What did you do Today 2018

B&Q, yes, my bro-in-law works the a local store.
4%??
and the rest.
£10 cheapo white box drill, costs £3.
Amazing really how it is manufactured, then shipped round the world, and still shows a small profit, for £3.

Couldn't buy the chuck for that

King fisher made pretax circa 6.6% on turnover last year & that was because Screwfix did very well. B & Q did far worse so 4% is possibly  not  that far off I suspect

Edited By Sam Longley 1 on 28/03/2018 17:03:19

Kingfisher profits at 6.6% includes all the write-offs, HO overheads, expenses etc etc etc and is its net,net, margin nothing to do with purchase cost vs selling price. So if their gross margin is less than 60% on most items I would be surprised.

So tell me how you purchase something without the infrastructure, staff etc to buy it

The manufactured cost ex the supplier may be low but the purchase cost to B & Q by the time it hits the shelf is effectively far far higher.The cost of getting the sale is just as hard. The difference is small & certainly not cloud cuckoo land figures of 60%

I’m not saying that you do not need an infrastructure to buy something but the cost of the item in isolation is small in comparison to its sale price, which is exactly what John Carruthers was pointing out. Successful FMCG organisations are those which can drive down their overheads as it goes straight onto the bottom line.

Gross margins in excess of 50% is normal for all large sheds and most high street business’s come to that.

Not only that but machined out of a lump of sticky hot rolled steel.

Andrew

If you consider the number of sales an optician, furniture store, art gallery, jewellers, fashion shop, etc has in the average day and then take their total overheads - rates, rent, heating, lighting, security, staffing, pension contributions, advertising, etc, etc into consideration a substantial mark-up is required to stay afloat.

I was once told that expensive watches had a 650& mark-up and large furniture items 300% which, given the cost of staying open I could believe. As a late friend who was in the motorcycle business once said, ‘I have to stay open every Friday night or folk will drift elsewhere, even if I don’t even get enough across the counter to pay for the lights’.

Re buying wood - I have, when possible, got all timber from a traditional yard. While quite often it will not sell a cut length, the quality of material offsets the extra cost. And I usually find a good use for the off-cut.

Jim

Gross margin is = price sold - (price paid + subcontractor costs). It doesn't include any overheads.

Today I was gently overtaken on the motorway by the first Jaguar I Pace I've seen - looked absolutely gorgeous in a rich, slightly purple tinged, blue. I was a bit confused by by its 67 plate ... then I saw the 'proptotype vehicle' in neat modest white letters on its rear hatch.

Neil.

Try & keep up -The original discussion started when SillyOlldDuffer correctly observed that that B& Q were possibly working on 4% margin. ( may now be 6% )John Carruthers seemed to dispute that. My point is really in support of SillyOldDuffers which was again disputed

Edited By Sam Longley 1 on 28/03/2018 22:01:32

Edited By Sam Longley 1 on 28/03/2018 22:03:53

Yes but there seems to be some confusion between net and gross profit. Quite possible to have 60% gross and 6% net!

Everyone is right!

I wasn't so long ago that Jaguar made cars with style and class . . .

When working i always costed things at X .58 which covered our costs entirely.

This evening I was overtaken on the M4 by a customised something that I think was a car body with large diameter maybe 3ft but narrow wheels like a tractor. Too dark to see details but definitely different.

When I worked in the defence industry post cost-plus days MOD rules were actual labour costs plus 80% for overheads (including 24/7 security, very expensive equipment, development etc) plus 8% profit and a few % fiddle factors. Then when we got the contract the race was on with management to squeeze costs and boost profit up to 18% when the MOD were allowed to claw it back.

Hi all, +1 for supporting local "proper wood yard", when I had my first house around 1970 there was a traditional yard about 300 yards away & as money was very tight I bought every bit of wood from there, including carrying the wood home manually or on my grandads barrow, money wasn't the only thing that was tight, still in business these days 48 years later but at least I have a car to cart the materials home in!

cheers Bob.

Amazing how some topics mushroom on this forum, isn't it? All I wanted was a little whinge about the amount of warped wood in my local B&Q. Anyway, I've picked up some good advice, for which I am very grateful.

With apologies to Mike for hi-jacking his original point about poor quality wood, the resulting discussion of the economics brings out what those much despised Bean Counters do to earn their bread. They aren't just there to frustrate practical men doing useful work! Breaking down costs in various ways makes it possible to see where a business is doing well and where it might be failing. This is far from obvious. A company can look solid on the shop-floor whilst the balance-sheet tells a different story. The outlook for a loss making company is bleak unless the problem, whatever it is, can be fixed. (Preferably not by raiding the pension fund!)

Accountants aren't magic though. Beeching 'fixed' the railways by closing unprofitable lines, not a bad idea in itself. Trouble is the per-line accounts he used didn't properly reflect the economics of the network as a whole, nor did they consider customer needs, nor did he have access to a full analysis of all the available data (pre-computer accounting). By modern standards the Beeching cuts were excessively crude. For example he closed branch-lines to developing London overspill towns, thus losing lucrative commuter traffic while spending on services to heavy industry who he didn't know were already half-dead. The analysis also failed to show that profitable lines depended on unprofitable feeders. Simplistically chopping out loss-making bits of the system cost more than it saved, and poor old BR staggered on. Like any tool, accounts have to be fit for purpose. Quite often they're not.

Dave

Reference wood quality, B&Q, Wickes etc don’t stand a chance of supplying wood that is anything like reasonable quality because all their wood is stored indoors in a heated building. We have a local “proper” wood merchants were wood is stored outside but under cover and therefore at reasonably stable humidity , they sell quality wood but understandably not at DIY store prices and they are always helpful and will cut to size and don’t mind non-trade custom.

Dave W

Opened up a box from the US to find a few rusty bits of cast iron inside, I'll have to find something to do with them. When I said I wanted something brown for Easter I rather had chocolate in mind

Should make up into an RMC type A engine.

Edited By JasonB on 29/03/2018 17:57:54

Today I retired after fifty two years as a toolmaker including apprenticeship, not sure if was the right decision but only time will tell.

Colin