Kit and parts prices...
 

I've read in the past about how hobby shops dont make much off of R/C and I've been wondering if this is true. I tend to think they make a killing. I bought an ofna clutch bell shim kit for 5 bucks the other day. To me, 5 bucks for any kind of RC part is cheap but when I got to think about it all it was was some tiny shims...not much at all. So what kind of mark up are we talking about here? I'm not complaining dont get me wrong...just curious.

i can tell you the mark up for nitro engines is around 180% (a trx 3.3 goes for £90 from traxxas UK to a shop, and the shop sells for £340 RRP, but usually around £270).

for parts it's about 50-100%.

models it's even less, maybe 10-30%.

The mark up on parts, tires, bodies, and hop ups is usually 30% to 60%. So your retail $5 shim cost the shop maybe $2.50.

Now on kits, the mark up is not to much maybe 10% to 30%. That of course depends on the shop. On line shops are really under cutting the brick and mortar shops.

I guess part of your confusion is on who is making the big profits.
Nowadays most hobby shops have to buy from a middleman, or distributor, as they aren't able to buy in sufficient quantities to buy straight from the major manufacturers --- so the distributor bumps the price they pay for an item passing on that bump to your local hobby shop who then bumps the price they pay to make a profit and help keep the doors open.

At the same time, literally every major retailer that all of us shop at --- from Walmart to Sears to Walgreens to whaterver --- has a much higher standard retail markup than any hobby shop you'll ever deal with. Most major retailers have somewhere in the line of 100% mark-up from what they pay for every item in their stores --- so the miniscule mark-ups we see in hobby shops are small in comparison.

There is also a big difference between kits and parts.
Kits have a relatively small mark-up, at least what the hobby shop marks them up, so as to keep them below what the manufacturers lists as their Suggested Retail Price so they can remain competitive with online retailers. Most shops are only making a 10% profit on car kits. IMO online retailers will one day kill of every last standing brick and motar hobby shop.
Parts, on the other hand, have a little more wiggle room --- yet at the same time the mark-up is usually less than 50%, and in most cases the only thing that keeps them in business.

also my lhs the guy told me he dosent mark up his kits to much because he knows the people are ganna be comming in to get parts and people are creatures of habbits so for a 1-50 doller part most people arnt going to call 20 shops they will just go to whats closest to them

Around here, it seems like its the airplane guys are the ones keeping the shops open. My nearest is a 30min drive one way. He sells nitro at very attractive prices for same reason - knows you'll likely be coming back.

Shops may make that much on traxxas but not on any race stuff i know of. It also depends on the buying power of the shop and the relationships with suppliers.

As a rule, it's like petrol stations. The petrol station doesn;t make it's money from the fuel it sells but the sales in the shop - candy, soda etc etc. The markup on car kits is less than anything else.

I agree with the comment about online putting bricks and mortar out of business as a rule, the trackside shop will survive though. You break a part and (In the U.S) 3- 9 days postage can put you out of action for a race and bunch of practice, and by the time you pay for overnight you may as well burn some fuel and go to the hobby shop and pick up a few extra glow plugs, have a chat and gaze at the super expensive italian mills.

My theory on online shops as a rule is it will kill small bricks and mortar. In ten years time i think you will see flagship stores so you can go check out the goods in person then find the best price online. DVD and CD media stores are already in their death throws as they can be sold digitally online. The big money makers from the online shopping boom are the postal services like Fedex... that's where i am buying my shares!

The problem internet stores are finding is cmpetition is so fierce they will and are grinding down their profit margins in competition and hurting themselves. It's so easy to price check between say Amain, tower hobbies and tilted it's almost ridiculous. At some point they won't be able to go down any more and it will be down to the shipping deals they have and the service they provide... which is of course the biggest bonus of going to a bricks and mortar store.

Here is another RC point: Effectively online with the forums and sheer communication ability we have now that we are shutting down the need for the experts at the hobby store for advice... one of the advantages of having a local hobby store.

i work at a hobby shop and i did it all yes we did not make much on kits because when we sold them the rest of the suff thats where we came out ahead we would make about 30-50 on each kit put parts wow clutch bell shims pay 1.05 per pack bodys 10.20 there is a big mark up in parts

It's called, free market capitalism.

Markups on various items can fluctuate between negative margins (game consoles) to 1000+% for the accessories. Everyone knows the razor-blade theory...

If you really want to be shocked at what the actual cost of products are, look into clothing.

Just to clarify, markup in retail is expressed as a percentage of the asking price, so 100% markup isn't possible unless the item was donated. 1000% markup isn't possible at all.

30% markup on a $100 retail item means that the dealer paid $70, his gross profit margin is $30 and you pay $100

My first job was at a hobby store in So Cal. We charged retail on parts, which was a 50% markup for all brands, if a part cost the customer $10, it cost us $5. Kits were a little more up in the air, we tried to make 25-30%, but then if we were $5-$10 above the big shops like tower then we were happy and we would match their price to make the customer happy. We made next to nothing on kits. Most shops make the majority of their money on parts or other areas like plastic models and such. Engines are a little more flexible, it depends on the manufacturer. OS was a 50% markup but the smaller guys like Novarossi were more like 30%. Christmas volume is what keeps most traditional shops in business, you make good money from trains. Also keep in mind the owner of the shop ran the place into bankruptcy in 3 years!!

Mark