azztec .. that can't be right dude.. if CompUSA has only 1 - 5% markup and thier prices are AT LEAST 20% higher than you can buy for online, what does that mean -- everyone else is taking a huge loss on my business?!!?
austonia,
I don't know for sure since I don't have access to the books of CompUSA or online retailers, but my guess is that COMPUSA, being a B&M Store has much higher cost. The online store only has a headquarters, some employees, servers etc. They probably don't have their own warehouses or inventory, instead drop shipping everything thru. Ingram or something.
In addition to above, CompUSA also has salaries for sales clerks, managers etc. utilities for each store, rent for each store, property tax tax for each store etc. So the while both the online retailer and CompUSA may pay the same price for the software or whatever, CompUSA also has other cost that they have to spread among their sales so they have to charge higher prices to make the same profit.
I don't know for sure since I don't have access to the books of CompUSA or online retailers, but my guess is that COMPUSA, being a B&M Store has much higher cost. The online store only has a headquarters, some employees, servers etc. They probably don't have their own warehouses or inventory, instead drop shipping everything thru. Ingram or something.
In addition to above, CompUSA also has salaries for sales clerks, managers etc. utilities for each store, rent for each store, property tax tax for each store etc. So the while both the online retailer and CompUSA may pay the same price for the software or whatever, CompUSA also has other cost that they have to spread among their sales so they have to charge higher prices to make the same profit.
i agree their prices are higher than most other places, i feel bad everytime i sell something but its my job. but the cost on most of their hp and compaq towers are usually only marked up a very small amount. They train their salesman to sell a bullsh*t 3yr warranty on those towers for around $500. That warranty money is all profit. They must not get a good deal from the manufacturers because cost prices for them are high. As an employee I get anything in the store for cost and still dont buy stuff there because it is still cheaper for me to go elsewhere.
I went to Compusa this morning. Seems like everything is jack up in prices. When I asked them about price matching they say "why didn't you buy from them". I said, "so I could save any extra 10%". He just stared at me and said "10 % only applies to full price". WTF. I left empty handed.
huh!! - that makes sense, about the cost of thier overhead being figured into the cost of thier products. i usually wouldn't buy a damn thing there considering pricewatch.com but i think those Rio CD MP3 player are pretty sweet, i'm gonna stop by and see if the employees havn't swiped them all.
about warentees - why buy something in the first place if you think it may break so soon? most consumer watch groups warn against them for just the reasons you bring up - they are rarely used so they become high profit for the seller. i imagine even if you needed to use one it would be a huge hassle. Funny thing is, i actually bought a warrentee on $200 Sony CD burner almost a year ago at CompUSA. It was only a replacement warrentee, and i had a HP burner recently crap out and the salesman said he would give it me the 1yr warentee for only $10 so i paid it. Guess what, its up in just under 2 weeks and the Sony burner is crapping out!
austonia,
Yeah, I know I'm arguing that the aren't making a killing on their sales but I don't really shop there all that much myself. I rather save money on online sales. I usually don't need any of the advantages that come from the B&M model (e.g. being able to see and handle the product, talking to a "knowlegable" sale clerk, that's not a slam at you azztec but I've heard sales clerks say the stupidiest things at some stores, etc.)
Yeah, I know I'm arguing that the aren't making a killing on their sales but I don't really shop there all that much myself. I rather save money on online sales. I usually don't need any of the advantages that come from the B&M model (e.g. being able to see and handle the product, talking to a "knowlegable" sale clerk, that's not a slam at you azztec but I've heard sales clerks say the stupidiest things at some stores, etc.)
Okay,
I see what the confusion is here. We are differing in semantics.
gross margin = (retail price)/(wholesale cost) - 1
Net margin = gross margin - factored operating and overhead expenses
Mark-up refers to gross margin, "what we sell it for versus what we buy it for."
Net margin refers to "what we actually make it in profit on this item after we factor in percentages of operating expenses and overhead". Op. expenses is stuff wages for store employees, rent, utilities, janitor services, etc. Overhead is stuff like coporate office salaries, CEO's stock options (lol), company's insurance premium, etc.
1-5% net margins I believe, that means you do make a profit. There's is no way you can make money off 1-5% gross margins; it would be very tight even if they sold a warranty with every single piece of hardware.
Hope this irons things out. I was talking gross margins, not net.
I see what the confusion is here. We are differing in semantics.
gross margin = (retail price)/(wholesale cost) - 1
Net margin = gross margin - factored operating and overhead expenses
Mark-up refers to gross margin, "what we sell it for versus what we buy it for."
Net margin refers to "what we actually make it in profit on this item after we factor in percentages of operating expenses and overhead". Op. expenses is stuff wages for store employees, rent, utilities, janitor services, etc. Overhead is stuff like coporate office salaries, CEO's stock options (lol), company's insurance premium, etc.
1-5% net margins I believe, that means you do make a profit. There's is no way you can make money off 1-5% gross margins; it would be very tight even if they sold a warranty with every single piece of hardware.
Hope this irons things out. I was talking gross margins, not net.
Last time I went there to check for CD Audio cable they wanted $25 for one..., BB sold the same one for $15 and Microcenter for $9 CompUSA sucks in my opinion.., unless they have a deal..
Mini -
Thanks for clarifying it for everyone. I wouldn't be surprised if gross margains on some products reached the 40%, but net margains is what really matters to a business. It doesn't matter if you have 100% gross margains on a product if after necessary expenses (of course companies sometimes spend money on stupid stuff ruining their business) you still lose money.
I heard a Circuit City employee telling a couple they had to buy a $15 mouse pad or their mouse would break.
Thanks for clarifying it for everyone. I wouldn't be surprised if gross margains on some products reached the 40%, but net margains is what really matters to a business. It doesn't matter if you have 100% gross margains on a product if after necessary expenses (of course companies sometimes spend money on stupid stuff ruining their business) you still lose money.
I heard a Circuit City employee telling a couple they had to buy a $15 mouse pad or their mouse would break.
Absolutely right HUH!!
You look at net margins to determine the profitability of a product-line.
And it is true that 10% off my undercut net profit...but don't confuse this with loosing money.
Most stores have what is called a "stocking or handling cost" (others may call it something else)and is usually determined as some sort of percentage of the wholesale price of the product; the percentage varies depending upon the type of product. For example, a desk has a higher percentage than a computer game because the desk takes up more storage space and is harder to handle, it takes more manpower and time.
Well, anyways...as long as the retail price is greater than the wholesale price plus the added price due to stocking IT IS ALL GOOD becuase your gross cash flow is positive which is always good. The reason it's good is because 90% or more of your operating and overhead costs are fixed, meaning they don't change based on how much you sell or don't sell.
The entire goal of retail store is minimize operating costs and maximize positive cash flow. 10% sale is a method of doing just this. they make less per item but sell more.
So Compusa will not be loosing money because they will not be coming even close to negative cash flow on any item only discounted 10%.
You look at net margins to determine the profitability of a product-line.
And it is true that 10% off my undercut net profit...but don't confuse this with loosing money.
Most stores have what is called a "stocking or handling cost" (others may call it something else)and is usually determined as some sort of percentage of the wholesale price of the product; the percentage varies depending upon the type of product. For example, a desk has a higher percentage than a computer game because the desk takes up more storage space and is harder to handle, it takes more manpower and time.
Well, anyways...as long as the retail price is greater than the wholesale price plus the added price due to stocking IT IS ALL GOOD becuase your gross cash flow is positive which is always good. The reason it's good is because 90% or more of your operating and overhead costs are fixed, meaning they don't change based on how much you sell or don't sell.
The entire goal of retail store is minimize operating costs and maximize positive cash flow. 10% sale is a method of doing just this. they make less per item but sell more.
So Compusa will not be loosing money because they will not be coming even close to negative cash flow on any item only discounted 10%.
This sale is great for some odd items that normally doesn't go onsale, like accessories, plus you don't have to wait. And use American Express Blue to make the purchase and pricematch with online store.
For example, I just bought myself a Creative SurroundStation, retails $79.99, CompUSA price $79.99. Everywhere else online is averages $65~70, but after you added the shipping charge (this is a pretty heavy item) and tax (maybe), total comes out to $81+. I got it for $77.75 out the door and I get to use it tonight instead sometime next week.
You get the picture...
For example, I just bought myself a Creative SurroundStation, retails $79.99, CompUSA price $79.99. Everywhere else online is averages $65~70, but after you added the shipping charge (this is a pretty heavy item) and tax (maybe), total comes out to $81+. I got it for $77.75 out the door and I get to use it tonight instead sometime next week.
You get the picture...
Unclebud:
The PowerMac G4/533 sells for $2200. Minus 10%, that's $1980. Plus tax.
The PowerMac G4/466 sells for $1700. Minus 10%, that's $1530. Plus tax.
I exchanged the 533 for the 466 this afternoon. Better value.
Steve
The PowerMac G4/533 sells for $2200. Minus 10%, that's $1980. Plus tax.
The PowerMac G4/466 sells for $1700. Minus 10%, that's $1530. Plus tax.
I exchanged the 533 for the 466 this afternoon. Better value.
Steve
Allen 7
Is the creative soundstation, that thing with the 2 arms that position the 2 rear speakers behind your head? How does it work? It seems like an interesting idea and I might be interested in getting it.
Is the creative soundstation, that thing with the 2 arms that position the 2 rear speakers behind your head? How does it work? It seems like an interesting idea and I might be interested in getting it.
I wish i have never ordered my Klipsch speakers 
so i can get the NEW yes the NEW 4.1 Klipsch speakers are in stock at CRAPUSA!!!!! get them!!!!
--SCSI
so i can get the NEW yes the NEW 4.1 Klipsch speakers are in stock at CRAPUSA!!!!! get them!!!! --SCSI
In my area they markup everything a ton... for instance:
Starcraft was list price of $40, they charged 60.
Printer cable: list price of about $10, they charge $30.
The Slawmp (as in swamp)USA's in my area (Connecticut) are horrible. I've gotten ripped off from their customer service so many times, they never honor rebates, and they jack up their prices like mad and pull all kinds of BS. I wouldn't shop there even if they had a free Athlon 1.2GHZ.
Starcraft was list price of $40, they charged 60.
Printer cable: list price of about $10, they charge $30.
The Slawmp (as in swamp)USA's in my area (Connecticut) are horrible. I've gotten ripped off from their customer service so many times, they never honor rebates, and they jack up their prices like mad and pull all kinds of BS. I wouldn't shop there even if they had a free Athlon 1.2GHZ.
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