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Old 11-01-2008, 04:37 AM   #16
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Originally Posted by RCSteve93 View Post
Not enough to support themselves. Support your LHS!
+ me

Why would you like to know this?

Other then that it differs from state to state and country to country.
On the whole (as previously stated) margins are slim compared to sales rate vs cost.

RC retailers mostly start for the passion and love of RC surely NOT to become rich.
For that a whole lot of other job or businesses would come first...for sure
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Old 11-01-2008, 07:51 AM   #17
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heres an example of extreme markup. A traxxas TRX3.3 engine. traxxas UK sell it to shops for 90. they sell it direct to customers for 270. so do the shops. the cost of the engine from taiwan is no more than 60. and, get this, you can buy a jato 3.3 for less than that!

BUT on kits, the markup is around 10-15%. not much. parts its 50%, and acsessories (glue, shock oil etc) its about 200%.
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Old 11-01-2008, 08:08 AM   #18
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but trust me the margins are not high and I deal with some of the biggest distributors

were talking around 10-15% on kits, electronics etc.
To make matters worse for a hobbyshop, the distributors you have to buy from have also become a retailer and in effect now compete with you the hobbyshop with their presence on the internet. Every hobbyshop I know hates these words coming from a customer behind the counter; "I can buy it cheaper from Tower"

To make matter worse for any shops in Illinois is that both of the distributors here can take a customer's order before noon and have the package on the customer's doorstep pretty much the next day.

The hobby shops here don't make any money on racers. They depend on moms/dads walking in with their 13 year old son and plopping down 500 bucks on a nitro RTR for the kid to bash with. Hopefully the kid breaks alot and then wants hop-ups too.

Racers only make up about 5-8% of RC profits for a bricks and mortar store. the other 95% is bashers.
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Old 11-01-2008, 08:26 AM   #19
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If a hobby store is smart they will have flexible pricing. The amount that the kid next door will pay for a part for his savage and the amount I will pay are two different things. I spend $4-8 thousand a year, shopping around means an extra couple of speed controls or a free car and radio. I do try to support my local stores and they try to support me by bringing in some high end stuff but it is not the merchandise they normally sell and I am sure their margins are lower on it. I always add the price of freight in and if I can buy the same locally I do, if not the discount internet suppliers need suport too. At the track I always buy my track stuff at the track, tires, replacement parts and the occasional chassis. I would buy everything at the track if they would sell even 10% cheaper but that 10% can mean $800 to me. I would just as soon cut them a cheque for $400 and still save money. I also ensure I always buy my lunch and drinks at the track to keep those services there (I have even bought drinks to take home on a slow night so they don't get discouraged)

I could sum it up by saying, I know it is up to us racers to support our portion of the industry and I try to. I would like to buy everything in town as Tower and Stormer have done nothing to support our track but with what I save on merchandise I will try to support our track other ways. The racers I hate are the ones who show up, race and leave. Never buy anything at the track, don't try to bring in new members, sell their old stuff out of town, rather than giving neobs a deal to get a new member. Bring McDonalds to the track instead of supporting the cafeteria. And they are usually the ones who openly bitch about other inexperianced drivers and the cost of membership.
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Old 11-01-2008, 09:02 AM   #20
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Originally Posted by ioxqq View Post
It is all depends. Some retailers buy direct from manufactures, the profit margin can be 70%. If buy from distributor then profit is around 40%-50%. Hobby shop owner can easily make $10000 - $30000 net income per month easy. In fact, they will tell you it is bad business always as they don't want more competition. hahahaha

what have you smoking latley?

lets say for your LHS do price matching with Touuer hobby, kits=$10 no more than $30 profits, Electronics/engines=10% yes it is true you buy novak ESC for $90 and sell em for $99.99 or lower!

but here is the interesting parts ppl often confused.

Parts 80% profits! wow!!
this could mean buy it for 50% lesss of List price and sell em for about 90% of retail WOW!! lots of money !!

right?

WRONG!

how bout things called inventories?

lets say ordered 10 of ASC0000 parts $10 each and sell em for $18 then you ended up with 3 dead stock. and you do clearnce for $10/each, you spend $100 and made $56 that is if all that clearnce did succeed, but there is parts that never sell or sell only 1/2 inventories, like chasis... and from that $56 you gotta pay Rent, wages, utilities, cresit cards fees etc etc.

if you invest same amount $$ in to other ventures your profits is way higher for BZ in U.S.

I know this cause I ran hobby shop before and now I'm in to mobile business.

support your LHS or Track that you race or you will ended up with very expensive toys with missing wheel on your shelve.

Last edited by SweepRacingUSA; 11-01-2008 at 09:22 AM.
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Old 11-01-2008, 09:07 AM   #21
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Originally Posted by ioxqq View Post
It is all depends. Some retailers buy direct from manufactures, the profit margin can be 70%. If buy from distributor then profit is around 40%-50%. Hobby shop owner can easily make $10000 - $30000 net income per month easy. In fact, they will tell you it is bad business always as they don't want more competition. hahahaha
What the hell are you smoking?

First of all, I don't know of a single hobby shop that buys directly from a manufacturer, except for small manufacturers. If you're buying Associated, Trinity, Losi, Futaba, Airtronics, Novak or any other manufacturer you are buying from a distributor. Yes I know you can buy from Trinity but you are buying from their distribution center.

Most hobby shops work on an average profit margin of around 10 percent! And the more expensive the item, the smaller the margin. Electronics is even smaller than that.

Add to that most racers won't hesistate to ask for a "discount."

I have gotten to know several hobby shop owners over the years gathering information about the business end of the hobby. It started out as research for opening my own hobby shop, but now I use it to gage the overall health of the entire hobby industry. Most racers haven't got a freaking clue of what hobby shops have to put up with.

So if you like your local track or hobby shop, if you like the idea of going to a place and hanging out with like minded people, if you like the idea of actually holding in your hand a piece of merchandise before you buy it, if you want your local track to stay open, then...


***Support your local hobby shop!!!***
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Old 11-01-2008, 09:12 AM   #22
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Originally Posted by ioxqq View Post
It is all depends. Some retailers buy direct from manufactures, the profit margin can be 70%. If buy from distributor then profit is around 40%-50%. Hobby shop owner can easily make $10000 - $30000 net income per month easy. In fact, they will tell you it is bad business always as they don't want more competition. hahahaha
If shops made that much money there would be one on every corner. The only ones that might make that kind of money are the big, heavily diversified ones that sell alot of planes, trains, models etc as well as race gear.

If I could show to a bank that I could make a net of 10,000 us dollars a month I would be in business next week.
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Old 11-01-2008, 09:14 AM   #23
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If I could show to a bank that I could make a net of 10,000 us dollars a month I would be in business next week.

...until you told them you needed a million dollars to do it.
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Old 11-01-2008, 09:28 AM   #24
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The only thing with a high mark-up is replacement parts for cars. Everything else seems to be relatively small. Things like TC tires are around $2 or $3.
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Old 11-01-2008, 09:28 AM   #25
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You know the best way to have a million dollars at the end of 6 months in the RC industry?

Start with two million!!!!!
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Old 11-01-2008, 09:36 AM   #26
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I dont know what kind of markup your local hobby stores have, or atleast should have, but mine use to have internet matching prices under the old owner. He sold the store to someone, who IMO doesnt have a clue. Example: Stormer hobbies was blowing out Kyosho inferno GT's for $299. I did a little research and found most online stores selling the same car for $349, but this local hobby shop I frequent had the same kit in stock for $459. Now mind you I would have had no problem buying from the shop had it been $350 plus tax since I had to pay for shipping anyway, heck maybe even $369 wouldnt have been out of the question to have it the same day. And its pretty much the same on parts, TRF shocks for $80 when everyone else selling these for $50-$60, But I had to have them for the parts so I bought them anyway. I must say I really do try to by locally (I honestly would prefect to have same day), but sometimes I feel I must see what the prices are to protect my wallet especially in todays economy as well, just my 2 cents.
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Old 11-01-2008, 10:19 AM   #27
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It is all depends. Some retailers buy direct from manufactures, the profit margin can be 70%. If buy from distributor then profit is around 40%-50%. Hobby shop owner can easily make $10000 - $30000 net income per month easy. In fact, they will tell you it is bad business always as they don't want more competition. hahahaha
Having previously owned a hobby shop for 7 years, those profit numbers DO NOT exist...(I wish they did...lol)

Kits, electronics, engines, basically all your high dollar items are the ones we make the LEAST (5-15% (at most!), sometimes break even just to stay competitive (don't forget the credit card fee % or paypal fee % that we cover)

Parts is where we make it back, and even then, there is NO 70% profit anywhere in this business.

Most of the guys that have a hobby shop are all hobbyist at one point who got the opportunity to start up a shop. They still enjoy R/C (that's the first thing that motivate them to keep the doors open, the fact that they still get to "play" with R/C cars all day long) and the fact that they can some what earn a living is a plus. If we are in business to make money...we look into other industries...

When I had my shop, I had no problem showing my customers my invoices from the distributor or the manufacture I buy from (most of my customers are my racing buddies from the past 16 years of racing) and I tell them if you have problem with me making $20-25 on a car kit to keep the doors open and continuing to provide my service to you, then sir, exit is on your right, use it!

For the most part, with the heavy discount stores, pricing in this industry is pretty transparent. I don't believe in guys making huge profit on a single item at some of the local hobby stores (I think those guys are just greedy) but I also have shown the door on more than one occasion to customers who knows they are already getting a good deal but still haggle for more. Give the guy on the other side of the counter a break some times

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Old 11-01-2008, 11:13 AM   #28
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This is an interesting thread.. Im glad I started it. I think that any reasonable person who knows something about the trials of running a business can appreciate how difficult and competitive this industry can be for your LHS.

I know for me, it becomes a tug and pull between nickle and diming every item I buy shopping all over the internet for the lowest price out and supporting the LHS by paying more for the parts. This is compounded by the economic situation that I'm sure all of are feeling to some extent. This is a hobby not a necessity and I know for me it is becoming more difficult to justify the costs.

I hope, just as with all businesses, that they put away some cash when times were good (if times were ever good for them) because I foresee more and more people pulling back there discretionary spending and / or finding the very lowest price for items through any means possible.

just a rant..

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Old 11-01-2008, 11:16 AM   #29
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if you want to make money become a distributor
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Old 11-01-2008, 11:16 AM   #30
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from working in the business I know it can be successful, but the margins are low on alot of items. some things are better, parts, oils, pinions, motor spray and bodies should all have decent margins. But kits and especially electronics, radios, batteries and motors all are really small margins from the distributors.

Then you have companies like Trinity that will sell motors to anyone who has $1000 bucks to spend at wholesale prices and that makes it really hard for hobby shops to make anything there. A hobby owner also needs to buy his motors direct and batteries straight from china by the case to stay competitive.

You can buy a brushless motor for about $65 dollars from a distributer

you can buy one from trinity direct for about $50

Your average motor builer will send his stickered version for about $75

So how is it as an average small store you are to make any money selling a motor for $10 more than what it cost because of someone who buys direct and sells out of thier basement shipping all over the us.

The only thing that keeps a hobby shop open is showcasing the new and fullfilling instant gratification. I have seen many hobby shops struggle because they dont carry enough stock to keep people interested.
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