I was at K-10 Trains and placed a order for a pair of PK 1 F3 A&B both powered in Monon colors. Now most companys I have worked for or ran try to keep a 50% margain, high voulme say around 35% to 25% margain. A well ran company should have a 10% profit margain after all cost are covred.
Ken of K-10 pulled up the Whalter site and his cost was $87.00 for the pair, told me $100.00? I told no, I given him $120.00 for the set. If this is the margain are LHS have to work on no wonder they are going belly up left and right.
I am not one to pass up a deal but a 13% markup will only keep a High Voulme open, maybe a Wally World but not a LHS.
I know what you mean. One of my LHS that I have just started doing buisness with gave me a $120 Badger airbrush for $10 under what he had in it, gave it to me for $60! Also, he gave me two jars of Polly S for free, and almost everything he gave me at least 10% off of the list price, and gave me 4 cast plaster rock molds for free! He is just a guy who does business out of his basement, and his shop has been completely destroyed by a flood once. Maybe he was just being nice to a first time costumer, but many more trips with alot of stuff for free and marked down, I could break him! He will get almost all my buisness now, thought. He also might have felt bad because he is a large scale dealer mostly, but I thought his selection was pretty darn good in HO for a large scale dealer. Just my [2c]
That price may not even cover the cost of shipping and handling.
People seem to forget the before they can even sell you the product, it has to get there, and that costs money. By the end of the day, they at least have to break even in terms of sales and their costs.
Those who are in retail aren’t about to tell you what their margins are, and you need to know their costs too.
ken, you really need to take a run out to warrenton, while the train haus is out of the monon scheme, they have the P1K F3 A/B sets for $60, and P2K U30 with sound for $100.
Rule of thumb in printing is 100% mark up if your just reselling something. If you have to make it yourself it’s even more. My closest LHS takes Walthers catalog price and tacks on about 25%.
They don’t get a lot of my business since I have to pay $40 in gas round trip for the privalige of being charged these prices.
My LHS doesn’t have a mark-up - it doesn’t have a mark-down either, for that matter. What it does have is two Monday thru Friday employees - Saturdays tend to be a family operation - a large quantity of merchandise, and the spirit that I, the customer, am the most important personage on the property. When something don’t work he takes it back -ain’t no “what-in-the-aitch-do-you-want-me-to-do-with-this-thing” emails. Think I’ll keep doing business there.
In business this is what’s known as a loss leader. They use the lower price items to get you in the door and then sock it to ya on the good stuff. Or then again maybe this is way of doing business. Never give a sucker an even break. Smile, you’re gettin’ one in your favor for a change, the next two may be comin’ straight up your butt.
As someone that has been a regular at K-10 Model trains for the last 6 years or so, I can say with some assurance that Ken’s pricing philosophy has always been to price his wares aggressively. His pricing is always as good, or very close to the best pricing that you will find on the web. If you are ever there when his UPS delivery comes in from Walthers or Horizon you will see that there is a lot of product moving through this small store. His incremental cost due to shipping will be minimal as it will come in with his weekly delivery. So he is going to make a few bucks on a sale that he does not have to stock and will be delivered with his regular order, seems like good business to me. It is one of the reasons that he gets close to 100% of my hobby dollars. With his monthly layout running sessions and his weekly RC racing on the track out back in the spring and summer, he has other revenue streams coming into the store. I think he is doing a fabulous job at meeting a need and growing the various hobbies he deals in. If any of you ever find yourself in the St. Louis area K-10 is well worth a visit. Expect great pricing and don’t worry about the next deal being the one to get you, that just is not Ken’s style.
River, he also has other PK 1 F3 as power pair for the same prices but I don’t want a NYC I was after Monon
As far as the lost leader, not sure if that was dreicted toward K-10 train or not. Believe me I know what that is about I was a Area Sup for Midas, you want to talk about margain mark up on parts are 135%. Replaces your breaks for $89.95 per axel, then there is the spirings, turn the rotor or drum, serives the calipers. Don’t get me wrong about Midas, good company and the store’s I ran did not lye to you about what was wrong. I had one Teck that did, I s–t canned on the spot, son of the owner. Well I no longer work there but neither does the son of the owner.
On the Monon set, I saw the screen of Kens with his prices so the cost was no bull. Maybe Ken just like’s me for that prices, but I sure hope he does not like every one or my K-10 will be closed like the other shops. One of the best LHS peroid much less with in 2 miles of me!
I ordered an Atlas Trainman Wooden Cupola Caboose when they were taking orders last fall. I was to do it through my LHS, which I did. I received it today and the sticker was CDN $15. I find that amazing, since I seem to recall paying much more for a Walther’s UP Cupola caboose at about the same time as I placed this order. I think I paid nearly CDN$ 30 for it, maybe $27.99…and had to add all the irons, to boot.
My LHS discounts and breaks even on big ticket items somewhere close to mail order but makes up for it by charging near MSRP for nickle and dime items such as rolling stock, tools, paints, scenery supplies, etc. Not many people are willing to spend $6.00 on shipping to save $6.00. It seems like nickle and dime items is where the bulk of our expenses go and the big ticket items generate a need for the nickle and dime items.
It seems to work for him because he is well stocked and moves a ton of stuff every month. He is a seasoned trainhead and his store looks like trainhead valhalla. Because of this, his store is loaded with trainheads on saturday which increases the buying impulses (“Go ahead and buy it - it’s OK to be a trainaholic” type group therapy). Because he is well stocked, you can’t resist stopping in for a freight car or something like that whenever you drive by his vicinity.
Because he moves a lot of stuff, he can get around Walthers. When dealing with Walthers, the only people making money is Walthers.
simon1996 has a point. A price that looks like charity for an item that is a sure sale, virtualy as soon as it hits the shop, is actually more in the nature of skimming a little gravy. Where the normal 40% profit margin becomes more reasonable is when the shop buys merchandise on “speculation”, assuming that a case of ATSF reefers will sell eventually and the sale will be lost if somebody decides he wants 5 or 10 after the current production run is sold out. Meanwhile, the unsold cars sit on the shelf tieing up money in inventory until they’re all sold. Anybody who’s ever taken out a loan and read (and understood) the fine print knows that money is a long way from free and inventory depth has to be paid for somehow.
Speaking as a former part time train show dealer and having worked in a hobby shop you guys have no real clue…There are closeouts at most wholesalers and dealer specials.
I pickup P2K GP9s on closeout for $22.57 each -case lot only-and sold them left and right for $45.00…
My LHS charges about 10% over MSRP for locos, rolling stock and other big ticket items, and list price for some of the smaller stuff, as discussed by others above, e.g. payed list price for Kadee 153’s that I needed the other day. I like the guys in there, but can’t pay their prices for the higher dollar stuff, though they don’t carry much in my fallen flag road anyway.
The day I pay anyone more than their asking price for anything is the day I go out and get my head examined. If someone asks too little for an item, that’s their problem, not mine. Its the LHS’s job to price their merchandise at a level that will maximize their profit. Ask too much, it won’t sell. Ask too little, it cuts into profits. When a merchant errors on the low side for something I want, I will pounce. I assume any businessman knows his business better than I do but if he doesn’t, I’m not going to bail him out.
Distributors will often have specials or extra volume discounts based on purchases and shipping is often included on large orders.
Frankly, it makes good business sense to discount the big-ticket items and charge retail, or close to it, for supplies, everyday rolling stock and similar items. Chances are you will purchase a DCC-equipped locomotive only now and then, but you will frequently buy stripwood, styrene, and such.
Jecorbett, reason I offer over what he asked is because of what Ken from K-10 Trains has done for me. I could not count the number of Atlas axles he has given me, Kadee coupler boxes then the wood work he has done. He cut all my lumber for the new K-10 Mine ( 5’ X 10’ ) for free. I forgot the box of road bed he gave me as well, yep some are used but 60% are new.
His help and support goes far above what little money he want for the F-3’s.
Good for you, Ken. I am sure that act raised his estimation of you, too.
I have done the same thing twice for the gentleman who helped me to finish our basement 11 months ago. Since then, he has come to the place twice to help with projects that I could not do due to a lack of experience. In both cases, although he spent a couple of hours getting me fixed up, plus his preparation for my specific needs and short commute to my property, and both times on a Saturday, he only invoiced me about CDN$100. I paid him by check, but added a very generous cash “thanks” to the envelope, with a note that his invoice, in my opinion, accurately reflected neither the effort and time he spent on my behalf, nor the esteem in which my wife and I hold him…in those very words. You can bet he was tickled, and has always replied with thanks and a promise that he will always “be there when you need me.”
Well maybe I’m just a cold hearted bleepity-bleep but when I go into any store, I am there to make a business decision about what I buy and I assume the proprietor is doing the same. Maybe when you are dealing with your friends, you act differently but that is not my relationship with my LHS. Don’t get me wrong, I like the people there and they are always glad to see me come in the door because I spend a lot of money there. I don’t do that because I am trying to help them out but because I get good value for my money. I recently bought a P2K steamer from them, non-sound and non-DCC. It had been on his shelves for a long time and had been deeply discounted. When they held a storewide 20% off sale on top of that, it was just too good to pass up. When I took the item to the checkout counter, the clerk had to check with the proprietor if the storewide sale applied to that engine as well. The proprietor reluctantly said it did. I gathered from the way he said it that he was probably selling it at a loss but apparently wanted to get it off the shelf (he still has 3 others). He had to take into account that newer P2Ks with both DCC and sound are now probably selling for about the original price of the one I bought. The fact that he had paid more for it than what he sold it to me for wasn’t my concern. That didn’t make the item more valuable to me. It was worth to me what I paid for it. If he had sold it at the original discounted price, or even for his cost, I probably would not have bought it and he would still have it sitting on his shelf depreciating in value. He cut his loss which is a good sound business decision. I got something on the cheap which was also a sound decision. We both benefitted even though neither of us was looking out for the other. That’s the way business works and I don’t let sentiment enter into it.