Members NewYorkNewYork Posted October 26, 2003 Members Share Posted October 26, 2003 Hi all, I'm thinking of starting my own business selling guitar effects and accessories. Does anyone know what the average markup is on effects pedals and pickups? Thanks to anyone who can help! Feel free to PM me if you don't want to discuss is publicly. Link to comment Share on other sites More sharing options...
Members pewing33ny Posted October 27, 2003 Members Share Posted October 27, 2003 i heard its something like 50%. my gretsch duo jet that they were selling for $1800 cost gc alittle more then $1000. i suppose with pedals its alot more. accesories are usually much higher markup then amps and guitars. Link to comment Share on other sites More sharing options...
Members AreJayBee Posted October 27, 2003 Members Share Posted October 27, 2003 It all depends...bigger companies buy in larger quantities so they get gear at lower prices. It also depends on each product manufacturer and what you can negotiate with them and/or the wholesaler you plan on dealing with. Best bet is to research different wholesalers/manufacturers/distributers and see what they offer and for how much. Link to comment Share on other sites More sharing options...
Members HirsuteND Posted October 28, 2003 Members Share Posted October 28, 2003 MSRP on instruments and pedals, pickups, strings, amps, etc. is often 100% higher than dealer cost. A pedal that lists for $100 cost the store $50. But, do all stores sell at msrp? Do some stores get discounts? In general, internet and mail order seems to have driven prices down in a lot of retail shops. So the 100% markup is not as common as it was 10 years ago. Link to comment Share on other sites More sharing options...
Members 6and8stringer Posted October 28, 2003 Members Share Posted October 28, 2003 Prices at stores are driven by market demands for lower prices and better values. List price is an imaginary number that is, in some cases, double the dealer cost. With few exceptions, though, that price is just that - imaginary. The street price is generally far lower than list. Any store that is starting their price negotiations at list price is a store you should high-tail it out of. There are some exceptions, though - there are some manufacturers that use list price as the selling price, and any markdown from that price is against their policies and can result in a dealer losing their dealership rights of their product line. There aren't too many manufacturers that do this, though. More commonly, some manufacturers impose a "MAP" price (Minimum Advertise-able Price) that is the lowest you can advertise the item for - or lose your line (this is why many dealers list "too low to print!"). You can still SELL it for less, you just can't put it in print. Yamaha and Roland are good examples of manufacturers with strict MAP policies. Other dealers make MAP the lowest sell price - if they get wind that you're selling it cheaper than MAP - whoops! There goes your dealership. That said, margins on gear are not as big as you would expect; you figure on a pocket tuner that costs a dealer $42 bucks, Lists for $89, sells for $69. Now you gotta pay hourly wage and commission to the schmo behind the counter that sold it to you, costs on the shipment that got the product to you to begin with, electricity for the lights and gas for the heat, rent... you get the picture. Link to comment Share on other sites More sharing options...
Members BryanMichael Posted October 29, 2003 Members Share Posted October 29, 2003 The funny thing is that all these kids won;t hesitate to drop 60.00 on a shirt at Abercrombie & Fitch or the GAP that cost 1.98 to make and ship to the US from some 3rd world country without ever batting an eye..... Link to comment Share on other sites More sharing options...
Members NewYorkNewYork Posted October 29, 2003 Author Members Share Posted October 29, 2003 I'm just in the early stages of planning out my business, and thankfully I have a secure day job with a good company while I work things out. Right now I'm envisioning a tiny Wal-Mart style discount business selling gear in bulk at the lowest possible prices, but with absolutely outstanding service and guarantees. Since I'm not a tech guru, I figure the way to go is to sell items that require no maintenance or repairs on my part, so no guitars that need to be set up, tube amps to repair, or things like that. (though in the future I'd like to join forces with someone with that type of expertise. So, I figure commodity goods like pedals, lower priced rack gear, smaller solid state and modeling amps, accessories, cables, strings, and stuff like that is the way to go for now. Just things I can hand over to the customer in a box. Eventually, I'd like to rent a small showroom to (likely a work loft in Brooklyn for around $1000 a month) work in and build things up. I'm fairly ruthless in business and can keep my expenses low, so my main concern is being able to get decent pricing from distributors. What do you guys think? I figure I'd buy about 4-5K in inventory to begin with, and work from there. Anyone think this is a nutty idea? And thanks in advance to anyone who can help. Link to comment Share on other sites More sharing options...
Members Undertoad Posted October 29, 2003 Members Share Posted October 29, 2003 Marketing marketing marketing. Well, run the numbers. If the location is $1000 a month, and you have no other employees, and you sell nothing but pedals, and you mark up every pedal $10, you have to sell 100 pedals the first month to make the rent. Every pedal after that is golden and buys you one good chinese food dinner. The problem is what happens when you make enough to pay the rent but not to buy the dinner. To sell that many pedals you have to get pedal-buyers to your place. And that's the hard part. Call me negative but it's the small places that can't do any marketing to get enough people to remember them and come to them for pedals. It doesn't matter how good your service is, this is the 2000s and people just don't give a crap. If the pedal is $10 cheaper at Sam Ash they will go there, unless you give them some real reason to do business in some other way. Now, if you have a $200/month website you only have to sell 20 of them and you don't have to be there and you don't have to have any employees. Plus you don't have to keep a huge inventory... Link to comment Share on other sites More sharing options...
Members NewYorkNewYork Posted October 29, 2003 Author Members Share Posted October 29, 2003 A major problem is that many manufacturers won't sell to you if you don't have some kind of physical shop. I was mainly interested in boutique pedals, but they won't sell to me without an actual shop. So I think cheaper rack gear may be the way to go. (stuff like the TC Electronics G Major) I would actually love to undercut Sam Ash and GC in price, but I don't think its possible on small volume, even with very low overhead. One advantage i would have is that I would be opening in a neighborhood with a lot of musicians and artists, and no big music stores. Ideally, I would do a lot of selling at low prices over the web. I think I could do well billing myself as a rock bottom source for certain types of commodity equipment, rather than a dealer of all goods. (a Boss pedal or Line 6 POD is the same no matter where you buy it) Right now, my biggest obstacle is getting my hands on the gear at a reasonable price. I've often bought and sold used goods at very nice profits (especially used Mesa Mark II amps for some odd reason) but would like something more steady even if the profits on each piece would be smaller) Once I figure that itty bitty problem out, I think the rest won't be too hard as long as I have diverse product lines and enough capital to get me through the dry spells. BTW, I plan on loading up on used gear from people selling to pay for Christmas presents. Link to comment Share on other sites More sharing options...
Members Chris Brooks Posted November 3, 2003 Members Share Posted November 3, 2003 I used to manage a music store here in Australia. 50% markup is correct, BUT... remember that 50% mark-up isn't 50% margin! 50% markup means you buy something for $100 and sell it for $150. The margin is then 33.33%. Bulk deals will increase margins, as will most dealership arrangements (stockist lines like the big brand names), but the standard is as above. 2nd hand items usually have 100% markup (=50% margin) Link to comment Share on other sites More sharing options...
Members aortizjr Posted November 4, 2003 Members Share Posted November 4, 2003 From working with dealers, they get a "dealer price" pretty much always. Unless they really buy a lot of items. But there is always MAP (Minimum Advertisable Price) which is usually about 20-30% above cost which is what Musicians Friend and all them sell for. For small shops, pretty much the only way to make it is to either just be able to sell a rediculous amount of stuff, or do some type of service. Where I am from, the stores mostly make it by doing repairs, rentals, lessons, etc. They do ok on selling gear, but they are usually pretty high priced and you have to really push them to get a sort of good deal out of them. Then the ones that give good deals, the other services is what really helps them work. If you are doing boutique pedals and such, I would see if you can really get a place with cheap rent. Then get a website for internet sales. Then just advertise and push the kind of service where you are more there to help and appeal to those that really care about their gear and tone. And prehaps not worry too much about the teenagers that are just looking for the cheapest stuff they can get by on. Just my .02 Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.