How Much Mark Up Is Their On Spas?

[hot_water]

I've never understood why it's important what the margin is when it comes to a consumer making the decision. All they should care about is price and value. If a specialty retailer has higher overhead per unit, it's up to them to decide whether they cut their margin to hit a price point or add value-added services to make up the difference. When I read about someone caring about margin, I read "well I don't necessarily want them to lose money but I don't want to be paying for their BMW." I don't understand why that matters. Make a determination on price versus what you're getting including the after-sale support.

I kinda think the whole markup question arose because people are frustrated trying to get "believable" information about these things. The margin question is just another angle... namely, are name brand spas better because they're more expensive? How much of the price difference is due to "real" quality differences and how much is due to overhead?

But, does a smaller maker, with higher production costs who has to sell at lower margins, make a better product than a huge high volume maker like a Watkins? Not necessarily, but they might. Same old problem... really no way to get to a reliable answer to the "quality" question based on the "margin" discussion.

A consumer has to spend some time shopping to define fairly precisely what they want in terms of the product, as well as how much support they're comfortable with. Then, as you said, "Make a determination on price versus what you're getting including the after-sale support". That's all that makes sense.

Best to everyone today... family, football & food! WooHoo!

[hottubdan]

Building the tub shell can't be very expensive. A friend has a boat company. His eight foot dingy is comparable to a spa shell. It is made in two parts, the outside hull and the inside shell with seating. The hull and inside shell are vacuum formed ABS. The space in between is filled with urethane foam. They cost him a couple hundred dollars each to make. The production process is completely automated, he loads the "Boat machine" with materials and it spits out an eight foot dingy every six minutes.

I would guess that the mark up on spas is close to fifty percent.

Dave

If the mark up on spas is 50%, then the manufacturers should be getting rich, as that is where that 50% is. Sure isn't on the dealer level.

On another note, the spa shell process isn't even close to what you described.

[Curioprop]

"Generally, when Costco is the primary obligor, is subject to inventory risk, has

latitude in establishing prices and selecting suppliers, can influence product or service specifications,

or has several but not all of these indicators, revenue is recorded on a gross basis. If the Company is

not the primary obligor and does not possess other indicators of gross reporting as noted above, it

records the net amounts as commissions earned, which is reflected in net sales." (pg 58)

Looks like Costo only records the commision earned on online sales shipped direct.

"Merchandise costs also include salaries, benefits,

depreciation on production equipment, and other related expenses incurred by the Company’s crossdocking

depot facilities and in certain fresh foods and ancillary departments." (pg 59)

Given the size of the operation, this is the way to record it but it does distort the margin calculation from the old days. They include a lot of soft costs.

Up in Canada they advertise some of there spas as "Enjoy peace of mind knowing you have a product built by the Arctic Spas® family" However, the style is not similar to any of the arctic or coyote spa. If i take the costco price and add the upgrades and dealer throughins (using costco prices when available) you can have a Tundra Legend Extreme with most the bells and whisltes for same price. Judging by the descriptions, that's a big upgrade.

[D.P. Roberts]

I kinda think the whole markup question arose because people are frustrated trying to get "believable" information about these things. The margin question is just another angle... namely, are name brand spas better because they're more expensive? How much of the price difference is due to "real" quality differences and how much is due to overhead?

This problem could be solved a lot more easily, and with less arguing.

The vast majority of spa shoppers on this site are here to get feedback on a specific manufacturer, model, or dealer - and a specific price. However, once they obtain the information they're looking for, they disappear, never to be heard from again. If they do come back, they usually state vague information - they don't want to say the name of the dealer, or simply say they "feel they got a good price." I'm not sure why they do this - perhaps they're afraid that they didn't get a good deal after all, or that they somehow still want to keep their information private / anonymous?

This board could be an incredibly powerful negotiating tool if consumers would be willing to give feedback on their purchases. When you buy a tub, give the name of the dealer, the model you purchased, and the price you paid (including delivery, accessories, or whatever). Sure, prices will vary from one dealer to the next, for a variety of reasons. However, it would at least give consumers a real starting point based on real sales numbers, instead of these rather theoretical observations about margins.

When I go to buy a car (or an appliance, or whatever), I don't research the dealer's margins, or the manufacturer's margins. I go to the car sites and find out what the car has actually been selling for. Then, when I go to a dealer, I don't have to haggle - I just explain to the dealer that his price is too high, and give the range based on the research I've done. If he can't give me a price in that range, I walk out.

[DK117]

I kinda think the whole markup question arose because people are frustrated trying to get "believable" information about these things. The margin question is just another angle... namely, are name brand spas better because they're more expensive? How much of the price difference is due to "real" quality differences and how much is due to overhead?

This problem could be solved a lot more easily, and with less arguing.

This board could be an incredibly powerful negotiating tool if consumers would be willing to give feedback on their purchases. When you buy a tub, give the name of the dealer, the model you purchased, and the price you paid (including delivery, accessories, or whatever). Sure, prices will vary from one dealer to the next, for a variety of reasons. However, it would at least give consumers a real starting point based on real sales numbers, instead of these rather theoretical observations about margins.

You've perfectly articulated the purpose of this thread.

DK117

2009 Evolution CXSi80 by Strong. Paid $4799 plus tax at Costco.com. $240 delivery, $130 electrical (wired myself) $80 start up chemicals, $118 under-mount cover-lifter from Patio Spash (via eBAY.)

If we could get enough people to post those details on other spa's we'd be in much better shape.

[Roger]

Roger,

1991 Hot Spring 9 jets paid $0 owned for 5 months sold for $1000

1993 Sundance 11 or so jets 4 person paid $0 owned for 1 year sold for $200

2000 D1 Aurora 2 paid $500 owned for 4 weeks sold for $1500

2002 Great Lakes Ottowa paid $4000 owned for 3 years (modified) sold for $2800

2001 D1 Aurora 2 paid $400 owned for 2 months sold for $1500

2003 Sundance paid $600 owned for 1 year sold for $1900

6-8 other no name (Keys, Dreamaker, Aquarius and such) bought or aquired free and sold cheap.

Now I own a custom built (by me) 12x8 shed with a 8x6 fully insulated cedar lined wood fired sauna on one end.

[great white]

This detailed enough?

[DK117]

This detailed enough?

Absolutely! Thank you! Now if we could get 20 or 30 others with different makes and models, I think we would revolutionize the industry. I doubt we'll get there, but this could be the beginning of a kbb.com or edmunds.com for Hot Tubs.

DK117

[great white]

This detailed enough?

*removed by OP for quoted post size*

Absolutely! Thank you! Now if we could get 20 or 30 others with different makes and models, I think we would revolutionize the industry. I doubt we'll get there, but this could be the beginning of a kbb.com or edmunds.com for Hot Tubs.

DK117

well, how about another?

Keep in mind, these were my quotes, from my dealer, with thier particular costs/discounts/ extras...

[Stuart A]

Here is mine remember the price is in pounds as I am in England.

Purchased 19th April 2007 from James White Spas

La Spa Heet 61 jets, 3 main pumps,

circ pump, ozone, stereo, 4 led lights, Cover (includes delivery & setup).£6382.98

Chemical starter pack........................................................................Free

One extra set of filter bags (3).............................................................Free

Sure step (I later reurned this unused and swapped it for chemicals).Free

Spa Umbrella,Footbath and cover lifter.............................................£178.72

VAT.................................................................£1148.30

Total..............................................................£7710.00

[Curioprop]

OK,

Arctic Tundra Legend Extreme (3 pumps plus blower)

Norhtern lights

Forever floor

Castcore cover

Microban color

Tru guard heater

Onzen Salt system

Cover lifter

36" 2 tier cedar step

50 GFI breaker and box

Delevery and setup

starter chemicles

Sales Tax

14,700 Can

13,818 US (aprox)

[B0Darc]

Wow, I hate this topic. Like a pet peev. I didn't even bother to read the previous 2 pages, no disrespect. On the Ford Truck forum are they spending their time talking about that damn profitable Ford Motor Company? You know who keeps them competitive? The market. It's almost 2010 people and "you get what you pay for..." was never more true. What I have read many times on here and similar forums is about folks going back for warranty claims only to find the dealer is no longer there to provide service. Wow, now that's even true of many car dealers.

The guy who charges a reasonable markup is the guy who by definition will be there when you need him. The guy who charges you too much and the guy who gives you a great deal will be out of business soon enough. How do you choose? Look for the guy who's been in business already for 5+ YEARS. You can't worry about how much he's making on those add-ons.. I'll tell ya. A majority of his profit. Almost everything you buy is half price to a retailer. He pays $5 and sells it to you for $10, he makes $5 ...gross. If he nets .50 cents of that $5 after taxes and expenses he's a genius. If he can find something he can buy for $2 and sell to you for $10, he make $3.50, that's not trickery, that's sending his kid to a better college. I don't know, but I doubt Spa dealers pay $3,000 for a hot tub they then sell for $6,000. Major purchases don't follow the pricing schedule for $10 items. For example the Ford dealer doesn't pay the Ford factory $10,000 for a truck they sell for $20,000 heh it's much more insidious than that <joke!>

You make your deals in Life one-by-one. If a major purchase sounded like a good deal when you made it, don't think you made a bad deal because some other lucky/fool just ran across some poor unfortunate soul in the last months of his spa business who made some ludicrously low-ball deal. That guy who will not be around next year for warranty work... or answering a simple question. So... neighbor, when you come into my retail outlet ...not C0stco ...not WallyMart, not HommesDepot, don't disrespect the notion that some of the money changing hands might go to my family or my future. Buyer beware works. Vote with your feet and your money. Support a guy you think deserves it ..a guy who seems to be fully intent on being there to sell you your NEXT hot tub in ten years. He'll only be there because you paid him to be...you made it profitable for him ...you came back and bought chemicals, and filters, and proudly referred friends ...because he deserves it.

Being loyal is a very becoming trait that garners customers the same kind of treatment in return from a retailer. When did saving every possible penny override Civility? Greed works from both ends of the spectrum. Good luck finding an honest person, but realize he's the one *not* telling you everything you want to hear. Liars are simply that, and that's the best barometer. They also rarely last long at one location... that makes lasting a long time at one location a great barometer. If you're only looking at price, you're about to be taken. Because when you *do* come back next year and need a problem resolved, it will very likely be coming out of the profits from the original sale. If I just take your money and split I get to keep it ALL, so it can quickly turn out you didn't make such a genius purchase in the long term.

I'm *not* a spa retailer or even close, but I did have my own business for over 10 years. I took care of the people that took care of me. I still have people overpay for my specialist services so they can know that when the sh*t hits the fan they have someone to make it go away. I don't care if C0stco was giving away hot tubs! You think Skippy the HommesDepot dude is going to be able to truly solve your water issues, or rush over to solve any issue to repay your Customer Loyalty to HD!? Hell NO! There will be a time you need an EXPERT ...and trust me, when that time comes, he better already know you. And you don't want to be remembered as the d-bag that came back and back and back, wasting valuable time to get some free add-ons and couple hundred bucks off your spa. I don't mean not to haggle or provide your retailer with true comparables you can get right now in the next town, or down the street. That's your duty to your family, and him convincing you to buy the stereo and plasma TV option is him doing his duty to his family. Dry your eyes. It's not magic, nor is it rocket science ...it's also not a crime scene when two neighbors exchange a buck... we used to call it "The Economy".

Oh and I did want to add this is directed to all the folks dropping in for a peek ..."we're thinking about buying a spa", and not the folks who contribute to this forum, which is one of the truly most generous sources of Spa Truth! If you recently bought a spa or are hoping to buy one in the near future, you owe it to yourself and COME BACK for the meat of the discussion here ...which is "So I just bought a hot tub... now what?"

Bo

[Roger]

Wow, I hate this topic. Like a pet peev. I didn't even bother to read the previous 2 pages, no disrespect. On the Ford Truck forum are they spending their time talking about that damn profitable Ford Motor Company? You know who keeps them competitive? The market. It's almost 2010 people and "you get what you pay for..." was never more true. What I have read many times on here and similar forums is about folks going back for warranty claims only to find the dealer is no longer there to provide service. Wow, now that's even true of many car dealers.

The guy who charges a reasonable markup is the guy who by definition will be there when you need him. The guy who charges you too much and the guy who gives you a great deal will be out of business soon enough. How do you choose? Look for the guy who's been in business already for 5+ YEARS. You can't worry about how much he's making on those add-ons.. I'll tell ya. A majority of his profit. Almost everything you buy is half price to a retailer. He pays $5 and sells it to you for $10, he makes $5 ...gross. If he nets .50 cents of that $5 after taxes and expenses he's a genius. If he can find something he can buy for $2 and sell to you for $10, he make $3.50, that's not trickery, that's sending his kid to a better college. I don't know, but I doubt Spa dealers pay $3,000 for a hot tub they then sell for $6,000. Major purchases don't follow the pricing schedule for $10 items. For example the Ford dealer doesn't pay the Ford factory $10,000 for a truck they sell for $20,000 heh it's much more insidious than that <joke!>

You make your deals in Life one-by-one. If a major purchase sounded like a good deal when you made it, don't think you made a bad deal because some other lucky/fool just ran across some poor unfortunate soul in the last months of his spa business who made some ludicrously low-ball deal. That guy who will not be around next year for warranty work... or answering a simple question. So... neighbor, when you come into my retail outlet ...not C0stco ...not WallyMart, not HommesDepot, don't disrespect the notion that some of the money changing hands might go to my family or my future. Buyer beware works. Vote with your feet and your money. Support a guy you think deserves it ..a guy who seems to be fully intent on being there to sell you your NEXT hot tub in ten years. He'll only be there because you paid him to be...you made it profitable for him ...you came back and bought chemicals, and filters, and proudly referred friends ...because he deserves it.

Being loyal is a very becoming trait that garners customers the same kind of treatment in return from a retailer. When did saving every possible penny override Civility? Greed works from both ends of the spectrum. Good luck finding an honest person, but realize he's the one *not* telling you everything you want to hear. Liars are simply that, and that's the best barometer. They also rarely last long at one location... that makes lasting a long time at one location a great barometer. If you're only looking at price, you're about to be taken. Because when you *do* come back next year and need a problem resolved, it will very likely be coming out of the profits from the original sale. If I just take your money and split I get to keep it ALL, so it can quickly turn out you didn't make such a genius purchase in the long term.

I'm *not* a spa retailer or even close, but I did have my own business for over 10 years. I took care of the people that took care of me. I still have people overpay for my specialist services so they can know that when the sh*t hits the fan they have someone to make it go away. I don't care if C0stco was giving away hot tubs! You think Skippy the HommesDepot dude is going to be able to truly solve your water issues, or rush over to solve any issue to repay your Customer Loyalty to HD!? Hell NO! There will be a time you need an EXPERT ...and trust me, when that time comes, he better already know you. And you don't want to be remembered as the d-bag that came back and back and back, wasting valuable time to get some free add-ons and couple hundred bucks off your spa. I don't mean not to haggle or provide your retailer with true comparables you can get right now in the next town, or down the street. That's your duty to your family, and him convincing you to buy the stereo and plasma TV option is him doing his duty to his family. Dry your eyes. It's not magic, nor is it rocket science ...it's also not a crime scene when two neighbors exchange a buck... we used to call it "The Economy".

Oh and I did want to add this is directed to all the folks dropping in for a peek ..."we're thinking about buying a spa", and not the folks who contribute to this forum, which is one of the truly most generous sources of Spa Truth! If you recently bought a spa or are hoping to buy one in the near future, you owe it to yourself and COME BACK for the meat of the discussion here ...which is "So I just bought a hot tub... now what?"

Bo

Sorry Bo, the Costco dopes just don't see it that way. But they do get a label. But it's nice to know we are appreciated. Our PM's tell us anyway.

[idhottub]

Wow, I hate this topic. Like a pet peev. I didn't even bother to read the previous 2 pages, no disrespect. On the Ford Truck forum are they spending their time talking about that damn profitable Ford Motor Company? You know who keeps them competitive? The market. It's almost 2010 people and "you get what you pay for..." was never more true. What I have read many times on here and similar forums is about folks going back for warranty claims only to find the dealer is no longer there to provide service. Wow, now that's even true of many car dealers.

The guy who charges a reasonable markup is the guy who by definition will be there when you need him. The guy who charges you too much and the guy who gives you a great deal will be out of business soon enough. How do you choose? Look for the guy who's been in business already for 5+ YEARS. You can't worry about how much he's making on those add-ons.. I'll tell ya. A majority of his profit. Almost everything you buy is half price to a retailer. He pays $5 and sells it to you for $10, he makes $5 ...gross. If he nets .50 cents of that $5 after taxes and expenses he's a genius. If he can find something he can buy for $2 and sell to you for $10, he make $3.50, that's not trickery, that's sending his kid to a better college. I don't know, but I doubt Spa dealers pay $3,000 for a hot tub they then sell for $6,000. Major purchases don't follow the pricing schedule for $10 items. For example the Ford dealer doesn't pay the Ford factory $10,000 for a truck they sell for $20,000 heh it's much more insidious than that <joke!>

You make your deals in Life one-by-one. If a major purchase sounded like a good deal when you made it, don't think you made a bad deal because some other lucky/fool just ran across some poor unfortunate soul in the last months of his spa business who made some ludicrously low-ball deal. That guy who will not be around next year for warranty work... or answering a simple question. So... neighbor, when you come into my retail outlet ...not C0stco ...not WallyMart, not HommesDepot, don't disrespect the notion that some of the money changing hands might go to my family or my future. Buyer beware works. Vote with your feet and your money. Support a guy you think deserves it ..a guy who seems to be fully intent on being there to sell you your NEXT hot tub in ten years. He'll only be there because you paid him to be...you made it profitable for him ...you came back and bought chemicals, and filters, and proudly referred friends ...because he deserves it.

Being loyal is a very becoming trait that garners customers the same kind of treatment in return from a retailer. When did saving every possible penny override Civility? Greed works from both ends of the spectrum. Good luck finding an honest person, but realize he's the one *not* telling you everything you want to hear. Liars are simply that, and that's the best barometer. They also rarely last long at one location... that makes lasting a long time at one location a great barometer. If you're only looking at price, you're about to be taken. Because when you *do* come back next year and need a problem resolved, it will very likely be coming out of the profits from the original sale. If I just take your money and split I get to keep it ALL, so it can quickly turn out you didn't make such a genius purchase in the long term.

I'm *not* a spa retailer or even close, but I did have my own business for over 10 years. I took care of the people that took care of me. I still have people overpay for my specialist services so they can know that when the sh*t hits the fan they have someone to make it go away. I don't care if C0stco was giving away hot tubs! You think Skippy the HommesDepot dude is going to be able to truly solve your water issues, or rush over to solve any issue to repay your Customer Loyalty to HD!? Hell NO! There will be a time you need an EXPERT ...and trust me, when that time comes, he better already know you. And you don't want to be remembered as the d-bag that came back and back and back, wasting valuable time to get some free add-ons and couple hundred bucks off your spa. I don't mean not to haggle or provide your retailer with true comparables you can get right now in the next town, or down the street. That's your duty to your family, and him convincing you to buy the stereo and plasma TV option is him doing his duty to his family. Dry your eyes. It's not magic, nor is it rocket science ...it's also not a crime scene when two neighbors exchange a buck... we used to call it "The Economy".

Oh and I did want to add this is directed to all the folks dropping in for a peek ..."we're thinking about buying a spa", and not the folks who contribute to this forum, which is one of the truly most generous sources of Spa Truth! If you recently bought a spa or are hoping to buy one in the near future, you owe it to yourself and COME BACK for the meat of the discussion here ...which is "So I just bought a hot tub... now what?"

Bo

Sorry Bo, the Costco dopes just don't see it that way. But they do get a label. But it's nice to know we are appreciated. Our PM's tell us anyway.

BODarc, excellent response, over time a good relationship with your local dealer is very important. All businesses need to make a fair profit to be there when you need them, of course this applies to all stores including Costco or Walmart.

“Costco dopes”, wow that certainty improved your creditability

[arf1410]

Wow, I hate this topic. Like a pet peev. ................................ght a hot tub... now what?"

Bo

Sorry Bo, the Costco dopes just don't see it that way. But they do get a label. But it's nice to know we are appreciated. Our PM's tell us anyway.

BODarc, excellent response, over time a good relationship with your local dealer is very important. All businesses need to make a fair profit to be there when you need them, of course this applies to all stores including Costco or Walmart.

“Costco dopes”, wow that certainty improved your creditability

This reminds me of the arguements about whether a Walmart should be allowed to move into a small town. Generally, most of the people want it, but the local small business owners always object, knowing correctly that they cannot compete on price, and it may drive them out of business. For better or worse, most (but of course not all) consumers are willing to trade less expertise for better price. I think that is in part becuase the expertise can be found, and for free, on the internet. As far as continued support from a Spa Dealer that's been around for 30 years v. Costco that's been selling Spas for 2 years...well, unfortunately, there have been a lot of spa, furniture, and other home stores that have gone out of business in the last year or 2, after a successful multi-decade run...So I feel more comfortable with Costco being there for me (at least for refund if I am dis-satisfied in 3 years), than any spa dealer being able to support me in three years.

[UK Arctic Dealer]

Wow, I hate this topic. Like a pet peev. I didn't even bother to read the previous 2 pages, no disrespect. On the Ford Truck forum are they spending their time talking about that damn profitable Ford Motor Company? You know who keeps them competitive? The market. It's almost 2010 people and "you get what you pay for..." was never more true. What I have read many times on here and similar forums is about folks going back for warranty claims only to find the dealer is no longer there to provide service. Wow, now that's even true of many car dealers.

The guy who charges a reasonable markup is the guy who by definition will be there when you need him. The guy who charges you too much and the guy who gives you a great deal will be out of business soon enough. How do you choose? Look for the guy who's been in business already for 5+ YEARS. You can't worry about how much he's making on those add-ons.. I'll tell ya. A majority of his profit. Almost everything you buy is half price to a retailer. He pays $5 and sells it to you for $10, he makes $5 ...gross. If he nets .50 cents of that $5 after taxes and expenses he's a genius. If he can find something he can buy for $2 and sell to you for $10, he make $3.50, that's not trickery, that's sending his kid to a better college. I don't know, but I doubt Spa dealers pay $3,000 for a hot tub they then sell for $6,000. Major purchases don't follow the pricing schedule for $10 items. For example the Ford dealer doesn't pay the Ford factory $10,000 for a truck they sell for $20,000 heh it's much more insidious than that <joke!>

You make your deals in Life one-by-one. If a major purchase sounded like a good deal when you made it, don't think you made a bad deal because some other lucky/fool just ran across some poor unfortunate soul in the last months of his spa business who made some ludicrously low-ball deal. That guy who will not be around next year for warranty work... or answering a simple question. So... neighbor, when you come into my retail outlet ...not C0stco ...not WallyMart, not HommesDepot, don't disrespect the notion that some of the money changing hands might go to my family or my future. Buyer beware works. Vote with your feet and your money. Support a guy you think deserves it ..a guy who seems to be fully intent on being there to sell you your NEXT hot tub in ten years. He'll only be there because you paid him to be...you made it profitable for him ...you came back and bought chemicals, and filters, and proudly referred friends ...because he deserves it.

Being loyal is a very becoming trait that garners customers the same kind of treatment in return from a retailer. When did saving every possible penny override Civility? Greed works from both ends of the spectrum. Good luck finding an honest person, but realize he's the one *not* telling you everything you want to hear. Liars are simply that, and that's the best barometer. They also rarely last long at one location... that makes lasting a long time at one location a great barometer. If you're only looking at price, you're about to be taken. Because when you *do* come back next year and need a problem resolved, it will very likely be coming out of the profits from the original sale. If I just take your money and split I get to keep it ALL, so it can quickly turn out you didn't make such a genius purchase in the long term.

I'm *not* a spa retailer or even close, but I did have my own business for over 10 years. I took care of the people that took care of me. I still have people overpay for my specialist services so they can know that when the sh*t hits the fan they have someone to make it go away. I don't care if C0stco was giving away hot tubs! You think Skippy the HommesDepot dude is going to be able to truly solve your water issues, or rush over to solve any issue to repay your Customer Loyalty to HD!? Hell NO! There will be a time you need an EXPERT ...and trust me, when that time comes, he better already know you. And you don't want to be remembered as the d-bag that came back and back and back, wasting valuable time to get some free add-ons and couple hundred bucks off your spa. I don't mean not to haggle or provide your retailer with true comparables you can get right now in the next town, or down the street. That's your duty to your family, and him convincing you to buy the stereo and plasma TV option is him doing his duty to his family. Dry your eyes. It's not magic, nor is it rocket science ...it's also not a crime scene when two neighbors exchange a buck... we used to call it "The Economy".

Oh and I did want to add this is directed to all the folks dropping in for a peek ..."we're thinking about buying a spa", and not the folks who contribute to this forum, which is one of the truly most generous sources of Spa Truth! If you recently bought a spa or are hoping to buy one in the near future, you owe it to yourself and COME BACK for the meat of the discussion here ...which is "So I just bought a hot tub... now what?"

Bo

Nice post.

[spatech (the unreal one)]

Roger,

1991 Hot Spring 9 jets paid $0 owned for 5 months sold for $1000

1993 Sundance 11 or so jets 4 person paid $0 owned for 1 year sold for $200

2000 D1 Aurora 2 paid $500 owned for 4 weeks sold for $1500

2002 Great Lakes Ottowa paid $4000 owned for 3 years (modified) sold for $2800

2001 D1 Aurora 2 paid $400 owned for 2 months sold for $1500

2003 Sundance paid $600 owned for 1 year sold for $1900

6-8 other no name (Keys, Dreamaker, Aquarius and such) bought or aquired free and sold cheap.

Now I own a custom built (by me) 12x8 shed with a 8x6 fully insulated cedar lined wood fired sauna on one end.

Wow, excellent margins Roger!!

[B0Darc]

Wow, I hate this topic. Like a pet peev. ................................ght a hot tub... now what?"

Bo

Sorry Bo, the Costco dopes just don't see it that way. But they do get a label. But it's nice to know we are appreciated. Our PM's tell us anyway.

BODarc, excellent response, over time a good relationship with your local dealer is very important. All businesses need to make a fair profit to be there when you need them, of course this applies to all stores including Costco or Walmart.

“Costco dopes”, wow that certainty improved your creditability

This reminds me of the arguements about whether a Walmart should be allowed to move into a small town. Generally, most of the people want it, but the local small business owners always object, knowing correctly that they cannot compete on price, and it may drive them out of business. For better or worse, most (but of course not all) consumers are willing to trade less expertise for better price. I think that is in part becuase the expertise can be found, and for free, on the internet. As far as continued support from a Spa Dealer that's been around for 30 years v. Costco that's been selling Spas for 2 years...well, unfortunately, there have been a lot of spa, furniture, and other home stores that have gone out of business in the last year or 2, after a successful multi-decade run...So I feel more comfortable with Costco being there for me (at least for refund if I am dis-satisfied in 3 years), than any spa dealer being able to support me in three years.

heh It shouldn't remind you... it IS the argument. Your words are true. The world changes... I remember when Netscape tried to sell their browser software for $50. "hey you can see pictures on the Internet with that stuff!" ...then next week Microsoft gives away I.E. 3.0 (?) as a download for Win95. I was more or less the victim of WallyMart, and I believe we have traded alot for "lower prices", and I mean culturally speaking, but that's another forum.

One thing I know is that the majority of folks are not so bright, nor are they mechanically inclined. A spa can be a little daunting without some self-confidence about one's chemistry skills and a little mechanical ability, and some folks just have the money and don't want to even know about such trivialities. There are also still folks who cannot squeeze an email or g00gle search result from that PC their kid bought them last Christmas.

This New World Retail Order requires you be a savvy self reliant person. I think the retail model of which you so wisely speak leaves out those perhaps not-so-savvy people. With the mom and pop shops gone they have no alternative. Who's left? The High end customers. Retailers for big ticket items like spas/pools/boats/Porshes have always been boom or bust, so if it feels like they're going for the maximum margin, it only makes sense.

[Roger]

“Costco dopes”, wow that certainty improved your creditability

My credibility is valuable to those that want or need it. I could care less about my credibility for those that don't. Peanut butter and bathroom tissue yes, hot tubs no. The last 3 manufacturers are proof of that. We can choose to see it or not, personal choice.

[Roger]

Wow, excellent margins Roger!!

Actualy I never listed my total investment to calculate margins for you. But I would say 30-40% minumum if we leave most of my sweat out. But I gota babysit them for a year or more. Which has turned out to be not so bad. Just picked up a 6 year old Keys/Phsudo Jacuzzi. Sold at our local big box (Home Depot) 50 bucks, has a good pump for sure but the rest may be junk, saw a couple split 90's froze I am sure. Try and fill it this weekend. Pretty rough shape. 50 bucks plus 25 for disposal and a couple hours with the sawzall, may take a loss. Business is boomin.

[DK117]

Already deleted by mods. I agree- prob shouldn't be posting raw PO data on here.

edit: going to look more closely at this publicly available information before arriving at a conclusion.

DK117

[DK117]

IN conclusion......The mods are deleting the posts because is better to not know the cost of the spa.......

I'd simply like to ask a few questions because I'm not an industry insider, but I know a few things about business.

1) Let's assume this data is real.

2) Am I correct in interpreting the invoices as a bunch of MAAX Elites for around 3K to local dealers?

3) What does a MAAX Elite retail for? $6K? 8K?

4) We must acknowledge additional dealer costs, labor, rent, power, insurance etc.

If those four questions/assumptions/acknowledgments are real the following assumptions must be taken into consideration.

1) Assume Costco mark-up is in the realm of 10% and they make their money on memberships.

2) My Strong was factory direct shipped (just like those on the invoices right?)

3) The $3500 or so that Strong received from Costco (or will receive once my warranty period expires) is MORE than what MAAX gets for their spas.

This last bit of thinking kind of throws a wrench in the whole "value" equation of "quality" tubs right? Or is MAAX not a quality manufacturer?

I'm really trying to ask these questions with as much respect to all involved. I hope you can point out my errors in reasoning. Because if you can't this seems at first glance to be empirical evidence of 50% plus markups by local dealers. It's not like we didn't all assume that already, but to know it as fact is another thing. Maybe this is unique to MAAX?

Welcoming feedback,

DK117

[reeffreak]

DK, An item that costs $1 and is sold for $2 is a 100% markup, not 50%. It's called keystone in retail. Looking at the income statement, COGS would be $1, and gross margin would be 50%. That's in line with small business financials and really not that surprising. Given the small # of tubs that a typical dealer moves, that's not a whole lot of meat on the bone to cover the rest of the expenses.

Four Winds sells Maui's factory direct for $3k to walk in customers. Look on Craigslist:Nashville for the ad. Lets assume they don't undercut their dealer channel, and that dealer cost (delivered) is in that ballpark... That same spa sells in the dealer for around $6k (google it), and has an "MSRP" of $12.5k (ha ha). 50% margin, 100% markup.

Not surprising, nobody's getting rich, and there really isn't anything wrong with the dealer earning a wage. What would help is for mfgs to have better pricing guidance so a customer doesn't shop a mfg against himself at multiple dealers. Put the pricing data out there (with adequate dealer margin), and when the customer walks into showroom A the tub is not $14k and $8k in showroom B (or internet).

I think a big part of the "quality" value proposition is after sale service. At least that's the pitch. I've had 2 small service issues with my tub, and the tech that comes out gets some beer $$. That builds the "service" relationship quite effectively..

[DK117]

DK, An item that costs $1 and is sold for $2 is a 100% markup, not 50%. It's called keystone in retail. Looking at the income statement, COGS would be $1, and gross margin would be 50%. That's in line with small business financials and really not that surprising. Given the small # of tubs that a typical dealer moves, that's not a whole lot of meat on the bone to cover the rest of the expenses.

Four Winds sells Maui's factory direct for $3k to walk in customers. Look on Craigslist:Nashville for the ad. Lets assume they don't undercut their dealer channel, and that dealer cost (delivered) is in that ballpark... That same spa sells in the dealer for around $6k (google it), and has an "MSRP" of $12.5k (ha ha). 50% margin, 100% markup.

Not surprising, nobody's getting rich, and there really isn't anything wrong with the dealer earning a wage. What would help is for mfgs to have better pricing guidance so a customer doesn't shop a mfg against himself at multiple dealers. Put the pricing data out there (with adequate dealer margin), and when the customer walks into showroom A the tub is not $14k and $8k in showroom B (or internet).

I think a big part of the "quality" value proposition is after sale service. At least that's the pitch. I've had 2 small service issues with my tub, and the tech that comes out gets some beer $$. That builds the "service" relationship quite effectively..

I've never been comfortable with the OP words "mark up" I was referring to margin, and thank you for the correction. I'm not averse to dealers making a living, in fact I rely on a local dealer for chemicals and expertise. And I know for a fact that they get quite good margins on the chemicals that I've purchased from them. I've recently considered purchasing those same chemicals online, but decided to purchase locally. But that decision was reversed when I purchased a tub. I think a lot of people on this forum need to eat some crow! I mean how can you rip Costco and Strong, when MAAX, and seemingly the industry, all manufacturer tubs to sell to various distribution outlets for what ? $2500 to $4000 ... and then sell those same tubs for double that (or more with options?) On a one dollar item I get it. On a tub there is no reason to not try factory direct purchasing. As far as I've found Costco is about as close as you can get to that model on a scalable basis. I have tended to agree with everyone here that my $4.7k Strong spa was a nice entry level spa, maybe equivalent to a $5 OR $6k dealer spa. I bought into the fact that I somehow was cheap and bought a less than top notch tub. But now that logic doesn't hold water. If the manufacturer receives the same or more on the sale of the tub, there's nothing to justify the fact that the Strong spa at 4.7k isn't equivalent to the 8K or 10K dealer tub.

DK117

EDIT: Acknowledgment, Strong doesn't have the history to be included in the high quality manufacturers with decades of experience. I get that. But the whole argument about the price of a spa equating the quality of said spa is now pretty suspect in this consumers opinion.

[Roger]

Four Winds, Maxx, Strong. All on the lower end of the tub quality scale. Maybe higher than bottom of the barrel but by no means quality top of the line product. All this is simply my opinion based on my experience and visual inspection of all three.