How do retailers make money off of CPUs

[OCGuy]

I was under the impression that the profit margin on a retail CPU is rather slim, even for the big boys. Intel gives its per-1K CPU price publicly. Do some people get better deals? Or do these guys just try and take a loss to move inventory?

http://forums.anandtech.com/me...=2292672&enterthread=y

(For those who dont want to bother clicking the link, Microcenter had Q8200/Q9300s for $99.99 today)

 

[Andrew1990]

Basically, it is to get traffic into their store. They might put 5-10 Q8200s on the shelf but 50 people show up. That means 40 people dont get a Q8200 but may buy something else.

It is just marketing.

 

[Idontcare]

Originally posted by: OCguy
I was under the impression that the profit margin on a retail CPU is rather slim

It is. S/H fees FTW. And if you pay $4 for RUSH processing we won't sit on your order for two days before issuing it to the warehouse for shipment.

Originally posted by: OCguy
even for the big boys. Intel gives its per-1K CPU price publicly. Do some people get better deals?

They do, significant sizeable price reductions for volume purchases.

Originally posted by: OCguy
Or do these guys just try and take a loss to move inventory?

Not likely for moving inventory. MC will have 5 of them in stock at their stores, issue this kind of crazy loss-leader to get the foot traffic (ergo the "in store only" part of the deal) lose $500 on the five they do sell but nab a few thousand in-store sales for people who pickup stuff while they are there since they made the trip anyway.

Standard (and I do mean STANDARD) operating procedure from the marketing 101 handbook for every retailer that exists.

edit: Andrew1990 beat me to it!

 

[OCGuy]

Originally posted by: Andrew1990
Basically, it is to get traffic into their store. They might put 5-10 Q8200s on the shelf but 50 people show up. That means 40 people dont get a Q8200 but may buy something else.

It is just marketing.

Eh you are probably right, as they were "sold out" across the nation pretty fast.


It just seems like they are taking a pretty big loss % to get a few people in the door.

Originally posted by: Idontcare
*snip*

Yea, suspicions confirmed. I bet they dont even put out their whole stock.

 

[chizow]

Don't put too much stock in the per unit prices you see publicized, those are similar to the sticker prices on cars to serve as MSRP guidance. You will never see the price per unit, per lot, or per pallette that the distributors actually pay to Intel. When you see these large B&M chains or major e-tailers, they're going to be dealing in enough volume to serve as their own distributor, so they essentially eat both pieces of that supply chain margin. I'm sure they also get volume discounts, as well as incentives, credits and rebates to clear out old stock, like you saw today. Ultimately, Intel needs retailers and channel partners to clear out old stock in order to sell their new product, so typically those losses go toward future purchase credits.

 

[nyker96]

I think MC's onsale items are all limited stocks. they just use it to attract customers. when I used to live in boston, there's one right next to my dorm. I just bike there, every week they had some item up to sale at pretty ridiculous prices, like $5AR for a modem etc. I usualy get there within few hours of the sale starting time. they almost always ran out. My conjectures are the employees probably divided off the available stocks or they never had any to begin with. but I did remember getting a free 1gb memory stick for putting in my name when I was visiting a friend in erving, CA. at his local MC store.

 

[Rick James]

In store only = Gay

 

[taltamir]

intel gives massive "rebates" to manufacturers that bundle intel products together... an intel mobo with intel wireless with intel CPU sold at or below "cost" results in a big fat check from intel...
basically the 1K lot values are a lie and is why they are being sued all the time for monopolistic practices...

companies that sell individual components on the other hand, simply have to buy larger lots than 1k units... in which case they get sizeable discounts.

 

[jjmIII]

The MC in Clev OH had over 75 units this morning, and still has 40 in stock. A friend got 6 today. I'm sure they are a loss leader, but they did (do) have plenty in stock..