Prices paid for Sundance Optima

[needaspa]

On one of these recent threads, someone said they pay 6000 for a optima/cameo (same pricing) from the manuf.  Apply a fair $500 profit - that allows a retail price of 6500  per unit.

[Brewman]

Just because someone says something doesn't mean it is true.  And marking up something $500 does not mean that the dealer is making a $500 profit.  Profit comes AFTER other costs of doing business are covered.  

Didja miss ECON 101 in school?

Seriously, get a clue.  

Brewman

[Chas]

It seems that some of you understand 'business 101' and some of you don't.

If you want to talk about markup, you need to understand what it is and how it is figured.

If an item costs $1000 and is sold for $2000, that is a 50% markup. That means that 50% of the selling price was markup - and this is the generally accepted use of the term.

Now, it may cost $900 to get that product from the manufacturer to the consumer's home - what with advertising, store rent, store operating costs, shipping, insurance, delivery and set-up, included items, employees, etc. So the Net Profit would be a hundred bucks.

If an item is free, and is sold at anything over free, then and only then do you have a '100% markup.' That could mean I got a spa free and sold it for $1. This happens when I get a call telling me, " come get it and you can have it."

So if needaspa is claiming 66% is standard in the industry, I think he may mean a real markup of around 33%, and he would be about right.

But when somebody tells me that THEY are the arbiter of a 'fair' markup for me to get on a given deal, I politely offer to show them one more thing - the door.

[needaspa]

I think someone failed Math 101.

'If an item costs $1000 and is sold for $2000, that is a 50% markup. That means that 50% of the selling price was markup - and this is the generally accepted use of the term.  '

Thats a 100% markup in your example!  Here is the math:

( (2000 - 1000) / 1000 ) * 100

[mowgli]

Must be either the New York area or me...price I get on both the Optima and the Hot spring envoy is approx. $8500...could the fealer really come down another $1000???

[needaspa]

Mowgli,

I have been quoted 7200 (plus tax) for an optima/cameo with:

cd ozonater
cover
lift
led lights
chemicals

I am working them and trying to get 6500.

[Chas]

Thats a 100% markup in your example!  Here is the math:

( (2000 - 1000) / 1000 ) * 100

Sorry, but you have it completely wrong. I stand by my example. I'm not really sure where you got your equation, but it has nothing to do with the topic at hand.

Markup is the percentage of the retail price that's above the cost. $1000 is 50% of $2000 - no matter who does the math. Here's a quote from a site with definitions of retail terms - since you don't seem to want to believe somebody who is actually IN business:

"Markup - The amount added to the cost price of goods to give the required selling price. "  Find that at:

http://www.hbc.com/hbc/mediacentre/mediakit/glossary/#M

or any other site that defines retail terms.

[Chris_H]

Chas:
Why are you up?  It is like 7:38 over on that side of the world.
Chris H

[needaspa]

Say the tub is costs 5000 from the manuf.  It is marked up 75% to 8750 or 3750 in markup.  This markup (3750) covers dealer costs and profit.

The big question is and this is where the grey area takes over.  What are costs and profit???

'$1000 is 50% of $2000'  Yes, that is going from 2000 to 1000.  It is 100% markup from 1000 to 2000.

[Lori]

Give up, Chas!  Needaspa will not listen to reason!

I stand behind you!  I am in charge of profit margins in our business (Automotive Refinish).  I purchase the goods coming in and price them to go out.  

Example:  Masking tape-3/4" comes to me at say $1.50.  30% mark-up (divide by .7) and it comes to $2.14.  That is what it costs my customer to buy it.  They in turn mark-up 30% (again, divide by .7) and the list price is $3.06 (with rounding).

You can also take list and mark it down for each (multiply by .7).

It has worked for our company for 30 years!

[needaspa]

Lori,

That's not 30% markup - its 43%.  Your company's been doing this for 30 years!!!  Wow, where did you get your employees - a second rate college?  Are you using fuzzy math?

If tape is $1.50 and you sell to your customers at $2.14, thats 43%.

( (2.14 - 1.5) / 1.5 ) * 100

Come on now, this is elementary!

Divide by .7 to get 30%?  Hello! This is illogical!

[IOWASPAMAN]

Needaspa,
Just one question, what do you do for a living?
Many of us on this board try to help the shopper find the right spa for them. Rarely have I seen them bash the competition( Rev. Jim excluded), but I have seen them get frustrated with someone who thinks they know more comes to this webboard and tries to tell them how they have been doing business for decades is wrong.
I know Chas, (it's me Moe) and I have the utmost respect for they way the man conducts himself, in person and on various webboards. When someone like Chas speaks on these boards many listen, except for you.
Get your business 101 book out, and learn about margins. Unfortunately this book will not help you with customer service and people skills.

[needaspa]

Like I said, only 2% of the US is college educated.  'When someone speaks on these boards many listen'  Its sad that 'many who listen' are part of the other 98%.  It may not be their fault they do not have a college education but it is saddening to see that they listen and follow the ignorant few on this board.

[Starlight]

OK, I can't help it anymore--I must respond.  I've been lurking on several boards for some time doing research for my next spa purchase.  For the most part, I've observed people offering advice, experiences, and support to those who ask questions.  Except for TheOneWhoWillNotBeNamed, posters seems to be friendly, helpful and behave in a manner to build a positive online community.  Then needaspa comes along.  I can understand his point of view, in a general way--things always cost more than one would like, and impulse buyers can often pay more than the average or reasonable price for an item.  But insisting on getting a price below the average, or even lowest cost of an item in your region is well, let's say unrealistic.  To dictate what the seller should be allowed to make as profit is ludicrous.  To go further, and suggest that customers line up lawyers to "force" dealers who had nothing to do with the sale of your item but who just happen to represent the same brand you bought--wow, I bet you win friends often when you buy durable goods.

Needaspa's tone has become more strident and disruptive lately since engaging in several flame wars.  His recent posts have included statements passed off as fact without any supporting basis, and that is something that really annoys me.
For example:

If tape is $1.50 and you sell to your customers at $2.14, thats 43%.

( (2.14 - 1.5) / 1.5 ) * 100

Come on now, this is elementary!

Divide by .7 to get 30%?  Hello! This is illogical!



There are apparently multiple ways to calculate markup, but a common one in the retail trade is just as Chas described.  Selling a spa that cost $1000 for $2000 is a 50% markup.  The formula is  $ Retail =  $ Cost / (100% - markup %), visit http://www.apparelsearch.com/retail_math.htm.

In a separate thread, you claim just 2% of the US population is college educated.  Go visit www.census.gov/prod/2000pubs/p20-528.pdf and you will see that very thorough data show over 25% of the population over 25 years old has at least a bachelor's degree.  Hello, this information is very easy to find and understand!! Plus, it's much more "logical" than arguing back and forth--go get real data if you want to beat some one over the head with information.

In the future, get your facts straight before publishing, and, if you wouldn't mind, provide a reference so the rest of us can verify a fact or know that it is just an opinion you are posting.

[Mendocino101]

Thank you so much for that sound advice...I am guilty of engaging in the ridiculousness of trying to understand his logic.... and perpetuating his argument... as you said so many people here try help and sincerely want to help those looking for good, honest, factual advice....