Nikon Profit Margins

Started Jul 14, 2013 | Discussions thread
Eamon Hickey
Veteran MemberPosts: 3,169
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some educated guesses
In reply to grtday, Jul 16, 2013

grtday wrote:

I'm a bit steamed that Nikon is artificially controlling pricing in the US. I know that brick and mortar retailers need to make a profit, but the the consumers expense and at the expense of fair competition?

Since this practice has become legal in the U.S., many, many companies are doing it, including many camera companies. Nikon is just one of a crowd of thousands. I'm not saying it's good (or bad); just that it's common.

Does anyone have any idea what Nikon offers retailers from deep deep cost to MSRP? I've heard anywhere from 10% to 35%?

I used to know exactly (when I worked for Nikon USA more than a decade ago), but now I can only offer an educated guess. And remember that we're talking here about the retailers' profit margins, not Nikon USA's margins. Nikon's margins are a whole different topic.

It's likely that the U.S. uniform retail price for most Nikon DSLRs is about 10-15% over book cost. There are some further discounts for retailers if they pay their bill on time and advertise Nikon products, which bring the real cost (what we used to call "net/net/net") to probably somewhere around 15-20% below uniform retail, give or take a couple of percentage points. Note that many retailers do not recognize the idea of "net/net/net" because in order to get some of the additional discount you have to spend it (the advertising co-op part).

Lenses are probably roughly the same.

(For perspective, when I worked at Nikon USA, and uniform retail pricing in the U.S. was illegal, most camera stores sold hardgoods (i.e. cameras and lenses) for 5-10% over net/net/net. Nikon's Minimum Advertised Price in those days -- the precursor to uniform prices -- was almost always 15% over book net, but retailers almost always discounted from MAP in one way or another.)

These are not high retail margins, by the way. Food, clothing, furniture, jewelry etc. start out with much higher margins (which are cut drastically during sales promotions, of course).

Most business consultants will tell you that a retail store has to achieve a store-wide profit margin of around 25-30% just to break even. (Internet and mail-order businesses can break even with lower margins.)

That 14-24mm lens that you want probably has a book net cost to the retailer of around $1700 and a net/net/net of around $1600. (Maybe 5% lower). So there's a little room for the retailer to give you a deal, but not that much.

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