessories was huge - several % percent markup.
And as stoned pointed out, COGAS (cost of goods sold) is only one part of the equation - it doesn't include the rest of the costs that retailers pay (rent, employees, utilities, shrinkage, advertising, ect). You can have a huge margin and still lose money if your expenses are high, or a small margin and be profitable if you have low expenses and high volume. The other thing to consider is "turns" - how often a business turns over it's inventory. Grocery stores have a thin margin, but lots of turns, which helps make up for it.
Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.
Members of our community may attach files to a post in accordance with the User Agreement. FatWallet is not responsible for the content, accuracy, completeness or validity of any information contained in any attached file. Files have *not* been scanned for viruses. Be especially wary of Excel files which may contain malicious content.
