Well no they don't tell you how much they paied for it. It's true of every retailer and for every product.

 

Well, maybe they don't, but I found a handy little app in the system that shows the percent profit on a given product. I can't speak for the main line, but TRU is only making around 25% on the MPM figures.

 

Mark up is not the same as profit.

 

Precisely, though profit is the lower--the general rule in consumer goods is price doubles at each distribution level to cover that level's overhead and allow enough profit margin to keep them dealing with that product.

As a general rule, once you get past 30%-off MSRP, the store is LOSING money on the sale because of overhead expenses, and at 50% or more they've taken a charge-off and are looking to recover something however little it may be rather than send it to a landfill and lose the whole investment.

Recovering Business/Management major over here...

 

So with a 25% profit, what kind of markup would you expect?

 

I'm assuming TRU and any other Big Box is big enough to completely bypass the midlayer the Mom-n-Pops depend on and act as their own distributor, pocketing the Distro--which fundamentally changes the math because of having the greater overhead expense. E-tail also has different math than B&M due to lack of "storefront" overhead, and puts price pressure on BBR just like BBR does MnP.

I am also obligated to note there's a reason I say "Recovering"... I got fed up with the office-politics BS and threw it all away to become a History major. Most of my Management classmates were douches anyway... not the kind of people I wanted to spend a career as a "peer" to.

 

So, it's not really an answer above, but at the end I consider a 25% profit for a commercial Big Box pretty reasonable--under Normal Model, if we assume the Distro Layer costs are same for both BBR and MnP (other than the distro's profit which gets cut out), let's use a $100 MSRP (assume no Minimum Advertised Price) for example.

Hasbro sells via BBR, Distro-> MnP and D2C.

Hasbro's "out the door" to BBR and Distro is about $25.
Distro overhead adds $12.50 to both, MnP eats another $12.50 for Distro Profit. Running costs $37.50 BBR, $50 MnP just to GET product into store.
Now we add another $25 for Retailer Overhead--this brings us to $62.50 BBR, $75 MnP.
Final out the door of $100 gives TRU $37.50, MnP $25, which explains why they can occasionally drop discounts that would break a Mom 'n' Pop. They may take a loss on an individual item, but the occasional Loss Leader gets people in the door and they'll probably buy other things at full price while there, much like a $100 Big Screen on Black Friday.
The REAL profit is in Hasbro D2C, which sells at full shelf price "to not undercut our retail partners" and thus pockets $75 in almost-pure profit, PLUS the $6.25 profit-margin in their $25 "trade price." ($12.50 costs from factory, $6.25 their overhead.)

 

I don't think there's been that kind of profit in the toys segment in years, however. Stores such as Walmart will often use toys as a loss leader, just part of the enticement to get people into the store. (Groceries are really bad, something along the lines of only a few points - it's made in volume.)

I seen some internal Walmart pricing info probably about 13 years ago, on Star Wars figures. I don't remember the exact numbers, but it showed along the lines of a cost of $5.72 for figures they were selling for $6.49 at the time.

 

Absolutely true. Walmart actually often operates their grocery section at a loss knowing folks will go purchase other goods in the more profitable side of their stores while they're there. It was all the talk at the local Kroger (Dillons in this case) among management when the grocery sections were first added at Walmart Supercenters. Eventually, Dillons had to start adding small non-grocery sections to their stores to combat the Supercenters.

Of course, now the they share a common foe...Amazon.

 

It's also worth noting that I jumped off the MBA Train in '02--to say things have changed a lot in the decade and a half since is an understatement.  

 

If this is true, EntertainmentEarth lied/lies about "Hasbro Direct" pricing.

But NEVER have I seen anywhere near that kind of margin from a distributor and I've been pretty open about what a shit show toy sales is.

This has been more in line with my experience.

 

Again, let me note that my data is 1. older than some TFWers' children (a kid born while I was in BUS 240 would be entering high school this year), and 2. general retail, which the toy sector may noticeably differ from, much as the petroleum industry is actually MUCH lower ROI than everybody thinks. (Everybody thinks "Cha-Ching" when they hear about "billions in profits," but few consider that their around 10% profit margin is VERY low across the corporate sector and the amount SPENT on exploration, extraction and refining to GET that profit sees a typical oil company having higher operating costs than many entire small COUNTRIES. Exploration being a huge expense by itself... a really good team will usually hit on one test well out of every ten drilled, which means before there's any profit from that Gusher it has to pay for nine dry holes first. The reason oil is so coveted as an investment is not its profit margin, but that it's a SAFE investment where your odds of losing money are approximately comparable to mine of knocking up a Playmate of the Month.)

There's also a factor called MAP - Minimum Advertised Price, where vendors are not ALLOWED to advertise below that--this is common on some computer parts, high-end electronics and firearms components, where the ways around it are to say things like "call for price," "email for quote" or "actual price shown in cart." EE's "Hasbro Direct" pricing is probably right at MAP or pretty close to it, possibly a bit higher since they have an entire layer of distribution cut out in direct sales.

 

The EE pricing I was referring to was EE Distribution. There doesn't seem to be a marked difference between four other distributors that I priced out. When I read "Hasbro Direct," I was skeptical as to how they made money from the deal and that was _before_ I was subjected to the dark side of their business practices. Where MAP applied, it was usually noted separately. I only ran into it with MLP Monopoly (USAopoly throws a hissy fit over online sales), some Jazwares products (don't want garbage quality dumped at garbage prices), and exclusives (like this "exclusive" set - Star Wars Black Series 6-Inch Action Figures: Entertainment Earth - with a MAP of $80 selling for barely half that).

Like I said, though, it's a shit show. At the volume that you have to do to make it actually work, you're big enough to bypass any distributor.

 

Don't mean to bother you but Is Barricade the only MPM on the TRU listing???

 

Kroger's in my old hometown often had non-potable items. I actually bought most of my Transformers at that Kroger's in 1985. They had an entire aisle devoted to Christmas items and Transformers in 1985 as well as half their floral shop cluttered with hundreds of Insecticons and Constructicons. As a kid, it was like walking around on Cybertron, surrounded by so many Transformers. I never saw anything like that again until Episode One came out.

The one sells some discount toys and a few other items here and there, but nothing like that. I wish they had the room to do more. The more competitive they all ate, the better their prices for customers.

 

Yep, right now just him prime and bee

 

Wouldn't it be nice if our employers raised our wages half as fast?

 

No. If that happened they would have to raise the price of the good and services that the sale. Then when they started to loose business they would have to pay people off.

 

Looking forward to picking up the Wave 1 deluxes at Target this Christmas for $9.99 each. Hopefully a fun repeat of TR pricing from last year, which really helped to stretch my TF budget during the Christmas season!

 

Wages are overrated. Be glad that you're allowed to work!