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 Post subject: Profit margin?
PostPosted: Thu May 28, 2020 11:51 am 
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What is the profit to Remington on an 870 Express?
I paid $329 for a 20 ga.




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 Post subject: Re: Profit margin?
PostPosted: Thu May 28, 2020 12:01 pm 
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I'd be surprised if it were more than $100, I'd bet it's less.

I doubt anyone here will have anything other than a speculative answer since I'm sure Remington keeps that info tightly guarded.

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 Post subject: Re: Profit margin?
PostPosted: Thu May 28, 2020 12:02 pm 
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I’m following this because I’d like to know too.

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 Post subject: Re: Profit margin?
PostPosted: Thu May 28, 2020 12:42 pm 
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Joined: Sun Mar 08, 2020 7:40 am
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Location: Houston, TX and Fairfield Glade, TN
In the old days of retail, many manufacturers would sell something for half of what it would eventually retail at. I doubt that is still the case.

I recently bought a MSRP 609.00 gun. I paid $500.00. I saw the wholesalers/ distributor's price to my LGS. It was about $440. So, my retailer only made $60.00 in the $500. transaction. There are many layers involved. Transportation; Specials, etc.


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 Post subject: Re: Profit margin?
PostPosted: Thu May 28, 2020 1:07 pm 
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I would guess margins are 15- 20% on firearms. Some are even less. On a 686 cost was about $1500 and they sold for around $1900, so slightly under 20%.

Some industries like clothing are 50-70% margins. Think about something that goes through distribution. The maker maybe only sells it for 1/4 to 1/3 of the final selling price and that includes profit.


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 Post subject: Re: Profit margin?
PostPosted: Thu May 28, 2020 1:58 pm 
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But what does the manufacturer make on the gun? That’s the question the OP asked.

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 Post subject: Re: Profit margin?
PostPosted: Thu May 28, 2020 3:09 pm 
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Exactly, you guys are talking retail, not wholesale pricing

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 Post subject: Re: Profit margin?
PostPosted: Thu May 28, 2020 3:21 pm 
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Unless Remington is making that information public, it's impossible to say. There is so much that goes into a price point a manufacturer charges:

1) Direct and identifiable costs.
2) Overhead.
3) Cost of goods.

etc. etc. etc.

Why does the OP want to know and why does it matter?


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 Post subject: Re: Profit margin?
PostPosted: Thu May 28, 2020 3:41 pm 
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Dr Duk wrote:
What is the profit to Remington on an 870 Express?
I paid $329 for a 20 ga.


What makes you assume there is profit? Whether a Big Mac, a Bic lighter, or a Ford F-150, met profit is contingent on a wide variety of costs: insurance, tooling, utilities, tax rate, and scale. If you design and manufacture a new shotgun, you may well be out $9 million dollars before the first shotgun is ever sold.

"Ford Motor Co. reported a larger pretax loss, adjusted for one-time items, than the company was expecting and said that number is expected to top $5 billion in the current quarter." That was reported just last month. You can dream about what Ford makes on a vehicle, but there is no current profit for Ford. It is all theory until the fiscal year ends.

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 Post subject: Re: Profit margin?
PostPosted: Thu May 28, 2020 4:14 pm 
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Wow.

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 Post subject: Re: Profit margin?
PostPosted: Thu May 28, 2020 4:14 pm 
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Dr, remember somewhere buried in your $329 price is the 11% Pittman funds. I also suspect that marketing costs from advertising, shows, sponsorships, internet, etc. make up a large amount of Remington's cost to produce.

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 Post subject: Re: Profit margin?
PostPosted: Thu May 28, 2020 5:37 pm 
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It is anyone. See https://www.marketwatch.com/investing/s ... financials .

Ruger is a very well-run company. Margins are slim, however.

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 Post subject: Re: Profit margin?
PostPosted: Thu May 28, 2020 6:46 pm 
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If Remington isn’t making a profit that would have added to the bankruptcy woes. The unit cost on an 870 Express probably includes items (previously described by Mr. Wakeman) that are amortized out over a stipulated time frame. My first job out of college was a rep for a regional sporting goods wholesaler. The margin on firearms (then) was razor thin with the significant markup being in ammunition. The 3” magnum 12 gauge lead loads were wholesale priced $7.75-8.50/box of 25 rounds. I was handloading 1 7/8 ounce 12 gauge 3” magnum loads for $1.86/25 rounds.

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 Post subject: Re: Profit margin?
PostPosted: Thu May 28, 2020 7:25 pm 
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No doubt the margin on an 870 Express is smaller than they'd like, but I bet the make money on them. The design and tooling have been around for decades, and they've found pretty much every nook and cranny to squeeze a dollar out of - matte instead of blue, plastic trigger groups instead of aluminum, plastic or plywood instead of real wood.

The ones they're probably losing money on, at least on a unit basis, are the new designs. Probably takes a couple hundred thousand units to pay off the startup costs.


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 Post subject: Re: Profit margin?
PostPosted: Thu May 28, 2020 8:44 pm 
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We’ve always been our own worst enemy. Firearms in particular and all consumer goods in general, US consumers have lost the capacity to distinguish between cost and value. In the chase for a “deal” we readily told corporations to offshore production where cheap labor and lax regulations abound. Now, we’re squealing about the bed we chose to make for ourselves.

IMO, if quality and hence value truly matters, go out tomorrow and buy a (domestic production) Remington, Mossberg, Ithaca or Ruger product. This will clearly tell the manufacturer’s what and where to make it.

Think this is hyperbole? Look at the numbers (and, prices they’re commanding) of 30+ YO Browning Auto-5’s, Remington 1100/870’s, Mossberg 500’s et al still in service and going bang each time the trigger is pulled.

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 Post subject: Re: Profit margin?
PostPosted: Fri May 29, 2020 6:15 am 
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Joined: Thu Sep 29, 2011 8:27 pm
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Location: Kentucky
A more meaningful question might be, “What is the contribution margin of an 870 Express?” Essentially, how much of the price (wholesale in this case) is over and above the incremental cost to produce it (cost of goods sold)? Sales price - Direct materials - Direct labor = contribution margin. That’s the amount that goes toward overhead like rent, interest on debt, utilities, advertisement, etc. If you sell enough of them you have enough total contribution margin to cover these costs and the excess is profit. Or something along these lines.


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 Post subject: Re: Profit margin?
PostPosted: Fri May 29, 2020 6:25 am 
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Joined: Thu Dec 05, 2013 7:11 am
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Location: Western Tampa, FL
mea culpa said "In the chase for a “deal” we readily told corporations to offshore production where cheap labor and lax regulations abound."

I agree completely and would add that the incentives provided for companies to out source Vis a vis our corporate taxes, sure didn't help either. As for me I will be trying real hard to Buy American after this latest fiasco compliments of the CCP. Will it make a difference to the CCP? Probably not, but I will feel better.


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 Post subject: Re: Profit margin?
PostPosted: Fri May 29, 2020 6:26 am 
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I’m on board with this ^

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 Post subject: Re: Profit margin?
PostPosted: Fri May 29, 2020 6:55 am 
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Joined: Wed May 23, 2018 5:21 pm
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Contribution margins are usually determined by the manufacturer and all products have to meet it, or else they are not made. For instance, in my industry, if we can't hit at least a 50% contribution margin, we do not do the product.


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 Post subject: Re: Profit margin?
PostPosted: Fri May 29, 2020 6:58 am 
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Joined: Wed May 23, 2018 5:21 pm
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Contribution margins are usually determined by the manufacturer and all products have to meet it, or else they are not made. For instance, in my industry, publishing, if we can't hit at least a 50% contribution margin, we do not do the product. I'm in publishing.

Each industry is different, and the way they cost account is different, but bottom line:

There's no way to know what Remington's "profit margin" is on a particular shotgun.

In my industry we do pro-formas that allow us to evaluate the individual book's income from operations, or .. the bottom line profit.




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