The small shops really make little profit on Camera and lens?

[TonyUSA]

I am thinking to purchase a lens that cost about $10,000 and I just did some research so I can go in the store and offer them a better price for me. Is it really true that the shop only make profit maybe 20% or less?

Thank you,

 

[ac12]

Yes.

Here is the problem

• You are using an incorrect term.
  • Selling price - cost = gross margin (not profit)
  • Gross margin (for all sales) - expenses (operating and other expenses) = profit
    • This profit number for a small shop could be down at about 5% or lower.
    • I say "or lower" because I know of two camera shops that shut down, because that number went below 0.
    • So even if the gross margin on a sale is 30%, the final profit might be less than 5%.
• Small shops do not sell the volume of the big shops (B&H and Adorama), so they don't get the discounts that the big shops have.
  • Example, years ago, I worked in a hobby store. Our COST of a train set was MORE than the price that Toys Are Us was selling the same train set for. It would have been cheaper for us to buy some of the inventory from Toys Are Us than from the distributor.
• People will come in and ask the shop to match internet prices of these big shops or Amazon.
  
  • Go back to #2. The selling price of the big shops could be lower than the cost for the small shops. If the small shop matched prices, the small shop would loose money on the sale.
• I know one small shop that has taken on consignment sales.
  • He does have to pay for those items, until it is sold. So his carrying cost is zero. And he has no risk of getting stuck with unsellable inventory.
    
  • There is no warranty hassles, once the buyer walks out the door that is it.
• Rent in some places have been driving small shops out of business.
  • There is something called "net net net." That means to the shop owner that he has to pay the landlord X, and on top of that he has to pay for all building maintenance and repairs (like reroofing and painting). These used to be stuff that was included in the rent, now they are added to the rent. So not only has the rent gone up, but now he has to pay these additional costs.
• The small shop generally has local expertise, vs essentially nothing when you buy online.
  • You can hold and check out the stuff before you buy.
    • It is really hard/impossible to determine fit (size and weight) of something online. Does the camera fit your hand, how does the controls feel under your fingers, does it balance well, etc. These are stuff that you cannot learn except by physically holding the item.
  • People will come in and look at and check out the gear in the store, then buy it online cheaper.
    • Then these people that bought stuff online, then come into the shop expecting to get free lessons on how to use the gear they bought online.

This is the problem for ALL small shops in virtually all business lines.

• There is only ONE camera shops within 15 miles of my house, were there used to be 8.
  
• There are no stationary stores either, only Office Depot.
  
  • Even Staples shut down because of high rent.
• Most of the hobby shops that I used to go to are gone, except for only two (one is 40 miles away).
  
• Any/every store that sells anything that can be bought online is at risk.

If you want to help your local store, do not haggle price. Pay him what he lists the item for.
If he is willing to give you a small discount, because of the size of the sale, take it, and don't haggle him for more.
And pay in CASH, so he saves on the credit card fees. 5% on $10,000 = $500

Years ago (before internet sales), I used to go to a local camera shop. They gave a 10% pro discount, CASH only.
Prices were MSRP. The pro discount did not apply to sale items.

 

[greybeard]

This is the reason small shops are closing.

 

[pendennis]

The local stores around here are on a "meet" basis as far as pricing goes. Bring in a price, and they'll check B&H, Adorama, and match it on the spot. However, you're on the hook for local sales tax (You're on the hook for use tax by out of state company shipments). Their list prices are well above the "B&H" model.

They do this out of necessity. If they don't, the customer can "point, click, and buy" on the internet. It's a problem, not of their making, but they pay the piper.

The photo business isn't the only one. All retailers are in the same bind. Walmart is now going toe-to-toe with Amazon. This does have an up side. Amazon isn't a monopoly, and they'll have to reconsider their "Prime" service pricing. Walmart doesn't have any fees. Stay tuned.

 

[Designer]

.. I just did some research ..

I'm surprised that someone settled on that 20% figure and presented it as universal.

Actually, different merchandise can have different markup percentages, ranging anywhere from just a pittance to well over 300%.

Depends on the merchandise, the shop, the locality, the manufacturer's distribution agreements, and other factors.

If you really are in the market for a $10,000 lens, then I suggest that you continue gathering information.

Shop around.

 

[480sparky]

......If you really are in the market for a $10,000 lens, then I suggest that you continue gathering information.

Shop around.

For a $10k lens, I'd look seriously into used ones. Send it in for factory CLA and rock on with some scratch on pocket.

 

[AlanKlein]

If you're buying an expensive item, giving what they ask is just silly. There's always room to negotiate. On the other hand, if they store spends a lot of time with you going through a bunch of selections, that;s worth something to you. It doesn't mean you have to give them what they ask. However, a little more than you can buy "blind" without salesman's help on the internet seems like a fair deal.

 

[TonyUSA]

Thank you everyone for your input.

All of mine photo equipments purchased from online AD including ebay and sometime at canonpricewatch. Canon 400mm f/2.8 II is the one I want. The cheapest on ebay is $9,000 but not an AD, I don't really want to take a chance to buy from them because they are not an AD. Most of AD on ebay are doing retail price. The best price right now is $9,400 and it is AD at canonpricewatch.

From my calculations base on ebay AD price is $10,000-13% ebay and PayPal fee = $8,700 in his pocket. So I guess I can walk in the local store and offer them $8,700 cash out the door. Not sure if this would work but I will give it a try.

 

[ac12]

You have not included sales tax, which could be a significant amount, depending on where you live.
Example at 8.25%, 8.25% of $8,700 = $718. That is an additional amount that YOU would be obligated to pay, not the store to absorb. Because if you bought from an internet store in your state, YOU have to pay the sales tax.
If you want $8,700 out the door, you are sticking the shop with absorbing and paying the sales tax.
At which point, you are asking for a 20% discount.

If I were the owner of a small local camera shop, my answer would be NO.
If it were Best Buy, who knows?

I am not privy to the manufacturer/dealer contracts, but "I think" for some of the pro gear, dealers are not allowed to sell below the manufacturer's set price. In which case, they cannot give you any discount. They could discount other stuff, or throw in other stuff for free, but the gear has to be sold at what the manufacturer specified.

 

[Derrel]

Buy from an Oregon dealer. Oregon has no sales tax. None. No matter where the buyer lives. ProPhoto Supply, or Focal Point Photography would be my two choices. Make a few phone calls. Maybe save yourself some serious money. Not really sure that the "II" version new is worth the extra $4,000-$6,000 over a used, earlier model.

$10k seems like a lot of money for to spend on that focal length and speed just for swimming meets; a 400/2.8 is too long a lens for many situations, and a 200mm f/2 and a 1.4x converter might make more sense for some people, or a 300/2.8 and a 1.4x converter; kind of depends on what, exactly, one wishes to use the lens "for", and how much of the use will be dedicated to what type of sports/subjects/events.

 

[TonyUSA]

Thank you so much,

 

[ac12]

Buy from an Oregon dealer. Oregon has no sales tax. None. No matter where the buyer lives. ProPhoto Supply, or Focal Point Photography would be my two choices. Make a few phone calls.

Except states like Calif will want their cut.
On my Calif state income tax, I have to declare how much I purchased on-line that was not taxed. Sales/use tax is then computed on that purchase amount.

With the latest Supreme Court ruling, the days of interstate sales with no sales tax is ending/has ended. All that is left is how to implement it, and if there will be a cut-off to let the small businesses avoid it. The problem with the cut-off is, some/many of the small business will still have to collect the tax, because they may not know if they go below or above that cut-off till year end when they do their taxes. That will force more companies to collect sales tax based on the buyers tax jurisdiction.
So, you will need an Oregon shipping address to avoid sales tax.

 

[TonyUSA]

Made a few phone calls but some only give $100 discount and some can not, I even offer them cash for 50 miles radius shops but all of them said they only make little money on this one.

 

[jcdeboever]

I know someone that owns a brick and mortar store. He makes most of his profit on prints, scanning, trinkets, and studio rental space. He makes profit on hardware but not like he used to because people don't buy cameras like they used to. He matches the big box online retailer. He even promotes it on the phone and in the store. Problem is, he may not have it in stock. He is into profit by square foot metric. I never even asked him to match online, he offered. I would have paid him retail. He is hoping you come back and utilize his services or spread the word. He is successful.

If it's about price, buy online. If it's about service, buy brick and mortar. You are not responsible for a business' success, they are. They took the risk. A solid business man will operate his business to succeed.