When I worked at circuit city, the cheaper something was, the more the markup. Something like. $9.99 RCA cable cost maybe $0.25. Speakers were about 80% markup. Electronics like TVs and Stereos were about 50% markup. Computers were only about 10%, unless you went with a âBuild Your Ownâ which was closer to 25%. Those numbers were all based on the cost to get the box of stuff to the store. Costs like sales people, rent, customer service, mgmt, all came out of those markups. In the end, if $100 worth of stuff went walking out the door, stolen, it would be closer to $1k-$10k to recover that. So in general, closer to 1-10% profit. Of course the warrantees were usually 100% profit, and any repair or exchange costs were passed to the manufacturers.
Iâve also seen that in food court type settings, the markup meeds to be close to 75%, because so much food ends up being garbage during the slow times. It doesnât help you much, but it is another reference.
I would be pretty shocked if costco really only had 10% margins. Especially on things like candy and cocacola. But even still, they are leveraging thousands of stores and hundreds if not thousands of customers per day at each store. They then use as little labor as they can and end up with a small shaving on tens of millions of dollars per day of sales.
Your business is entirely different. You have basically three categories of stuff. a) printed parts. b) Stuff you make very easily available, like bags of screws, or sharp stuff and c) commodities, like power supplies, belts, enstops. Things like commodities are going to be used to comparison shop. But they also shouldnât be a waste of your time. Things like your parts donât have a good comparison, but end up in the whole machine price, which people will use to compare to other cnc machines. Also, people will weigh their own prints against it. Things like bags of screws, sharp stuff, preflashed controllers, those things should have a higher markup because 1) They have more than their weight in value. 2) They are labor and higher intelligence labor heavy.
Prices also have a funny way of sending their own signals. Donât hate me, but I think the #1 reason people thought bose made good speakers was because they cost more. They paid CC a lot of money to put up separate bose displays because if you heard them side by side against a polk audio speaker, the polls sounded better. Iâm not suggesting you be like bose (I hate them). But donât assume people will dislike your products if they cost more. Many people want to spend more money on a better quality product. If you can deliver a better product that no one else can, you can ask for a higher price and be praised for it.
(Iâve already typed so much, but I have to add)
Sparkfun may be a good example to follow. They have straightforward shipping rates (no free shipping games). They make a lot of their own parts (which are reasonable, and good profits for them) and they sell a lot of common stuff. They are usually near the most expensive for commodity things. They also often will only sell you 10x. So if youâre selling bearings that cost you $0.30ea. You could sell a 10pk. for $5. No one is going to come to v1 for bearings (unless they want to support you personally). You donât want them to. But they might sell in a kit or as an add on to some bits, saving some money on shipping and getting a competitive price out of it.
), and no reverse logistics.
