profit margin..

[sprucemt]

David Doyle, That is a nice description of reality. The last paragraph is right on the button.

 

[JohnnyReb]

I've written a couple of books that include values (prices) of military vehicles - and I've bought my share of trucks - so I'll consider myself qualified to chime in here.

First of all, if you want a top-quality (as in show-grade) restored truck, by far the least expensive place to buy it is from another collector. None of us keep an accurate accounting of the parts we put into a truck, and since it is a "hobby" - the labor is "free".

That is not the case for a buisiness. If you look at the percentage of per-item mark up for the big guys (like Memphis Equipment) - their margin may look very high. Having spent thousands of hours there (and thousands of dollars there), I can tell you that their overhead is HUGE (espeically at the Memphis location). Property taxes on a city block in downtown Memphis, payroll, insurance, and benefits on fifty employees, a dedicated semi and driver, a shop building that can accomodate, easily, a dozen or more of the largest MVs the US Army has ever fielded, carrying costs on hundreds of trucks, and millions of parts. One summer they cut up over a hundred 6x6s - and you couldn't really notice that any were gone. All this consumes a LOT of money.

When I decided I wanted a wrecker - that is who I bought it from. I could have bought a truck elsewhere, that would have theoriticallly been cheaper. But, I didn't have time to restore it myself - I wanted to spend my time driving - I wanted certain features (heater, hard top, convoy light, all the OVM) and they could deliver a truck EXACTLY like I wanted, with a warranty.

Since I have so little time off from work - I don't consider my time off "free" - I am choosing to spend my time playing rather than working - so it costs as much per hour for me to pull a wrench on a truck as I normally make in an hour. I could spend this "money" by buying the finished truck I wanted - or spend it in off time building the truck I want - the difference is by buying from the dealer, from the first moment I spent money I had the finished product, rather than spending money (time) for several months before I got what wanted - and then there would be no warranty.

Its been years since I studied this, but IIRC in the typical retail business a 40% per-item margin yields the business something like a 5% net profit annually. So, if your business is trucks, one you buy for $1500 should sell for $2500 - and at the end of the day after overhead you'll have $125 profit.

Regards,
David Doyle

DD put it very well........ The customer needs to understand that staying open and having the product available on your demand probably constitutes more of the cost than the original inventory investment.

 

[JohnnyReb]

I am simply amazed by the small business (and large business) owners of this great country. We are blessed with such an opportunity..... a person can literally buy almost anything you want at almost anytime. This availability costs money. I have noted that many foreigners (even from 1st world countries) are truly amazed by this business structure.

 

[Michael]

It seems from the comments, that I have offended the dealers on the list. If so, I apologize. To answer the original post, I do not think there is such a thing as a percentage markup of the bid price of an individual truck purchased at GL. This is especially true for individuals buying the occasional truck. You never know who you are bidding against and if you paid a reasonable amount for it. It is my opinion that trucks are like cars and they have a value like used cars.

I don't pretend to know how big dealers set their price and I sure didn't mean to imply there was something wrong with it or that they were making too much of a profit. The fact remains that they do have a price and it makes no sense to pay GL as much unless you know for a fact that it is straight out of a depot rebuild. Yet it happens all of the time. I was just trying to come up with a price guideline to prevent people form spending too much at GL or GSA and a rough idea of what it might be worth once they get it home and go over it. I really wasn't even including complete rebuilds like Memphis Eq.

 

[jatonka]

Johnnyreb, You have sure brought up a good point, We are SO lucky to be able to get what ever we want. Most countries just can't get want they want or NEED. I have guys from the UK contacting me for parts for M35s all the while, even the wood bows for deuces and m135s. They just cant get them anywhere else. We should remember, it costs a lot of money to do business in the USA, the consumer doesn't want to hear that their supplier has closed up or doesn't carry that any more. Dealers will charge what they have to charge, competition will keep them in line. We will get our parts. JT out

 

[derby]

David Doyle once again has brought out the "truth of the matter" I hear of guy's buying and selling and making big profits.If You get down to it 5-10% is a respectable profit.If these guy's actually did the numbers and included their time they would see that "big profit " is just a myth.Your time is worth something,think of that when Your kid asks you to play ball just before you leave to get your next truck,or when your wife hands you divorce papers when you get home! So I guess the margin is ,what can you afford to lose.

 

[Offroadfabworks]

Yes that is a very good point brought up by DD on the subject. It takes alot of time and overhead to keep a business running. Like its said Insurance anymore is costly, plus property taxes on the building, the Thousands of dollars just spent to keep all kinds of items on the shelfs, Payroll, the cost of updating tools, and stuff to keep the shop and business going. What seems to be that the company is making alot of money really is not the issue. Then on top of that the government still takes a % out of the company for the Taxes that a business pays in every year, plus the % that the Credit Card companys get from each transaction.
By the time its all said and done Derby hit the nail on the head. You wind up with about a 5-10% profit. Then factor in the time away from the family or kids working or chasing after stuff for the customers to meet deadlines or get them something done on a deadline. Its really more like a break even proposition.

 

[Recovry4x4]

When I was running a pool company in OH we had to sell everything at 100% markup just to keep the door open. Labor rate for a technician was about $80 hr (1986) and hourly wages for that person about $14. Still had a hard time keeping the doors open. it's tough to run a business efficiently unless you are the only employee and take responsibility for everything

 

[sprucemt]

So, if one of you come up to me at a show or contact me somehow and in regards to pricing, ask, "can you do better than that", do not be suprised if I burst out laughing or double the price right there and then. Unless of course, you are knock dead gorgeous, with just the right touch, ya might get it for free. Guy's, no need to try.

 

[jatonka]

Sprucemtsurplus, You are the PT Barnum of OD iron, You hit the nail on the head every time. You remind me of an old friend in Vermont, ask him if he can do better on his price and the WHOLE da%&ed show will hear his answer to you, loud and clear!!!! The cost of doing business is is more than was barganed for.

 

[nhdiesel]

I was just skimming through the posts, so please excuse me if these things have been mentioned already.

When considering the purchase prices for Deuces, factor in that for every X number of Deuces you buy in repairable/running condition for resell, you'll need to buy one for parts. No matter how much of a creampuff you get from GL, there will be something that you will need to replace- a broken mirror, torn seat, cracked window, etc. When you are reselling a large quantity of the same vehicle, you will save money by having your own part's rig instead of buying parts from a vendor. Nothing against the vendors on here...but buying individual parts is fine when you are fixing one or two trucks of your own. For running a business, you will want a source of parts at your fingertips for all of those "little" parts you'll find you need- a certain bolt, bracket, clamp, etc.

Something else- your target market will affect selling price quite a bit. I think you'd have a hard time selling Deuces on here for $5000+, because everyone on here knows about GL, knows good sources for trucks, etc. But if you sell to the general public, such as on ebay, you'll get buyers who don't know the "going price" of Deuces, and are willing to pay more just because they really want that truck. I used to sell used Jeep parts on ebay, and it was amazing how many people would bid an item up to twice the price of a brand new part!

Oh, and one more point to mention- depending on where you live, if you are in an area without many Deuces, when you sell several locally, you will end up opening up a new market- Deuce parts. The people you sell to will eventually need parts, and they will already know you, and will most likely come to you first. So there is another reason to have a couple parts rigs on hand.

Jim

 

[ecostruction]

I suppose I already know the answer to this question: answer, 'whatever the market will bear'.. but thought I'd get some feedback anyway..

...or I won't get an answer as too ambiguous...or too sensitive/personal..

In essence, how much will a deuce cost from another member or business?

is there such a thing as a fair profit margin?

i.e., someone buys a deuce off GL for, say $2500. Takes it home, goes over it well, fixes what needs to be fixed and then offers it for sale at say:
50% profit: $3750
75% profit: $4375
100% profit: $5000

I would expect that expenses to pick the vehicle up (gas, lodging, meals, time, etc) would be part of the makeup.
Also labor and parts needed...

Just curious how folks arrive at an asking price..Seems that would be a great marketing tool to let one know the expenses involved but, on the other hand, maybe too personal. I have no business sense, hence my, rather blunt questions.. Not meant to put anyone on the spot, just curious..

I'm sure places like Memphis and Clark, etc..have very high percentages of profit
i.e. from Clark, their web site says base level M36 Cab/Chassis goes for $12.5K w/o winch, w/o air assit shift, etc..
If bought, say for $3K from GL (unless they get some sort of mass discount-Do they?) and sell for $15K (w/above options) then would that reflect a profit margin of 400% and an actual profit of $12K...

I realize there are a lot of variables here..but again, just asking..

Mike

I'm still totally amazed how cheap these trucks are considering what they are and what they can do. Try to replace them with something new, from a functionality standpoint, and only pay 2-5k.

As with anything, the product is worth what someone will pay. It's very hard to answer your questions, because as someone pointed out, there are too many variables. Don't look at a commercial dealer like Memphis and compare to the myriad of other folks "getting in" with this big release of trucks. While there is a big overhead at a place like Memphis, they are not just sitting around and doing minor repairs to get a truck ready for sale. It's a complete rebuild process geared toward their customers. I would venture to guess their customers aren't on this site. If so, they would probably advertise.

Though I may sell a truck down the road, I'm not in the business to sell these. I need them for my business. So, they have a completely different value to me, than someone who wants to look out their window and see it in their driveway because it's cool. I think they are probably worth more to me than some other people.

If I were in the business to re-sell these trucks bought from GL, I'm not sure I would advertise here and try to sell to a SS. If I weren't in the business and had my "baby" to sell to a good home and wasn't concerned with a big profit, this is a perfect place.

It's too tough from my perspective to put a straight "NADAish" value to these things because the intended market is not always the same. I wouldn't even look at it that way if in the business to make money on them. I think the value is higher at the local level marketing to the potential end "user" of the truck for what it can do for them. Those are probably people not on ebay or sites like this.

FYI: for me and my business, the value of these trucks is much higher than what we are currently paying through GL, or fellow members. I think it's a PITA to get from GL and deal with all of the logistics. Then get it through inspection, etc. Dealing with that means I can't deal with my business. That means I'm not making money through my business. If I had the coin when I had the need, I would have gladly purchased through a commercial dealer. Probably Memphis.

Just thought I would add my perspective as a business owner using these trucks and as someone who spent too much time in college trying to be an accountant/economist before God intervened and led me down a much less stressful path.

FWIW

 

[TheBuggyman]

I charge $150/hr for my dozer and loader if that is how you want it and let me tell you that I make far less money doing it this way than by quoting a job. By the time I subtract for undercarriage wear, maintenance, fuel, transport, labor and savings I might personally make $40/hr off of that machine. Now, let me quote a job and I would make $100/hr off of them! So, that averages about $70 which is not alot when a simple water pump is $750!

There are alot of costs behind business that folks do not realize if you are an honest dealer in OD iron. I think that MOST of the time the price is justified.

 

[tobyS]

I noticed the government paid $74,450 for my 84 923. Profit is relative to value, not just cost.

 

[m16ty]

I don't really put too much thought into what somebody pays for the a truck I'm looking at. If it's worth (to me) what he's asking, I'll buy it. If it isn't, I'll walk. What he gave for the truck really doesn't matter.

I sold a tractor awhile back to a guy for $5,800. A day after I sold it I saw it on craigslist for $7,000. I say more power to him if he can get it. I originally had it listed for $6,500 and didn't get any takers. Some people would get mad over this but me and him made a deal and I was happy with $5,800, what he does or doesn't sell it for really doesn't affect me.

 

[Dblbeard]

Basically it's all about the $ dollar, whether it's guys buying from GL for $2500 and selling for $7500 or if it's our so called brothers in arms that are buying the ar15's at your local sporting goods store for $900 and then turning around and selling them for $1500 and feeding on the fear of others during these times, it's all about the money and making all you can off of anyone. It's a business and it's how they make money, not friends. In these times everyone has to do everything they can to make it while the government keeps taking more and more. People sell cars to make money to support their families just as the people do to sell the ar's for profit, I don't particularly care for people feeding off the fears of others and marking up prices, but that's the world we live in. I prefer not knowing what someone paid for something I'm buying, so I don't have any hard feelings for them making so much money off me. As far as the MV's, if someone will spend a little time on the internet and do some searching on local for sale ads they can save a lot of money buying from individuals rather than buying from the dealers. Just looking this past week I found almost a dozen deuce vehicles for less than 4k. I even found several antique deuces for very reasonable prices.

 

[MarcusOReallyus]

Well, I am not sure it is quite that simple.
What a person pays for something and what it is worth is not always the same.

I bought an excellent deuce from a member and paid his asking price which was less than he had in it.

If you pay $2500 for a truck at GL.... get home and the engine locks....not worth $2500 anymore. If you pay $2500 and discover it is a recent depot rebuild or has more "bells and whistles" then you knew about....truck is probably worth more than $2500 to another member (and also to you).

Part of the "profit" some would pay to another member would be for the risk the GL buyer takes at the auction. It has been my experience that if you buy a truck from most anyone on this site, you are going to know the pros and cons on the equipment and be able to make an informed decision on a price.

Therefore, I don't personally have any problem with fellas making a profit on a truck sold to me.....I can always decide what it is worth to me.

I have done both: bought years back from DRMO and from private sellers on this site...
Experience: 50/50 on my purchases from DRMO. 100% happy with the private deal.

just my
JR

Well said, sir!

Especially this:

Therefore, I don't personally have any problem with fellas making a profit on a truck sold to me.....I can always decide what it is worth to me.

That's all that matters. When I buy something, whether its a vehicle or a soda pop, it's really none of my business what profit margin the seller is making.


I'll say it again: IT'S NONE OF MY BUSINESS.



The idea that a certain markup is "fair" and some other markup is "unfair" is just plain wrong. (Karl Marx wouldn't agree.)


The only part of the price that is my business is this: does the selling price give ME good value for my money.

I get to decide that. Nobody else.


The seller could be losing his shirt or making a killing. That doesn't have anything at all to do with whether or not the price is good value for my money.