p.1 #1 · Is the profit margin for retailers on Canon lenses really so low?
So I was at Best Buy yesterday admiring their new photo set up (it really is impressive) and started talking with the person manning the area. I'm interested in buying a 16-35mm f/4L IS so he checked and they had one in stock. B&H Photo and Amazon list it at $999. Best Buy had it listed at the same price for a while but at some point this weekend it went back up to $1099, which is the price it had last night.
I was tempted, but mentioned how I can buy from B&H and get it with no tax and free expedited shipping at a lower price. He said they would price match the item, but had to see if he could go even lower than that so after taxes my price would match the B&H price. He comes back saying they would, by policy, price match B&H, but they couldn't go any lower as they pay $1029 for the lens and even at price match of $999 they would be taking a loss. At full list price of $1099 they are only making a $70 profit, or 6%...
Is that true? Is the profit margin for retailers so low? I find it hard to believe B&H is losing money on every sale of that lens, do they get a better price due to their larger volume? Would love to hear from someone with more information. Thanks
p.1 #3 · Is the profit margin for retailers on Canon lenses really so low?
mb126 wrote:
I also highly doubt the 18-year-old on the floor knows either.
Why do you assume he was 18 years old?
Why do you think he can't know that? I worked as a camera salesperson for about 1.5 years at one point in my life (different store) and my point of sale system let me see the item cost, the minimum sale price, and advertised sale price.
p.1 #5 · Is the profit margin for retailers on Canon lenses really so low?
FLSTCSAM wrote:
The best buy employee is very mistaken or an idiot.
I've spoken with this guy before, so I can believe he was very mistaken or that he was telling me what his supervisor told him to tell me. But I don't think he was an idiot.
FLSTCSAM wrote:
The margins are low, about 25%, but they aren't buying anything at $1000.00 and selling it for $1000.00.
Only the gov can buy high and sell low.
That makes sense. Oh well, I decided to save the $70 I would pay on taxes and buy from the B&S board here or from B&H next week when they resume orders. Thanks for the clarification.
p.1 #6 · Is the profit margin for retailers on Canon lenses really so low?
Close, I've been in retail management for multiple camera retailers and Apple computer, since the late '70's (off and on). The book cost on that lens is probably about $1029. However, the manufacturers, offer discounts for prompt payment and also co-op dollars and other incentives that in reality lower the dealer cost on that lens by an additional $100 to $200.
The clerks have no clue on the real cost of the products they are selling.
p.1 #7 · Is the profit margin for retailers on Canon lenses really so low?
FLSTCSAM wrote:
The best buy employee is very mistaken or an idiot.
The margins are low, about 25%, but they aren't buying anything at $1000.00 and selling it for $1000.00.
Only the gov can buy high and sell low.
Sam
Employees have various levels of access to the real cost of an item. The sales clerk can only see what the company wants someone at that level to see. Access the system as a floor manager or better yet as a store's general manager and you see an entirely different set of pricing.
p.1 #8 · Is the profit margin for retailers on Canon lenses really so low?
FLSTCSAM wrote:
The best buy employee is very mistaken or an idiot.
The margins are low, about 25%, but they aren't buying anything at $1000.00 and selling it for $1000.00.
Only the gov can buy high and sell low.
Sam
I'm friends with a couple of people who own camera stores, and the margins they've told me about are far below 25%. In the case of the 50/1.8 STM, their vendor cost is $120, and MSRP is $125.
Where did you get the information saying 25% margins? We wouldn't see camera stores failing at such a rate if they had 25% margins.
p.1 #9 · Is the profit margin for retailers on Canon lenses really so low?
If the stores follow all the manufacturers promotions and financing options they could get 25% or even more at times.
As an example manufacturers will offer discounts for prompt payment of invoices. Lets say on January 2 you place an order for $100,000 of camera bodies, lenses and kits. If you pay the bill by the due date February 10, you'll receive a discount of between 10 and 15%. The discount is usually in the form of merchandise credit, so in affect you get $10,000 of free goods. In some cases you just take the discount right off the payment.
There are also co-op dollars available to promote and advertise the specific products, kits etc. Co-op dollars can be a profit center for retailers that work it right.
p.1 #12 · Is the profit margin for retailers on Canon lenses really so low?
Best Buy has started making select stores in select markets camera centers and they stock a lot of better Canon, Fuji, Nikon and Sony gear. They are also putting dedicated staff in the camera centers and getting them additional training to help in supporting the more advanced gear.
p.1 #13 · Is the profit margin for retailers on Canon lenses really so low?
Jeff Donald wrote:
Best Buy has started making select stores in select markets camera centers and they stock a lot of better Canon, Fuji, Nikon and Sony gear. They are also putting dedicated staff in the camera centers and getting them additional training to help in supporting the more advanced gear.
Thanks. Seems like a good business move considering how the camera market is in an ongoing collapse
p.1 #14 · Is the profit margin for retailers on Canon lenses really so low?
No kidding, the greater Tampa Bay area (about 4mil people) has only had one retail store since January. This market is ripe for a retailer that knows how to do it right.
p.1 #15 · Is the profit margin for retailers on Canon lenses really so low?
There are typically multiple things that determine the actual store's cost. First, the store buys at X dollars. Then, often based on volume or promotions, they get kickbacks or other incentives from the manufacturer which effectively lower the cost much further, but if you were to just look at a cost invoice or in the computer you would just see "X".
I used to sell commercial building supplies (Not a direct comparison I know, but electronics sales work similarly) and this was exactly how it worked. We wouldn't discount certain items, not let contractors use their discount accounts on them, or we would sell them "below cost" as a "loss leader", and that's what we told customers. Then, at the end of the year, we got enormous kickbacks that far offset any "losses" we had on those items. Car dealerships work almost exactly the same way too.
p.1 #16 · Is the profit margin for retailers on Canon lenses really so low?
snapsy wrote:
I'm surprised a Best Buy B&M store would have this lens in stock. I thought they only sold their premium camera gear for online delivery.
I was very surprised too. In the past they've only had a couple of lenses, this time they had a Canon display, a Nikon display, a whole miniature mountain set with buildings, people, windmills, etc with a circle of cameras from the manufacturers around it so you could test them, etc. They had a Sony section, they had Fuji, etc.
I'm a Canon guy, so I paid attention mostly to that display. They had on display:
- 16-35mm f/2.8L II
- 16-35mm f/4L IS
- 24-70mm f/2.8L II
- 50mm f/1.2L
- 70-200mm f/2.8L IS II
- 100-400mm f/4-5.6L IS II
- 70-300mm f/4-5.6L IS
- 50 mm f/1.4
- 50mm f/1.8 STM
- 70-300mm IS USM
- 10-18mm IS STM
- 40mm f/2.8 pancake
- 18-200mm IS something or other
- 75-300mm crappy lens
- a few other lenses I can't recall now
- a couple of flashes
Cameras ranged from SL1 to 5D III (with the only copy of the 25-105mm L I saw), including 6D, 70D and 80D (with new 18-135 lens mounted on it). No 1D series on display anywhere.
p.1 #17 · Is the profit margin for retailers on Canon lenses really so low?
I remember when Cord Camera was still in business toward the end of their life they stopped carrying Canon gear. The manager told me the profit margin on Canon gear was so low it really did not make sense for them to carry their gear anymore. He said if you buy a Rebel kit and do not buy any high mark up accessories they actually lose money when you factor in all of the overhead.
p.1 #18 · Is the profit margin for retailers on Canon lenses really so low?
Having worked at circuit city years ago, they are still making a profit(I'd imagine anyways) at $999. My best guess on the lens would be cost at around $850-900. I vaguely remember paying around $600 cheaper than retail for the 5D/24-105 kit back when it came out. Obviously, the cheaper the lens, the less the discount the is.
p.1 #19 · Is the profit margin for retailers on Canon lenses really so low?
Eric Mastilak wrote:
I remember when Cord Camera was still in business toward the end of their life they stopped carrying Canon gear. The manager told me the profit margin on Canon gear was so low it really did not make sense for them to carry their gear anymore. He said if you buy a Rebel kit and do not buy any high mark up accessories they actually lose money when you factor in all of the overhead.
That's the standard line from management in the camera retail industry. The reality probably was that Canon quit selling to them because they were way over their credit limit. I've seen this many times when small retailers (and sometimes very large like Ritz Camera Centers) go out or file for bankruptcy. Whose going to buy from you if you tell your customers that you're going out of business and can't buy from certain companies? Poor business practices, but it happens every day in this country.
p.1 #20 · Is the profit margin for retailers on Canon lenses really so low?
M. Best wrote:
Having worked at circuit city years ago, they are still making a profit(I'd imagine anyways) at $999. My best guess on the lens would be cost at around $850-900. I vaguely remember paying around $600 cheaper than retail for the 5D/24-105 kit back when it came out. Obviously, the cheaper the lens, the less the discount the is.
You may have purchased that under the manufacturers "personal purchase program" that allows store personnel to purchase limited equipment direct from camera manufacturers at lower prices than the dealer can purchase at. The typical discount was around 15 to 25% below the best dealer cost (not counting incentives). This encourages store employees to purchase cameras and lenses and then in turn that employee is more likely to sell the products for the manufacture they shoot with.
I remember back in the late '70's i purchased a bunch of Olympus gear under the personal purchase plan and the bodies came engraved with my name in them. The really reduced the incentive to buy gear and turn around and try to flip it. To the best of my knowledge manufacturers no longer engrave bodies etc. but the warranty is automatically registered to in the employees name.
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