Forum adverts like this one are shown to any user who is not logged in. Join us by filling out a tiny 3 field form and you will get your own, free, dakka user account which gives a good range of benefits to you: No adverts like this in the forums anymore. Times and dates in your local timezone. Full tracking of what you have read so you can skip to your first unread post, easily see what has changed since you last logged in, and easily see what is new at a glance. Email notifications for threads you want to watch closely. Being a part of the oldest wargaming community on the net. If you are already a member then feel free to login now.

Thought the Dakkanauts might be well-placed to answer my friend’s leftfield question: ‘does anyone know what sort of a mark-up/margin independent retailers make on board games, war games and hobby books?’

It’s been a while since I had contacts in the retail world, but IIRC they generally bought stuff from distributors at like 50% off. But that may differ on products, etc.

From that profit they had some wiggle room for sales, but still needed to cover their overhead.

I know we have some actual shop owners who post here occasionally, hopefully you can get a better/more up to date answer.

Yeah, 50% is the general rule of thumb to buy from distributors.

We (Oathsworn) don't sell our minis through retail/distribution, but we get asked regularly, so I know the kind of discounts needed - distributors generally require 60% discount, and retailers going direct generally want 40 to 50% discount.

Both distributors and retailers usually expect shipping to be included in the price, as well.

 LunarSol wrote:
Yeah, 50% is the general rule of thumb to buy from distributors.

Sure, but that is not the profit margin. From that 50% you have to pay rent, utliities, insurance, wages, subscriptions, marketing, and other expenses.

When I ran the numbers about 7 years ago the profits were almost non-existant, and you were putting in long hours for almost no return.

So my answer would be something like 0-5%. So if you sold $100K you would "profit" about $0-$5K dollars per annum. Enough to barely keep going, but one wrong bet and you were screwed. It was just as likely to lose money any given year.

There are a few caveats though. You could pack a lot of "living expenses" into those numbers if you also sold some grocery-style items and had a company vehicle. Of course, even losing money you could sometimes come out okay due to tax benefits, and possibly get more from tax returns in a year than actual profits. So the best way to make a million dollars in the Hobby Shop industry is to start with 2 million.

A business like this is all based on how good you are at building relationships/community (which is time and effort intensive) and how well you can absorb losses from year-to-year. If you want to survive, you have to take the money side extremely seriously, have a strong personality, and it helps to have an outside income stream as well.

For the hobbyist one off attempt? Normally lose money once your labour is factored in at minimum wage.

 Easy E wrote:

 LunarSol wrote:
Yeah, 50% is the general rule of thumb to buy from distributors.

Sure, but that is not the profit margin. From that 50% you have to pay rent, utliities, insurance, wages, subscriptions, marketing, and other expenses.

When I ran the numbers about 7 years ago the profits were almost non-existant, and you were putting in long hours for almost no return.

So my answer would be something like 0-5%. So if you sold $100K you would "profit" about $0-$5K dollars per annum. Enough to barely keep going, but one wrong bet and you were screwed. It was just as likely to lose money any given year.

There are a few caveats though. You could pack a lot of "living expenses" into those numbers if you also sold some grocery-style items and had a company vehicle. Of course, even losing money you could sometimes come out okay due to tax benefits, and possibly get more from tax returns in a year than actual profits. So the best way to make a million dollars in the Hobby Shop industry is to start with 2 million.

A business like this is all based on how good you are at building relationships/community (which is time and effort intensive) and how well you can absorb losses from year-to-year. If you want to survive, you have to take the money side extremely seriously, have a strong personality, and it helps to have an outside income stream as well.

Oh, I'm not in any way suggesting that is a good margin. Even discounting costs, you're looking at the reality of something that sells low enough volumes that priced at double what paid for from distribution, if you stock 2 and sell 1 you're breaking even. You are absolutely spending more to stay stocked than you're making back for a while and probably needing to have a few big sales to offload unsold products just to refresh shelves.

Yeah, you really need a strong business plan that you update every year to stay on top of the business side of things.

However, most people interested in a business like this are NOT going to be focused on that side of the equation.