Dealer profit?

[triple-bee]

Did a deal on a B King this aft but whilst i was there the silly gentleman left his computer on so i saw the cost price of the bike to him, he did look suitably red in the face when i pointed this out

Any way it got me thinking what would you consider to be a reasonable mark up from a dealer for what amounts to getting a warrenty and a bit of back up over buying private ???

Wont name the dealer, he is a nice guy i i will probably deal with him again

[awayatc]

so common....
how much is the mark up?.....
Kiss and tell....

[Grahameeboy]

Did a deal on a B King this aft but whilst i was there the silly gentleman left his computer on so i saw the cost price of the bike to him, he did look suitably red in the face when i pointed this out

Any way it got me thinking what would you consider to be a reasonable mark up from a dealer for what amounts to getting a warrenty and a bit of back up over buying private ???

Wont name the dealer, he is a nice guy i i will probably deal with him again

He is allowed to make a living...pay for the business...was it significant....I know someone who runs a Yamaha bike shop and he says that the mark up is not all that great..but then if you the price for a B King is $19,000 and he makes say $4,000 Gross Profit before tax overheads that does not sound too bad.

[FROSTY]

If a dealer isn't making $1500 Nett profit then he wont be in buisiness very long.
Keep in mind dude theeres a few "hidden" costs to add to that cost price.
1) rent,power,phone,insurances on the building are paid from profit on sales
2) wages
3) sales staff commissions.

[triple-bee]

The bike is a used one at 16K, I will spill the beans on the mark up after people have had there say

[Mully]

I'm sure this discussion has been had before..

This guy has to (presumably) hold the stock
Pay rent/power/phone/web hosting etc
Pay wages
In addition to providing warranty services (my understanding is that for warranty work, the distributor doesn't always pay for labour - only parts)

And so on.

It's like most businesses - they may appear to make a reasonable profit per unit sold, but the actual profit is minimal.

[Headbanger]

I'd hope they would make 3k off a bike in that price range.4k would be better.

What was the difference?....6k?

[Grahameeboy]

The bike is a used one at 16K, I will spill the beans on the mark up after people have had there say

Remember he has to allow for haggling

[Ixion]

I'm sure this discussion has been had before..

This guy has to (presumably) hold the stock
Pay rent/power/phone/web hosting etc
Pay wages
In addition to providing warranty services (my understanding is that for warranty work, the distributor doesn't always pay for labour - only parts)

And so on.

It's like most businesses - they may appear to make a reasonable profit per unit sold, but the actual profit is minimal.

You left off licensing the bikes! And interest costs on holding the stock (that can really hurt).

Someone mentioned a retail of $16000. On that basis I'd expect a dealer buy price of no more than $11000-12000. Assuming the bike can just be sold on without needing any more work than a valet.

[paturoa]

I traded my SV recently and the new for sale price in their show room means that the dealer's margin would be feck all even if sold at the sticker price!!!.

There would have been a lot of hours of workshop time just to clean it, they put new front disks & pads on it, and prolly a couple of other things I didn't notice.

It must be hard out there atm for dealers, and the ACC storm is probabaly another pressure that isn't helping.

[R1madness]

You left off licensing the bikes! And interest costs on holding the stock (that can really hurt).

Someone mentioned a retail of $16000. On that basis I'd expect a dealer buy price of no more than $11000-12000. Assuming the bike can just be sold on without needing any more work than a valet.

Shit i wish lol. That would be a 1 in 100 deal wth that sort o money in it.

[awayatc]

If you don't make enough "profit' you got to close up shop.....
simple

[Mully]

You left off licensing the bikes! And interest costs on holding the stock (that can really hurt).


Well, the hope would be that he has the regos on hold where he can *cough*Dealerplates*cough*

And I included interest costs in holding the stock costs. (we can also get into opportunity cost of the finance too if you want.....)

Yeah, he'd probably have to valet the bikes. Have minor scrapes cleaned up, replace levers, new tyres, service et al.

Plus on used bikes, the CGA kicks in even if there's no manufacturer's warranty left so he'd have to honour that....

[Maha]

The bike is a used one at 16K, I will spill the beans on the mark up after people have had there say

So its a trade bike for sale at $16k?
They probably traded it at $10-$11K.......:beer:

Five to six grand in the kitty?

[paulmac]

VERY unusual to have 3 or 4 G margin on any bike !!

[Motu]

What do you do for a living? Do you or your boss get enough return to make a reasonablr living.If you are an employee,if he made more money on the products or services,then you could get a pay increase....are you worth it? If self employed do you make enough on your products or services to make a living,give your employees a reasonable wage...do you make enough to put money into your business to allow growth?

Apart from insurance companies,finance companies and banks,everyone is entitled to earn a decent living.

[p.dath]

I would think 20% to 25% mark up would be appropriate. If it is a low value bike, then maybe 30%. There are a lot of costs, and part of the cost of being a good dealer is paying for some issue - even though you strictly shouldn't have to.

[triple-bee]

OK i will give u the numbers I am happy with the deal but i just wanted opinions

Bike was advertised at $16,750 NZD I got it down to 16K with a $400 helmet thrown in

Saw the e mail bike stood him at $1450,


I ended up getting a free $500 helmet so his profit was a grand I did take the hump a bit but rang the wife who thought it was quite reasonable like i said i am happy with the deal and will probably use the guy again

[Mully]

OK i will give u the numbers I am happy with the deal but i just wanted opinions

Bike was advertised at $16,750 NZD I got it down to 16K with a $400 helmet thrown in

Saw the e mail bike stood him at $1450,


I ended up getting a free $500 helmet so his profit was a grand I did take the hump a bit but rang the wife who thought it was quite reasonable like i said i am happy with the deal and will probably use the guy again

Presume you mean $14,500....

If you're happy, and he's happy, there's no issue.

You maybe could have saved $1k buying privately, but you'd have no comeback if something needed doing. To my mind, that piece of mind is well worth $1K.

[klyong82]

Could the dealer be selling the bike on behalf of the seller? Hence the small markup?

I know I traded a Fireblade for 6k and they sold it for 8k a month later but thats an old bike.

[p.dath]

...
Bike was advertised at $16,750 NZD I got it down to 16K with a $400 helmet thrown in

Saw the e mail bike stood him at $1450,
...

If that was meant to be $14,500, then that is about a 15% mark up. You were treated fairly.

[steve_t]

Holy crap. That dealer gave you a GREAT deal!! No wonder you're happy!! You should definitely buy from him again and know that you're getting great value :hug:

[Cr1MiNaL]

If a dealer isn't making $1500 Nett profit then he wont be in buisiness very long.
Keep in mind dude theeres a few "hidden" costs to add to that cost price.
1) rent,power,phone,insurances on the building are paid from profit on sales
2) wages
3) sales staff commissions.

I presume and hope the above mentioned costs were not "hidden" to the dealer! Then again a business with a good business and marketing plan should not have any "hidden" costs. Costs only become hidden because they were not planned for e.g. a tax bill in the first year payable in the second year with the second year's tax. Are you getting confused between fixed costs and variable costs?

[Headbanger]

Based on those figures I wouldn't want to be a motorcycle dealer. I'd be gutted.

[p.dath]

I presume and hope the above mentioned costs were not "hidden" to the dealer! Then again a business with a good business and marketing plan should not have any "hidden" costs. Costs only become hidden because they were not planned for e.g. a tax bill in the first year payable in the second year with the second year's tax. Are you getting confused between fixed costs and variable costs?

Frosty was meaning the costs are hidden to the buyer, not the dealer. e,g. The buyer has no idea what the component of the gross profit is that goes towards paying the building lease (for example).

[Cr1MiNaL]

Frosty was meaning the costs are hidden to the buyer, not the dealer. e,g. The buyer has no idea what the component of the gross profit is that goes towards paying the building lease (for example).

Well in that case that statement was so rhetorical it is almost redundant.

[smokeyging]

OK i will give u the numbers I am happy with the deal but i just wanted opinions

Bike was advertised at $16,750 NZD I got it down to 16K with a $400 helmet thrown in

Saw the e mail bike stood him at $1450,


I ended up getting a free $500 helmet so his profit was a grand I did take the hump a bit but rang the wife who thought it was quite reasonable like i said i am happy with the deal and will probably use the guy again

that guy is cutting it fine on a bike that price, hardly pay the rent. i'd be looking after that dealer, those guys are hard to come by.

[mossy1200]

Remember as well the markup on the bike is irrelevant as we have no info on what deal was done for them to secure the bike.They may have made good money to secure it or very little.Markup would be low for the shop at those figures.Remember for every bike sold quick theres the bike they have had in stock for 6months or more that ends up selling at cost to clear and held up thousands for ex amount of months.Alot of bike shops run because the shop owner loves bikes as much as money.I would suggest that return on investment could be higher selling different products.Also for every week they sells lots of bikes there is weeks they sell none or one but they pay staff and costs every week.

Was a sharp price at your end.Good buying.

[nallac]

shit i thought there would've been more of a profit margin than that.

cuts it fine for haggling and any come backs.+keeping the Business afloat.
only a grand profit you'd want to sell at least 10 per week to keep everything
humming a long and pay everyones wages,pay the tax man etc

[danchop]

i remember when the gn250s were released here again a few years back the profit was about $300 gross and you should see what the workshop guys had to do with putting the ferkers together!

[ynot slow]

Was going to say trade maybe $14000,with hope he made more from what was traded on,then only having so called cosmetic cleaning to resell.He may have a buyer for your bike (if applicable)and also hoping you will buy from him associated parts,and or use his workshop services.

Makes some retail margins seem either large or small,have seen beds sold at wholesale x 2.1.

[YellowDog]

How do you know that price wasn't left on the screen for you to see?

IMO - No motorcycle dealer is that stupid or would make such a small return.

[IdunBrokdItAgin]

I always work on the assumption that bike shops make around 20% profit on everything. That is profit before expenses mind. The expense aspect to shops has already been listed above.

The reason for my guess of 20% is that most dealers offer discount cards of 10% with the purchase of a bike (and yes I know this is on gear and accessories only not purchases of other bikes). So if they are content to give away an ongoing 10% profit margin to secure a large deal then I must assume that the remaining profit margin must be equal to or larger than that.

Just my 2c.

[mynameis]

Well if he bought it for $14.5k and sold it for $16k to you that's a markup of about 10.5%.

$1.5k in profit margin, take out all the 101 expenses I'd say he would be left with $500 or less.

Fuck all money for the amount of work involved to be perfectly honest. I hope his other deals are better.

[McJim]

I used to sell flat packed kitchens in the UK in the late eighties. A markup of 400% was not uncommon. People wondered how we could knock 60% off the price of a kitchen sometimes.

Usual rules apply though - if you can shift more units per period you can afford to make less profit per unit.

Maybe he's flicking losts of bikes really fast so he can afford to give you a good bargain.

[Headbanger]

Or maybe that figure of $14500 was the lowest figure he could go down to before the manager kicked his arse.......

[Pedrostt500]

The way I look at it is , you can go for a big proffit margin and have the bike sitting on the show room floor for months on end, taking up valuble floor space, or you can shave the proffit back, turn the bike over faster, thus making it look as though you are getting fresh stock through the shop, and keeping the cash turn over happening.

If your shop has a lease of $ 15 per foot per anum, and you have an object wort $10, that is one foot square in the middle of your shop and you need a clear space of one foot right around the object, ate the end of the year that object would have to sell for $ 135 just to reclaim what it owes you in rent.

[mynameis]

I used to sell flat packed kitchens in the UK in the late eighties. A markup of 400% was not uncommon. People wondered how we could knock 60% off the price of a kitchen sometimes.

Usual rules apply though - if you can shift more units per period you can afford to make less profit per unit.

Maybe he's flicking losts of bikes really fast so he can afford to give you a good bargain.

Not in little ol New Zealand.


Or maybe that figure of $14500 was the lowest figure he could go down to before the manager kicked his arse.......

Could be, just doesn't sound right to me anyway. Could also be a one off case.

[Sparky Bills]

Its been said before but dealer margins are crap.
It pretty much costs a dealer money when selling a scooter. Next to no margin in those.

Oh what am I saying!!? Dealers are sharks who make huge amounts of money!
Thats why they all drive around in the Lambo's...:whistle:

[breakaway]

Quit bitching so much. You have no idea of the overheads that the dealer has to put up with.

[Swoop]

you can go for a big proffit margin and have the bike sitting on the show room floor for months on end, taking up valuble floor space
A great comment from Kerry at KTL (http://www.ktlbikes.co.nz/), was "I want to sell bikes, not collect them and have them taking up floor space". I was quite impressed with his attitude... and also the great service!

[sidecar bob]

If a dealer isn't making $1500 Nett profit then he wont be in buisiness very long.
Keep in mind dude theeres a few "hidden" costs to add to that cost price.
1) rent,power,phone,insurances on the building are paid from profit on sales
2) wages
3) sales staff commissions.

4) ACC. (all you guys are bleating about your bike ACC but my business already pays over 10k a year ACC)
5) Tax
6) Sick pay, stat hols
7) Rates, (all paid by the business wether you are tenant or building owner)
8) Plant repairs & replacements.
9) Company vehicle upkeep, rego insurance.
10) bad debts from losers that think you are rich & they dont have to pay.
11) The list goes on & on, Only a munter would complain that a business had a very small gross profit margin on a product.
Oh, and for all our trouble of being in business, it would be nice to make at least as much as our highest paid staff member at the end of it all.
Not something that all business owners do.

[steve_t]

4) ACC. (all you guys are bleating about your bike ACC but my business already pays over 10k a year ACC)
5) Tax
6) Sick pay, stat hols
7) Rates, (all paid by the business wether you are tenant or building owner)
8) Plant repairs & replacements.
9) Company vehicle upkeep, rego insurance.
10) bad debts from losers that think you are rich & they dont have to pay.
11) The list goes on & on, Only a munter would complain that a business had a very small gross profit margin on a product.
Oh, and for all our trouble of being in business, it would be nice to make at least as much as our highest paid staff member at the end of it all.
Not something that all business owners do.

Could there be any more stat holidays?! As an employer there are WAY TOO MANY!
But I'm sure all the employees around here are gonna say there are way too few :girlfight: :buggerd:

[FROSTY]

Could there be any more stat holidays?! As an employer there are WAY TOO MANY!
But I'm sure all the employees around here are gonna say there are way too few :girlfight: :buggerd:
Actually dude I have an issue with stat holidays. To me ALL non essential organisations should shut down for ALL stat holidays.
Logic says that for example if ALL car dealers had to close it would affect profit not one tiny bit. Same with the likes of red shed etc.

[R1madness]

I dont mind my guys getting time off. The work hard for my business, but still 4 weeks annual leave, 1 week sick leave and 2 weeks of stat days is probibly enough.... That totals to almost 2 months of the year off per employee. Not counting the odd goodwill 1/2 day here and there as well.
I wonder when i get a holiday lol....

[scrivy]

I dont mind my guys getting time off. The work hard for my business, but still 4 weeks annual leave, 1 week sick leave and 2 weeks of stat days is probibly enough.... That totals to almost 2 months of the year off per employee. Not counting the odd goodwill 1/2 day here and there as well.
I wonder when i get a holiday lol....

Dude, you forgot 1 weeks bereavement leave also....... or should I mean to say, have you deemed to have suffered a bereavement.......??????
$$$$$$$ all good money paid out by business owners.
I didn't get into business to become a social welfare provider!!

Customers just don't get the jist of what the term 'OVERHEADS' is!

[Headbanger]

The "customers" don't have to care or know about your overheads, Anymore then you need to care about their outgoings.

They are there to buy, You are there to sell, So find the common ground (price, product, service)....or not.

[boman]

My old boss used to say that a Dollar in his pocket was better than a dollar in the competitions poket. I have known him to make $300.00 profit on a $4000.00 set of mags rather than lose a sale. It usually paid off in return sales, ie punctures replacement tyres etc. It was handy to know that as long as some profit was made then he didn't care how much. It worked very successfully. Stock turn over was fast, and the benifits of selling lots of a certain product ment better buying on that product.

[Robert Taylor]

What do you do for a living? Do you or your boss get enough return to make a reasonablr living.If you are an employee,if he made more money on the products or services,then you could get a pay increase....are you worth it? If self employed do you make enough on your products or services to make a living,give your employees a reasonable wage...do you make enough to put money into your business to allow growth?

Apart from insurance companies,finance companies and banks,everyone is entitled to earn a decent living.

Exactly! What also riles me is the amount of dishonesty that often happens when a bike is traded. Expensive faults that are not immediately obvious will not be disclosed by the owner. How many dealers have been scewed in this way?
Its little wonder that many dealers shy away from especially trading in 250cc 4 stroke MX bikes.

[Robert Taylor]

My old boss used to say that a Dollar in his pocket was better than a dollar in the competitions poket. I have known him to make $300.00 profit on a $4000.00 set of mags rather than lose a sale. It usually paid off in return sales, ie punctures replacement tyres etc. It was handy to know that as long as some profit was made then he didn't care how much. It worked very successfully. Stock turn over was fast, and the benifits of selling lots of a certain product ment better buying on that product.

Its also sending a message to the market that the product has little value, that creates a rod for everyones back and lowers living standards. Especially the wage packets of wage and salary earners. This self perpetuates.

[FROSTY]

Its also sending a message to the market that the product has little value, that creates a rod for everyones back and lowers living standards. Especially the wage packets of wage and salary earners. This self perpetuates.
Indeed it does but then price fixing is against the law.
You sir have built your buisiness based on having a unique product and service and quite frankly I admire you for that.But there are a lot of us buisiness owners who don't have that luxury.
There are products --for example digital cameras you can buy from many different places. So if within a 1km circle one can buy EXACTLY the same product from 5 different stores for 5 different prices what do you do?
Go for the cheapest price?
Or offer the better reputation stores the opertunity to match the deal?

[boman]

Indeed it does but then price fixing is against the law.
You sir have built your buisiness based on having a unique product and service and quite frankly I admire you for that.But there are a lot of us buisiness owners who don't have that luxury.
There are products --for example digital cameras you can buy from many different places. So if within a 1km circle one can buy EXACTLY the same product from 5 different stores for 5 different prices what do you do?
Go for the cheapest price?
Or offer the better reputation stores the opertunity to match the deal?

You tend to go for the cheapest price, or the next best price if the service is better. It can be the difference, great service and good price, or ok service and a great price. I bought the Sv on a good price and great service. Never regretted the decision. The shop always delivers.

[Hinny]

My old boss used to say that a Dollar in his pocket was better than a dollar in the competitions poket. I have known him to make $300.00 profit on a $4000.00 set of mags rather than lose a sale. It usually paid off in return sales, ie punctures replacement tyres etc. It was handy to know that as long as some profit was made then he didn't care how much. It worked very successfully. Stock turn over was fast, and the benifits of selling lots of a certain product ment better buying on that product.

Succinctly summed up by a former employer...

"Half a loaf of bread is better than no bloody bread at all."

[sidecar bob]

The "customers" don't have to care or know about your overheads, Anymore then you need to care about their outgoings.

They are there to buy, You are there to sell, So find the common ground (price, product, service)....or not.

Yes, but in this case its not the dealer that has had a bleat on a public forum about how much the client is making.
What my clients are worth (& many of them are worth some millions) is none of my business. My business is to give them the best deal that i can, so they return with all their mates.

[Ducky848]

The shops margin is the difference between what they can get the goods for and what someone is prepared to pay for them. end of story.

The margins move, sometimes better sometimes not. Don't forget margin does not equal profit or cash in the pocket. Unless you have been in business you just won't understand how hard it can be to make margins that exceed overheads and leave anything left.

Many employees make more than their boss. Certainly get more holidays!!

[FROSTY]

Many employees make more than their boss. Certainly get more holidays!!
I'd suggest nowadays thats more like MOST

[sidecar bob]

I'd suggest nowadays thats more like MOST

Id suggest youre right.

[Robert Taylor]

Indeed it does but then price fixing is against the law.
You sir have built your buisiness based on having a unique product and service and quite frankly I admire you for that.But there are a lot of us buisiness owners who don't have that luxury.
There are products --for example digital cameras you can buy from many different places. So if within a 1km circle one can buy EXACTLY the same product from 5 different stores for 5 different prices what do you do?
Go for the cheapest price?
Or offer the better reputation stores the opertunity to match the deal?

I wasnt suggesting price fixing. Im always for fair and resonable profit for every party involved and great service.
This dutch auction mentality is in the end event destructive to everybody.

[ynot slow]

I wasnt suggesting price fixing. Im always for fair and resonable profit for every party involved and great service.
This dutch auction mentality is in the end event destructive to everybody.

Have first hand from a manufacturer,who when they developed an excellent product about 15 yrs ago,the idea was the concept was the breakthrough technology meant no need to discount the item.Was distributed to select outlets,and the word from the directors(retailers) to staff was no one is discounting the item,supplier thought the wholesale price to retail was such that a good mark up was available to the retailer if everyone sold at rrp.Was ok for a while,then one outlet decided to discount,then back to square one.I personally went to my manager,and then to director to say can we match this price,in the end we matched a price from competitor in another town,made 2% after gst,but the client returned and spent more so worked both ways,we could've said we can't match and the other outlet has ongoing bussiness maybe.

[Morcs]

Remember he has to allow for haggling

This is true, especially in NZ. When I was selling boats, we had to add on about 2k to an average 30k boat just to allow for the fact that Kiwis will haggle - if you put the price at 28k, theyll want it for 26k say, so put the price at 30k, and theyll haggle to 28k.
We used to need $4k per $20k of boat we used to sell generally.

[Okey Dokey]

The profit/markup/margin seems pretty low to me. The buyer of the bike got a great bargain, I would think.

[AllanB]

Mate if you are bitching about him making a grand on the bike then I politely suggest to you that you are way out of line.

The medical costs for the poor guy to get his arse hole repaired after you screwed it would be that alone :lol::lol::lol::lol::lol::lol:


Just ride the beast and be happy.

[triple-bee]

Read the post there was no bitching involved i just asked a question, lets face it if i wasn,t happy then i wouldnt have bought the bike

[mynameis]

Exactly! What also riles me is the amount of dishonesty that often happens when a bike is traded. Expensive faults that are not immediately obvious will not be disclosed by the owner. How many dealers have been scewed in this way?
Its little wonder that many dealers shy away from especially trading in 250cc 4 stroke MX bikes.

Are right but to be honest there are some real dishonest crook dealers out there as well.

[Hinny]

Are right but to be honest there are some real dishonest crook dealers out there as well.
A car dealer friend was hearing this complaint from a lawyer.
He put him in his place by pointing out that there are more lawyers in jail than car dealers.

[AllanB]

I ended up getting a free $500 helmet so his profit was a grand I did take the hump a bit but rang the wife who thought it was quite reasonable

This bit - you got the 'hump' over him making a crappy grand on a $16k bike.

Your wife looks like she can spot a bargin :2thumbsup

It's a lot of bike for only $16 - if it's not yet wearing a pair fit some yoshis - Yum!

[mynameis]

A car dealer friend was hearing this complaint from a lawyer.
He put him in his place by pointing out that there are more lawyers in jail than car dealers.

Was there more to that story?

[Hinny]

Was there more to that story?
Nothing that would add or detract.

Love your avatar.

[triple-bee]

U are right Allan i was cheap she definatly got a bargain :no:

Went to pick the bike up today and some git in the workshop has scratched the swinger, better luck next sat :Punk:

[triple-bee]

And it,s already got the carbon Yoshi,s on it :done:

[Toaster]

Yep. Gross margin and gross profit, let alome net profit (if any) are wildly different things.

[ready4whatever]

Im not sure but I hate car dealers. Bike dealers gotta be better I hope. Im sure theres good dealers but i had a bad experience with one that put me back years financially. Revenge is sweet though... nothing that a can of spray-on paint stripper cant fix

[pritch]

When I traded each of my (recent) bikes I was told what price they would be on the yard for after the deal was done; a surpisingly modest mark-up. I did check and that was what they were marked at.

Of course I have no idea what he paid for the one I bought, but I was happy.

I don't think that the dealers are "creaming it", maybe the increased Fontera payout will be good for farmbike sales, but I wouldn't want the hours and the worries of running a dealership thanks.