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Golf Equipment Pricing ("Cost" vs. Retail)

post #1 of 11
Thread Starter 

Question to those who are (or have been) in the golf industry.  I was curious what type of differences there are in what Golf Galaxy (or other retailers) pay for iron sets or drivers vs. the retail sale price.

 

Considering how much retail prices drop on drivers after 8-10 months, I assume the retailers' costs for drivers are well below the retail prices.  But with irons, the retail costs seem to remain firm for years.

post #2 of 11

It will be interesting to see what responses you get on this question. You make a good point on the irons pricing holding steady for years. On the surface that could be due to the lower production numbers of full sets of irons vs Drivers.  Then that begs the question do they produce more drivers/woods because they are easier to produce? 

post #3 of 11

I think you also have to consider that the manufacturers probably lower their prices as well once a model is nearing it's shelf life.  Especially on drivers since new models come out at least annually.    Versus iron sets that seem to hang around for 2 or more years. 

 

For instance I recently purchased a TM R9 460 driver for $147 on Amazon.com

That was probably at or around what the box shops paid for them when they first came out.  Hence the $300 price tag for us.

I assume that TaylorMade probably dropped their price on the R9's to around $99 or under to the dealers once the R11's started showing up. 

 

Also, I have seen in my recent hybrid search that TaylorMade will release clubs to online dealers with an "ARP" stamp.  Asset Recovery Plan, which, after researching stands for overstock they are selling or customer non-open item returns.  They sell it cheap and in turn we benefit from the cheaper prices.  As long as you are willing to forgo the warranty from TaylorMade.  However most online retailers will provide you with a warranty on the club.   

post #4 of 11

Most sporting goods retail at a 100% markup. So that means the store paid ~$100 for a ~$200 driver. That is a fairly standard procedure on most high dollar retail operations.

post #5 of 11

Assuming that the costs are around the same regardless of it being a local pro shop or national chain, most clubs are probably at about a 40-50% margin.  I bought an old hybrid a couple year ago when a new model came out and the pro shop simply sold it to me at cost which was about $115.  The retail was $199.  I had a friend a few years ago who knew a club rep and was able to get a $400 driver at cost for about $260. 

 

Depending on the shop and manufacturer, there might be discounts on top of the regular cost, that allow them to make more money.  If I am a club pro with a Cleveland club deal, the equipment I get from Cleveland will cost me less than the Taylor Made gear I have and I'll make more money on it.  You should always be able to negotiate a lower price on clubs from a pro shop when it is 'their' brand since they will have more wiggle room to make their profit due to a lower cost.

 

From what I understand, when you see stuff drastically reduced, the retailer is getting some sort of dealer allowance from the manufacturer to help move the old product.  They are not just taking a bath on it by selling it below cost.  Nobody wants old gear on the shelf when the new stuff comes out so they do what they can to move it.   

post #6 of 11

To reconcile the posts of soulton and goblue, a 50% margin and a 100% markup are equal.  Goblue said 40-50%, and based on my retail sporting experience (though not golf), I would lean toward the 40-45% margin or around 67- 82% markup.  I would have to believe that if the big chains don't get a different pricing structure, they at least get some kind of rebate on the back end for volume.  Or there could be a volume structure set up on the front end available to every dealer.  I also don't know if everyone is on the same distribution set up--do the small shops buy direct from the manufacturer or is there another step in the delivery chain.

post #7 of 11

I have a friendly acquaintance that is a golf pro.  He said that he gets different pricing than Dick's Sporting Goods or other large retailers because of their volume.  He'll pay more and have to sell it for less than they will.  His club selling volume is waaaaay down over the last couple of years.  Not sure about specifics, but he said just beats his break even now on equipment.  He carries product as a courtesy to course membership and doesn't expect to make much on clubs.

post #8 of 11

I just stumbled across this thread and thought I would add my two cents. To kind of add a little more on the cost side of things here are some interesting points. I lived in S. Korea from 04-10 and I was friends with a golf rep for a major company. He informed me that with his company 64-72% of the retail price for the product goes to player endorsement. I am sure the other companies are somewhere in line with that. Funny thing is, if you ever get a chance to go to China and see the factories and take a tour, you will see that a lot of heads are made in the same foundries. They will have a load come off the line and get divided up. The same heads go into different stalls and get stamped and decorated with different markings. That's where a lot of "clones" come from. It is the exact same head, just stamped differently. Not every brand does it this way but a lot do. The cost of manufacturing clubs in China is so cheap you would not believe it. There is a good reason why clubs are made there now and not here. Money. The foundries never shut down, assembly shops operate 24/7, workers live at the factories in dorms. It is crazy in China. Go down one street and by clone irons for 50 bucks or go over two streets and buy real ones for 200, 8 irons, bag, wedge or two and a driver. Cosmetic blems is about it. Go to Mission Hills and pay top dollar. Makes you wonder how can a 400 driver from 2013 be 129.00 today and someone still make a profit. Cost the driver only cost 2.00 to make to begin with.  

post #9 of 11

Why can you get a graphite driver shaft for $50 or $350? Is there really that much difference in their mfg and performance?

post #10 of 11
Quote:
Originally Posted by Fozcycle View Post
 

Why can you get a graphite driver shaft for $50 or $350? Is there really that much difference in their mfg and performance?

 

Difficult question. 

 

Mostly its about feel. More price you can get a stout shaft that feels softer. Even that is subjective though. 

 

Numbers-wise you probably wont see much difference. Were it really hits a golfer is someone with a very high swing speed. It gets tricky because of how the shaft loads. These shafts just don't have the market outside of very good players, so they cost more. You get higher torque, less weight (less material), not as stiff shafts. There is a lot of volume being sold of those compared to other shafts. 

 

Though in terms of pricing, those shafts should be priced more actually because the volume is higher. Price should go up as demand goes up. Oh well. 

post #11 of 11
Most of the time in retail, items have different mark up percentages. Retail is what I do for a living and marking merchandise at a standard percentage will not work. You also have to factor in buying practices. Most manufacturer s will offer buying incentives for retailers on new or discontinued product. So I guess the simple answer is it depends on your location and the retailer you are purchasing from.
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