What do retail stores pay for these cameras?

[Jackal]

My friend and I were talking about how much retail stores like best buy or circuit city get their camera's for from canon?

For example. How much would comp USA get a 20D for? Was wondering how much stores profit from the sales.

Random question because I have nothing better to do. :p

[Toogy]

I think it varies from store to store and country to country based on buying power.
For example there is no way for a Canadian dealer to compete directly against US prices because Canon Canada sells to their distributers at a much higher wholesale cost then they do to the USA.

[NickC]

It wouldn't tell you anything about their profit, because profit is after business expenses. You don't know what that is. In other words, you could buy an item for $6 and sell it for $10 but after store rent, electricity, insurance, wages, shrinkage, etc., you might be making ten cents.

[trbo187]

12%-16% margin on DSLR's

[gmen]

It is indeed a pretty complex mix. It's not quite as straightforward as saying a camera 'costs' a retailer £x and they then sell it on at a 'profit' of y%.

Retailers work on a 'gross margin', by applying a 'mark-up' to the cost price. On high value photographic hardware, that margin could be as little as 5-10%. As NickC points on this 'margin' is later diminished in pure profit terms by other business costs.

The actual 'cost price' of an item can also be a moving target. Suppliers will apply various retrospective discounts and other mechanisms (e.g. end of line discounts) that may cause the cost price to vary over a period of time. A 'calculated' cost price will only be determined over a fixed period of time for accounting purposes.

[condyk]

... and then they pay tax on what's left over. Boy, who'd be in retail these days :lol: :lol:

[Mike Panic]

its funny listening to people's speculations :)

it isn't as much as most people think it is

[KennyG]

Between 5% and 10% depending on promotions from the manufacturers is about normal. Retailers do not make big margins on anything in electronics, from cameras to PC's. They rely on volume and higher margins on accessories to make their bottom line, which is usually less than 10% on turnover. You can see why mom and pop stores have to charge more than say B&H. It isn't that they are ripping anyone off, it is they have to just to survive.

[Mogwyth]

Jessops the UK's largest photographic retailer made a gross profit margin of 30% in 03/04. After operating costs etc you're down to about 5-6% profit before tax. Which is slightly better than sectors like food where the best manage just under 5%. Which is why are I always laugh when people whinge about the massive profits made by big companies (most of which goes to pension funds etc), they don't actualy make much more than you would putting your money on deposit.

[JaertX]

You can see why mom and pop stores have to charge more than say B&H. It isn't that they are ripping anyone off, it is they have to just to survive.

Yeah, but if my local mom and pop camera shop (hey that rhymed) keeps charging what the do, they're not going to survive. I saved at least $300 ordering my elan and 50mm 1.8 from B&H.

That's quite a bit of diapers and formula.

I could understand if they made up for their price difference with customer service, but I haven't been overly thrilled with that either.

Oh well, so goes small town life.

[KennyG]

Having been to B&H on a busy Sunday running up to Xmas (yes, we UK folks do visit the US) the amount of people going through that store per minute, never mind per hour or day, shows how they can work to slim margins. The local stores are probably lucky to get one minutes worth of B&H business in a month.

Jessops in the UK are having a tough time and have announced much lower than expected profits. Apparently this is as a result of digital camera sales taking a steep drop. DSLR sales however are rising, but you don't sell them in the same volume and margins are not much better.

[glangston]

There's profit margin on the sale and then there's inventory turns. What really matters is the ROE or ROI, whichever term means more to you. If you make less than a treasury certificate and don't get an equity kicker, you either just love the business or you're a masochist. :cool:

[Citizensmith]

Yeah, but if my local mom and pop camera shop (hey that rhymed) keeps charging what the do, they're not going to survive. I saved at least $300 ordering my elan and 50mm 1.8 from B&H.

That's quite a bit of diapers and formula.

I could understand if they made up for their price difference with customer service, but I haven't been overly thrilled with that either.

Oh well, so goes small town life.

And Walmart knows this. This is why they put so much pressure on retailers. They are big so they can. So say goodbye to your local family owned business and an American manufacturing industry. Say hello to megastores that sell cheap generic sanitized crap of which over 80% is made in China.

[slin100]

In another forum, an employee at an unnamed photo shop quoted the wholesale price for the 70-200/2.8L IS at $1699. That's the same price as offered by B&H's. There's no doubt that B&H gets preferred pricing or kickbacks from Canon. Mom and pop shops have no choice but to charge more. They simply can't compete with the bigger stores because they're handicapped from the outset.

[mkh]

But when Best Buy is selling the 300D in their stores for $799 and you can buy it online for $650 then there is either:

1. Huge markup for Best Buy
2. They don't have the same cost as the online retailers and must price higer
3 They do have same cost but ridiculously high overhead causes the higher price

Either way the support you get at those types of stores is not worth $150

[charlesu]

There really is not much margin (difference between Cost and Sales price is Margin, not profit) on things like cameras. Dealers make their money on accessories instead. That's why a small cable (1/8" mono plug at both ends) sells for $19.95 at the camera store and $3 at the electronics store.

[Steve Parr]

I worked in music retail for a long time. It was most common to pay one-half on the MSRP for an item. If a guitar retailed at a grand, we paid $500.00. These prices were determined by the manufacturer. In some rare instances, the manufacturer would even dictate what the item could be sold for.

My understanding is that it's very different for photo gear. While $500.00 may buy a dealer a $1,000.00 guitar, it might only buy him a $700.00 camera.

I don't concern myself with what the dealer pays. Hey, he's gotta' make a living. If I pay a price that I believe is fair, then I'm comfortable with it...

Steve

[Steve Parr]

They simply can't compete with the bigger stores because they're handicapped from the outset.

I'd agree and disagree with that.

Certainly, from a pricing standpoint, it could be difficult to compete. BUt a Mom & Pop joint will be able to offer you service that a place like B&H never will, simply due to the fact that they're mail-order...

Steve

[mtndew]

Depending on the company. Some business's will get a better deal if they prebook a item in advance with volume. While others will get a deal with volume after that item is released. I've even heard companys spending over a certain amount of $$$ will get discounts also. And this is experince i picked up over the years while working in retail.

[slin100]

I'd agree and disagree with that.

Certainly, from a pricing standpoint, it could be difficult to compete. BUt a Mom & Pop joint will be able to offer you service that a place like B&H never will, simply due to the fact that they're mail-order...

Steve
It's mail-order to me and maybe to you, but B&H is also a brick and mortar store. If I lived in New York, I could go in and possibly get the same level of service and still pay less. And B&H's website is pretty impressive. No, it can't make recommendations, answer questions (although there is Live Chat), or otherwise hold your hand, but it's about as good as it gets.

[slin100]

But when Best Buy is selling the 300D in their stores for $799 and you can buy it online for $650 then there is either:

1. Huge markup for Best Buy
2. They don't have the same cost as the online retailers and must price higer
3 They do have same cost but ridiculously high overhead causes the higher price

Either way the support you get at those types of stores is not worth $150
I'd venture to guess that it's a combination of 1 and 2. Best Buy probably doesn't get the same cost as B&H because it doesn't earn the incentives from selling the higher-priced consumer and L lenses, and pro bodies.

I believe it's not public, but I read somewhere that B&H's total revenue a year or two ago was well over $1 Billion. That's around $2,000 per minute. I can't even imagine what percentage of that is Canon equipment. You can be sure Canon treats B&H very well and probably better than Best Buy.

[prohidium]

As a former buyer in retail I can tell you that the cost the average employee might see on a computer screen in the back office is usually never the real cost.

In most larger stores the price for an item is negotiated off the manufacturers price list. There will be volume discounts, special discounts, advertising discounts, face of invoice discounts, payment terms, prepaid freight, defect allowances, monthly, quarterly and annual rebates and anything else that gets negotiated - such as things like purchase 50 drebels and get 50 18-55 lenses at no charge. The retailer then has the choice on what to pass along to the customer. In most electronics there is usually a volume rebate system in place that could be significant. So, at retail the retailer may mark up from invoice cost at something like 15 to 50% ( or what ever is normal in the photography industry) and then later profitibiliy is determined by sales less cost of goods sold after rebates. This can be done by total sales of all items for overall profit or it can be measured by individual sku's or by narrow or broad categories. In many cases the retail is set by the market place and then the retailer is left to negotiate the profitability. Stores with larger volumes or stores that belong to buying groups can negotiate better then independant stores with smaller volumes. A store like B&H would have volumes on their side, as would walmart but some smaller stores may belong to larger buying groups and get similar pricing to large volume stores. There are also laws governing how manufactures can give discounts that would upset or illegally stack the marketplace. These laws are difficult to enforce though and there are many deals between retailers and manufactures.

To sum it up, there could be very significant cost differences amongst any retailer at any time.

The other issue is the grey market issue. For example, in many cases distributors are set up to sell product on behalf of the manufacturer. The distributor may sell outside of its normal customer base and provide a price advantage to someone who would have to normally buy through some other channel. This is why companies such as canon will talk about warranty issues with grey market as product was sold outside of the regular distribution channels that were designed to keep a level playing field for retailers. Interestingly, manufacturers are just as concerned on what costs they sell at as they can really upset big customers by selling something too cheap to some and not others.

[condyk]

Very interesting ... and then add to the mix the fact that some places will run with extremely low cost of sales, due to efficiency in processes and related systems and reduced all round staff costs (not just salaries!) So, they buy at the same price, but poroduce greatly enhanced margin. B&H seem to have amazing efficiency built in to every step of the chain. A small operator could attempt to replicate some of what they do and so start to erode some advatages the bigger players have.

[Kennymc]

My friend and I were talking about how much retail stores like best buy or circuit city get their camera's for from canon?

For example. How much would comp USA get a 20D for? Was wondering how much stores profit from the sales.

Random question because I have nothing better to do. :p

IMHO there are actually two questions in one here, which need to be answered seperately to avoid confussion...
Question one is how much do they buy it for and how much do they sell it for...
Question two is how much profit is made on the sale...
Answer one is just a simple matter of taking one from the other but this does not determine the profit margin...
Answer two is a matter of taking the (selling price) - (purchase price + all overheads inc taxes)
None of these questions can be accurately answered without actually knowing what each individual retailer pays the wholesaler and what over heads that retailer has to offset against his selling price...
That's why internet purchases are often cheaper than store bought items because they buy in bulk and there is only one warehouse upkeep to offset against their selling price instead of stores having to buy in smaller quantities and have more staff, greater ground rates etc, etc to offset against their prices... You could actually buy cheaper on the net and they can make more profit on the deal than your local store would make if you bought the same item from them at a dearer price...

[Incomplete Pete]

My girlfriend works in Jessops, like all camera stores, they operate like a cinema. They make very little from the main object, the camera, or the film in a cinema's case, and then push to sell the add ones like bags, memory cards etc., or popcorn for a cinema. These accesories hold the real mark, the cameras are there to get you into the shop!

[chtgrubbs]

Fifteen or so years ago I worked in photography retail. In those days a camera had three wholesale prices. There was book net, which was what the wholesale distributors catalog said was the dealers price. Then there was the promotional net, which was a little lower and was based usually on buying a certain volume of cameras and lenses. Then there was a discount called "anticipation", which was a discount based on the anticipation that the dealer would pay for the order in 10-30 days. We usually sold cameras at Promotional Net, which meant the only markup was the cash discount. This was before accounting for overhead and taxes, so the real profit on a camera or lens was little or nothing. There may have been extra incentives to the store negotiated between the store and company rep, but I wasn't privy to these.

As Pete said above, the real money was in accessories. A filter which might wholesale at $3-4 dollars was retailed for $24-30. Camera bags, tripods, cable releases and all the other small consumables had good margins. The big moneymaker, of course was photofinishing, since it didn't have to be inventoried. You come back the next day, pay for your prints, and the dealer doesn't have to pay the lab for a few weeks giving him some cash to pay for the SLR's that he isn't making any money on.:)

I think the market is different now. I think that margins on new digital cameras is higher because there is demand for the latest and greatest and people are willing to pay more for having it. Also, because dealers are going to get stuck with alot of obsolete cameras which they will eventually have to steeply discount to unload them. I have been in some dealers where there were sales tables piled high with last year's digital P&S.