Just wandering, What is the profit margin for retailers on items such as computers, accessories, game consoles etc
Thanks.
Retailers Profit Margin
Trent on 13/10/2009 - 19:45
Comments
depends on the brand.
Apple - 10% usually, they have very small margins - when a store has 10% off, they're usually selling just above cost price.Retailers make their money through accessories, so they're kinda expected to have the ipods etc.
Other brands, it's usually a lot more, closer to 25-30%, could be more or less depending on what store it is. The easiest way to find out what the cost price is, is to look up the parts on msy (arguably the cheapest retailler), then take off say %5??
Gaming consoles: probably around 10%
Fashion: starts around 30%, but can be higher depending on store/brand
Booze: Beer - 5-10%, Wine - ~30%
What were you thinking of getting? i might be able to give you a better answer…
Thanks for the answers. I'm not thinking about buying anything, just wanting to find out what sort of profit do the retailers make from electronic/computer items.
Regarding 'fashion', don't retailers mark up the prices by at least 100%?
How else could they afford to give huge discounts at their "sale"?it really depends which store mate, for kathmandu, yes more than 100%. For somewhere like myer, i don't think i've seen more than 25% off house brands.. so margin is around 30%. Brands sold at bigw/kmart etc are likely to have a smaller markup when compared with stored like SDS/overboard etc because they have a larger order quantity from the distributor.
Myer is defintely at least 100% or they are sourcing their clothing from the dearest sellers. I used to work at Katies and have seen a few items on our racks that we were selling for around $40 and myer had the exact same thing for around $120.
Margins are also impacted by a number of other things like "marketing" rebates
The manufacturer approves of an ad, then funds it, this way they can have some control over the price advertised. Also they give back bonuses if a store sells a predefined number of units (car manufacturers do this a lot).
They also pay "rent" for space in the store -so "invoice" cost is NOT the only way money is made by the store - hence $1 on invoice cost sales can still be profitable by the store as the various rebates are not included. And sales staff are not always aware of these.
Notice that many times they dont try to hide the "cost" on the computer sometimes even stepping aside so you can sneak a peak - hence they refer to the manager
And there are probably other "rebate" types around as well
Managing accounts for a couple of retail stores, I've noticed a few things that are interesting in this area.
One is that, sometimes the stores can afford it because they might have bought a certain quantity and received it at say 30% off from their wholesaler, thus they can take say 50% off the RRP and still be making a profit because they are still making say 20% (assuming the margin was 50% to start with).
Wholesalers also tend to offer 5-15% discounts if invoices are paid up front as well, or within 30 days rather than 60 or 90 days.
So if a store is planning a sale, they may set aside some cash to purchase the main advertised sale items in larger than normal quantities to get a discount, then pay up front to get a further discount. All of a sudden, the 50% off sale sees them making just as much profit as if the item was bought at the full retail price.
Then other items around the store may be discounted by a smaller amount, subsequently encouraging people to buy them as well as one of the 50% off items.
Like ozpete says, theres a lot that the sales staff are not always aware of and often only the management that plans the sales and orders knows about.
Darksbane Nice addition to the discussion - thanks
are you trying to open a business?
I managed a company that manufactured environmental equipment in Australia. A product that we produced for $2-$3 (less actually) would be wholesaled for $9-$15 dollars depending on quantity and would retail for $23-$30 or more. I we had manufactured overseas you could halve the price to produce (even after import).
Not sure how this applies across the board but it has mad me very dubious about pricing.
geez mate, that is quite a wide ranging question.
accessories probably have highest profit margin.
Game consoles I suspect don't have a huge margin, but games and accessories would.
Also, depends where u r shopping and what u want.