Leica dealer profit margin?

[monza]

I'm unaware of minimum stocking requirements for Leica. They had special programs for medium format which would provide larger margins if demos were on display but those were optional.

 

[MoJo]

There is obviously a difference of opinions to this challenging topic. I do have something concrete to offer here however. I used to work in a camera store, that became a licensed Leica dealer, and I read the actual contract myself between Leica and the store. It was a multi-page contract, and I do remember as clear as day, that the margin on Leica products was 25-27%. This is not hearsay, or what some dealer states. I was also aware that the margins on other brands, Canon, etc, were only about 5-8%, hence the emphasis by stores on selling accessories, where the profit is much higher.

 

[monza]

There is obviously a difference of opinions to this challenging topic. I do have something concrete to offer here however. I used to work in a camera store, that became a licensed Leica dealer, and I read the actual contract myself between Leica and the store. It was a multi-page contract, and I do remember as clear as day, that the margin on Leica products was 25-27%. This is not hearsay, or what some dealer states. I was also aware that the margins on other brands, Canon, etc, were only about 5-8%, hence the emphasis by stores on selling accessories, where the profit is much higher.

What century was this?

Standard margins have been as I've posted above for the past several years.

 

[FrozenInTime]

Working this from the other end:

What does it cost to lease 2000-5000 sq. ft. , renovate / set up, stock and run a boutique store in a prime city centre location with three knowledgable staff ?

How much net return is needed to make the enterprise worth while ?

I would be amazed if the actual margins and bulk discounts were not individually negotiated to get beyond the standard dealer retail terms.

 

[monza]

Working this from the other end:

What does it cost to lease 2000-5000 sq. ft. , renovate / set up, stock and run a boutique store in a prime city centre location with three knowledgable staff ?

How much net return is needed to make the enterprise worth while ?

I would be amazed if the actual margins and bulk discounts were not individually negotiated to get beyond the standard dealer retail terms.

Overhead certainly is a large factor, as is personnel expense.

Another factor that exists today is competition from Leica themselves. When skus are scarce, who gets allocation, company stores or independent dealers? I informed this forum of the impending plan of company owned stores a few years ago and some took issue with it; a few short months later I was proven correct.

To compete as a US Leica dealer today requires low overhead and creative execution. Popflash is the best example.

 

[monza]

I would be amazed if the actual margins and bulk discounts were not individually negotiated to get beyond the standard dealer retail terms.

There may be a very small number of dealers who have the leverage to do this. They have to have serious volume and prove that they won't give away the pricing advantage. B&H and maybe one or two others at most might qualify but a small independent dealer has no where near the clout to do this.

 

[MoJo]

What century was this?

Standard margins have been as I've posted above for the past several years.

Well it was in this century, but just barely. I am surprised that Leica has lowered their margins by so much, but can only speak for what I saw at the time.

 

[hasselbladfan]

They could have sold them at 5D prices and still made a profit but no no, it's Leica. Superior blah blah blah until it has any of the myriad of problems associated with that camera. ...

But hugely over-priced considering how it was developed and all the issues that came with it. I know, I know, Leica doesn't sell cameras, they sell mystique. [/url]

LEICA's COMPANY FINANCIALS

Income Statement 2011 2010 2009 2008 2007
Revenue $364 $215 $187 $243 $201
Gross Profit $209 $133 $102 $140 $116.059

Net Income $50 $3.9 $-6.4 $4.4 $0.4

For those, who are interested in Leica's profit as a Company (only data till 2011). I would not like to be a shareholder. From 2007-2010, they made barely 1.6 mio in combined profit in 4 years on a 4 years turnover of 850 mio, despite their high prices.

Finally in 2011, they seem to turn the corner and have a 14% profit.