How about a serious sale?

Page 2 of 2  


You really sound like you are guessing here. I can assure you "many" car dealers are not making their money selling their cars either. The new cars sales at many dealerships are simply at break even at best. Big volume sales however generate a lot of business for the much more profitable back end of the business. The mechanical shop, parts department, and body shop/make ready department get a piece of the pie on every unit sold and repeat retail business in those departments generate much nicer profits.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On Tue, 04 Jan 2005 15:16:18 GMT, "Leon"

Correct, they're LEASING them at big profits.
Barry
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
wrote:

You think? There are VERY few dealerships that own their vehicle inventory. Not unusual for a typical dealership in a large city to have floor plan interest costing them 5 to 10 million a year. I suspect that the company carrying the note or lease is making the real money. When shopping for a new car, look at the state inspection stickers. The oldest sticker will indicate the car or cars that have been costing the dealer month after month in floor plan interest. When I worked for a dealership the average vehicle cost the dealer about $300 per month to have it sitting on the lot and that was simply interim interest that he was paying. That was in the mid 80's With a modest inventory of 400 vehicles and the price of cars being double that of 20 years ago the expense add up quickly. Many of the leases are backed by an outside finance company and the dealer simply gets a commission on the lease so to speak.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
I think the proper term for that practice is called FLEASING
Tillman
Warning: Don't waste your money on 150,000+ woodworking plans on eBay. Get more for free - links to a huge number of woodworking plans: http://home.comcast.net/~tillman_stevens/woodworkinglinks.html
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On Tue, 04 Jan 2005 06:42:05 -0800, Never Enough Money wrote:

Having worked in a Woodcraft store, I can tell you that the higher the listed price of the item, the less the margin. In addition, Woodcraft stores are franchise stores and get their stock from Woodcraft HQ. There is more to margin than what the store pays and what the item sells for, for instance rent of store space heating/cooling/electrical, local taxes, payroll, shipping costs, interest on loans (unless you coughed up a half mill or more in cash to open your franchise) for starters. At the end of the day/month/year, the cumulative margin on all items sold must at least pay for all expenses. The employee discount didn't apply if it reduced the price of the item below store cost (not even considering all the above). In this case the employee price was store cost. None of the major power tools qualified for the full employee discount because of this. For example, a unisaw might have a margin of $100 before expenses and you might sell one a month. This is a whopping $1200/year profit which you get to use to pay for all the aforementioned expenses. OTOH, items like plastic glue bottles might have a markup of 200%. These things are what keeps the stores in business, not the heavy iron. When there's a sale on these big ticket items, it reduces the margin to a point where you can only hope customers attracted by the sale also buy a bunch of small stuff and/or accessories.
- Doug
--

To escape criticism--do nothing, say nothing, be nothing." (Elbert Hubbard)


Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
I just bought a Jet drill press on Amazon. The normal price is $399 but Amazon had a one day sale with an extra $17.50 off and then there is the standing $25 off any tool over $199. On top of that I get a $100 rebate from Jet having already bought another tool in their discount scheme this quarter so the net price of the drill press is $256.50. I did a similar thing with their air filter and got a tool that is normally $250 for $125 after all the discounts ($50 off, $25 standing, $50 Jet cash back).
So yes there are some really good deals on tools on occasion. These Jet tools are exactly the same as the Delta models.
Now compare my tools deal with the price of a dishwasher or a washing machine. For $800 I get a piece of crap that has a cabinet made out of thin steel, a cheap motor, bearings etc and is produced in vastly larger quantities. What gives here? I just spent $100 on a part to fix the clothes washer door lock and another $15 on wheels for the dishwasher china basket.
Compare the cost of the machine tools to even the type of hand tools they sell in Home Despot. Its quite amazing the amount of iron and steel you get for your money. Then take into account the fact that Amazon is paying for the shipping which is not cheap on the bulky items and is presumably making some sort of profit.
Bottom line is that the tools themselves must cost next to nothing to produce or the system simply could not work.
The big cost in machine tools is table saws. My Unisaw cost me as much as all the rest of my big tools put together. OK so it has a pricey Baldor motor but the margins on the rest of the machine are way better than those on the bulk of $400 workshop tools. I can see a way that a company could make a profit on those, but no way can I see how a $400 band saw makes money.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On Tue, 04 Jan 2005 17:16:02 -0800, Phillip Hallam-Baker wrote:

Just remember that the Woodcraft franchises must get their inventory from Woodcraft HQ, and Woodcraft HQ ain't in the biz to be a non-profit entity. In otherwords, HQ sets the sets the cost and the sale price for every item they supply, and if there is a big fat margin on heavy iron because of volume purchasing or whatever, it ain't the franchisee that gets the bulk of it. There's a reason Woodcraft went from corporate owned stores to franchises. In a way, it's a form of outsourcing the expensive outlet part of the biz.
- Doug
--

To escape criticism--do nothing, say nothing, be nothing." (Elbert Hubbard)


Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Answers my question. Just like McStores everywhere, they are exploited by their franchiser.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On Wed, 05 Jan 2005 07:19:35 -0500, George wrote:

OTOH, a franchise owner with his own dough invested in a store may take a little keener interest in how the store is run than a company employee with no monetary investment. AFAIK, most franchises survive. I worked in one that failed but another was opened in the same city by a guy that already owned a franchise in another city, so it can't be all bad.
- Doug
--

To escape criticism--do nothing, say nothing, be nothing." (Elbert Hubbard)


Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

...and just like McStores everywhere if it weren't for the franchiser they wouldn't be in business, have any business or have a clue how to profitably run their business. That is why people buy franchises instead of just starting their own hamburger store or woodworking supply store. Nobody twisted their arms ya know.
Dave Hall
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Dave Hall responds:

Add to the other benefits the reputation of the franchisor, something that takes time and care to develop. Too, not all the outfits I mentioned are franchise arrangements--I'm pretty sure all the WWS stores are owned by the corporation.
A lot of buyers might ask themselves if they'd patronize store called Joe Nobody's Wood Tools & Supplies with the same confidence they have buying at WCS, for example. Franchisees are seldom exploited: it takes big bucks to get into the bigger franchises, including gaining the abiity to sell Big Macs, but the returns are often fabulous. If the franchise buyers feel so exploited, one has to wonder why so may buy multiple franchises. All five Texas Woodcraft franchises were owned by one guy a few years ago. Probably still are.
Charlie Self "A politician is an animal which can sit on a fence and yet keep both ears to the ground." H. L. Mencken
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Charlie Self wrote:

In talking to our local woodcraft dealer about tools, he is very concerned about Amazon. He told me that his markup is 10% or less on power tools. The specials are financed by the manufacturers (in coordination with corporate). The fact that you could get a dewalt belt sander for a lower everyday price, 20% off, $25 off ($125 purchase or more they ran for a while), free shipping, and no sales tax caused him to scale back on stock levels of these types of tools. Final price turned out to be approx 50% of list, and this is just one example.
Sometimes I go for the price, sometimes I pay $25-$35 more because we are paying for the knowledge of the store personnel which have really come in handy. Also of note is their 1 year guarantee versus 30 days at amazon.
Joe
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

or making plenty of people a little money.
If the margins are so thin, it's because the salaries are too high. Which brings us to outsourcing.....
I'd bet if all of us simply stopped buying routers for six months, we'd see some sales. We'd also see some industry consolidation. Why do we need Milwaulkee, Porter-Cable, Ryobi, Festool, DeWalt, Hitachi, Bosch, Makita, and others) when 3 or 4 would be plenty? Supply and demand would work.
Sorry, I wax political. My apologies.
BTW, I'm not so sure I'd beleive the 10% markup the Woodcraft guy is stating -- it's not wise for a retailer to be telling the world what he makes.....unless ... you can guess.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Ok, lets start with your salary...
John Emmons

Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On Wed, 05 Jan 2005 11:33:50 -0800, Never Enough Money wrote:

The folks running the register (computer terminal) can find out exactly what the franchisee cost is for the item as well as the listed price. The big ticket items are truly only marked up by a small margin. Not sure what the HQ cost is and how much the item is marked up there on the way to the franchisee.
- Doug
--

To escape criticism--do nothing, say nothing, be nothing." (Elbert Hubbard)


Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Um salery affects "net profit" not gross profit. Typically margins are figuted on gross profit not net profit. Many more things can affect net profit that salary.

To see a sale you have to have a buyer..
We'd also see some industry consolidation.
Possibly.
Why do we need Milwaulkee, Porter-Cable, Ryobi, Festool, DeWalt, Hitachi, Bosch, Makita, and others) when 3 or 4 would be plenty?
Because none of them are exactly the same and not every one wants the same thing.
Supply and demand would work.
Yeah, the fewer choices the higher the prices. The higher the demand the higher the prices.

The 10% mark up is quite common for small power tools. Keep in mind that this 10% mark up affects gross profit and is indexed against the published dealer cost. If the dealer buys 10 at a time of an item he may also be eligable for a discout himself when he buys. Depending on which inventory accounting method the dealer uses, this profit may or may not factor into gross profit or the "marked up price". For the ease of accounting this discount in volume purchasing adds to the net proifit rather than the gross profit. As for it not being wise to tell the world, welcome to Capitolism. Some one always lets the "secret" out. Really not a secret.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Problem develops when corporate's aims and estimation of what the franchise should be or do is at odds with local reality. Some chains take the advertising money, yet demand the individual store buy a minimum quantity if they want to qualify for the discount which will allow them a profit on what's going to be placed on national sale.
Neat deal. You put up the money and hire a boss....

Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Exploited? By that you must mean that the franchiser who fronts marketing money, who negotiates discounts with suppliers, who allows the profitable use of their corporate name, who manages inventory and product line issues, who provides training and product updates, who is the go to person for each of the franchises around the country. Yeah - they exploit the franchise all right. Doug's comments above, while inarguably based on some experience, lack the reality of the way franchises work. Words like "big fat profits" are dead give aways. In the world of retail there are not big fat profits as stated by Doug. There are profits to be sure, but what's wrong with that? You only hear phrases like "big fat profits" from folks who feel they have a rightful axe to grind. Maybe they do, maybe they don't. That's not for me to know, but it's a bit of the Peter and the big bad wolf syndrome to paint the picture of the big cigar smoking, gold ring wearing franchise owner counting the drops of sweat coming from the brows of each of his franchises. Remember, every one of those McStores that pop up in your neighborhood employs people. The more that pop up, the more the profit is for the franchiser. The thing is, that profit is based on volume more than big fat profits on any one product. Volume means that lots of people are making money along the way.
--

-Mike-
snipped-for-privacy@alltel.net
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Ok - so old age and brain farts hit again. I read Doug's original comments again and realized he didn't say what I first thought I read. Sorry Doug. My bad.
--

-Mike-
snipped-for-privacy@alltel.net
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Related Threads

    HomeOwnersHub.com is a website for homeowners and building and maintenance pros. It is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.