As a rule of thumb that I use most manufacturers and some retailers build in 20-35% of profit in any product at a minimum. This is from my experiences... Granted if you get quoted that say (hypothetically speaking) for instance KW V3's are $2100.00 retail I am pretty sure you can haggle them down to $1800 and even $1700 if your good!!! its all in the deal. I bought my KW V3's for my s2000 for $1650 shipped and they retailed for $2100+... so the money is there its just whether or not you can work a relationship and a good deal. the only way these retailers will survive is good old fashion word of mouth. I know this for a fact... Get a good deal and a customer will speak loudly about what a great deal they got and then it becomes a numbers game... quantity over quality!

Put the mobile down and step away from the keyboard! Breath in, breath out. It'll be ok!

And an iPod is nothing more than some plastic and some melted sand, but many don't blink at paying $400 for one.

Remove R&D time/money from the picture and you're left with materials and know-how. Most anyone can get the materials for a car project, but the know-how to put it together isn't rattling around in everyone's head, nor is the experience in doing so. You have to weigh the cost of an item/service against what's valuable to you. With a Helm's manual, I could take apart an engine and replace a ring... but it's worth significantly more to me to pay someone $2k to do it than spend the next 2 weeks solid in the driveway taking the time to do it myself. I can figure out how, and the materials/tools are easy enough to get, but my lack of experience in taking apart more than one or two engines in my lifetime means I'm going to be sloooow at it.

Sure, an exhaust is just a few bent/welded pipes, but it took time/money for someone to measure everything, test it, go through several prototypes, etc. They have to be a good welder if you want it to last (particularly stainless/titanium)... this comes from experience and not overnight. They have to have the right tools to bend it and weld it... this is usually money spent over many years to put together a full workshop.

Companies manufacture items to make a profit, not just enough so they can pay their employees an hourly wage. Figure two people working full-time on an exhaust, and let's say it takes two weeks for them to get something they're happy with (probably quite short, in reality). That's 160 hours worth of work and even at a paltry $10/hr that's $1,600 in the hole right there. Add in cost of only two prototypes worth of material... say $400. You're ready to start producing, but you're $2k down. Let's say hand production costs 6 hours (@ $10/hr) and $200 in materials... that catback exhaust you just bought for $320 shipped cost $260 to produce and $30 to ship. The owner sits back and enjoys his high-end profit of $30/exhaust. Woo hoo! He can now afford to purchase a couple six-packs of Corona and sit in his hammock for another hour.

But what about automation, you say? Fine, they automate it and cut the production time per exhaust down to 1 hour. Who paid for the multi-million $ robot welder that put it together? As the company owner, now you're hoping you can sell in quantity to make those small per-exhaust profits add up to pay for the capital equipment you're now leasing to lower the production times and raise your profit margin. And so on, ad infinitum...

I've been a business owner for over 7 years now and everything above is the [/u]simplified[/u] version. A while back I purchased a $30k laser engraving/cutting system with the knowledge it was not going to pay itself back immediately. Clients who knew I had it now expected me to work for less profit because they assumed I would make it up in quantity. Its a viscous cycle. One guy asked me to give him one of my LED lighting designs because "It's only a bunch of LEDs and those are dirt cheap." I replied with "Fine... if it's just a bunch of dirt cheap LEDs with nothing spent on R&D, then go design it yourself! don't forget to le me know how that turned out for you..."

But don't think that all items are cheap to manufacture simply because the components are inexpensive. Yes, charging $10k for a Lamborghini's exhaust may seem hugely expensive, but how much time/energy/money went into its development for a market that may sell 100 total? Sure, the profit margin is still higher for that exhaust than for a Neon's exhaust, but the risk was greater, too... what if only 50 people decided to buy instead of the projected 100? You're out some serious cash, particularly if you haven't paid off the R&D or capitol equipment yet.

You know guys, there is an upside to 'high' prices, however one chooses to define that. High prices provide an incentive to produce quality parts. Think about it. Imagine that you're in the exhaust manufacturing business, and market research indicates that 370Z owners are cheapskates who are, on average, only willing to pay, say, $50 for an exhaust. What incentive do you have to actually put the resources into producing a quality exhaust? In fact, you probably wouldn't even be bothered to produce any exhaust for this car. It's just not a market worth tapping into. Now imagine that 370Z owners are, on average, willing to dish out $1500 to upgrade their exhausts, and you happen to know that each exhaust will only cost you about $600 to produce (incl. development costs, material, labor, marketing, etc.). In other words, there's a real profit opportunity here. Suddenly, there's an incentive to make an exhaust. And not just any exhaust -- there's an incentive to make a high-quality exhaust, because you know that with margins like that, there are bound to be others who want to get in on the action for a slice of the pie. i.e., there will be competition, and competition tends to drive quality.

I guess the point I'm trying to make here is that profit, 'excessive' as some may find it to be, is what drives production and the availability of goods and services. Indeed, the whole problem with socialism (IMO) is that it fails to recognize that without profit-opportunity, there is little motivation to be productive.

Another upside is that high prices have a natural poseur-prohibitive effect. But I'll leave that one for another day.

None of this is anything new...Who here remembers the days of SR5's, Bugs, BBS and Webers not to mention wink mirrors. :p

Perfect example. I don't think it could be explained any better ;) Keep in mind that the numbers he mentioned are only a loose figure. In most cases I have seen overhead to make most products on the market you see costs significantly more. Companies go through multiple prototypes each of which are tested before the final design is released. Don't you wonder how a company like Trust/Greddy had to file for bankruptcy not that long ago? This is a company I had/have always looked at as being one of the more successful companies in the aftermarket parts industry. If they were making 90% profit margins do you really think they would be struggling to keep their doors open? Where do you think all of that debt came from? There is a great deal more time and money that goes into the parts that are available.

I think people are mixing overhead expenses and profit together. Everything a company sells has overhead attached to it as well as profit. If a manufactuer charges $1000 dollars for an exhaust and is costs them $500 dollars to make it...is that 100% profit? No..unless they have zero overhead. They have to pay the bills: 1)salaries, 2) utililities, 3) leased spaces, 4) R&D, 5)benefits for employees, etc..the list goes on and on and on. These are all attached to the sale of any product. Its just the cost of doing business. I work for a government contractor..I am a "product" to the government. They pay my company TWICE what I make.....and yet my company only see an 11% profit on my employment as a direct charge to the government as specified by the contract. The rest goes towards benefits, my office space, computer...everything I need to function.

This is why online wholesalers can sell stuff so much cheaper than Best Buy....they have almost no overhead to recoup.

You're totally right. There are lots of overhead costs that go into each product a company makes.

The bottom line is that there is enough competition in the Z aftermarket space to keep prices in check. Just look at our vendors... they consistently try to offer us the lowest possible prices and take market share away from the others.

My point in bringing up overhead expenses was to point out that its not just a few pieces of piping thrown together and charging 10x as much for what the material costs was. A lot of people have the view point that if the piping costs $200 in material and the exhausts costs $2000 then they are making $1800 profit thus having a tremendous margin (extreme example I know). Yes overhead is just part of the cost of doing business, but it is also factored into the sale price. Some parts take longer to make whether it be by R&D or actual production time. This overhead is usually taken into consideration when a company prices an item. I know we are on the same page here, just trying to clarify ;)

Some how, I skipped over your entire thread while I was typing mine hehe. I agree with you. I was also trying to point out overhead is part of the sale price and isnt considered profit.

A bit self-serving in your answers don't ya think being that you are a sponsor / vendor? Of course you would defend the high prices of things.

On the flip side you are the self-serving consumer who doesn't think the manufacturers/vendors have a right to turn a profit. If you don't think prices are fair, don't buy the products. It's pretty simple.

I'm a believer in free markets and competition. Free markets + competition = competitive prices. Do you think Ryan would be in business if he ripped people off?

Haha, ya, exactly my point ;)

Not really actually. The higher prices from the manufactures means we as vendors have to pay higher prices which is then directly reflected upon you, the customer. If we pay lower prices from the manufacturing company we pass on most of those savings to you as well. So cheaper prices for us mean cheaper prices for you. Think of it this way, vendors are customer as well. We have to buy parts just like you do. Higher prices means lower quantity of customers, which means less money for us as vendors. Yes we are in the reselling business, but it benefits us more to be able to buy parts cheaper. Make sense? :)

Another point to consider is that most manufactures have MAP pricing which vendors have to comply with. This means we as the vendors are not allowed to sell certain products for below the requested amount set by the manufacturing company.

Also, would you prefer I don't comment in this thread? I would assume the majority would want to know the viewpoint of a vendor on this forum instead of not know what our thoughts were on this matter. I try to be as up front and approachable as possible :) I already pointed out that I'm a vendor and my point of view may be seen differently, and rightfully so. However whether you are aware of it or not, we are in the same boat here to a certain degree.

;) This is how I see it as well. I believe our/other vendors prices are priced fairly to directly reflect the products we are selling. Yes, we are here to make a profit. However, we try to pass on the best price we can to the customers. I'm glad there are people out there who understand this. ;)

I'm not either of the above, so how do you explain my answer?


Just because something doesn't fit your point of view does not make it invalid... just because he's a sponsor/vendor does not mean his defense of the position is wrong.

If you ain't got the money, then you had better fold...