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What Would be a Fair Markup of a Product?

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Discussion Starter · #1 ·
As consumers we are always in search of the Best Deal possible. Some companies or individuals markup their items more than others in order to maximize their profit margins. Now my question is, if there was to be a "Markup", to you as a consumer, what would be a FAIR and appropriate markup of a given product?

At which point does the "Markup" becomes excessive and you feel as if you are being taken advantage of????
 

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Depends completely on the dealer.

A guy selling out of his house can go for a $500-900 markup

But a dealer whos paying building cost, employee cost, advertising, insurance, bonding, ETC should charge more because they have more bills.
They employ people, pay for use of a building, and help the economy so they NEED to make more money than "joe dealer"
Not do be confused with dumbass sarah palins "joe plumber" comments
And you usually get more stability going with a big dealer than a mom N pop shop.

So I really dont think this question is fair, as the answer is skewed and there no real magic number.
 

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if economics teaches us anything, it's that the market makes the prices, not the dealer....
Thus why bikes sit on showroom floors for months.
It only worth what the highest bidder can and is willing to pay.
 

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Discussion Starter · #4 · (Edited)
Depends completely on the dealer.

A guy selling out of his house can go for a $500-900 markup

But a dealer whos paying building cost, employee cost, advertising, insurance, bonding, ETC should charge more because they have more bills.
They employ people, pay for use of a building, and help the economy so they NEED to make more money than "joe dealer"
Not do be confused with dumbass sarah palins "joe plumber" comments
And you usually get more stability going with a big dealer than a mom N pop shop.

So I really dont think this question is fair, as the answer is skewed and there no real magic number.
We are talking about a range of percentages here Nick and not dollar amounts:dontknow:. Did you pick an answer? BTW, where in the hell have you been? :welcome:back. Are you still riding with "Flip-Flops" and a tank top?:joke:

BTW, don't worry about markets, instead concentrate on the question and take it from a consumer's perspective. How much are you willing to pay over what a product is really worth (actual value)?
 

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I would have to say it would depend on the size of the company selling the product.
 

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As a contractor I mark up 15 to 20% on all materials. This helps with over head cost. In some cases you can mark up to 35% Anymore than that and you end up screwing yourself, because no one will buy from you.
 

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Discussion Starter · #7 ·
As a contractor I mark up 15 to 20% on all materials. This helps with over head cost. In some cases you can mark up to 35% Anymore than that and you end up screwing yourself, because no one will buy from you.
To me that is a pretty good range (15 to 35%)--however, are you selling to the end user or to other businesses who will do their own markup for profit?
 

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OH CRAP

I clicked the wrong button, I wanted 35-50% I hit the wrong one, CHIT lol
 

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Discussion Starter · #9 ·
I clicked the wrong button, I wanted 35-50% I hit the wrong one, CHIT lol
Don't worry Nemo, I was expecting that from someone but definitely not you:joke:. While I don't believe the answer can be changed, I can always count you within the group that you meant to select:bigthumbsup:.
 

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There are many variables to consider when trying to determine a fair markup. Example: A large computer company put a lot a resources into research & development, marketing, and manufacturing computers then on the other hand you can have a mom & pop shop building computers also. Would you expect their markups and prices to be the same? I wouldn't think so because often markups are based on supply/demand, competition, vendors/suppliers, administrative costs, overhead, etc.

In my opinion its impossible to generalize a fair markup. However, if you narrow it down to a specific product or service, then it would be easy to answer.
 

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It depends on how you calculate it. If you factor in all the items that shootnmove mentioned, then a lower percentage would be fair as you're covering all your costs. If you're just looking at materials and labor, then a higher percentage would be appropriate.

I went 35-50% considering most smaller companies selling motorcycle products probably have no idea what their actual costs are, and just look at year end profit. I know my company marks up items we buy by about 50% and at the end of the year we net about 6% profit. That's not much if you have plans on ever expanding.
 

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I bought a hair and nail salon out in the islands and all product was a flat 100% markup, period, Now that's one industry that keeps supplies at a premium!! Services were very fair for the area. Now on the mainland at the sweat shops they would do a set of gel nails for $20!!! Unreal what they sell them selves for. My girls charged $40 out there.And for a 45-60 minute nailjob That wasn't bad. Mainland girls would bang them out in 20 minutes.......
 

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We are talking about a range of percentages here Nick and not dollar amounts:dontknow:. Did you pick an answer? BTW, where in the hell have you been? :welcome:back. Are you still riding with "Flip-Flops" and a tank top?:joke:

BTW, don't worry about markets, instead concentrate on the question and take it from a consumer's perspective. How much are you willing to pay over what a product is really worth (actual value)?
Yes I still ride with flip flops and no shirt, I ride like that all the way to the gaybar. where u and I meet ! (wednesday nights)

And dealers dont markup based off a % value, we markup off a dollar value per bike. And the usual profit looked to be made is 500-900 per bike
up to 1500 on big ticket HOT bikes

Noene will pay more than its actuallly worth, unless of course they are trading in or need financing where its real easy for a buyer to get taken advantage of
 

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There are many variables to consider when trying to determine a fair markup. Example: A large computer company put a lot a resources into research & development, marketing, and manufacturing computers then on the other hand you can have a mom & pop shop building computers also. Would you expect their markups and prices to be the same? I wouldn't think so because often markups are based on supply/demand, competition, vendors/suppliers, administrative costs, overhead, etc.

In my opinion its impossible to generalize a fair markup. However, if you narrow it down to a specific product or service, then it would be easy to answer.
:agree:

At which point does the "Markup" becomes excessive and you feel as if you are being taken advantage of????
Well if you feel that you are being taken advantage of, then don't buy the product and buy it from another person or vendor. I know I work on my bike because I like turning wrenches and it beats paying $100 an hour labor rate.

I would love to buy the Mono Lisa for $20 as I am sure that he spent way less then that in materials on painting that painting. And there is a reason why a hand built car costs more then a mass production car. Why organic costs more then regular foods. We live in a country that is founded on capitalism. If everything was sold for at "cost" I think our flag might look like the United Ways sign not the stars and strips. The market will dictate the price as stated above. I could come up with hundreds of examples. There really is no right answer as there are to many variables.
 

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I do not think your question can be answered because there is no answer.

First, we would need to come to a universal definition of 'fair' which is by its very nature subjective.

Second, you would need to limit the question to a particular product or category of product.

Let's use a hypothetical guy buying something very cheap, like an electric relay. he buys them 1000 at a time and so it works out to cost him $.30 each. he sells them for $6, which is a very fair price and in fact cheaper than you could go buy one of them at any store. Is his 2000% markup unfair? No, he bought and will need to deal with 1000 of the things. He needs to engage in 1000 sales transactions to unload them. Even marked up 2000%, he is still cheaper than you could go buy one yourself. So here, even a 2000% markup seems 'fair'.

Now, let's consider a drop-ship ebay seller. Let's say he sells up-flush toilet kits (I use this because I am shopping for one). He never sees his product. He became an authorized dealer and lists them on ebay where the going price is $700. The kit cost him $682 for a total profit of $18 or about 2.5%. That profit is worth it to him because all he needs to do is get the order and turn around and have it shipped from the manufacturer's warehouse. So, the thinks 2.5% is 'fair' and so does his buyer who would be looking at a $900 retail cost.

If we take the 2000% 'fair' profit from the relay seller and apply it to the up-flush kit seller, he would be asking $136k. Nobody would buy from him because the going price is $700. Should he cry that he can not get the same percentage profit that his neighbor the relay seller can get? Should the relay seller be expected to sell at the 2.5% markup and get only $.31? Of course not. For all of his efforts, he would only make $100 for his efforts and would provably not bother to go through the 1000 transactions to do it.

So, how can we possibly talk about a 'fair' markup percentage that should apply to everything?

A thing is worth what it is worth. The room for markup is what makes it worth it or not to the seller to get into the business of selling the item. There is no 'fair' in the transaction. There is no 'taking advantage of' possible in most transactions as if the markup is too high, buyers will simply go to the lower priced sellers.
 

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Worth

Does not matter in my eyes what it is, how rare it is, what it cost to produce or anything else... It's only worth what you can get for it...

eg,.. don't try and sell ice to an eskimo or rice to a chinaman...
 

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Dec. 15 2009 I paid over $20,000 for a used Ford White Lightning with a bit over 34,000 miles on the clock. A lot of folks over at NLOC (National Lightning Owners Club) said I over paid. Whatever!

From 2000 to 2002 I had a White Lightning that I was forced to sell due to a layoff. It had a bit over 34,000 miles when I sold it.

So when I saw a White Lightning with a bit over 34,000 available, I told my wife to get dreesed, I am goiing to buy another White Lightning.

I did not dicker price one bit, paid what they were asking. And am totally happy to this day for having done so.

So I am the one who clicked the last option.:D
 
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