What's the markup on digital cameras?

[JimAuburn]

Does anyone know? I mean, what's the percentage range of what retailers make on digital camera bodies over what they have to pay the manufacturers?

I've seen reps from B&H and Adorama on this board. I wonder whether they would tell us? Maybe not.

[E]

I'd bet you'll not get an answer from a retailer. However, I suspect the profit margin is very low on the DSLR itself, either body only or with a lens.

[cyclohexane]

It can be pretty darn low.

Sometimes a dealer makes more money selling you an $88 filter than a $3000 DSLR or a $2000 lens. Filters have a humongous mark-up; the $88 filter might have only cost the dealer $8, where the DSLR was $2950 or the lens was $1950.

For some of the popular rebate programs the dealers actually lose money and are reimbursed by the manufacturer's local subsidiary (Nikon USA, Canon USA...) after the item is sold to the consumer.

Thom Hogan (bythom.com) sometimes touches on this subject; it may be worthwhile to dig through his site archives. He used to post regularly on DPReview so you can also try searching through his posts there as well.

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[Carusoswi]

I would guess that dealer markup can be very low. Mark-ups through the chain, however, would be another story. I am not in the photography equipment selling business, but experience in other areas leads me to believe that the point person (or entity, in this case the retailer) stands to face the most demanding business challenge - high fixed expenses, low margins - while the real money is made north of him/her by the manufacturers and entities in between who handle the product before it reaches the retailer.

At first though, one might ask, heck, how many middle guys can there be. I assure you there are more than you might imagine.

I don't really count B&H and similar sellers. While B&H, indeed, has its brick and mortar building (or, perhaps, buildings), they effectively leverage what are local fixed expenses on a national scale - certainly nothing wrong with this approach, but the approach, in my mind, makes comparison of their business model meaningless against the local retail shop. There was a time when the B&H's of the world had a more challenging task of balancing advertising revenues against sales because most advertising was accomplished through print media. The Internet has changed that greatly (although, to be fair, I have no idea what INTERNET-based advertising might run a firm like B&H).

For the little guy selling locally, I imagine that markup on big ticket items is held to painfully low levels in order to compete with the INTERNET sellers for "foot" traffic.

I, frankly, don't see how they can do it, but, perhaps, someone in that business will share some insight.

The Ritz Cameras of the world aren't making it, again, because fixed expenses driven by high cost of leasing space in shopping malls takes a huge hit on their bottom lines.

Leased space for non-mall shops may be less, but, I'm guessing not enough less to overcome the competitive disadvantage they must bear against Internet outlets.

I think it would be interesting to see what advantage, if any, mall based shops enjoy in terms of traffic against destination shops. I see one local shop that also has a web-based marketing program, and, perhaps, that is one method local stores use to compete with the big INTERNET guys.

I apologize for my tangential post, but, hopefully most will find it somewhat on topic.

Caruso

[KmH]

I bet the camera makers make the vast majority of their camera/lens profits from the high volume, entry-level gear. Not the very low volume pro stuff.

Nikon & Canon make more than cameras and lenses.

Nikon is the second largest maker of steppers used in the photolithography process used to fabricate semiconductors.

Nikon has other divisions that make binoculars, microscopes, rifle scopes, inspection equipment, and more.

[jkderby]

Back in the 70's when I managed a camera store the mark up was no more than 10%. We made the profit from film, processing and accessories. Not sure now but probably still the same.

[Jim Jones]

Retailers also have to protect themselves from the rapid model changes in digital cameras. Today's state-of-the-art camera is next year's relic. Prices can drop rapidly. I bought a soon to be discontinued digital P&S from a small store for less than the local Walmart had to pay for theirs.

[tomrit]

Someplace between <0% and 1000%.

You have two kinds of mark up. The first is mark up over wholesale, the second is mark up over cost. Cost = wholesale + overhead, and is what any sane business looks at.

Another factor is turnover, that is how fast the item sells. Stuff like bread & milk has a high turn over, a 5% over cost mark up can equal a 5000% return on investment. Something like a $50,000 diamond neclace may sit on the shelf for years reducing the 1000% mark up to a 20% return on investment. Something that sells slowly, but has a low markup can give a reseller a negative return on investment. Return on investment is, of course, the real bottom line, and almost no one is going to tell anyone but the IRS what that is.

So, there are a lot of factors that go into pricing.

If you are talking about what kind of discount dealers get from the distributors, that is another thing, and the volume purchased has a lot of effect on it. The smallest sellers probably get 15% off of MSSP, while the biggest may get 85% off, then there are very large dealers who sell so much that they buy directly from the manufacturer and cut out the middleman markups altogether. All that is why some stores find it cheaper to buy their stock off the shelf at Walmart than from the distributor.

So, the short answer, is that there is no short answer.

[Helen Oster]

Retailers are controlled by the manufacturers and distributors in more than simply accessibility to the products; in addition, the financial agreements between retailers and the manufacturers / distributors are complicated. It isn’t a clear case that all the items on the shelves or in transit are necessarily owned outright by the retailer at the point of sale to the customer, which is one reason why MAP agreements are so very powerful.

Right now the Japanese Yen is at an all time high against the dollar (as it was following the Kobe earthquake in 1995), as Japanese businesses withdraw funds from overseas markets, thus increasing the cost of everything imported from Japan.

As this chart indicates: http://finance.yahoo.com/echarts?s=u...urce=undefined the US Dollar has become weaker mainly due to the Federal Reserve's QE2, in order to increase exports and decrease imports. As retailers' overheads and running costs are fixed (unless employees are laid off), this may go some way to explaining the recent price rises.



More than this I cannot say.