Gross profit is meaningless for anything other than internal audits to keep tabs on costs and efficiency. What counts is the EBIT. Before I was let go from my company in a round of "restructuring" (read: the upper management was afraid they wouldn't get their Christmas bonuses to augment their 1/4 mil salaries) I operated my department consistantly at 17-18% EBIT. In a very competitive industy, that is a very difficult accomplishment while still remaining competitive with the little "mom & pop" companies that have virtually no overhead. If you guys think these companies like FMF are making extreme profits, ask yourself why there aren't lots of companies trying to cash in on that "highly pofitable" market.
FMF in the mall
- Thread starter Sage
- Start date
marcusgunby
LIFETIME SPONSOR
- Jan 9, 2000
- 6,450
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So spanky are you saying microsoft is a good company or a bad one?all in fun mind:p gross profits doesnt mean good products or business conduct-clever marketing can be all you need.
By "good" company, I was talking about being profitable, not moral or ethical. As for Microsoft, they didn't do anything that every other Conglomerate or Corporation hasn't done, they just stood out because there is no real altenative to their product(say what you want, Linux is not a feasible alternative to Windows for most people or businesses). And gross profits has nothing to do with making a good product, it just means you are good at selling your product.:cool:
All in fun, marcus...:)
Grrr! I need a new keyboard!:(
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This one is for Spanky!!
QUOTE]You must know very little about business. A good gross profit margin for any company on a product is around 15-18% EBIT (Earnings Before Interest and Taxes). On that $9.00 gaset, the company you puchased it from made a net profit of probably no more than $.35-.40. You have to sell a hell of a lot of product to make any money like that. [/QUOTE]
Do you mean 20 percent after operating expenses and all other costs?
Now I am no millionare yet. But at 30 I run an growing saddle company and I own a mattress store (soon to be a chain) here in Arlington, I started my business with 3500 bucks I got from selling a car that I paid for!
Two years later I am still going and growing strong!
I dont know much but I don't get out of bed for less than doubling my investment on any item!
On my horse equiptment I wont even mail a bridle for less than a 400% mark up.
Sure in some businesses 20% EBIT is great but if you think all companies work on that rule you are smoking crack!
Bulldukey if you think they made 20% EBIT on the gasket itself. You gonna tell me that they have that part in stock tying up their floor space and working capital for 18%.
Someone got paid on that 9 dollar gasket!! Maybe not the dealer then the manufacturer. It is my opinion it was probably both!
If we all ran our business like that we would go broke. I would be better off working for someone else!
So tell me Spanky what businesses do you own and run?
I gotta hear this one!
Sincerely Irritated,
Kingriz1
QUOTE]You must know very little about business. A good gross profit margin for any company on a product is around 15-18% EBIT (Earnings Before Interest and Taxes). On that $9.00 gaset, the company you puchased it from made a net profit of probably no more than $.35-.40. You have to sell a hell of a lot of product to make any money like that. [/QUOTE]
Do you mean 20 percent after operating expenses and all other costs?
Now I am no millionare yet. But at 30 I run an growing saddle company and I own a mattress store (soon to be a chain) here in Arlington, I started my business with 3500 bucks I got from selling a car that I paid for!
Two years later I am still going and growing strong!
I dont know much but I don't get out of bed for less than doubling my investment on any item!
On my horse equiptment I wont even mail a bridle for less than a 400% mark up.
Sure in some businesses 20% EBIT is great but if you think all companies work on that rule you are smoking crack!
Bulldukey if you think they made 20% EBIT on the gasket itself. You gonna tell me that they have that part in stock tying up their floor space and working capital for 18%.
Someone got paid on that 9 dollar gasket!! Maybe not the dealer then the manufacturer. It is my opinion it was probably both!
If we all ran our business like that we would go broke. I would be better off working for someone else!
So tell me Spanky what businesses do you own and run?
I gotta hear this one!
Sincerely Irritated,
Kingriz1
I think the recognition for the sport is awesome! My only concern, is that the companies don't grow so big, that they forget that we are the ones who made them! I recently did a school project on mx, and recieved all kinds of support from a lot of really great companies... but guess who wouldn't even send me a catalogue, without my $3.00 for shipping...:uh: FOX!!!:mad: they've gotten so big/cheap that won't even give one lowly moto-grom a couple of stickers and a catalogue, to hand out at his school fair!:mad: Huge props to Steve Schaffer at PJ1, and Michelle Versteeg at DeVol Racing! these people were very helpful!
- Aug 2, 2000
- 13,510
- 19
I get at least 5 or 6 FREE Fox catalogs a year! I haven't bought anything from fox since last Christmas (a top and pants for my Buttercup ;) ), but they keep sending me every catalog they make.
That $9 for the gasket was the end-user's cost, not the manufacturer's cost. There are at least a couple of mark-ups between the manufacturer and the consumer. And you selling saddles at 400% markup in a small business with little overhead is not the same as a large, high volume corporation.
I do not own a business, but I am certainly familiar with running one. I ran a department that did $5-7 million a year in total revenues, and I had to track that money to the last cent. I put $1,020,000 to the bottom line for my company from my depatment this year (as of Nov. 30, when I was let go) at 17% EBIT. This is in a very crowded, competitive industry, and high single-item profits are simply non-existant. The profit comes small chunks at a time, from volume.
You are right that all companies do not operate this way, but we were talking about a large corporation ( Suzuki) that makes profits from high volume, not a small, independant company.
I am sorry that I offended you with my statement about "knowing nothing about business". It was a poor choice of words on my part, and was not meant in the context that it must have presented. I apologize for the insult.
- Oct 20, 2000
- 2,969
- 2
Spanky, I too am in business for myself and have been since 1995. Myself and one partner have an office equipment dealership and based on BEQI & sales quota that the mnfg has established in order for us to continue as a dealer we have managed to hold on to the #1 spot in the nation every year since we began. Now the only reason I mentioned this is to let you know that I do understand how businesses must operate to survive. I can tell you that prior to doing what I do now I had worked for another company and I know what their prices are. I'll give you and example: A feed roller on a certain machine sold for $36. Now that I'm in business for myself I can buy the same part for $2. Now I do pay dealer cost but don't you think the manufacturer still is making money at $2. a pop?
It's kind of like the government paying $800. for a hammer, someone is taking advantage & in the motorcycle industry they get away with what they can get away with and that's fine with me. Reminds me of the old saying, "if you wanna pay, you gotta pay.";) If ever I get into a position that I can't afford to play then they won't be getting any money from me. If enough people fall into that catagory then the mnfg will have to re-think their marketing strategy or go out of business.
I'm sure that a gasket is probably die cut on a machine that someone just enters the numbers and the machine does the rest. It's probably not any big deal to reprogram but I have no way of knowing for sure & it really makes no difference to me anyway. All I know is I can buy a gasket kit for a small block Chevy for as much as I pay for a kit for the KTM and I know the KTM doesn't cost any more to mnfg.
Any smart business would never run ontop of Windows :)
Look at all the big boys, Windows for the desktop *nix for the back end, you know the part that really counts.
When was the last time you saw a DB running on Windows? We aren't talking MS SQL 2000 here, we are talking Oracle, Sybase, MYSQL. Scalable enterprise level software ALL running on Unix platforms. Linux is a really good solution for any business that doesn't want to get bent over by Bill Gates like alot of other people. Linux is about 400 times more stable, doesn't require service packs, and doesn't need a **** Xeon to run a webserver. Plus you pay for all the licences, support, all that other crap when you could pay a smart *nix admin 60K a year and everything would be taken care of. Whats one thing that couldn't be run on a *nix platform that can be run on a Windows platform?
Anyways, enough with my Windows/Linux rant. Just wanted to make sure everyone knew there are alternative solutions to Windows.
Look at all the big boys, Windows for the desktop *nix for the back end, you know the part that really counts.
When was the last time you saw a DB running on Windows? We aren't talking MS SQL 2000 here, we are talking Oracle, Sybase, MYSQL. Scalable enterprise level software ALL running on Unix platforms. Linux is a really good solution for any business that doesn't want to get bent over by Bill Gates like alot of other people. Linux is about 400 times more stable, doesn't require service packs, and doesn't need a **** Xeon to run a webserver. Plus you pay for all the licences, support, all that other crap when you could pay a smart *nix admin 60K a year and everything would be taken care of. Whats one thing that couldn't be run on a *nix platform that can be run on a Windows platform?
Anyways, enough with my Windows/Linux rant. Just wanted to make sure everyone knew there are alternative solutions to Windows.
Adrenaline
Mod Ban
- Oct 26, 2001
- 245
- 0
I agree it's nice to have gear thats sold cheaper to me. But I agree wiith YZEater, I hate people in general walking around in motocross apparel. It drives me nuts if they don't ride. Why do they wear it if they don't ride? it's nice to have it cheaper but to identify other riders and to be different i'd rather pay more and have less people wearing my motocross apparel.
Can we stick to the topic Spanky and Kingriz1 you two are confusing me with all those numbers!:eek: :silly:
Adrenaline
Can we stick to the topic Spanky and Kingriz1 you two are confusing me with all those numbers!:eek: :silly:
Adrenaline
Now, being truthfull:confused: I don't really care who wears what. If they got the money, and that's what they want to sport, let them. In my opinion, MX has been overlooked to long. People always (and probably still will) said "You ride dirtbikes? Well that's no sport, all you do is give it gas and ride around. How hard can that be?" To me the sport is underappreciated. Bring it to the light for everyone to see. Just don't let them see how horrible I ride:p :uh:
A reseller will take 18% and run with it. But a MFG will go broke soon with only an 18% margin.
I really wonder why JT got out of the MX gear market. They are still around, but have a limited focus in their product offerings since they only make stuff for paintball now:think
One might think that with the rise in popularity that they might consider jumping back in.
XRP - thanks for the trip down memory lane. I can remember sitting in class doodling FMF, JT, and DG logos all over my folders and book covers all the while thinking about riding my YZ80! Come to think of it, that might explain why my grades could have been a tad better... :scream:
-jeffd
- Oct 20, 2000
- 2,969
- 2
I appologize for going a little off topic here but this is exactly what I was talking about. I'm actually going to tie this all together.
The cost of the lease is $112 per month, plus the cost of the gasket material, cost of labor & the other overhead. Now granted if all you did was make l gaskets you would have to sell a lot to make any real money. Motorcycle mnfgrs probably outsource the gaskets and the people that them probably mnfg 100's of 1000's to all sorts of different venders so the overhead should be less in relationship to the amount of business they do. In other words, they stay in business and turn a profit.
Now if a motorcycle mnfg makes their own gaskets they would still have to sell a lot of gaskets to offset the cost of overhead, (which should'nt be too hard) probably more than if they had outsourced but they are less reliant because they sell more than one product. In other words they can make a little profit off of many items and still do well, I guess that's where the mnfg has to make a decission.
My comment on the cost of gaskets was because I can't figure out why KTM gaskets cost more than the Jap bikes.
It sounds like Fox has decided to do take a simular action and sell to all sorts of different vendors (dealers) much the way the gasket mnfg makes gaskets for many different products. Now they move more volume and produce more profit. We would all hope that if Fox or the gasket mnfg make a lot of profit that it would eventually trickle down to the end user but unfortunantly that's not always the case. I would be happy to buy a jersey at Wal Mart for 1/3 of the price I can get them now, even if everyone else is wearing them.
marcusgunby
LIFETIME SPONSOR
- Jan 9, 2000
- 6,450
- 2
Jeff KTM gaskets are only expensive in the US-the price has no relationship to costs or profits-its what they think you will stand paying for the extra quality;)
- Oct 20, 2000
- 2,969
- 2
I realize this Marcus, it's not only about supply & demand but what the market will bear. This is the case for most things we buy, be it motorcycle related or not. If someone else made gaskets that fit KTM's and sold a bunch of them then KTM's prices will come down if they wanted to compete. Why limit your profits when your product sells? Especially if you have a corner on the market. The truth is that I don't blame them one bit. I knew how much this stuff cost before I bought my last KTM yet it made no difference to me.
A little something my Grandmother once told me...the story 1st..Uh Um..
I had bought some new tires for a truck I once had. My Dad kept telling me he could get me some for about half of what it was going to cost me than if I gotten them on my own. I kept waiting but he never got around to getting them & I was getting desperate. I finally borrowed my Grandmothers' credit card and charged them. I ended up selling the truck before I got the tires paid off and the entire time my Dad kept telling me that if I had only waited ...etc. Of coarse I was feeling pretty down because I thought I had used poor judgment. My Grandmother ask me if at the time I bought the tires if I was happy with my purchase and I said yes. She then told me that I had nothing to feel bad about. That's the way I feel about my KTM.:)
- Thread starter
- #47
Re: Re: FMF in the mall
I own a shop and have watched the margins dwindle down to almost nothing, the way I make money is service and a few dollars off the parts, with so many companys selling out to big stores it hitting the shops hardeder then you know. If you thing theres so much money in parts try opening your own shop.
I own a shop and have watched the margins dwindle down to almost nothing, the way I make money is service and a few dollars off the parts, with so many companys selling out to big stores it hitting the shops hardeder then you know. If you thing theres so much money in parts try opening your own shop.
- Aug 2, 2000
- 13,510
- 19
Re: Re: Re: FMF in the mall
No doubt shop owners are probably taking it in the shorts, but the manufacturers aren't working for free, and they don't need the practice . . .
- Thread starter
- #49
I think the whole point to this thread is this, If you keep farming all the motorcycle products to places like wal-mart then long term wise you will also be counting on the min wage 16 year old in the oil change dept to adjust the valves on you 426 or rebuild lower end one your CR250. For all the people that think there a 400% mark up on the parts here’s some examples-
Dealer cost- retail-
Thor core 3 jersey 32.50 49.95
Pants 83.90 139.95
Gloves 19.90 33.95
(All kx 125)
FMF fatty pipe 144.00 199.99
PCII 70.00 99.95
Pro x piston 53.40 88.95
Cometic gasket kit 16.77 27.95
Total $420.47 $640.65
Minus 15% to compete with mail & internet $544.55
minus 2.5% - guy paid with a CC $530.93
ending totals - D/C $420.47 sales total $530.93
Actual profit $110.46 (pre tax)
And the above would be a really good sale, how many per day would a business have to do to stay in business? If we could get full retail out of the parts it wouldn’t be so bad, since we all have the internet & mail order to compete with it kills profits, then add in wal mart, shop ko, target, Kmart & etc. etc. etc. gaining access to power sports specific products and drawing more people out of their local shops what long term effects will this have? I don’t care what non-riders are wearing or if they know what the logos on their underwear stand for, that was not the point to this flame, the point was keep pulling the bread & butter out of the shops and see what happens. How would you feel when bike shop rates get up to $100 dollars per hour because the parts profit is gone. :silly:
Dealer cost- retail-
Thor core 3 jersey 32.50 49.95
Pants 83.90 139.95
Gloves 19.90 33.95
(All kx 125)
FMF fatty pipe 144.00 199.99
PCII 70.00 99.95
Pro x piston 53.40 88.95
Cometic gasket kit 16.77 27.95
Total $420.47 $640.65
Minus 15% to compete with mail & internet $544.55
minus 2.5% - guy paid with a CC $530.93
ending totals - D/C $420.47 sales total $530.93
Actual profit $110.46 (pre tax)
And the above would be a really good sale, how many per day would a business have to do to stay in business? If we could get full retail out of the parts it wouldn’t be so bad, since we all have the internet & mail order to compete with it kills profits, then add in wal mart, shop ko, target, Kmart & etc. etc. etc. gaining access to power sports specific products and drawing more people out of their local shops what long term effects will this have? I don’t care what non-riders are wearing or if they know what the logos on their underwear stand for, that was not the point to this flame, the point was keep pulling the bread & butter out of the shops and see what happens. How would you feel when bike shop rates get up to $100 dollars per hour because the parts profit is gone. :silly:
I've got a Green Bay Packers Jersey with "FAVRE" on the back. I'm guessing that when I walk my 5'10" 220 pound lard carcass through the mall that nobody is convinced that I play football or am Brett Favre. ;)
Just means I'm a fan. (for better or worse...mostly worse I think) :p
Just means I'm a fan. (for better or worse...mostly worse I think) :p
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