What profit should retail kart shops make?

Gemma · Joined: 03 Aug 2001 Posts: 70

I have stated in another topic that in my humble opinion a retail shop should make a profit of 30%-35%. There are many who are not, and on some parts this margin should be up around the 70%-80% mark. These guys have families to support just like we do.
It would be fine if they are selling things for US$5,000-US$10,000 all the time, sure there profit margins could be lower, but when the selling price of some parts maybe US$5-US$100 the margin needs to be much higher.
The old catch 22 situation just keeps coming back, motorsport is expensive, it does not matter what form of motorsport it is,if you want to have fun in motorsport it is a lot cheaper to go to a hire-kart track. It costs us about US$4 per lap of racing, and if you work out your own scenario, I think you will find it somewhere near the same.
We have to support the people who are supporting the sport, without the retailers, you would not be able to repair your kart.
We need more money in the sport to give more money back to the sport,to get more people interested in the sport, US$10,000 to enter a PRO-RACE, and US$200,000 to the winner, what no-one interested? that is a suprise. Sorry for being sarcastic.

Patrick Hubbell

quote:
Originally posted by Ray Kristie:
I have stated in another topic that in my humble opinion a retail shop should make a profit of 30%-35%. There are many who are not, and on some parts this margin should be up around the 70%-80% mark. These guys have families to support just like we do.
It would be fine if they are selling things for US$5,000-US$10,000 all the time, sure there profit margins could be lower, but when the selling price of some parts maybe US$5-US$100 the margin needs to be much higher.
The old catch 22 situation just keeps coming back, motorsport is expensive, it does not matter what form of motorsport it is,if you want to have fun in motorsport it is a lot cheaper to go to a hire-kart track. It costs us about US$4 per lap of racing, and if you work out your own scenario, I think you will find it somewhere near the same.
We have to support the people who are supporting the sport, without the retailers, you would not be able to repair your kart.
We need more money in the sport to give more money back to the sport,to get more people interested in the sport, US$10,000 to enter a PRO-RACE, and US$200,000 to the winner, what no-one interested? that is a suprise. Sorry for being sarcastic.

No need to apologize for your opinions. Sure some kart shops mark up items in excess of 50,100 percent and sometimes more. You pay for the conveinence at the "local" kart shop. If you feel you can get it cheaper some where else and can wait to get it then that's the way to go.

A business no matter what type needs to sell at a profit that will keep the doors open. Some just take it to far but if they offer something else like customer support then their high prices could be acceptable.

Darren Swisher

In my years of business ownership in the karting industry, I have come to the realization that many karters see profit as a bad word, Thinking that they, in return for running a sticker, should get there items at cost. Or that since I am a business owner I have all the money I ever need and they should get a deal. Just my opinion, It seems to be changing slowly.

As for what a business should set his profit margins at is somewhat simple.

1. What is the competition selling price.
2. Am I offering added service.
3. What will the market hold.
4. What are my absolute cost, which is cost of item plus freight, overhead ect.

I would say most businesses are fair when it comes to profit margins. In the end if the customer is happy that the product is performing and happy with the service, price of an it will come in a second or third in reasons for purchasing.

Darren

Roy Randolph

I personally have owned business in the past (not Karting) and I personally know a couple guys that have thier own Kart Shop. Since this is a Free Market, one can sell thier goods for any price they want, but your not required to buy them. With that in mind prices are market and value driven. I am more than willing to go to the Home Theater store to purchase my Big Screen TV because I know I will get service AFTER the sale. If price was my ONLY consideration I would buy it at Wal-Mart (a high volume discount store in the USA)The service and quality would not be as good.

But I sit by and watch karters go calling up the Kart shop asking questions and wanting help and when they purchase their karting goods they go buy from the cheapest outlet they can find. To me thats a slap in the face to the Kart Shop. If your going to do that than make a donation. This goes on ALL the time.

Chaz Clover · Joined: 18 Jul 2001 Posts: 879

In many segments of the retail industry, retailers ofeten use a "Keystone" markup. That's about 100%. IOW they pay 1 dollar and sell for 2 dollars. The jewelry industry uses even higher margins.

Current margins in the karting industry (by my understanding) are painfully low IMO. It's no wonder kart shops are so cash poor.

I disagree with Ray's assertion that shops be limited to a particular markup. Shops should sell their products for whatever they can get.

Unfortunately in this business it seems they can't get all that much.

Chaz Clover
http://www.kartmonster.com

Chaz Clover · Joined: 18 Jul 2001 Posts: 879

Ooops!

Sorry about the misunderstanding.

quote:
Originally posted by Ray Kristie:
Hold on a minute, I think you have misunderstood what I had said. I think they should make a minimum of 30%-35%, the more they make, the more they will put back into karting (well most would) I would be happy if they made 100%, it would give everyone a wider range of parts to select from and no waiting for a part to come in next week etc, when you want to race now.

Gemma · Joined: 03 Aug 2001 Posts: 70

Hold on a minute, I think you have misunderstood what I had said. I think they should make a minimum of 30%-35%, the more they make, the more they will put back into karting (well most would) I would be happy if they made 100%, it would give everyone a wider range of parts to select from and no waiting for a part to come in next week etc, when you want to race now.

S. Clark · Joined: 18 Jul 2001 Posts: 32

I love you guys
Steve at web page

Andy Seesemann

quote:
Originally posted by Ray Kristie:
, the more they make, the more they will put back into karting (well most would)

Why is that statement about putting back into karting made?

I work at a karting business that sends our motor builder to local, regional and national events to help with customers(both ours and rival shops) and tech. We help the local clubs and regional series by sponsoring classes and donating products. We are a ROTAX MAX Distribution Center and I am the Regional Coordinator for our series(organizer of the class, keeper of the points trackside support. etc.). So, I think that we do a lot.

My question is, why don't we ask this of other businesses outside of karting? You never hear of people bashing the Supermarket for not giving back to hunger. Or the clothing store not giving back to people with poor fashion sense. We do however always hear that karting businesses NEED to give back to the sport.

WHY?

-ANDY

Bob Chiras · Joined: 30 Jul 2001 Posts: 198

As a team owner I never shop for price but always shop for service.

My suppliers are the best that I can find in service. They share knowledge, the accept input, they supply track side support.

When I need products they source for me. I say I saw it in a magazine and would like to try something they often have positive or negative experience with the item prior to me asking.

Smart racers shop for service and not price. The few if any dollars that you may save will never be noticed on the day when you need something at a race and there is no one to source the part for you.
I've had some of my suppliers overnight stuff to their hotels for us to run the next day. You do not get that from the low price guy.

Quality service always wins.