I would love to find out the profit on a ton of pellets!!
Does Anny one know??
The dealers must make some good $$$$ :bug: LOL
Does Anny one know??
The dealers must make some good $$$$ :bug: LOL
It might surprise you how little the profit margin is.Gabe said:I would love to find out the profit on a ton of pellets!!
Does Anny one know??
The dealers must make some good $$$$ :bug: LOL
smoke show said:They do have expenses to pay also.
In retailing, what's called a "50% markup" is figured backwards - it means that 50% of the final price is markup from wholesale. Or 100% over the wholesale price. At an old-line department store that's the standard. And at your local hardware store, for everything that's not a loss leader to pull you into the store, that's the standard. That's why deep discounters of, say, musical instruments will give about 40% off - because that still leaves them what we'd call a 20% markup from wholesale, although a retailer would call it 10%.j-takeman said:A common retail mark up would be somewhere around 50% for most things.
whit said:In retailing, what's called a "50% markup" is figured backwards - it means that 50% of the final price is markup from wholesale. Or 100% over the wholesale price. At an old-line department store that's the standard. And at your local hardware store, for everything that's not a loss leader to pull you into the store, that's the standard. That's why deep discounters of, say, musical instruments will give about 40% off - because that still leaves them what we'd call a 20% markup from wholesale, although a retailer would call it 10%.j-takeman said:A common retail mark up would be somewhere around 50% for most things.
Now, I have no idea how the big box stores are pricing pellets. In part it may be as loss leaders. In part it may be to keep their delivery trucks busy. HD is $60 to roll a truck. A lumber store I'm buying a couple of tons of Barefoot from at $289 a ton rolls the truck for $18. The lumber store is losing money on the truck. For HD, that truck is a profit center. And if their driver's on salary when the truck's not rolling he's not doing much. The lumber store's drivers also do other jobs around the store.
HD has a fleet of trucks constantly on the road picking up the wholesale merchandise. The lumber store on the other hand makes a deal with Barefoot for a load, and then puts the load out to bid by local independent truckers. There may be economy of scale there for HD too. Plus it keeps its trucks busy at an end of the season when there are fewer building materials moving. HD also makes the pellet manufacturers bid to sell it pellets the cheapest. They absolutely don't care what they get, if it's pellets. The local lumber yard only carries a few brands, and it cares. So the lumber store bids to buy the pellets. HD has the manufacturers bid to sell them. Drives the price down, but also the quality.
I'd guess when you see pellets in your local hardware store at $7.50 a bag - which I see around here - that's a full "50%" (i.e. 100%) markup from their wholesale price. So $3.75 would be wholesale. Which would mean when the big box store are selling them at around $4 early in the season they aren't making much, but when they jack it up to $5 as the weather gets chilly there's real money in that - it's out of loss leader territory. But it requires big-box volumes to make sense. So getting a higher-quality pellet for $1 a bag more, and keeping the money in the local community, is worth it to me.
Although if I had my own truck to haul the $197-a-ton garbage Wal-Mart features, I'd be tempted. $2 a bag smells like real money.
When you get to Wal-Mart there's another motive too. They're very aware that high prices for fuel take money out of pockets that would otherwise be spent on all the other stuff Wal-Mart sells. So it may well be true that the $197-a-ton pallets lined up in front of the local Wal-Mart are at their cost.SXIPro said:I'd bet pellet dealers are making 20 points GP. Box stores, I'd venture to say are using them as loss leaders or just breaking even.
whit said:In retailing, what's called a "50% markup" is figured backwards - it means that 50% of the final price is markup from wholesale. Or 100% over the wholesale price.
PJPellet said:My dealer is selling a certain brand pellet for 250.00. 12 miles away a different dealer is selling the same exact pellets for 195.00. That's a BIG difference to me.
kinsman stoves [email said:[email protected][/email]]Just remember the average gas station owner makes over $1.00 a gallon profit on unleaded
VTrider said:kinsman stoves [email said:[email protected][/email]]Just remember the average gas station owner makes over $1.00 a gallon profit on unleaded
I find this hard to believe, I've always 'heard' that it's just a few cents - can you reference this?
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