Markup: an item costing $75 and selling for $100 has a 33% markup (the $25 added is 33% of the cost to the dealer)
Profit margin: the same item has $25 of its $100 selling price as profit = 25% profit margin (25/100).
The average brick and mortar retail store has an overhead of 30% of sales, i.e. needs at least a 30% profit margin. The item above would be a "loss leader" and make the dealer no money at all.
Telescopes usually don't have as large a margin as the example above. In fact, most of the time it's about half of that.
But, dealers may earn a rebate at the end of the year, which might pull the effective margin up to just below the break even.
An astronomy dealer who just sold scopes would go out of business, which is why many if not most of them sell a lot of accessories (a tad higher margin)
or cameras, or posters, or something else to make an overall margin above the break-even point. And why most business is done on-line.
A store retailer may average $100 per square foot on display. A warehouse may have upwards of $1000 per square foot on the shelves.
Sales per square foot need to be higher for the retailer to stay in business. Of course, a warehouse operation has different expenses, and often spends more on advertising.
Most of the astronomy business owners I know and have met live very frugally. Even Al Nagler drives a Prius.
When I was in the bicycle business, bicycles averaged 30-38% margins and accessories 40-50% margins and dealers complained all the time that they made no money.
They would have laughed at the astronomy market.
I think we're all in it for the love of the hobby. If we wanted to make real money, we'd drive delivery trucks.
Edited by Starman1, 20 January 2020 - 07:09 PM.