PC Hardware retail margins, what really are they?

I have worked in a high street outlet and that was 20% markup.

Working for myself it was more like 5% at most but charged a flat fee of £75 to setup the laptop (get rid of all the cr@p, setup Office if they bought it, anti-virus, local or online backup and go around to customers house and setup on wifi). Only way I made money was on this setup fee and even then it just wasn't worth the hassle.
 
Dr House said:
You know its quite distasteful for people to be commenting on Spies financial situation
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Seems to be all in jest. I congratulate the man on having a very sucessful business, not only on the turnover but actually a company that cares about the customer! This man deserves all the nice cars, houses, holidays he can!
 
its down to category management and product mix management to get the desired ratio of sales from high and low margin products.

its going to be difficult to sell a notebook or desktop for more than 10% for example, but once someone is in your shop buying a notebook, you can sell them attachments that can bump up the margin per the order.

so they will try to sell a mixture of computers, accessories, warranties to help generate sufficient GM and cash margin.

but then a store will have higher costs as well than an e-tailor for example, due to higher rent, staffing costs plus storage and shopfront requirements.

so whilst they may be making 10-15% on an order, the higher costs will mean that the fixed cost is higher and therefore that the net profitability of the sale will be diminished.
 
House said:
Spie's not driving around in K plate Escort is he? But then he runs a very successful business so why should he?

Why the interest? Your last paragraph sounds like your saying e-tailers should be cheaper? Well they are cheaper! What’s your issue? E-tailers still have overheads.

Margins are set for all companies at whatever the market will bare and in an online business prices (including the margin part) are what get people “through the door” electronically.

If you’re asking why there’s a price band between e-tailers? It can be allot of things exchange rate as you mentioned is one important factor but purchasing power and the skill of the people doing the buying are also big factors.

Then there’s sales strategy: Do I sell hard drives at less margin to gain customers and make more on graphics cards? Or do I sell graphics cards for less margin and make it on hard drives? Of course online this doesn’t work as well as in bricks and mortar stores but it’s still a factor.

A 20% price spread isn’t that much really if you consider all the factors involved, just make sure you’re not buying at the high end of the curve.
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I think the fuse blew on your post dude.
 
A real world example of how tin can have so little mark-up.

Quoting four suppliers with a target price of £150 on APC UPS, 40 units required, the best quote came in at £2 above cost per unit and because they wanted the business they got it. £80 mark-up (not even profit) on a £6,000 order, go figure...
 
Bleek said:
Retail is about volume and turnover, many products can be sold at a loss because it draws custom, make £1 on an item worth £50 and it looks daft, sell a few hundred thousand because you have the capacity to do so and suddenly the whole setup looks more attractive.

Supermarkets are balance very much in this way, they sell many products at cost or below just to outpace their competitors, they know that a few bargains will draw custom and typically other purchases along the way.

A business of this ilk is less worried about margin and more concerned with turnover.
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It all depends on what retail sector you're talking about. The margins in DIY retailing, for example, are much higher than supermarkets or etailers selling computer components. It's not all about volume. Combined sourcing and greater leverage of our buying power maintains and grows that margin. Selling the same products in the UK as we do in France, Russia, Poland, China, wherever saves us millions every year, which in turns creates a greater margin which we can then use to lower prices to the point where the extra sales will negate the loss of margin opposed to the competition.

As an example off the top of my head...

Grout remover - Cost to store 10p Selling price £1.98
Trimmer spool and line - Cost to store 50p Selling price £5.98
Hover mower - Cost to store £30 Selling price £74.98

You just don't get those margins in food.
 
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