Three times as many OEM sales...that would be a big difference in OEM income compared with components....and far fewer fussy customers. Have no idea what the mark-ups are on OEM equipment, so might be way off base on this one.
As for fussy customers, I'm here for them. To change shafts, grips, loft/lie. When a customer convinces himself/herself that the "name brand" is the most reliable they have taken the hook! That's what the proline company spends ad bucks for. Endorsements by Pros sets the hook so that the customer places poor performance on themselves not the manufacturer. That's why they take their stuff to Second Swing or Play It Again Sports when it doesn't put them on the tour.
As for proline markup. Take the manufacturer's suggested retail and multiply by 60% that's dealer cost. Now discount the suggested retail to "street price" (what retailers are actually selling the product for). Divide dealer cost by street price and subtract the result from 100. The result is Gross markup percent. Subtract business expense and you have net profit. Example $800 sugg. retail for set of irons, cost $480 "street price" $699.99 equals 31.428% after expenses this will be reduced to about 25%, run a sale and it could come down to 20-22%. At 22% gross profit is $135.38. Would you give me $480 to make $135.38 profit? Yes, if you can turn the goods fast and easy! Yes, if you can have 90 payment terms. Yes, if you get co-op ad allowances. Absolutely yes if you can stock balance out outdated merchandise. Dreamer! That's what is squeezing profit out of the proline dealers. Faster introduction of new products is forcing clearance prices and lower p! rofit! This is becoming the current method of "sucking through" golf equipment! A custom builder doesn't experience as much risk (head inventory may go "stale" but shafts/grips/ferrules don't). And head inventory is low compared to inventory of completed sets in various shaft flexes. Would you spend $125 (approx.cost of components) to take in $260 for a set of irons with about 1.5 hrs. labor and 1 hr. sell time for the same $135 profit? That's what a good clubmaker is doing. Can you reduce the time factor? Can you get the sale faster? Can you get MORE sales? Can you accept sloppier tolerances and correct them yourself at a reasonable cost (adjust loft/lie)? Profit picture will improve! You can give your customer a better set of clubs (fit) for a much better price!
I haven't even touched on the profitability of repairs, retro fitting, regripping! You could make more profit on a reshaft/regrip/loft-lie adjustment job than the dealer who originally sold the clubs!
Smile at those fussy customers. You will never be able to please some people! Ponce DeLeon never found the fountain either! Say Thank You for letting me have so much fun while getting paid.
Lecture over, I've got to get the deposit to the bank!
Arnie
