Re: Guitar Pak Profit Margins

"Jeff" <catfisherman62@xxxxxxxxxxxx> wrote in
news:HfzZe.31403$S26.24960@xxxxxxxxxxxxxxxxxxxx:

> After sitting around this morning looking at the "Wish Books" I found
> myself wondering how much these companies could be making off of the
> Paks like the Squire Telepaks or Strat Paks and the Epiphone LP Paks.
> I am thinking these Guitars and other equipment must be put together
> for little to nothing. If you think about it there is the cost of
> materiels and putting together the Guitar and the Amp. The cost of the
> tuner and gig bag, strap and cable. Then there is the cost of handling
> halfway around the world followed by shipping halfway around the world
> followed by handling in the US. That would be followed by trucking to
> a central location and shipped out to individual stores who still have
> to make a profit. So I would like to see the answers to a couple of
> questions like:
>
> a. What is the actual cost (In US Dollars) of the Squire Strat or Tele
> and Epi. LP at origination. I bet its under $25.
>
> b. What is the profit margin for the US Distributers.
>
> c. What is the profit margin for local sales.
>
> I would bet that it is huge and overall better than 100% for the
> distributers.
>
>
>

Well, they usually do pretty well, sure. Depends on the product, of
course, but figure you'll pay at least three times what they paid that
factory in China...

But then you factor in things like advertising, packaging, rent,
electricity, heat, employees, etc.

And what it comes down to is these companies probably end up seeing a
margin of less than 5 percent. If that.

I'm just conjecturing, of course. But those paks aren't being sold to
musicians, they're being sold to parents who are buying them for their
kids and just want something easy.

And maybe the kid will take to it and start aspiring to play a real
Fender or a real Gibson....so if the companies can build up a certain
brand loyalty, they'll end up with a customer pretty much for life.

I mean, how many of you all are more or less faithful to a particular
brand? Sure, you may have other brands, but there's one you'll always go
back to.

Anyway, back to the concept of profit margins --they make sense to a
certain extent, and they're necessary of course...for a lot of people,
especially distributors, they survive on their ability to squeeze out a
margin...no margin, no wage.

Then there are companies like Nike, where most of it's margin (apart from
what they squander on those insanely expensive ad campaigns, of course).

Or Total over here in France, which just announced a profit of 15 billion
euros this year. Most of which comes from those ever-increasing numbers
at the pump.
.

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