Retail profit margins and MSRP

[TheGiver]

So being in sales myself for a long time now, I've always wondered what the profit margins are on smokes. We all understand that there is no exact to this, given the broadness of production quantities, distribution methods etc etc.

[b]With that.. If a main stream, say Ashton VSG Robusto Box MSRP is $250, what is the wholesale cost?[/b]


Not to sound like a dick....but please no "I'd guess or I think". I would really like to hear from current/previous wholesale/retailers.

At the end of the day we pay what we want and what we think they are worth to [b]US[/b]

PS, I love how retail sites and their pricing. 4 diff sites = 4 diff MSRP's for the exact same smoke.

[themoneycollector]

Typically, it's $125

[themoneycollector]

You'll never get a straight answer due to taxes vary by state or even some special circumstances by city.  But typically, if wholesale cost is $100, most retailers are expected to double it to $200 MSRP and be able to cover their costs & overhead and have a reasonable profit as well.

[TheGiver]

OMG

50% margins. I'm in the WRONG business. You sure? That's crazy.

[Scott From NY]

Depends on manufacturer. Pretty sure Fuente has one of the lowest markups, most of the industry is Keystone (100% over wholesale) I believe. Not 100% what you are looking for but a start. then taxes get added and certain states pay tax on wholesale etc etc

[themoneycollector]

And to add to that, it's also not uncommon for a vendor or manufacturer to create false MSRP's to give the impression of discounting (ie Gurkha).  So a $100 wholesale box will have an inflated $400 MSRP, but be advertised as having 50% off to $200.  I'll reiterate, this can be done by vendors as well as manufacturers.

[themoneycollector]

[quote author=TheGiver link=topic=17642.msg84520#msg84520 date=1360801744]
OMG

50% margins. I'm in the WRONG business. You sure? That's crazy.
[/quote]

That's pretty standard in almost any retail business.  The only big exceptions that jump to mind are groceries, cars, homes, and very few electronics (tv's, computers) and then items that sell extremely well and serve to atract customers to a retail (think cell phones, apple products and the like).

And then there's exceptions with even higher margins (textbooks, pharma) and then specialty items (think the HDMI cables that are on display next to the big screen tv's and disposable items)

[themoneycollector]

Oh and restaurants are typically 200%, but they have much more overhead

Do I get an A for business class today?

[mbrogan82]

It's generally practiced that B&M's will mark up product 100% on standard easy to find stock. In addition most (not all) will go above and beyound that 100% mark up for hard to obtain products (ie Opus X). Some stores limit the amount of hard to obtain products to 2 sticks per visit, to allow other customers access to buy HTF product or to frequently have HTF stock on hand to lure customers in store.
In addition products not moving will be discounted upwards of 30% to create shelf space and capital for better performing products. Employees usually also receive the 30% discount on what they smoke.

Manufactures VERY rarely give terms, meaning the store pays up front for the product, not 30/60/90 days. Remember however Cigar stores have decent overhead, rent/mortage, utilities, payroll, insurance, product preservation, and the always present goverment restrictions that they need to deal with. Slim margins, they can expect 10/15% return on investment if they survive year one.

Again lots of varations, the above is very general.

[crgcpro]

[quote author=Scott From NY link=topic=17642.msg84521#msg84521 date=1360801850]
Depends on manufacturer. Pretty sure Fuente has one of the lowest markups, most of the industry is Keystone (100% over wholesale) I believe. Not 100% what you are looking for but a start. then taxes get added and certain states pay tax on wholesale etc etc
[/quote]

A couple of shop owners have told me they make a smaller margin on Padron than they do anything else. That's why you will rarely see them on sale anywhere.