I would like anyone to give opinions or facts on how much bow companies mark up the price on the products they sell.If they can sell a bow for $700.00 how much did it actually cost them to make it?Or if they sell a dozen arrows for $80.00 how much $ did they pocket?just curious anyone have any first hand knowledge?

Good question. Mathews sells a $700 new bow, but at the same time Martin will sell a new bow for $300. Both machined aluminum risers, film dipped finishes, and so on. So what does it really cost? No idea, but that's a start.

I don't have any information that is directly related to any archery equipment companies, but I can comment on business in general.

First, profit is going to at least a couple different businesses. On the retail end, most bow shops are going to make a minimum of 30-35% if they want to stay in business. If there is a distributor in the middle, then they will also take a cut, though I think many, if not most, bow manufacturers are dealing directly with the retail outlet. On the manufacturing level, different companies will have different profit margins, depending on several things, including their efficiency in making the product. Fortunately, in industries as competitive as bow manufacturing, prices are going to be in line with the competition. Profit margins will vary on each product. The lastest, greatest bows will have the highest profit margins, so the company can try to recoup R&D costs, heavy advertising for the new products, and take advantage of any temporary competitive advantage.

Fortunately, you can count on a competitive market to keep prices in check. Companies with the best perceived products and service will generally make a bit more per bow. However, large demand can put pressure on the company by creating a need for more manufacturing facilities, employees, etc. They may have a need to reinvest these profits faster than they make them and can actually cause them to be in a poor financial position.

The end result is a dynamic pricing structure and profit margin. There will always be companies who give you the best products, sevice or selection, and those who give you the most bang for your dollar. The same can be said for a particular companies' product line. Some bows in that line, will be better values, others will be better products.

If you really want the details, you will have to check the annual report put out by any publicly owned company. If it's privately owned, you can only guess. They are not going to tell anyone.

Coming from a logistics background, I can tell you that it's quite expensive to tool up for a new product. The product itself may not cost that much to manufacture per unit, but the concept exploration, alternatives, prototypes, low-rate production for testing, and the machinery necessary for full production can be quite expensive. So when you pay for the bow, you're not just paying for the material, you're paying for all the work, engineering and tooling. After the companies recoup that money, it's all profit after that. I believe they're making plenty.

<font color=orange>Go #20!</font id=orange>

You are also paying for marketing and R&D for every bow purchased as well.

It is no different than the automotive industry. A Mercedes and a Kia are basically the same. Both are sheet metal, both have tires, both have engines.

Do both get the job done? Absolutely.
Are there people willing to pay more to get the extras out of their vehicle? Absolutely.

It is a rather moot point how much it costs to make product &quot;x.&quot; What matters is how much a business can sell product x for and maximize profits. I do not know how much it costs Mathews, Bowtech, or Hoyt to make their bows. I do know people are willing to pay as much as $700 for them, and to them they are worth every penny. What difference does it make if Beman sells arrows for $80 and hypothetically makes $60? That is capitalism, supply and demand. As long as there is a high demand for product x from company y, then they can charge higher prices. To me, the Bemans are worth it and I am willing to pay that much, but the Mathews are not (please don't attack me on that one, I said to me).

As with any business the main goal is to make a profit. to do so you have a lot of costs to cover such as employees salaries, benefits, company insurance, rent/mortgage, utilities, marketing, shipping costs, R&D, etc. As you can see a company needs to have an X amount of cash to just be able to run without even turning a profit. Depending on the size of the company and all the variables one company could sell the same bow for 300 while another might have to sell it for 500. It's simply business and for the most part I do not think companies really want to sell really expensive bows bu they have to make some money so they do have to charge for them. Also remember that 500 dollar price isn't what the company will get back. The dealer gets a cut of that based upon how much he needs to keep his business running also. He dosn't pay &quot;list&quot; price on it so he has a lot of say in the final price and what he needs to pay his bills & cut a profit.

I'll use an example for you. Lets say we have a dozen arrows that retail for $75.00. now lets break it down, of course this is all made up so keep that in mind & is only to show a point.

Materials $1.00 (ok right now you are saying wow a $74.00 profit!)
Labor costs $30 (benefits included) for one hour
R&D $3.00 spread over &quot;x&quot; amount of product over &quot;X&quot; amount of time
Marketing $1.00 spread over &quot;x&quot; amount of product with ongoing costs spread over the life of product.
Packaging .50 per Dz.
Building & utilities $1.50 averaged out over all products
Shipping $1.00 averaged out over all products per year
Insurance $1.00 averaged over all products
Misc. Expenses $1.00 averaged over all products
profit $3.00 per dozen

Total $43.00 just to complete the product & out the door to a disstributor.

distributor gets product for $43.00
Rent/Utlities $1.00
Shipping $1.00
Labor Costs $5.00
Marketing $3.00
Insurance $1.00
Misc. Expenses $4.00
Profit $3.00
Total for product now $61.00

Local Pro Shop gets product for $ 61.00 so he has $14.00 to cover all of his expenses and to somehow fit a profit into that $14.00 just to sell it at list price.

As you can see it can cost a company a lot to just make the product to cover their expenses. each company will have variations with what they pay for what but you get the idea.

In addition to what the others have said, I would add that although the market is competetive, you will not see a drastic price reduction in any bow even if there is an improvement in efficiency. Improvements in productivity and profitability will not result in increased customer satisfaction through price breaks. The last thing any bow company wants to do is start a price war with it's competitors. You will notice most Hoyt, Mathews and Bowtech products are very close in price (differences are associated with location). The same is true of catalog bows. Every manufacturer produces a premium bow for around $499.

thanks for the response everyone.I was hoping maybe pinwheel could give us a better understanding?I realize the research and developement part of all products is usually going to cost alot, but once they start mass-producing a product aren't they making VERY good profit?I was just curious--and still would like to see some REAL numbers but probably won't get a very honest reply from any company that's turning a high profit margin per product item they sell.oh well,it was worth a shot.thanks for the replies.

If it were a business where companies could make an obscene profit, you'd see you really large companies getting into it. Intense competition will always bring down the price if the profit is really that out of line.

If the most profitable company out there, was making $100 per bow after expenses, I'd be surprised.<img src=icon_smile_shock.gif border=0 align=middle>

<BLOCKQUOTE id=quote<font size=1 face='Verdana, Arial, Helvetica' id=quote>quote:<hr height=1 noshade id=quote> It is no different than the automotive industry. A Mercedes and a Kia are basically the same. Both are sheet metal, both have tires, both have engines.

<hr height=1 noshade id=quote></BLOCKQUOTE id=quote></font id=quote><font face='Verdana, Arial, Helvetica' size=2 id=quote>

Cool, I love my Kia Sportage and now I can feel like I drive a Mercedes too!!<img src=icon_smile_wink.gif border=0 align=middle>

<img src=icon_smile_big.gif border=0 align=middle>

Seriously though I can add something to this thread. Profit margins vary from manufacturer to manufacturer and from model to model. I can't speak as to how much it actually costs to make a bow or a treestand but I do know how much of a markup some pro shops put on them. One could expect to pay anywhere from 15-30% less if they were able to buy a bow directly from the manufacturer instead of having to go through a dealer. Ofcourse, there is also regional pricing issues as well.<img src=icon_smile_wink.gif border=0 align=middle>