Can anyone give me a clue what the dealer markup is on a new boat? What’s the spread between the MSRP and what the dealer pays? Is there any consistency across the industry, or is it quite variable?
Why do I ask? The place I’d like to purchase from lists the Stratos 14.5L at CAD$1649, which is Dagger’s Canadian MSRP. However, I’ve found another place with it on sale for CAD$1279. I have to assume that the place with it on sale is still making a profit, or at the very least breaking even. Just curious what the profit margins run for new boats. I get it that businesses exist to make money, I just prefer they get most of it from someone else.
I’d prefer to find one used to avoid paying sales tax, but that’s very unlikely to happen considering the short time the boat has been available in Canada.
I always allow the higher price store to match prices but if they don’t, price wins out. At 57 pounds that’s a lot of plastic so I’d say they are doubling their money if not more. I’ve looked before trying to find the profit margin but have never found an exact number. There are good prices online that can ship to your home and with winter fast approaching I’d say look for an online sale and pay the shipping.
If you knew what they are paying does it changed what you are paying?
Price is a concern but not the end all with me. There are always incentives for dealers to buy. How much they buy, time of year, does the manufacturer need to push stuff. I would show the place you want to buy the other price and say can you help me out. Near 400 is a chunk of change and big percentage wise. The place you want to buy it at offer anything to you other than price? Things like service and knowledge? Things like that make me support a business to some extent. Business is tough nowadays at all levels. Walmart vs Amazon and local place vs box store. I’ll pay a bit more for service, knowledge, convenience and a smile. If I go to buy a car they tell me I am only making this much I tell them it doesn’t matter what you paid only what I pay. We all do what’s best for us but price is not always the end all for me. If I don’t support the local hardware store I’ll be at Home Depot all the time they will be gone. Then I am left talking to idiots, fighting the crowds, and if I have a problem does the guy in the box store give a rats ass? Could I have bought cars and stuff for my business cheaper yes. When I go to the dealership that nobody knows me I am lost in the sea of people. If I bought five or ten cars there they jump for me. Everyone weighs it out for themselves.
Profit margins on outdoor gear like kayaks, backpacks, tents and sleeping bags are NOT anywhere near as high as they are on what are called in the business “keystone goods”, particularly clothing and shoes, that are typically marked up 100% from wholesale (a 50% margin) or even more for desirable name brands. When I managed wilderness outfitter shops (which included kayaks) the margin on boats was around 30%, or roughly a 45% mark-up. This actually included the freight cost, which at the time ran around 10% of wholesale cost. So if the store paid $1000 for a boat and $100 for delivery, we had a price tag of $1450 on it and profited $350. This meant our net profit was only about 24%. End of season sales of 20% off were virtually break-even for us. We only did that to clear space and raise cash for stocking other seasonal gear (like XC skiis) and to avoid having to pay end of year taxes on inventory.
When you consider the cost of handling and storage of items like boats and the amount of sales labor and time involved in educating customers and helping them choose a craft, it would not be possible for any shop or outfitter to survive without the margins that are earned on accessories for the sport, like paddles, safety gear and clothing.
I doubt that the margin structure on kayaks has changed greatly since then. Considering the complexity involved in making and distributing kayaks, the prices are very reasonable. Nobody is getting rich building and selling boats – which is one reason that so many good brands fall by the wayside or are swallowed up by sporting goods mega-corporations. People now being able to price shop on line and order from low-overhead vendors (who can cut prices more readily) have further cramped the ability of independent outfitters to hang on. We used to have 6 outfitters (2 major chains and 4 independent shops) in my metro area that sold quality outdoor gear and boats. The last indie near me closed last year and one of the chains had pulled out two years before that. We do still have one local outfitter but they are an inconvenient hour-long drive away. And I know that the couple that owns the business could not maintain it without another source of income.
If you have an indie store that offers a good selection of boats and gear (and, as they often do, on-the-water demos and technique and safety classes), don’t presume that they are ripping you off when they don’t have the discounted prices that you can find on line. Give them a chance to match or come close to any lower price you’ve found but keep in mind those low margins. Also bear in mind that lower prices for what may seem like the same model can be due to the cheaper one being an older model (last digits of the serial number will tell you the production year.) If you value having a local outfitter, give them some love and buy from them regularly. Weigh marginal cost savings against the advantages of personal service and the presence in your community of a store dedicated to your chosen sport. I sorely miss having a place nearby to browse and inspect new gear and to pick up items I need to replace or add to my kit as I expand my adventures.
I struggle internally with the idea of supporting independent, well-run businesses with higher prices versus the bigger and/or corporate entities with no conscience (or customer service) but usually better deals. When I was younger and still living at home, I used to spend money very haphazardly on electronic toys and junk. I started working early on and made decent money but had very few expenses. Thus, if I wanted something I went and bought it from the first store I found it in. This was before online shopping was ubiquitous and shopping around for prices was much harder than it is today.
Plod forward a decade or two and I find myself near the lower end of “middle class”. I have lots of expenses and a strong drive to save aggressively for retirement so that if I’m working into my later years it’s because I want to not because I have to. I also want to enjoy “today” in a way that fits my financial picture. This leads to the inevitable bargain hunting on big ticket items where a small percentage savings can mean a large improvement to the big picture.
The closest outfitter to me is about a 45 minute drive. They have poor service, high prices, and little stock of what interests me for kayaks. If it weren’t for being on a well-traveled route where the city weekend warriors stop on their way north, I don’t think they’d be in business anymore. I called and asked them about their price on the Stratos and they quoted the MSRP. There are a few others in this category within 1-1/2 hours but I haven’t bothered with them beyond an initial check out. The nearest one that I consider very useful is about 2-1/2 hours. I’d like to support them and have sent many others there as well. My mentioning of the fact that I know of three brand new boat purchases in the past few years by others was a direct result of my recommendation had no apparent effect on the negotiations. They do have a price match policy and just prior to starting this thread I sent them a message about the other price I found. I’m waiting to hear back on that one. Although I haven’t been able to find anything that specifically states they’ll only match “regularly advertised” prices, I wouldn’t be surprised if that was the answer. They’ve been in business a long time, and I don’t suppose you stay in business for that long by offering too many deals just because someone asks.
I asked the question about the profit margin on boats because I’m genuinely curious. I’ve never had a good understanding of industries where the manufacturer sets the retail price and most dealers sell at that price. Actually, it’s the exceptions that I’m interested in. I can appreciate that sometimes there might be contracts involved, but why a company would sign on for this is beyond me. Every market is different and a business needs the flexibility to be competitive. If the business just uses the MSRP, are they doing so blindly, or are they considering the market? With the manufacturer dictating the market price of their product, does it level the playing field for the sale of their product in a wide market area because new product available sells for that price? If that were the case, how are there still some that offer lower prices? I think I need an MBA to figure this out.
I’ll probably find out on Monday whether the price match is a go or not. Then I need to decide for myself if I actually want to make the purchase right now, Depending on the answer, I might be going on a weekend road trip.
some companies that make kayaks don’t want their dealers blowing stuff out cheap. They then end up listing it as a blem and there is nothing wrong with it. It keeps the manufacturer happy. I takes two to tango seller and buyer. Go with what your head likes best at the moment.
Years ago say mid 80’s I was buying rough terrain telescopic fork lifts for my masonry business. Dealer on Long Island had the place sewn up. NY NJ & CT. They sold 120 machines one year. I poked around and saw and saw prices in NC they were 62,000 vs. 72,000. Dealer in NC was afraid to sell out of his territory. He had a rental machine with 40 hr. on it so it was not new. He was still afraid. I even took the serial # tags off the machine cab, axles, transmission. Local seller still found out through finance company somehow. Turn out the dealer on LI was going to dealer meetings and bragging how he was selling them 10 grand over list. So I bought two more with low hr. like 100 and 150 from his rental fleet and saved say 12 or 13 on each machine, Then I bought all my part from NC dealer Arrow Equipment for the next 30 years. Parts guy was fast and just knew it all in his head. Who wants raped not me.
@Rookie said:
One note relating to the thread on big stores versus small businesses: … (snip) … I’ll stick with an outfitter who has my safety interests in mind versus anonymously pushing a button for an online order.
Just to be clear, as far as I know, all of the places I’ve been comparing are relatively small independent outfitters. The one with the sale price is about a 6 hour drive one way in a very large city vs. 2-1/2 hour pretty remote location for my preferred point of purchase. Well, let’s be honest, I’d rather drive less than 15 minutes if that was an option.
I will admit that if I found an online source that had an amazing price factoring in shipping it would be a hard decision. But I’ve read enough bad experiences with the shipping of boats that I’m very hesitant to go down that road. I agree in principle with supporting small and semi-local businesses, but I don’t feel obligated to be the hero using my own wallet to keep them going when the WalMart parking lots are full and $300 wreck kayaks are flying off the shelf. I have supported the “2-1/2 hour away” outfitter with referrals and a couple hundred dollars in lessons already so I won’t have a guilty conscience if they decide not to honour the sale price match and force me to purchase elsewhere.
I think boats are in a different category because they’re such big ticket items and there aren’t very many big national stores that sell sea kayaks.
I would think it’s better for that outfitter to move inventory by matching the sale price than have a kayak that needs dusting every day, unless the Stratos 14.5L is in hot demand.
When I worked for an outfitter we did often offer substantial discounts on high ticket items, but we tended to reserve those bottom line sacrifices for loyal repeat patrons, not drop-in deal chasers and cherry pickers. It’s very important for any independent shop’s survival to cultivate a core of devoted regular customers who appreciate the variety of goods, local convenience and personal service that they can get there. If you are going to break even or take a net loss on a sale, best to do it to reinforce a valued relationship with somebody that you have learned you can rely on for continuing business and referrals. When the last shop I managed had seasonal clearance sales or special deals (items that we had been able to buy at substantial wholesale discounts) we would have “by invitation only” pre-sales in the store for our core clients before opening them to the general public.
I’m just explaining this so that people understand that if you are going to ask a shop to cut into their margin, consider what you may or may not be offering them in return. Even if they may be in the position where selling a boat at a discount might get them some much-needed cash flow or clear storage space for seasonal merchandise, they might justifiably wonder what secondary benefit they might gain from the buyer in this scenario. Instead of just asking for a price match or reduction on one specific boat, you might consider asking them what other savings options they might be able to offer, such as substantial discounts on accessories you may need, like dry wear, roof racks or a higher end paddle – even free skills classes – that might offset the price differential. Lots of times shops have excess or slow-moving stock that they can discount or even throw in for free to create an attractive deal for a prospective buyer.
Running an independent outfitter is truly a labor of love: nobody gets rich doing it. In fact, few owners can survive on the slender profits generated. In the case of all the ones that I have worked for or with whom I am personally familiar the owners also had to have another source of income to sustain hearth and home. And the hours worked and physical and mental demands of keeping an attractively stocked and professionally staffed wilderness sports outlet can wreak havoc on one’s own life, including really limiting your own ability and free time to enjoy those very sports that you are enabling others to enjoy. My hackles rise when I hear people suggesting that dealers selling low-margin items at MSRP are “raping” their buyers. That is simply not the case…
As much as I truly understand people wanting to get the best value for their money, unless we are all willing to live in a world where eventually our only retail options will be monopolies like Walmart and Amazon peddling bulk crap from Chinese sweatshops (while underpaying their own workers so badly they have to rely on public assistance to survive), we need to pause and consider the repercussions of all of our buying decisions,
@willowleaf said:
As much as I truly understand people wanting to get the best value for their money, unless we are all willing to live in a world where eventually our only retail options will be monopolies like Walmart and Amazon peddling bulk crap from Chinese sweatshops (while underpaying their own workers so badly they have to rely on public assistance to survive), we need to pause and consider the repercussions of all of our buying decisions,
Capitalism wouldn’t be my first choice either, but nobody asked my opinion when I was born into it. To debate it further would get very political, so let’s avoid that please.
The price match was accepted and I’m going to go ahead with the purchase. This is simply a case of them honouring their own price matching policy.
But we don’t practice real capitalism in the USA, do we?. Instead it’s a warped form of plutocratic socialism where big banks, wealthy stockholders and mega corporations are protected, privileged and provided by the government with benefits and advantages that are not available to smaller businesses and entrepreneurs, not to mention organized labor, no matter how hard they strive. Citizens United (defining corporations as “citizens” and allowing them free rein in buying political favoritism) only accelerated this deterioration of true competition and corruption of economic fairness.
Yeah, yeah, I know: take it to “Bicker and Banter”…
I am glad that you got the deal you want – actually a pretty good time of year to have that kind of successful “horse trading”. Hope we still have shops within the next decade where paddlers can get what they need in similar fashion.
@willowleaf said:
I am glad that you got the deal you want – actually a pretty good time of year to have that kind of successful “horse trading”. Hope we still have shops within the next decade where paddlers can get what they need in similar fashion.
If not, consider the contents your gear storage room as an investment for retirement income. Quality used outdoor gear should be worth quite a bit if you can’t buy it new anymore.
Oh, wait… the current generation of young adults only goes outside to move between buildings and vehicles. Never mind.
And yes, it’s a great time of year for buying boats. I bought my Sirocco in the winter for a great price, and I’ll wait for the spring before I list it for sale. I expect I’ll make a modest profit on it, even at a comparatively good price.
There are still young people that love wilderness adventure sports. My outdoor club has had growing membership of 20 and 30 somethings over the past couple of years. I went to the screening of the “Rock Reel” film festival at a local campus last month (rock climbing and mountaineering documentaries) and the large auditorium was standing room only. 5 years ago that same venue was half empty for a similar screening.
Outdoor recreation has always been a cyclical thing. I guess I should be more hopeful and not such a Cassandra. After all, we all thought indie bookstores were completely dead because of the Big Box bookstores and Amazon. Guess what: all the Borders closed and most of the Barnes and Noble outlets within my major eastern city shut down and we have had a wonderful resurgence of small neighborhood bookstores all over town that are doing well.
And more young people seem to be waking up to the value and immensity of our wild places and wanting to visit and explore them, I believe this is in large part because of publicity about them being threatened by the current climate of dismantling conserved lands and environmental protections.
