I've heard it said that channel pricing is 30-50% lower then retail prices. Makes sense as system builders need to make some profit. I talked to a channel partner and the price that she quoted from her vendor was like $10 (including S&H) more expensive then the retail. Why is that? Is there something wrong?
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Channel Pricing?
- Thread starter Duke3d87
- Start date
BillR
Born Again Cynic
- Joined
- Feb 17, 2002
- Messages
- 18,535
Duke3d87 said:
I believe someone has misled you on mark up, especially on computer parts. Those kinds of percentages on CPUs, ram, mother boards and other core components just dont exist.
Apple is among the most profitable of the computer companies. Last years I pod Nano that sold for $149 actually cost Apple $97.00 to manufacture, and thats before boxing shipping and advertising. Apple reported making $25.00 gross per unit. That doesnt leave much for the resellers, especially if they buy from distributors who of course want their cut.
With CPUs its all about quantity. The best deals start when you buy in lots of 1000 direct from the manufacture. Unless you are a Dell, HP etc that usually doesnt happen. The smaller dealers buy from distribution channels. The bigger distributors might actually be able to buy 1000 piece lots, but as a rule they cant which is why they are distributors. They become the middleman between the factory and your dealer and of course then need to make a profit as well.
So, in this case your Channel Partner is buying as a third person down the line. Depending from whom she is buying and the quantity involved that 10$ difference just might be her profit.
Most local computer shops make it up on accessories and labor and service. Why do you think BB has the Geek Squad and now CC has Fire Dog, labor is where the profit is.
Same with the new TVs suggested retail would be a wonderful thing, the dealer could actually make30 to 40 percent, but that never happens. Years ago a thing called MAP came along which means minimum advertised price. This means that all the Video and Hi Fi manufactures cant advertise in the Sunday paper below a fixed price. That fixed price (MAP) is well below MSRP, manufactures suggested retail price, as in the 10 to 15% bracket these days. Thus in order to stay in business every dealer is going to push for home installation and tons of accessories.
Sorry for the long-winded explanation, just trying to clarify why much of the pricing is where you see it these days. There is more to all this, ad money, end of the year rebates for the dealers etc, but I won't go into that here.
