shop profit margins on sales!

[smoker]

with the credit crunch it seems a lot of shops, including computer sellers, are offering discounts of 10, 20, and sometimes 50%. this in the run up to christmas, generally a boon time for retailers and the sales don't usually start till january (at least where i am!). i have every sympathy with the growing struggles of every sector of the communtity, especially during hard times, but...

i just wondered, how much, if any, profit are the shops getting offering these discounts. or if they are still profiting after selling something for 50% less. if they are still making a profit at something 50% cheaper, then it strikes me that they have in normal times been overcharging! of course, that is just my opinion, i know there are overheads, etc, to consider.

any thoughts on the matter, any retailers wish to comment on what a typical profit is, on say, a £500 quid computer, or a £500 flat screen tv?

[AliTabuger7]

typically they offer these deals to get people to come to the store in the first place, and overcharge on the things not on sale that will be bought for convenience.

At least, thats my understanding of it.

[Bölvaður]

They are trying to get rid of stock which they have invested in to minimize risk of losing everything when their stock becomes worthless because no one is willing to buy it, or are able to buy it.

They might be even be selling some items under the price they bought it from the factory. But you should not feel bad for them, it is a business they expertise in, and if they fail.. they fail and should learn from it. After that we can continue with more knowledge about what not to do when we are all going bankrupt.):P

[magmon]

i just wondered, how much, if any, profit are the shops getting offering these discounts. or if they are still profiting after selling something for 50% less. if they are still making a profit at something 50% cheaper, then it strikes me that they have in normal times been overcharging! of course, that is just my opinion, i know there are overheads, etc, to consider.


Well, from what I understand, a business's goal is to double their money. And, from what the economy has been doing, I wouldn't be amazed to see them trying to triple their money. So, I bet they are in fact still making money.

[Peter Anselmo]

It largely depends on the industry. I used to work at Circuit City, and I can tell you that in Audio/Video, the margins are large - typically 50%. In computers it's much slimmer. The margin on a CPU tower is typically only 10%. The markup on accessories (USB cables, monster cables, Power cables) is huge, typically 500-1000%.

[smoker]

It largely depends on the industry. I used to work at Circuit City, and I can tell you that in Audio/Video, the margins are large - typically 50%. In computers it's much slimmer. The margin on a CPU tower is typically only 10%. The markup on accessories (USB cables, monster cables, Power cables) is huge, typically 500-1000%.

500-1000% seems unfair to me as a consumer. 20% i would say is fair, considering overheads, advertising, etc. but i'm not a retailer, so there may be other expenses to take into consideration. i will certainly only be buying expensive items at sales from now on, even if it means waiting awhile!

[Paqman]

500-1000% seems unfair to me as a consumer.

A lot of markets are like this. The core item you buy will be pretty reasonable, but they'll try and nail you with all the extras. That's why salespeople will always try and upsell, a lot of places give bonuses to staff who sell more of their ripoff upgraded warranties/insurance/whatever.

[fatality_uk]

No where near!!! A margin is NOT the same as profit. Business 101!!!

If I buy a product from a supplier for £1 and sell it for £2, I wont be making 100% profit. Quite likely on a price difference like that, taking into account corporation tax, storage, shipping costs, marketing, dispatch, salaries, utility bills, fees and a variety of other factors, I will make 5-8% profit on that and that would be a great profit.

[I-75]

typically they offer these deals to get people to come to the store in the first place, and overcharge on the things not on sale that will be bought for convenience.

At least, thats my understanding of it.

Right, just like when we were looking for a HDTV a year or so ago. The sales person said we NEED a $45 Power strip with surge protection. We NEED a HDMI cable for $65, we NEED a three year extended warranty.

I said we NEED to get out of here, and found a better deal on a slightly better HDTV for $100 less and no sales pressure at HH Gregg. (Midwest area).

[gn2]

Here's a classic example of retailer greed.

The USB A-B printer cable.

DSG retail outlets in the UK, PCWorld, Dixons, Currys have them beside the checkout and customers are encouraged to buy one along with their printer.

How much do they charge? A shocking amount (http://www.pcworld.co.uk/martprd/product/seo/451389) considering that you can get one for this price (http://cgi.ebay.co.uk/USB-2-0-A-B-1-8M-Cable-for-Printers-HDD-Enclose-etc_W0QQitemZ280291067351QQcmdZViewItemQQptZUK_Com puting_USB_Cables?hash=item280291067351&_trksid=p3286.c0.m14&_trkparms=66%3A2|65%3A15|39%3A1|240%3A1318).