p.3 #2 · Is the profit margin for retailers on Canon lenses really so low?
just another datapoint, i worked at bestbuy for awhile (many years ago), and one of the perks is that we could buy things at 'cost'--well they told us that it was cost but i suspect it was higher than that. That may be what they are quoting to you as their cost but in reality it's not.
in the end this is really academic, i think the PM to $999 was fair, it's not fair that they would eat the tax for you because even if you buy from B&H in most states you would need to claim that purchase and pay the tax directly.
p.3 #3 · Is the profit margin for retailers on Canon lenses really so low?
Thanks for the many responses here. I've learned a lot, for sure.
I agree that Best Buy didn't do any wrong by not matching the price - tax situation, I wasn't really expecting them to. I simply told the guy we would order online to save the $70 on tax that could go to my baby instead. He volunteered to try to lower the price, and couldn't. But I wasn't mad.
I went home straight to buy it from B&H...and B&H then lost my business because they are closed for the entire week for Passover. I appreciate that they respect their holidays so much, but my plans can't wait on their holidays. So I bought the lens from a forum user here and saved myself some money in the process.
p.3 #4 · Is the profit margin for retailers on Canon lenses really so low?
Max_Pain wrote:
Thanks for the many responses here. I've learned a lot, for sure.
I agree that Best Buy didn't do any wrong by not matching the price - tax situation, I wasn't really expecting them to. I simply told the guy we would order online to save the $70 on tax that could go to my baby instead. He volunteered to try to lower the price, and couldn't. But I wasn't mad.
I went home straight to buy it from B&H...and B&H then lost my business because they are closed for the entire week for Passover. I appreciate that they respect their holidays so much, but my plans can't wait on their holidays. So I bought the lens from a forum user here and saved myself some money in the process.
You weren't mad. But you didn't buy it from them in the end. After admiring their display, and talking to them, and getting them to find one in stock, then you tell them you can buy it $70 cheaper from a company who didn't have to spend any time talking to you, answering your questions, or locating and showing you the product.
Nice. No wonder companies find it hard to buy stock, or even stay in business.
p.3 #5 · Is the profit margin for retailers on Canon lenses really so low?
Jeff Donald wrote:
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....Show more →
Yes, it is (was?) a bit similar in Europe but it is very difficult to know the real cost of these products for the retailer. I worked in development, sales and distribution of camera equipment (also as Canon OEM) and there are all kinds of incentives, end-of-quarter deals etc. that may or may not be useful for a specific retail channel.
In the late nineties, margins on e.g. Canon lenses used to be in the 15-30% range. Especially after online sales took off, the average retail price on internet was frequently lower than official distributor price (for single items, but sometimes even with Qty discounts). So retail margins (without taking special incentives into account) were in practice close to zero. However, if the shop doesn't buy from the distributor they may lose their dealer status or Qty discounts, so sometimes they buy despite the higher price.
A small shop that doesn't use all the tricks will make no money and will probably be better off buying from their competitors. They may offer the camera in the hope of selling accessories or just because they need to hit a sales target. At the same time, a company that moves a huge amount of e.g. Canon printers at the right time might get a bunch of camera equipment alongside for very low cost. Maybe the MAP (which is very effectively enforced by Canon in Europe) has changed things a bit and offers most retailers a small positive margin again, but that's from after my time in the field. I doubt much has changed though, given the general business practices etc.
And I'm not even talking about 'grey' distribution channels, exchange rate woes and all the misconceptions about it with the general public.
p.3 #6 · Is the profit margin for retailers on Canon lenses really so low?
Shutterbug2006 wrote:
You weren't mad. But you didn't buy it from them in the end. After admiring their display, and talking to them, and getting them to find one in stock, then you tell them you can buy it $70 cheaper from a company who didn't have to spend any time talking to you, answering your questions, or locating and showing you the product.
Nice. No wonder companies find it hard to buy stock, or even stay in business.
Thanks for making me sound like an asshole.
I've given that particular Best Buy quite a lot of my money, including buying my wife's 70D kit from them. Sorry if I can't decide to spend extra money just to be nice. I assume you can and therefore the attitude. Good for ya. I have to find the best deals I can for this ridiculously expensive hobby that brings me zero income.
p.3 #7 · Is the profit margin for retailers on Canon lenses really so low?
Jeff Donald wrote:
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.
Very true. In the consumer electronics business there are often many things involved that ultimately affect your margins and therefore profitability. Disregarding the cash discount (which is fairly common in most businesses), with consumer electronics you deal with a variety of kickbacks, bonuses based on quantities bought and/or sold (and often not available until after the goods have been sold, therefore not considered part of the stock value), price protection (supplier or manufacturer crediting you for being stuck with old inventory that's dropping in value) and so on and so forth, making it near-impossible to tell, at the point of sale, what your actual cost of goods sold truly is. Often times things are sold at no profit, or even negative profit, because of these. Depending on your local accounting rules, and to some extent your auditors, you may or may not apply some of these expected profits to your current stock valuation.
p.3 #8 · Is the profit margin for retailers on Canon lenses really so low?
pingflood wrote:
Very true. In the consumer electronics business there are often many things involved that ultimately affect your margins and therefore profitability. Disregarding the cash discount (which is fairly common in most businesses), with consumer electronics you deal with a variety of kickbacks, bonuses based on quantities bought and/or sold (and often not available until after the goods have been sold, therefore not considered part of the stock value), price protection (supplier or manufacturer crediting you for being stuck with old inventory that's dropping in value) and so on and so forth, making it near-impossible to tell, at the point of sale, what your actual cost of goods sold truly is. Often times things are sold at no profit, or even negative profit, because of these. Depending on your local accounting rules, and to some extent your auditors, you may or may not apply some of these expected profits to your current stock valuation.
Yes. You often hear of Costco's 7-12% markups, but if you look into their accounting practices, they add to the basis of their cost, a amount for inward shipping and distribution, returns and stock loss due to breakage or theft, so their cost used in accounting is higher than what they directly pay for the items. They were called out for that, but they won the argument. Now, I suspect Best Buy and many others do the same.
There are many different ways of keeping the books, the rule is that the books must reflect the true status of the business if you want to be publicly traded. For private companies, just profits matter.
p.3 #9 · Is the profit margin for retailers on Canon lenses really so low?
Max_Pain wrote:
Thanks for making me sound like an asshole.
I have to find the best deals I can for this ridiculously expensive hobby that brings me zero income.
I didn't make you sound like an asshole --- YOU did. No offense intended. I was merely pointing out how your post came across. You don't have to justify anything to me, and frankly I couldn't care less.
p.3 #10 · Is the profit margin for retailers on Canon lenses really so low?
I use to work in an big electronics store in Canada. Camera equipment varied in markup percentages, but the Canon and Nikon stuff was about 10-15%. We could buy at cost + 5%. Sometimes sale items actually went below "cost" although there were many factors that went into this (loss leader, commision, pre-calculating overhead, dealer incentives, etc.).
At the end of the day, it's a total guess. It changes based on lens, location, buying power, incentives, etc.
p.3 #11 · Is the profit margin for retailers on Canon lenses really so low?
ZachOly wrote:
I use to work in an big electronics store in Canada. Camera equipment varied in markup percentages, but the Canon and Nikon stuff was about 10-15%. We could buy at cost + 5%. Sometimes sale items actually went below "cost" although there were many factors that went into this (loss leader, commision, pre-calculating overhead, dealer incentives, etc.).
At the end of the day, it's a total guess. It changes based on lens, location, buying power, incentives, etc.
Canon Canada's new MAP prices are 8.8% above dealer cost for most pro gear (not including volume discounts and other incentives). Margins are a bit better on Nikon, but I don't know the exact number. Sony markups are much higher.
p.3 #12 · Is the profit margin for retailers on Canon lenses really so low?
Shutterbug2006 wrote:
You weren't mad. But you didn't buy it from them in the end. After admiring their display, and talking to them, and getting them to find one in stock, then you tell them you can buy it $70 cheaper from a company who didn't have to spend any time talking to you, answering your questions, or locating and showing you the product.
Nice. No wonder companies find it hard to buy stock, or even stay in business.
It's called comparison shopping. It's perfectly legitimate, and in fact where would our economy be if nobody did that. Who would even dare to talk to a sales person, if you then had to feel obligated to buy something, as you have spent their time? I doubt that even Best Buy would like for shoppers to run away from their sales people. I rather think they are ok with comparison shoppers, getting a chance to talk to them and realizing not every effort will result in a sale.
p.3 #13 · Is the profit margin for retailers on Canon lenses really so low?
Thorsten wrote:
It's called comparison shopping. It's perfectly legitimate, and in fact where would our economy be if nobody did that. Who would even dare to talk to a sales person, if you then had to feel obligated to buy something, as you have spent their time? I doubt that even Best Buy would like for shoppers to run away from their sales people. I rather think they are ok with comparison shoppers, getting a chance to talk to them and realizing not every effort will result in a sale.
Yes, comparison shopping is one thing. Going into a shop and trying out gear knowing damn well you won't purchase the gear from the shop is another. I believe there are many that use the privilege of handling gear in the B&M shops and then go online to order so they can save a buck.
p.3 #14 · Is the profit margin for retailers on Canon lenses really so low?
If that last one was aimed at me, two problems with the statement:
1) I didn't try out any gear. It was behind a glass display, and the one he brought out was in a box that was never opened. I never even touched it.
2) I didn't "know damn well" that I wouldn't purchase. As a matter of fact, I was about 2 minutes from buying there until my wife reminded me that $70 I would save from B&H or $150 I saved by buying used goes a long way to buying diapers.
In general I disagree with that mentality as well. As someone who sold cameras and cars in my past, I think it's on the establishment (and the salesperson) to provide the incentive to purchase at that location vs all competitors.
p.3 #15 · Is the profit margin for retailers on Canon lenses really so low?
Not trying to be argumentative, but just stating a fact, that in Florida the State requires you to pay sales tax on most products purchased out of state. The state only selectively enforces that payment, but it is the law.
The state started strict enforcement starting back in about 2009 and targeted select industries and professions that historically purchase a lot of good mail order/internet. Photography businesses are one of the industries targeted and I've had several friends hit with large tax bills after they were audited by the state. One friend had a 5 figure tax bill for several years worth of taxes, interest and penalties. Many states are very lax with sales tax, but Florida is aggressive in the enforcement, mostly because we don't have a state income tax.
p.3 #16 · Is the profit margin for retailers on Canon lenses really so low?
California has gotten much stricter as well, and we have both a healthy income tax and a very ample sales tax. There's now a line item on your state income tax return to declare out of state purchases subject to use tax. That's for everyday shoppers. Those of us with State Resale certificates have always had to declare every quarter. Of course, if you never get audited, none of this matters - if...
p.3 #17 · Is the profit margin for retailers on Canon lenses really so low?
A couple things.
I think that any of us who find it useful or even critical to be able to go to brick and mortar shops to try certain equipment or even to ask questions should recognize that it is in our self-interest to patronize those same shops so that they will continue to be there when we need those services again in the future. It might cost you a bit more (though may shops will match online sale prices if you ask) but there is value in that extra cost. (I buy both ways — online when I know what I want and don't have to touch it first, and at shops when I need to see and touch.
In California, as mentioned above, it is the law the you must pay "use tax" on online purchases. Certainly if you are claiming equipment and other purchases for tax purposes you had been take care of this. (The same forms that we use to report the sales tax we collect from our own sales also asks specifically for this information.) I suppose you can choose not to... but that is a choice to violate the law.
p.3 #18 · Is the profit margin for retailers on Canon lenses really so low?
Shutterbug2006 wrote:
You weren't mad. But you didn't buy it from them in the end. After admiring their display, and talking to them, and getting them to find one in stock, then you tell them you can buy it $70 cheaper from a company who didn't have to spend any time talking to you, answering your questions, or locating and showing you the product.
Nice. No wonder companies find it hard to buy stock, or even stay in business.
Well stated. Furthermore, $70 is chump change and hardly justifies the drive home and the hassle of buying online and fretting over delivery. I would have bought it on the spot and gone home happy.
p.3 #20 · Is the profit margin for retailers on Canon lenses really so low?
Most of the gear which I bought new came from this one B&M store. I get the opportunity to try the gear before buying it which I value a lot. I also get great information from the staff when I need it. The big kicker since I have this relationship with this shop is I get to use their rental gear for free.
Sure some items cost a bit more than what I can get online...but I don't have the hassle of shipping and returning a bad copy which seems to be a common pain. Too boot...which online store will give me free rentals...B&H? Adorama? Amazon?
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