I think everyone has noticed that most firearms have been hard to find lately. And I know everyone understand this is thanks to what I call "Banic" buying, meaning people were afraid their favorite guns were going to be restricted or outright banned. The backlog is starting to ease a little, and more suppliers and distributors actually have guns available. There was a time when 4 out of my 9 firearms suppliers had ZERO (none, nada, zilch, zip) handguns available, and the only rifles were oddball calibers of lever action cowboy guns.
But what we are seeing is that the prices have all gone up (or mostly, there are a few that have held the line). Manufacturers are raising their distributor costs, which causes them to raise their dealer price, which causes us dealers to raise our prices. By how much? Well, that actually varies by model even within a certain manufacturer. We do have a free market system, and people are entitled to charge whatever they want for something. That is the law of supply and demand.
But what I wanted to get across here is that it isn't the dealers who are really raking in the dough. In most cases, we are the ones who are getting squeezed on these items because we are the ones that have to walk the fine line between making a buck and keeping customers happy.
A lot of people seem to think the "markup" on firearms is pretty high. I am here to tell you that this IS NOT the case. While every manufacturer and distributor sets their own prices, the difference between MSRP (what the manufacturer says is the "Retail" price) and distributor cost is generally 10% for guns under $1,200 and maybe 15-18% for more expensive guns. That is GENERALLY, and many brands are WELL BELOW that.
Well, you say, 10% is not bad on $1000, right? Making $100 is not bad for 10 minutes work. Except for the fact that that 10% is MSRP to cost, not what we can actually sell it for. When was the last time you paid MSRP for a gun? For some folks, probably NEVER. If I can make 5-6%, that is pretty good.
And that is on a gun that I put out my money on, and HOPE that someone will buy it at some point. It may sit on my shelf for 2 days, or 2 years. All the while that is money not available to buy more guns, pay bills, or anything else.
One other thing people don't stop to consider is credit card fees. The only time I ever have a "Cash Discount" price where I try to get back any credit card fees is if I put something on auction starting at $0.01. In more than 50% of the cases, I end up selling this gun for less than my cost, so I try to stop some of my loses by not eating the credit card fees. Other than that, I count this as a cost of doing business and it is a part of the cost of the gun.
These credit card fees are NOT insignificant. They run anywhere from 1.75 to 3.5% of the purchase amount. It depends on the credit card you use. Why are some fees so high? Well, those are the cards where YOU get your cash back, or airline miles, or whatever perk you have chosen. You didn't think those were really free, did you? Someone is paying those, and that would be the store (and ultimately everyone who buys things, because we have to build a little extra in to our prices to make up for that).
So, now the nitty gritty; how much do I really make on a sale? Let's take a fictional gun (I am actually using a real gun here, just not telling you which one it is). So the Fireball 550 has an MSRP of $1040, and Bud's Gun Shop has it for $914 so I pretty much have to match that price. Well, that gun costs me $827, so my gross margin is $87. But 3% credit card fees takes $27.50 right off that, so I'm down to $59.50. From that I pay for my federal license, my business insurance and all the other advertising and associated costs to do business. If that sale was through Gunbroker, or GunsAmerica or any other online forms, there are fees associated with that as well (from about 1-2.5% usually) Fortunately I am a small dealer and don't have employees or big overhead expenses, because I am working in the 4-6% markup range.
The last thing I will mention is when I do specials on my Facebook page. In these cases, I am literally making no money if you use a credit card. Take in point my SGL31-95 special I just ran. I put it out there at $1240, shipping included. If you use a credit card, that brings what I get down to $1202 after fees. Shipping of a long gun is going to run me around $23-29 depending on where you live. So we are down to $1181-1175 (depending on shipping). This rifle, shipped to me, is costing me $1171. So, you can see that if I did all my figuring properly and no one lives a long way away (like Alaska or Hawaii) or uses a high rewards credit card I am making between $4-10.
Don't get me wrong, I'm not crying or saying it isn't fair. I do this because the Facebook group are good people, and because I like having good will from potential customers who MIGHT come back and buy something that will make me $40-50 later. If I didn't want to do it, I wouldn't.
I just want folks to know that most gun dealers are NOT getting rich at your expense. Most are like me; trying to walk that line between making enough to stay in business and keeping prices low to keep our customers happy.
If you REALLY want to make a dealer like me happy, send us a check. It is the same amount of money to you as putting it on a card, but it really helps on the dealers end. It may mean that at some point I can do an extra Facebook special, or be able to offer a Military Discount to one of our warfighters that I may not be able to do otherwise. At the end of the day, all I really want to do is not lose money and be able to keep selling guns to people at good prices if I can.
