Music Store Mark Up - Telecaster Guitar Forum
The Number 1 Fender Telecaster Guitar authority in the world.
   

Go Back   Telecaster Guitar Forum > General Discussion Forum > Bad Dog Cafe
Forgot Username/Password? Join Us!
Notices

Bad Dog Cafe Hershey's Bad Dog Cafe is our Off Topic forum -- but NO POLITICS and NO FIGHTING. NOTE: Discussion of guitars other than Tele & Strat belongs in the "Other Guitars" forum and discussion of Music belongs in the "Music to Your Ears" forum.


Wilde Pickups by Bill & Becky Lawrence WD Music Products Amplified Parts Mod Kits DIY Amps, Mods, Pedals dallenpickups.com Warmoth.com seymourduncan.com


Forum Jump


Reply
 
Thread Tools
Old January 8th, 2009, 09:21 AM   #1 (permalink)
Tele-Holic
 
Join Date: Apr 2003
Location: Georgia
Posts: 598
Music Store Mark Up

I know that this has been discussed here before, but about how much is a music store's mark up? How much do they add to what they actually pay for a guitar. 20%, 50%, More?

threadbare is offline   Reply With Quote

Old January 8th, 2009, 09:47 AM   #2 (permalink)
RIP
Poster Extraordinaire
 
Eric Karonen's Avatar
 
Join Date: Mar 2003
Location: Toronto, Canada
Age: 62
Posts: 5,349
I would think the rule of thumb is that the cheaper the guitar, the less the mark-up, just like cars. Most wannabe musician's can't afford the expensive stuff, and neither can the business, especially for small stores! And, another rule of thumb for retailers, is at least a three-times markup, particularly when it comes to food and clothes. Profit is another story, hence the various degrees of mark-up. Rarely does something sell out.
__________________
Sounds the tough horn, and twangs the quivering string.
--Pope (1688-1744)
Eric Karonen is offline   Reply With Quote

Old January 8th, 2009, 09:53 AM   #3 (permalink)
Poster Extraordinaire
 
octatonic's Avatar
 
Join Date: May 2007
Location: An Australian in London.
Age: 42
Posts: 6,549
It depends on many things.

It used to be 30% basic on RRP (which I think you guys call MSRP?) but larger chains gets massive discounts for buying in bulk and paying on time.

Smaller stores what buy guitars one or two at a time might even negotiate a 30/60 (or a 30/60/90) split, meaning they pay the manufacturer for the guitar over 2 or 3 months. (30/60 refers to how many days the account can be overdue).

Also when you consider how much the sell price is compared to the RRP it isn't that accurate.
You also have to factor the cost of business- shops have huge rents, rates, wages and such.

I used to work in a small store- it was impossible to compete against the larger chains who had all the buying power and could do much better prices.
Eventually the store I worked for shut down the owner being 1/2 a million in debt (I had left years before).
__________________
http://www.jamesrichmond.com
octatonic is offline   Reply With Quote

Sponsored Links   #
Sponsored posting
 

Old January 8th, 2009, 10:38 AM   #4 (permalink)
Tele-Meister
 
nevadacalifornia's Avatar
 
Join Date: Feb 2007
Location: Wisconsin
Age: 46
Posts: 257
I think that if you look at the MSRP that is set by Fender, Gibson, Martin, etc.
and devide it in 1/2, that you have the cost paid by the dealer. At least the independant dealers. The big chains must get it even cheaper.
nevadacalifornia is offline   Reply With Quote

Old January 8th, 2009, 10:47 AM   #5 (permalink)
Doctor of Teleocity
 
studio1087's Avatar
 
Join Date: May 2003
Location: Near Milwaukee
Age: 50
Posts: 15,960
I worked in guitar retail for three years in college and got to see invoices for everything because we had to fill out a cost vs. negotiated sell price sheet for accounting when we got paid every other week.

Guitars, amps, keyboards, drum sets, mics, pedals were all purchased at 50% of the published list price. We tried to make at least 25% but we often discounted more expensive items more than 25% because we could still make a few hundred dollars on a sale. (Higher price tag, more profit dollars).

Strings, picks, slides, polish and polishing cloths, straps....all the little doo-dads that came from bundled marketing groups often had a greater discount than 50%. I had standing orders to discount any set of D'Addario strings to $3.00 to good customers because our volume discount on strings was much more than 50%. My boss used to kid that we paid less than $1.95 for any set of strings in the store. I never saw string invoices because we were not commissioned on picks and strings.

The only time that we bought large items better than 50% was when we hit a volume goal with some manufacturers. Peavey amps were as low as 50% + 15% additional when we hit a volume goal set by our Peavey rep.

Other factors for larger stores are consignment inventory. The manufacturer's rep would push a huge batch of amps at us and tell us that if we took all 48 amps, we didn't have to pay for 90 days. The store would fill with gear and the trick was to sell the bulk of it before the 90 days ran out....we would get billed 0% down net 90 days. My boss would really deal when time was running out and we had a $14,000 invoice to pay. Peavey was a company that really pushed the large orders with consignment terms. I remember recieving 70 amps having to take half of them to our off site warehouse because the combo dept was filled. I would ask my boss...."Chief, what the heck did you do?" He would say..."Hartley Peavey owns these for 90 days....not to worry!" That was his consignment joke.

Our owner was a local TV and traveling Polka band hero....he would take music tour groups to Germany on the side. I remember him saying. "Sell guys...sell.....I used to have money in the bank and now I own 14 Les Pauls." He never really understood the electronic stuff but he always put business in perspective.

John
__________________
John

"The rock and roll business is pretty absurd, but the world of serious music is much worse." - Frank Zappa
studio1087 is offline   Reply With Quote

Old January 8th, 2009, 10:57 AM   #6 (permalink)
Doctor of Teleocity
 
TheGoodTexan's Avatar
 
Join Date: Apr 2003
Location: Nashville, TN
Posts: 11,040
xx

Last edited by TheGoodTexan; February 2nd, 2009 at 11:18 AM.
TheGoodTexan is offline   Reply With Quote

Old January 8th, 2009, 11:03 AM   #7 (permalink)
Doctor of Teleocity
 
TheGoodTexan's Avatar
 
Join Date: Apr 2003
Location: Nashville, TN
Posts: 11,040
xx

Last edited by TheGoodTexan; February 2nd, 2009 at 11:18 AM.
TheGoodTexan is offline   Reply With Quote

Old January 8th, 2009, 03:57 PM   #8 (permalink)
Tele-Holic
 
stealyerface's Avatar
 
Join Date: Mar 2008
Location: Upstate NY
Age: 45
Posts: 691
Being in the car business, I know for sure I have sold $50,000 Tahoes for less of a profit than some Guitar Center deals on a new Fender Guitar. Which sucks for me I guess.

But I wonder why there is not an "Edmunds" or "Invoice.com" for guitars? Why is it that someone can come in the dealership and brandish the newest addition of Consumer Reports Buying Guide, and get to within a few dollars of what I actually pay for the car, and then have the audacity to offer me $100 over that price, and the next week feel okay with giving some big music chain a 25% profit on a $1000 item?

I would love to roll onto GC with a "GuitarInvoice.com" handbook, and say, "Good morning D'Angelo. Dude, that sure is a sweet full-sleeve tattoo of the Virgin Mary being pole-axed by a horse wearing a battle helmet... but anyway, It says here in my magazine that you guys paid $550 for this 52' Reissue Telecaster. You have it priced up on the wall for $1499. I'll give you $575 for it. Whaddyasay?"

Of course it will never happen, but I can dare to dream can't I?

syf
__________________
...You ain't gonna learn what you don't wanna know....GD
stealyerface is offline   Reply With Quote

Old January 8th, 2009, 04:09 PM   #9 (permalink)
Tele-Afflicted
 
stxrus's Avatar
 
Join Date: May 2007
Location: St. Croix, USVI
Age: 62
Posts: 1,644
Quote:
Originally Posted by stealyerface View Post
I would love to roll onto GC with a "GuitarInvoice.com" handbook, and say, "Good morning D'Angelo. Dude, that sure is a sweet full-sleeve tattoo of the Virgin Mary being pole-axed by a horse wearing a battle helmet... but anyway, It says here in my magazine that you guys paid $550 for this 52' Reissue Telecaster. You have it priced up on the wall for $1499. I'll give you $575 for it. Whaddyasay?"
you owe me a monitor, keyboard, mouse, and possibly a printer. i just about drowned my desk with a diet coke i was trying to drink while reading this.

my god that is funny

steve
stxrus is offline   Reply With Quote

Old January 8th, 2009, 04:12 PM   #10 (permalink)
Doctor of Teleocity
 
studio1087's Avatar
 
Join Date: May 2003
Location: Near Milwaukee
Age: 50
Posts: 15,960
Quote:
Originally Posted by stealyerface View Post
Being in the car business, I know for sure I have sold $50,000 Tahoes for less of a profit than some Guitar Center deals on a new Fender Guitar. Which sucks for me I guess.

But I wonder why there is not an "Edmunds" or "Invoice.com" for guitars? Why is it that someone can come in the dealership and brandish the newest addition of Consumer Reports Buying Guide, and get to within a few dollars of what I actually pay for the car, and then have the audacity to offer me $100 over that price, and the next week feel okay with giving some big music chain a 25% profit on a $1000 item?

I would love to roll onto GC with a "GuitarInvoice.com" handbook, and say, "Good morning D'Angelo. Dude, that sure is a sweet full-sleeve tattoo of the Virgin Mary being pole-axed by a horse wearing a battle helmet... but anyway, It says here in my magazine that you guys paid $550 for this 52' Reissue Telecaster. You have it priced up on the wall for $1499. I'll give you $575 for it. Whaddyasay?"

Of course it will never happen, but I can dare to dream can't I?

syf

It may be happening now in that we know that you just divide the list guitar price in half and you have the cost. Guitars are pretty easy.

I don't mean to sidetrack the topic but car dealerships are a big mystery. I've seen the dealer invoices for three Honda Accors that I bought near cost (paying cash) and the dealer explained to me that there are hold-backs and incentives from Honda that make the deal profitable. How does that work? I've always assumed that their is more profit in running a large auto service department than there is in selling new cars. If a dealer has 18 reapir bays and they are all full at $100 per hour labor, I would hope that they are making enough money to stay afloat.

I know a guy who owns a great CF Martin shop on the east side of Milwaukee and he has told me that there are days where he'll make $200 selling a new D-28 but he'll make $600 the same day doing a vintage neck reset (he's an amazing luthier). Acoustic guitars might fetch more labor and repair income than electrics simply because the tools and skills are so specialized for steaming off a dovetail neckset or installing a pickup.

John
__________________
John

"The rock and roll business is pretty absurd, but the world of serious music is much worse." - Frank Zappa
studio1087 is offline   Reply With Quote

Old January 8th, 2009, 04:30 PM   #11 (permalink)
Friend of Leo's
 
Sterling Indigo's Avatar
 
Join Date: Sep 2008
Location: East Lansing
Posts: 2,391
Quote:
Originally Posted by stxrus View Post
you owe me a monitor, keyboard, mouse, and possibly a printer. i just about drowned my desk with a diet coke i was trying to drink while reading this.

my god that is funny

steve
+1, I now have "pole-axed" added to my limited lexicon...can't wait to use it..what does it mean?
Sterling Indigo is offline   Reply With Quote

Old January 8th, 2009, 04:48 PM   #12 (permalink)
Tele-Holic
 
stealyerface's Avatar
 
Join Date: Mar 2008
Location: Upstate NY
Age: 45
Posts: 691
Quote:
Originally Posted by studio1087 View Post

I don't mean to sidetrack the topic but car dealerships are a big mystery. I've seen the dealer invoices for three Honda Accors that I bought near cost (paying cash) and the dealer explained to me that there are hold-backs and incentives from Honda that make the deal profitable. How does that work? I've always assumed that their is more profit in running a large auto service department than there is in selling new cars. If a dealer has 18 reapir bays and they are all full at $100 per hour labor, I would hope that they are making enough money to stay afloat.

I know a guy who owns a great CF Martin shop on the east side of Milwaukee and he has told me that there are days where he'll make $200 selling a new D-28 but he'll make $600 the same day doing a vintage neck reset (he's an amazing luthier). Acoustic guitars might fetch more labor and repair income than electrics simply because the tools and skills are so specialized for steaming off a dovetail neckset or installing a pickup.

John
Well, 4 times a year, GM gives us a little bit of money back to help pay for the floor plan interest that accrues on the cars that we pay GM for. This is called Holdback. I cannot afford to pay cash (liquid) for all the cars on the inventory. So I pay a monthly charge based on the value of the vehicles. After I sell the car, I get a percentage of what I have already paid them back to the dealership to help pay for the next round of cars. It is not a lot of money per car, but enough on the big ticket items to warrant selling them at a quick-turn price, and recouping the money down the road. There is the mystery to that.

Service is a money maker but you need great mechanics. GM is all flat-rate based. So if a brake job says it takes 2.5 hours, that is what they pay. So if the mechanic can do the job in 1.8 hours, the dealership can turn it over, and everyone makes money. If a guy is new or screws up a job, and it takes him 4 hours, the book says 2.5 and that is that. Good mechanics make the dealership money. Service is where the dealership makes the money while the sales department brings the new service customers in. A symbiotic relationship that is very important...

Funny you should mention a neck reset. I have my heart in my throat as we speak because my beloved 1954 Martin 00-18 is on its way to Martin (Dave Nichols) for a warranty neck-reset. My dads parents bought it new when he was 8 years old. So, for the original owner a reset is a lifetime warrantied item. I am awaiting the phone call that says it is lost, stolen, ruined, missing... whatever. Always the pessimist, I hope she turns out okay, and back to me safe and sound...

syf
__________________
...You ain't gonna learn what you don't wanna know....GD
stealyerface is offline   Reply With Quote

Old January 8th, 2009, 04:51 PM   #13 (permalink)
Tele-Holic
 
stealyerface's Avatar
 
Join Date: Mar 2008
Location: Upstate NY
Age: 45
Posts: 691
Quote:
Originally Posted by Sterling Indigo View Post
+1, I now have "pole-axed" added to my limited lexicon...can't wait to use it..what does it mean?
The pole axe was a weapon used in medeival England. It was literally an axe atop a long pole. Originally the term meant to be killed with such a weapon; it later came to mean being violently killed with any such weapon or instrument

happy to help!

syf
__________________
...You ain't gonna learn what you don't wanna know....GD
stealyerface is offline   Reply With Quote

Old January 8th, 2009, 05:02 PM   #14 (permalink)
Tele-Holic
 
PixelMover's Avatar
 
Join Date: Oct 2008
Location: Boston Area
Age: 37
Posts: 744
Quote:
Originally Posted by stealyerface View Post
"Good morning D'Angelo. Dude, that sure is a sweet full-sleeve tattoo of the Virgin Mary being pole-axed by a horse wearing a battle helmet... but anyway, It says here in my magazine that you guys paid $550 for this 52' Reissue Telecaster. You have it priced up on the wall for $1499. I'll give you $575 for it. Whaddyasay?"

Of course it will never happen, but I can dare to dream can't I?

syf

Haha -- Nice!
Glad I wasn't drinking anything when I read that. In the end isn't it up to the dealer -- cars or guitars -- to essentially tell the buyer to take a walk? Stealyerface, do you turn people away like I've seen GC do numerous times. In the end I get the feeling GC employess (maybe a bad example) could care less if you buy that guitar on the wall. Realistically, $1000 msrp, store buys for $500, their tag says $750. You can hope to get it for what? $650 lowest? Only $150 profit for the store when they pay that full-sleeved tattooed dude $10 an hour for his time?

It just doesn't work out.
__________________
"Should've taken a left turn at Albuquerque."

Last edited by PixelMover; January 9th, 2009 at 09:34 AM. Reason: unappropriate line
PixelMover is offline   Reply With Quote

Old January 8th, 2009, 05:06 PM   #15 (permalink)
Friend of Leo's
 
Sterling Indigo's Avatar
 
Join Date: Sep 2008
Location: East Lansing
Posts: 2,391
Quote:
Originally Posted by stealyerface View Post
The pole axe was a weapon used in medeival England. It was literally an axe atop a long pole. Originally the term meant to be killed with such a weapon; it later came to mean being violently killed with any such weapon or instrument

happy to help!

syf
Just so my tat guy will understand...thanks! I'll definitely be gettin this one 'full sleeve' as you said.
Sterling Indigo is offline   Reply With Quote

Old January 8th, 2009, 05:25 PM   #16 (permalink)
Tele-Holic
 
stealyerface's Avatar
 
Join Date: Mar 2008
Location: Upstate NY
Age: 45
Posts: 691
Quote:
Originally Posted by PixelMover View Post
Haha -- Nice!
Glad I wasn't drinking anything when I read that. In the end isn't it up to the dealer -- cars or guitars -- to essentially tell the buyer to take a walk? Stealyerface, do you turn people away like I've seen GC do numerous times. In the end I get the feeling GC employess (maybe a bad example) could care less if you buy that guitar on the wall. Realistically, $1000 msrp, store buys for $500, their tag says $750. You can hope to get it for what? $650 lowest? Only $150 profit for the store when they pay that full-sleeved tattooed dude $10 an hour for his time?

It just doesn't work out. Are most of these music stores tax shelters?
Yes, we do tell folks that we cannot sell the cars and trucks for what they wanted, but my point is why is there a publication that makes this anyone's freaking business anyway? No one has a book about how much the dealer cost of a Dishwasher is. No one goes into Sears and offers the salesman $20 over the "cost" of the Kitchen Aid Mixer.... People go in and pay the asking price, or made-up "sale" price on an oven all the time. And if they pay $2900 for a Vulcan, they are paying over 50% in marked up profit... but God Forbid they come look at a Suburban and pay more than $200 more than I did...

syf
__________________
...You ain't gonna learn what you don't wanna know....GD
stealyerface is offline   Reply With Quote

Old January 9th, 2009, 09:33 AM   #17 (permalink)
Tele-Holic
 
PixelMover's Avatar
 
Join Date: Oct 2008
Location: Boston Area
Age: 37
Posts: 744
//deleted// not going to get into a trite argument...
__________________
"Should've taken a left turn at Albuquerque."
PixelMover is offline   Reply With Quote

Old January 9th, 2009, 09:38 AM   #18 (permalink)
Tele-Holic
 
stealyerface's Avatar
 
Join Date: Mar 2008
Location: Upstate NY
Age: 45
Posts: 691
Feel free to comment... You won't hurt my feelings. Remember, I am in the car business, I don't have any feelings.

syf
__________________
...You ain't gonna learn what you don't wanna know....GD
stealyerface is offline   Reply With Quote

Old January 9th, 2009, 09:56 AM   #19 (permalink)
Doctor of Teleocity
 
studio1087's Avatar
 
Join Date: May 2003
Location: Near Milwaukee
Age: 50
Posts: 15,960
A 00-18 from 1954?? !!

I bow before you sir.

Holy Schniekies!

Photo??

John
__________________
John

"The rock and roll business is pretty absurd, but the world of serious music is much worse." - Frank Zappa
studio1087 is offline   Reply With Quote

Old January 9th, 2009, 10:19 AM   #20 (permalink)
Tele-Holic
 
stealyerface's Avatar
 
Join Date: Mar 2008
Location: Upstate NY
Age: 45
Posts: 691
[IMG][/IMG]

This is the only shot I have that was in an old camera... once she gets back from the doctor's office, I'll post some nicer pics of the old girl.

syf
__________________
...You ain't gonna learn what you don't wanna know....GD
stealyerface is offline   Reply With Quote

Reply

Bookmarks

Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Forum Jump


» Random Photo for Guests
Morse Frankentele Replica
Untitled Document



 


Powered by vBadvanced CMPS v3.2.2



IMPORTANT:Treat everyone here with respect, no matter how difficult! No sex, drug, political, religion or hate discussion permitted here.


Powered by vBulletin® Version 3.8.7
Copyright ©2000 - 2014, vBulletin Solutions, Inc.
Content Relevant URLs by vBSEO 3.6.0 RC 2
© TDPRI.COM 1999 - 2014 All rights reserved.