We've launched the new forums! Read more here

New Driver...What you Pay-Where it goes?

bobgeorge

bobgeorge

Kentucky Wildcat Fan!
Joined
Jan 6, 2011
Messages
2,046
Reaction score
51
Location
Georgetown, KY
Handicap
15
All,

Has anyone looked a the new golf magazine, page 69. It gives a breakdown of where the cost of the driver goes. For a $400 driver it says:

Retail markup - $200
Materials, freight, and delivery - $105
Salaries and overhead - $45
Marketing and player endorsements - $20
Company profit - $20
Research and development - $10

Obviously this is just an average. I am sure some companies like Taylormade and Callaway spend a lot more on marketing...but I was shocked that the profit was only $20 & R&D only $10.

Any comments?
 
bobgeorge said:
All,

Has anyone looked a the new golf magazine, page 69. It gives a breakdown of where the cost of the driver goes. For a $400 driver it says:

Retail markup - $200
Materials, freight, and delivery - $105
Salaries and overhead - $45
Marketing and player endorsements - $20
Company profit - $20
Research and development - $10

Obviously this is just an average. I am sure some companies like Taylormade and Callaway spend a lot more on marketing...but I was shocked that the profit was only $20 & R&D only $10.

Any comments?
Click to expand...

Taylormade sold 1million white drivers:

Retail markup - $200million
Materials, freight, and delivery - $105million
Salaries and overhead - $45million
Marketing and player endorsements - $20million
Company profit - $20million
Research and development - $10million

Maybe sounds kind of right when you look at it in terms of total and not per driver.
 
I would have thought there might be a little more company profit and a little less retail markup...don't most of the Major OEM's set the minimum retail price?
 
It's always interesting as to how much the retail mark up is for items. It usually is double what they pay.
 
Those are some crazy numbers to look at. Never knew there was so much that went into a single club.


Tapaway!
 
c0ncept said:
Taylormade sold 1million white drivers:

Retail markup - $200million
Materials, freight, and delivery - $105million
Salaries and overhead - $45million
Marketing and player endorsements - $20million
Company profit - $20million
Research and development - $10million

Maybe sounds kind of right when you look at it in terms of total and not per driver.
Click to expand...

I really can't imagine TM making so little money out of two models!
 
Wow. Crazy that the OEM makes such a small percentage. Retail markup is much bigger than I thought it would be. Crazy stuff.
 
They buy em' for that cheap!!! Looks like I need to "open a shop".


Tempo, timing, tapping.
 
Damaikis said:
Wow. Crazy that the OEM makes such a small percentage. Retail markup is much bigger than I thought it would be. Crazy stuff.
Click to expand...
They make more than you think if you look at it. If the cost of goods sold is $105, that remaining $95 is the total profit to the OEM. This is just showing how they, on average, break out that profit. Maybe they keep $20, maybe it is $50. Accounting can be manipulated to make it look like anything you want. As the other example showed, multiply that by a million, then by 3 or 4 different clubs, and they are doing alright. As far as the retail markup goes, when you consider how many get sold at $100 off, it makes sense. They try and sell as many as they can at $400, but when that dries up they sell them for $300 and it looks like a great deal to the consumer. The store is still making $100.
 
The mark up on almost all retail is crazy at the big box stores. This is mainly due to the large quantity they buy and usually are buying straight from the factory and not a middle man(distributor). Our local mom and pop stores, clubs and pro shops don't get the same deals on clubs as say GG, Dick's, Golf Smith, Golf Tech; etc....

I have a buddy who used to have a small business and wouldn't carry certain products because he would make less than a dollar per item sold, because he had to compete with the BIG chains on price.

I know we pay a little more at the locally owned places sometimes but sometimes it's worth keeping the little guy in business and food on his/her table.
 
golfinFF said:
The mark up on almost all retail is crazy at the big box stores. This is mainly due to the large quantity they buy and usually are buying straight from the factory and not a middle man(distributor). Our local mom and pop stores, clubs and pro shops don't get the same deals on clubs as say GG, Dick's, Golf Smith, Golf Tech; etc....

I have a buddy who used to have a small business and wouldn't carry certain products because he would make less than a dollar per item sold, because he had to compete with the BIG chains on price.

I know we pay a little more at the locally owned places sometimes but sometimes it's worth keeping the little guy in business and food on his/her table.
Click to expand...

Couldn't agree more.
 
Agreed GolfinFF. There isn't too many small shops around me but I like to buy from them when I find them.
 
The retailer has rent, employee costs, inventory cost, advertising expenses etc. So it is not like they are pocketing $200. They are also not guaranteed to sell the club for $400 since the inventory will get marked down as soon as newer generations come out.
 
Which is why I buy new clubs that are a year or more old on markdown and the markup is knocked down. 99% of the performance of the new model for 50%-75% of the price after they are marked down to move out the next year.
 
NathanL said:
Which is why I buy new clubs that are a year or more old on markdown and the markup is knocked down. 99% of the performance of the new model for 50%-75% of the price after they are marked down to move out the next year.
Click to expand...

If I could only get so lucky. Still looking for a decent 909D2 voodoo without sky marks for under $150 lol
 
In 2006 I started looking into starting a business when I retired in 2008. My friends who were in business said this is not a good time to start a business. The main reason they showed me was that small businesses like I would be starting , 50% of my gross goes out in checks to the government. I said taxes are not that high, they said the rule of thumb for businesses is 31% taxes to local, state and national. The rest of the government costs which your gross pays goes for things like employee taxes, social security, etc before you start paying rent, utilities, cost of product, insurance, employee income etc.
 
I worked retail for a golf chain a decade+ ago and the markup on big drivers was more like $100 on those $400 drivers, not $200. ie Titleist 975D wholesale cost us $300, sold for $400.

As previously mentioned retailers have employees, stores (for our convenience to compare and try things out in person), all the other business fees. Just look at home many retail stores of all types close/fail on a regular basis. Retail does not always mean monster profits regardless of the industry.
 
NathanL said:
Which is why I buy new clubs that are a year or more old on markdown and the markup is knocked down. 99% of the performance of the new model for 50%-75% of the price after they are marked down to move out the next year.
Click to expand...

me too!
 
Shipping and freight is a touch steep, especially since they probably have some sort of deal worked out with UPS/FedEx for the amount of sending they do.
 
Retail markup standard is usually 100%. On everything you buy.

Not surprised one bit...
 
You must log in or register to reply here.
Back
Top