Originally Posted by
ioxqq
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
Steve Wang