Selling equipment to A******a, less than straightforward

Started Apr 14, 2014 | Discussions thread
Marty4650 Forum Pro • Posts: 14,476
James... think it through

I'm sure you probably think they told you "70% of the retail selling price for new stock" but the odds are you probably heard it wrong. Because no business could operate that way and last for very long. Companies like A*****a cannot stay in business for 40 years if they are cheating their customers. There is some good reason they are still around while many of their competitors have shut their doors.

"70% of the retail selling price for USED stock" is much more likely. And even that is pretty generous, when you consider the overhead costs that retailers have.

On some items, there are huge markups, often 100% markup or more. Things like jewelry, furniture and mattresses. This is why you often see them being sold at "50% to 70% off sales." But you will never see such huge markups on electronic goods because the margins just aren't that high.

Here are some typical markups on consumer goods :

  • Eyeglasses Markups: 800-1,000%
  • Prescription Medicine Markups: 200-5,600%
  • Furniture Markups: 200-400%
  • Shoe Markups: 100-500%
  • Clothing Markups: 100-350%
  • Cosmetics Markups: 60-80%
  • Cell Phone Markups: 8-10%
  • New Car Markups: 8-10%
  • Grocery Markups: 5-25%

Electronic goods like cameras, computers and TVs are sold in an extremely competitive environment and therefore have relatively low markups, in the range of 10-25%. They are often commodities that don't require demonstration or showrooms or expert sales people. They can be ordered online with assurance that one brand new Model X camera will be exactly like every other brand new Model X camera, and the only difference is the price you pay.

The risks for the seller are smaller for new goods than for used goods. If something is defective they can simply return it to the manufacturer for credit. They cannot do this with used goods, so they need a higher markup.

I would think that an offer to pay "50% of the retail selling price" is reasonable for used cameras and lenses, and that 70% would be very generous.

You just can't have it both ways. You cannot expect to get a 10% discount on new merchandise, then be able to sell it back to the retailer at a 25% discount from the new price. That would leave them insufficient margin to cover their costs, taxes, payroll expenses, or any profit.

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