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MMD > Archives > August 1998 > 1998.08.16 > 02Prev  Next

Dealer Margins
By John A. Tuttle

Hi All,  I'd like to thank Marty Roenigk for his candor but in the
absence of real numbers and specific terminologies, simply stating
that you have a margin of 20% doesn't say very much.  And perhaps
it's better that way.

Frankly, the reason I responded to the initial question in the first
place was because I figured no one would respond at all.  There are so
many variables that go into figuring actual profit that most business
people have to hire an accountant.  So breaking it down into simple
equations is nearly, if not totally impossible.

My only experience in retail was a small piano store in Asbury Park,
NJ.  And at that time (1973), the MSRP for a new piano was 100% above
wholesale, not including cartage.  So I used those figures for my
simple example.  Figuring out what's going on today can't be very easy
or straightforward.

Even getting a good feel for what's going on is difficult since each
dealer's situation is different.  As Marty said, he deals in high
volume.  Others deal in low volume.  So I suppose you could draw one
conclusion from what Marty said, and that would be that when buying an
item, you're probably better off to go to a high volume dealer.  But
that's pretty much common sense.  Conversely, when it's time to sell,
you might be better off directing your efforts to lower volume dealers.
Who actually knows?   I know I don't.

Recently, I've been telling people that because of the Internet,
prices seem to be coming down on some items and going through the roof
on others.  The fact remains that when it comes to buying, education
is your best tool to getting a good buy.  When it comes to selling,
patience is your only true ally.


John A. Tuttle

Key Words in Subject:  Dealer, Margins

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