Im just trying to get a feel for what the end users of pellets think is a fair margin for the retailer to make on pellets.
Thanks!
Thanks!
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Souzafone
Feeling the Heat
I figure 10% should be a minimum markup, something the box stores should live with, and dealers and other suppliers should get a higher percentage. It costs money to maintain an inventory, and also the necessary overhead of any business, lights, heat, employees, insurance, etc. When a company pays $200 a ton and sells for $300, that's a 50% markup and is gouging.
A pellet retailer has overhead just like any retailer and is entitled to make a profit to stay in business. With a 40% markup they would be lucky to make a 10% profit after expenses. So if you figure pellets at the mill are currently $140-$160/ton + $45/ ton transportation= $205 X 40%markup =$287/ton retail. Pretty close to the average prices we have seen this year. That nets a $29/ ton profit for all that effort! No one is getting rich selling pellets.
JustWood
Minister of Fire
Souzafone said:
BWAAAHAHAHAHA
! 10% is a joke. A commercial line of credit will cost a dealer that much. What about the 3% a dealer gets hit for on credit card sales.Overhead ,transportation costs, and market conditions vary greatly the world over. This poll is irrelevant and there is no such thing as gouging!
jtakeman
Minister of Fire
I agree the average retail mark up is usually 40%. Some push that a little higher.
Then you have the ones that gouge the price's who knows what that markup is maybe 100%.
jay
Then you have the ones that gouge the price's who knows what that markup is maybe 100%.
jay
tinkabranc
Minister of Fire
Blah Ho Vick said:
You crack me up :lol:
I agree this poll is just a "bomb tosser" but how can you continually beleive
there is no such thing as gouging? Come on!
You may not screw over your customers but there are alot of bad apples out there
that will not hesitate to take advantage of some one when they get the chance.
Local stove dealer advertising "March Madness Sale" premium pellets for $410.00
a ton - pick up only. His competitor across town selling same brand for $289.00.
Hmmm...
JustWood
Minister of Fire
tinkabranc said:
At $410 , you have NO idea what his overhead is and NO idea what his contract price at the mill is.
Everyone has a choice of where to buy. If it's $410 here and $289 over there it's a pretty easy choice where to buy. If you decide to pay the $410 knowing about the $289 your not a very smart shopper. If you pay $410 NOT knowing about the $289 once again your not a very smart shopper. It pays to do your homework and be prepared well ahead of time.Everyone has a choice of when and what they want to pay for pellets.If a person procrastinates too long or doesn't shop around and has to pay big bucks for pellets it's their own fault not the dealer.
Someone crying "GOUGING" wreaks of Entitlement if you ask me.
kinsmanstoves
Minister of Fire
I am all for freedom of speech but do you go to grocery store forums and ask what the fair price of oranges is? How about gasoline from your local service station?
If you do not like the price of someone selling pellets, do not buy from them. Kinda makes sense to me.
But everyone is going to be shocked at the price of pellets this summer. Worse yet do not buy early and wait to see what happens. I have a feeling you will be burning up your computer.
Eric
If you do not like the price of someone selling pellets, do not buy from them. Kinda makes sense to me.
But everyone is going to be shocked at the price of pellets this summer. Worse yet do not buy early and wait to see what happens. I have a feeling you will be burning up your computer.
Eric
kinsmanstoves
Minister of Fire
Souzafone said:
50% mark up is not gouging. The average retail mark up on anything retail is between 40% and 45%. Have I sold under that, yes? Have I sold over that, Yes?
Eric
this wasnt a bomb-tosser at all! As a retailer, I know what I need to sell something at in order to make money. Sell below a reasonable profit margin? I might as well just stay home and watch cartoons.....probably gonna save me money in the long run. The reason I posted this is because I was curious about what you folks thought was a "fair" markup. I read alot of posts here concerning the price, so, hey, I thought I'd ask.
As for Eric's posts above: I concur. As another pellet retailer I dont feel there will be much, if any, drop in pellet pricing for spring. You can wait it out, and that gamble might pay off for you...but its just that: a gamble. Another gamble: dont buy pellets, hoping your alternative means of heat stays cheap this winter. I dont think anyone here, and certainly not me, can predict that. heck, if I could, I certainly wouldnt be here posting, nor would I be working Saturdays and Sundays, nor would I live in New England. I'd be living off the interest from my millions made in the futures markets.......
As for Eric's posts above: I concur. As another pellet retailer I dont feel there will be much, if any, drop in pellet pricing for spring. You can wait it out, and that gamble might pay off for you...but its just that: a gamble. Another gamble: dont buy pellets, hoping your alternative means of heat stays cheap this winter. I dont think anyone here, and certainly not me, can predict that. heck, if I could, I certainly wouldnt be here posting, nor would I be working Saturdays and Sundays, nor would I live in New England. I'd be living off the interest from my millions made in the futures markets.......
hearthtools
Moderator Emeritus
The average price I sell pellets for is $30 per ton over what I pay after shipping.
this does not take into the factor of
the extra cost to have of area to store pellets
Fork lift. USED $10K
Fuel and Maintenance for the forklift
Loss off pellets from broken bags or wet
Time to unload the 21 ton truckload (about and hour two people)
time to schedule trucks to come in and deal with customers.
time it takes to take time away from other customers to load your ton or to load 5 bags at a time in your car every few days.
and the emotional stress of people bitching about availability, quality, Bags, and price
So glad I will be done with Retail in 2 weeks.
I like to see some of you come up with the capital, Knowledge, Time and space to be sure you have in stock at a fair price product.
You got to have capital and VERY GOOD credit to keep a place going.
I did it for 19 years and now I am DONE.
this does not take into the factor of
the extra cost to have of area to store pellets
Fork lift. USED $10K
Fuel and Maintenance for the forklift
Loss off pellets from broken bags or wet
Time to unload the 21 ton truckload (about and hour two people)
time to schedule trucks to come in and deal with customers.
time it takes to take time away from other customers to load your ton or to load 5 bags at a time in your car every few days.
and the emotional stress of people bitching about availability, quality, Bags, and price
So glad I will be done with Retail in 2 weeks.
I like to see some of you come up with the capital, Knowledge, Time and space to be sure you have in stock at a fair price product.
You got to have capital and VERY GOOD credit to keep a place going.
I did it for 19 years and now I am DONE.
kinsmanstoves
Minister of Fire
jtakeman
Minister of Fire
hearthtools said:
I could only make it 1 year in retail, Burnt me out! No way would I ever go back. I would have to be a silent partner drinking brewski's some where, While the partner got beat up. Knocked down and dragged. Never again. It would be hard making ends meet without at least a 40% markup. Course that all bepends on the overhead. Everyone thinks its so easy till it's tried!
jay
kilbury
Balls of fire
AMENjtakeman said:
16 years in hearth, my family in retail since 1964. Yet we are still coming back for more. Somedays we all wanna pack it up but we don't know what else to do! Everyone needs to have a business and see what its like. I love doin business with other business owners, for the most part they are more reasonable then alot of people because they know what it's like.heh....we all have our crosses to bear! My family has been doing this since the forties (retail), myself, only since I was 12 (Im the 3rd generation, and we have a few members of the 4th generation working here now), with a stint in the oilfields and college to round me out. The thing I notice is that its MUCH more difficult to do the retail biz every year, and the challenges come from all angles...the gummint, the economy, the suppliers, and yes, the consumer. Most of the consumers are great folks too, but its that one guy in 100 who kills the whole day for you! Had a lady the other day, or rather, my brother did, who called and said her stove was making a "funny noise"....well, funny to me and funny to her might be different....and she wanted someone to come out and look at it. He tried to explain to her that if it was indeed broken, it would be covered under warrantee, free of charge, but if it were something else, say a cleaning issue, then there would be a service charge. She countered with the fact that she wouldnt pay for a sevice charge even if it wasnt warrantee! Ugh.
tinkabranc
Minister of Fire
I can relate to both sides as I owned my own business in a different industry selling product/services
to both the retail and wholesale markets. Retail does suck at times and I would not go back but, had lots of great
clients that made up for that one that was unreasonable and difficult.
As a consumer, obviously the lowest price tag gets my attention but is not the only deciding factor.
Quality and Service are equally important to me. If any of these factors are null, I shop elsewhere.
to both the retail and wholesale markets. Retail does suck at times and I would not go back but, had lots of great
clients that made up for that one that was unreasonable and difficult.
As a consumer, obviously the lowest price tag gets my attention but is not the only deciding factor.
Quality and Service are equally important to me. If any of these factors are null, I shop elsewhere.
woodsman23
Minister of Fire
WAAAAAAaaaaaaaaaaaaaa i'm under stress, waaaaaaaaaaa i don't want to do it anymore waaaaaaaaaaaaa.. wa waaa. I did not want to go fight in a war but i did and have no regets. I owned a bar and loved every backbreaking moment of it. You guys crack me up. My my my. if we all thought like you so called business owners then we would all be in trouble and buying from ????????
save$
Minister of Fire
Cost varies to the extreme. I think the real question is are you located where burning pellets is cost effective, if being cost effective is your goal. In toady's world of supply and demand and and yes, greed, energy cost. In markets where there are no real regulations, price will be expressed at what ever the market will bear. Where there are regulations on energy, it doesn't take long for the "regulators" to decide they want their cut of the action. (AKA Tax or fees)
Looking ahead, I think I would want a stove that could burn a variety of fuels. I would want to have options such as another form of heating. I would want my energy needs to be as efficient as is realistic. Prevention of heat loss might be the very best investment in energy use.
I don't think it is realistic to think a merchant is going to charge less than what he s able to earn.
An option might be in the formation of local coops where groups of pellet burners get together, pool their needs and contract directly from the producer. I know of a local retailer who's cost is $13 a ton to get the pellets on their lot. Customers who pick them up get a good deal. But if the retailer has to deliver, then then cost goes up. My dealer charged me $20 to deliver six tons right into my garage!, remarkable I know. He asked me to remember him next season. I've gone back to him for other items. I would hate to see him go out of business.
Looking ahead, I think I would want a stove that could burn a variety of fuels. I would want to have options such as another form of heating. I would want my energy needs to be as efficient as is realistic. Prevention of heat loss might be the very best investment in energy use.
I don't think it is realistic to think a merchant is going to charge less than what he s able to earn.
An option might be in the formation of local coops where groups of pellet burners get together, pool their needs and contract directly from the producer. I know of a local retailer who's cost is $13 a ton to get the pellets on their lot. Customers who pick them up get a good deal. But if the retailer has to deliver, then then cost goes up. My dealer charged me $20 to deliver six tons right into my garage!, remarkable I know. He asked me to remember him next season. I've gone back to him for other items. I would hate to see him go out of business.
kilbury
Balls of fire
Wow wow wow! Must be that charming personality that got you out of the bar biz! I guess if I didn't like what I was doin 95% percent of the time I would get out. I do enough of yours, yours, yours all day long and yet I'm on here still doin the "your" thing. Good thing for you and I cause I don't wanna buy from ??????, cause once they have the money its only a matter of time before they have the goverment. Maybe we can all work for walmart, home depot and lowes when all the little guys are gone.
webbie
Seasoned Moderator
I voted for $30.
But - consumers should be aware that in almost NO case does the retailer.....this being a regular stove dealer, etc.....make an actual profit on this sale. When you consider the overhead, loading, insurance, etc. it is probably a loss.
The retailer can make money on the initial stove sale - maybe a little on the installation, and a very smart dealer may be able to make something on scheduled yearly service and cleaning.
In general, though, when I was in retail ALL my money was really made on the stove and chimney.
But - consumers should be aware that in almost NO case does the retailer.....this being a regular stove dealer, etc.....make an actual profit on this sale. When you consider the overhead, loading, insurance, etc. it is probably a loss.
The retailer can make money on the initial stove sale - maybe a little on the installation, and a very smart dealer may be able to make something on scheduled yearly service and cleaning.
In general, though, when I was in retail ALL my money was really made on the stove and chimney.
we make are money on the stove up front and very little on pellets. No wonder some of the other local hearth shops don't sell pellets. They come to us, then I run out. Than I have to hear "why can't they get pellets?"
kinsman stoves said:
OK that left us hanging. Do you really feel that the prices will go way up later this year? I just want to know so I can stock up now if there is a good chance that the price will increase a lot!
woodsman23
Minister of Fire
balls of fire said:
quote: kinsman stoves - 10 March 2009 01:45 PM
I am all for freedom of speech but do you go to grocery store forums and ask what the fair price of oranges is? How about gasoline from your local service station? Quote
If you do not like the price of someone selling pellets, do not buy from them. Kinda makes sense to me.
But everyone is going to be shocked at the price of pellets this summer. Worse yet do not buy early and wait to see what happens. I have a feeling you will be burning up your computer.
Eric
I am not picking on you persay it's just when i read things like wait until you see the price of pellets this year but he does not say anything else just another scare tatic from a dealer....... just like the news all gloom and doom. I had the bar for years then it burned to the ground and i moved on with no regrets. I do agree it is a real hassle but its yours!!
how about this, my COST as a dealer. In April-May 239/ton, and it goes up from there, September - March $258/ton, oh and no price guarentee. That's three times what i was paying five years ago.
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