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Author Topic: Wholesale / Dealer costs of radios?  (Read 1849 times)
KT0DD
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« on: April 09, 2016, 07:23:24 AM »

This may be a very controversial topic, but I have often wondered how much markup is on HF radios and what the actual wholesale cost of radios is?
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N3HFS
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« Reply #1 on: April 09, 2016, 07:42:32 AM »

I'm not sure it's all that controversial.  Authorized retailers have to mark that type of equipment up by very small amounts.  The benefits of those sales is a lot like selling lottery tickets in one respect - you make a pittance selling them, but it gets customers in the door to buy the more profitable items.

There is another avenue where greater sales volume is beneficial.  In many "name brand" markets, the manufacturers will kick back a percentage of the sales in the form of marketing dollars.  The retailer can place ads with that money, so long as the manufacturer gets some part of the advertisement's recognition.

It may be less common these days, but authorized warranty work is sometimes another way to generate profit, although warranty reimbursement rates are usually quite low.  However, it allows the store to get original parts and proprietary information that is useful in generating post-warranty profits (although consumer laws have weakened the proprietary info and parts access part of this scheme).  This works much like automobile dealers, I guess.
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VE3FMC
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« Reply #2 on: April 09, 2016, 09:43:09 AM »

I'm not sure it's all that controversial.  Authorized retailers have to mark that type of equipment up by very small amounts.  The benefits of those sales is a lot like selling lottery tickets in one respect - you make a pittance selling them, but it gets customers in the door to buy the more profitable items.

There is another avenue where greater sales volume is beneficial.  In many "name brand" markets, the manufacturers will kick back a percentage of the sales in the form of marketing dollars.  The retailer can place ads with that money, so long as the manufacturer gets some part of the advertisement's recognition.

It may be less common these days, but authorized warranty work is sometimes another way to generate profit, although warranty reimbursement rates are usually quite low.  However, it allows the store to get original parts and proprietary information that is useful in generating post-warranty profits (although consumer laws have weakened the proprietary info and parts access part of this scheme).  This works much like automobile dealers, I guess.

Get the first time radio buyers in the door, sell them a new rig. Then sell them that all band G5RV for $99.95 (the antenna that costs $35 to homebrew!)
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NO2A
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« Reply #3 on: April 09, 2016, 02:22:59 PM »

This subject has come up before. Apparently, the dealers make more from accessories than they do radios. So I've heard.
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N4UE
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« Reply #4 on: April 09, 2016, 04:55:04 PM »

This subject has come up before. Apparently, the dealers make more from accessories than they do radios. So I've heard.

I also believe this. I used to travel to Tokyo a lot. I bought several radios and it really surprised me that things like cw filters (Icom) were about 1/2 of the price here. In addition, the radios were a great deal. I always checked the $/Yen conversion rate before heading to Akihabara.... Wonderful people.

ron
N4UE
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K9MHZ
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« Reply #5 on: April 10, 2016, 04:49:17 AM »

Yes, I do remember coming back from there with lots of accessories.  I'm not sure that I ever bought an actual radio, since the sale deals in the US were as good and you didn't have to worry about transport, customs, etc.  But the accessories were a bargain and worth the effort.

It's been a while, though.

 
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KD6CPA
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« Reply #6 on: April 10, 2016, 08:36:55 AM »

Don't know specifically about ham radio stuff, but a friend who works at the largest boating retailer in the US (maybe the world) says the profit margin on most boating HTs is maybe 5%.  As others have said, the money is made on all the accessories.  The most popular quality boating HTs are made by Icom and Standard (Yaesu).
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G3RZP
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« Reply #7 on: April 10, 2016, 11:27:50 PM »

Assume you have $100k of stock and you are paying even as low as 4% to the bank to finance that. You need more than 4% mark up to break even.....even if you are getting good margins on accessories.  I know that one UK dealer who advertises widely here has stock to the value of about $3 million. Overall, he needs around a 25% minimum return on that to finance the staff, buildings, test gear in the service department, taxes, insurance, attendance at exhibitions and conventions and so on.

Not a business that I would like to be in........especially as hams are notoriously frugal in many areas.
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KU7PDX
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« Reply #8 on: April 12, 2016, 09:15:50 AM »

This may be a very controversial topic, but I have often wondered how much markup is on HF radios and what the actual wholesale cost of radios is?

Nobody has really answered your question, but the markup is about 20% from wholesale on the "major" components like transceivers/tuners/etc. and the markup is about 40-50% (or more) on accessories like coax, adapters, antennas.

When retailers advertise sales and discounts, these are usually offered by the manufacturer via a back-end rebate (BER) to the retailer (they get so many $$ off of their next purchase order). Typically these are offered to all retailers along with market development funds (MDF) to pay for the advertisements. This is why it seems that the same Icom radio ends up being on sale everywhere at the same time.

From a manufacturing perspective, the rule of thumb used to be to charge 4x the box of parts as the wholesale price, but that has been pressed down to 3x or even 2x in response to the international marketplaces were now seeing online (Amazon, eBay, Alibaba, etc).
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73,
Chris - KU7PDX
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