Page 1 of Markup? What you mean make a profit?

As this was stearing rapidly away from being on topic for the thread it was sitting in, I thought Id start a new one about it as its a very interesting discussion on its own.

I think we can all agree that we find it reasonable for a company to make enough money to cover their costs and make a bit of dough whenever they sell us something. The issue for contention is of course always going to be how much.

Most internet mail order companies obviously have lower costs than high street retailers so their markup can be a lot lower for them to make a profit. You only have to do a quick browse of popular net mail order places to notice that some companies have a lower markup than others, relying on shifting volume to survive.

Now lets look at how much the retailers get a disc for and how much they sell it, since we are far more willing to pay out a higher markup for a DVD player than a cheap mass duplicated disc. DVDs in the UK seem VERY expensive compared to the US who`s online sites regularly offer discounts of up to 40% on preorders.

If UK companies did the same thing they would be selling at a loss. Lets look at an example with say Warner`s Three Kings which came out this week. This costs retailers roughly £13.50 buy, and it retails for £19.99 and thats what you pay in a high-street store. Allowing for VAT, they will make around £3.50 from every copy you buy, doesn`t sound a lot does it but still a nice profit margin to help offset the high costs of store based commerce.

Now as for internet retailers who are selling this at £15.99? If they are buying it at £13.50 they can`t even be making a profit unless they are getting a bulk discount and even then they must be making far less. That is with a 20% discount too, so clearly 40% discounts are just never going to be feasable in the UK.

Makes you think doesnt it.

Doesn`t this belong in a column ?! ;-) (certainly long enough, insightful enough and topical enough)

What I`d like to find out is how the £13.50 cost price is divided. I`m sure the studios are raking it in somewhere !

This item was edited on Tuesday, 19th September 2000, 19:25

how do you figure the £13.50 price??
the so-called wholesaler Makro sell all dvds that have rrp of 19.99 at 13.99 pre-vat.
do you seriously think they are happy to make a piddling 50p profit on every disc they sell - not really enough to cover overheads is it?
retailers in this country will charge whatever they think the customer will pay, and whatever they ALL agree they can get away with.
the yanks seem to get bigger discounts because they have a more volatile market, and which is more competition led than ours.

Thats the trade price for this disc, however I do believe that they get discounts for bulk purchases.

And Dan, I don`t put sensible stuff in my column, that would be heresy!