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Spa Mark-Up


arf1410

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This is not the answer you are probably looking for but it depends on the dealer. There is not a specific margin that a dealer has to adhere to. Plus shipping costs vary, the cost of accessories such as chemicals, steps, cover lifts, etc vary and that should be factored into the price.

With all due respect, I doubt any dealer is going to post on a public forum what they pay wholesale for the products they sell to make a living otherwise consumers will demand the product at prices too low to sustain business.

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With all due respect, I doubt any dealer is going to post on a public forum what they pay wholesale for the products they sell to make a living otherwise consumers will demand the product at prices too low to sustain business.

I also doubt the mark up is a universal number across the board either. There is a markup for sure.... shop owners have to eat and live too. That being said... some like to eat and live more than others. My dealer wanted to sell me a blower for $200. I picked up the same one at spadepot for about $80 and you can be sure there is a mark up on that too. Small shops however (like mine) typically have a higher mark up because they move less product.

Advice..... shop around... that's all.

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Recently purchased a Spa and am trying to better understand this business.

I realize there is a fair amount of variation in answers to this question, and spa dealers don't really want this info to be "public"...never-the-less there might be some former "insiders" on this forum who can provide data.

Can't really shop around because unlike buying a car, where in a big metro area there are numerous independent Ford dealerships, for example, it appears there is only one dealership (or chain) for a particular brand of spa.

Are spas like cars where there is minimal markup on the vehicles, profit is made on repair, parts, and used cars? Or do spa dealers make most of their money selling the spas themselves?

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Recently purchased a Spa and am trying to better understand this business.

I realize there is a fair amount of variation in answers to this question, and spa dealers don't really want this info to be "public"...never-the-less there might be some former "insiders" on this forum who can provide data.

Can't really shop around because unlike buying a car, where in a big metro area there are numerous independent Ford dealerships, for example, it appears there is only one dealership (or chain) for a particular brand of spa.

Are spas like cars where there is minimal markup on the vehicles, profit is made on repair, parts, and used cars? Or do spa dealers make most of their money selling the spas themselves?

I think that dealers who sell only hot tubs will likely sell at higher margins than one who sells other items like pools and saunas or patio furniture in addition to hot tubs.

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For a short period a couple of years ago, there were some dealer invoices circulating that showed an appx 80-100% markup for a major brand of value line spas (less freight). This was shut down pretty quick on the net. Before totally freaking out about getting hosed as a consumer, note this is in-line with low volume high $$ product in most retail settings selling discretionary product.. Be it furniture, hot tubs, aquariums, bicycles, high end home theater, etc. It takes that kind of margin to keep the employees paid, doors open, and the lights on.

There is also a spa factory near me that sells customer direct / on Craigslist right off the factory floor.. I have compared factory direct prices (cash and carry) against retail internet sellers.. Assuming they don't undercut their dealers and sell direct somewhere between wholesale and retail, the near 100% markup holds true here too. So to answer your original question, I'm going to put the bookends of the cost of that $10k tub somewhere between $4-6k dealer cost + shipping + whatever accessories and startup services the dealer chooses to throw in. Nobody is getting rich with that markup though.

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For a short period a couple of years ago, there were some dealer invoices circulating that showed an appx 80-100% markup for a major brand of value line spas (less freight). This was shut down pretty quick on the net. Before totally freaking out about getting hosed as a consumer, note this is in-line with low volume high $$ product in most retail settings selling discretionary product.. Be it furniture, hot tubs, aquariums, bicycles, high end home theater, etc. It takes that kind of margin to keep the employees paid, doors open, and the lights on.

There is also a spa factory near me that sells customer direct / on Craigslist right off the factory floor.. I have compared factory direct prices (cash and carry) against retail internet sellers.. Assuming they don't undercut their dealers and sell direct somewhere between wholesale and retail, the near 100% markup holds true here too. So to answer your original question, I'm going to put the bookends of the cost of that $10k tub somewhere between $4-6k dealer cost + shipping + whatever accessories and startup services the dealer chooses to throw in. Nobody is getting rich with that markup though.

I live in Fort Wayne IN, World headquarters and manufacturing center for Master Spa. I can tell you from 1st hand experience that whatever the markup is, it isn't that much. I was going to get the same deal at my local Master Spa dealer (which is located INSIDE the World Headquarters park), as if I was buying a Master Spa in Florida. The big advantage to buying from Master Spa in my area is that you can buy factory "blems". These are spa's that have some very tiny cosmetic damage. You can get a smoking deal on them. For the record I own a Limelight =)

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The big advantage to buying from Master Spa in my area is that you can buy factory "blems". These are spa's that have some very tiny cosmetic damage. You can get a smoking deal on them. For the record I own a Limelight =)

The logic behind my markup claim is that whatever "smoking deal" a cash and carry consumer can get is still more than the wholesale cost of the spa to the dealers. Otherwise the factory is undercutting the dealer sales model and/or you'd see dealers selling the blems as markdowns and there would not be a factory direct-to-consumer option. So you can assume that the wholesale to retail markup is higher than any direct option, possibly substantially so.

This is part of the reason why spas, motorcycles, furniture, good bicycles, etc. have such a low trade-in value. It is more profitable for the merchant to acquire new product from the factory than to consign and/or resell used product.

If you study any retail model (especially those that are sales commission based), you'll see that my markup claims are in line. High end furniture is another great example. $25k of brand-name furniture at a commissioned, reputable dealer is about $8k wholesale. That is not saying that the consumer is getting ripped off, it means that the value prop of full service, after-sale support has costs.

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New2Spa states "whatever the markup is, it isn't that much"- yet his post provides info that to me supports a large markup. ReefFreak and a few others claim it is a whole bunch. I tend to agree with Reef, that they are marked up quite a bit like any other high value, commisionable product typically sold at "mom and pop" retailer....however admittedly have no facts and data, or inside knowledge to support my opinion, thus my original post trying to gather real info!

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Generally speaking, MSRP is 200% of what was paid for it, (100% markup) "sale" price is usually a 40% markup so they can afford to throw it steps etc.

Any dealer selling below a 40% margin is not long for the business, you just won't be able to maintain costs.

Blems sell for about the same margin.

Parts, chems, and filters are usually 100%-120% markup depending on the dealer.

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Generally speaking, MSRP is 200% of what was paid for it, (100% markup) "sale" price is usually a 40% markup so they can afford to throw it steps etc.

Any dealer selling below a 40% margin is not long for the business, you just won't be able to maintain costs.

Blems sell for about the same margin.

Parts, chems, and filters are usually 100%-120% markup depending on the dealer.

A dealer needs to make a decent living and this sounds about what I would expect. Once you add all his costs such as sales people and overhead costs such as buildings, utilities, inventory, insurances and Taxes, there is not much left even with those margins. Seems like everybody thinks all business rip people off, when in reality they are trying to provide a service and maintain a living just like the people buying them. I make money in my business as well, I hope you do too! Safe tubbing everyone.

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New2Spa states "whatever the markup is, it isn't that much"- yet his post provides info that to me supports a large markup. ReefFreak and a few others claim it is a whole bunch. I tend to agree with Reef, that they are marked up quite a bit like any other high value, commisionable product typically sold at "mom and pop" retailer....however admittedly have no facts and data, or inside knowledge to support my opinion, thus my original post trying to gather real info!

I don't think 100% mark up is that bad, or hell even 200%. Hot tubs take up a lot of floor space, floor space = more overhead in the business world. some spa dealers might have to sit on some models on their showroom floors for months before being able to sell it. It's a pure luxery item, no one needs a hot tub. Basically what do you care what the mark up is? Buy the hot tub you can afford. God forbid the dealer makes a living!

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I'm not passing judgement as to a mark-up being good, or bad. Certainly a merchant has a right to charge whatever the market will bear. I am just trying to understand the fear spa merchants appear to have about a "big box" store getting into the spa retail business...sounds like there is potentially a lot for them to worry about if the markup are indeed ~100%...

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I'm not passing judgement as to a mark-up being good, or bad. Certainly a merchant has a right to charge whatever the market will bear. I am just trying to understand the fear spa merchants appear to have about a "big box" store getting into the spa retail business...sounds like there is potentially a lot for them to worry about if the markup are indeed ~100%...

I bought a spa this past Monday. I couldn't get the dealer to go down $200 off his initial counter! I offered $5800, he countered with $6200 + an ACE system. I then offered $6000, he said that was his best deal. We went back and forth for a bit and he actually let me walk out! I ended up taking the offer because I knew how good it was. The moral of the story for me was that the mark up must have not that much considering he was risking losing the sale over $200.

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I'm not passing judgement as to a mark-up being good, or bad. Certainly a merchant has a right to charge whatever the market will bear. I am just trying to understand the fear spa merchants appear to have about a "big box" store getting into the spa retail business...sounds like there is potentially a lot for them to worry about if the markup are indeed ~100%...

I bought a spa this past Monday. I couldn't get the dealer to go down $200 off his initial counter! I offered $5800, he countered with $6200 + an ACE system. I then offered $6000, he said that was his best deal. We went back and forth for a bit and he actually let me walk out! I ended up taking the offer because I knew how good it was. The moral of the story for me was that the mark up must have not that much considering he was risking losing the sale over $200.

Like I said, any dealer fool enough to sell for less than a 40% margin isn't going to be around to service them, and as for big box stores, make no mistake, the markup is still there, just not the quality, they don't have to care as much about quality when you will never see them face to face.

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As most posters seem to feel there is a fairly large mark up on spas (ie 50-100%), if, hypothetically, one of the major manufacturers of quality spas (is hotsprings, sundance, etc) decided to provide product at similar wholesale costs as to existing dealers, to big box stores, certainly the big box stores can sell virtually any product at a lower cost than a "mom and pop" store? Why do you suppose no major manufacturer has tried to go that route, to move more product?

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Like I said, any dealer fool enough to sell for less than a 40% margin isn't going to be around to service them, and as for big box stores, make no mistake, the markup is still there, just not the quality, they don't have to care as much about quality when you will never see them face to face.

Do you really believe Costco has the same margin as a local dealer? That completely ignores economies of scale and the entire reason big box stores exist and thrive. If you don't like the tubs Costco sells, that's fine, just say so. Point out the lack of dealer support and the lack of wet test. I suppose everyone is entitled to their opinion, and I promised to play nice, but saying that Costco has the same margin as a local dealer is just absurd.

As far as the face to face time, I guarantee you that I spend more time face to face at my local Costco than your average spa owner spends at the billiards/fireplace/pool/spa dealership.

DK117

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As most posters seem to feel there is a fairly large mark up on spas (ie 50-100%), if, hypothetically, one of the major manufacturers of quality spas (is hotsprings, sundance, etc) decided to provide product at similar wholesale costs as to existing dealers, to big box stores, certainly the big box stores can sell virtually any product at a lower cost than a "mom and pop" store? Why do you suppose no major manufacturer has tried to go that route, to move more product?

There is a saying in this business, that the less the customer pays, the more they expect, cheap customers are, in fact, a huge pain in the @$$.

If a major manufacturer went strait to the big box stores with cut rate prices, they would lose all their dealers overnight, and most spa customers are too smart to buy a spa out of a website or brochure and insist on wet testing, they insist on knowing there is a service department.

Granted, there will always be those who ignore the obvious, but to date, not enough people to keep a direct to the public spa manufacturer in business.

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Do you really believe Costco has the same margin as a local dealer? That completely ignores economies of scale and the entire reason big box stores exist and thrive. If you don't like the tubs Costco sells, that's fine, just say so. Point out the lack of dealer support and the lack of wet test. I suppose everyone is entitled to their opinion, and I promised to play nice, but saying that Costco has the same margin as a local dealer is just absurd.

As far as the face to face time, I guarantee you that I spend more time face to face at my local Costco than your average spa owner spends at the billiards/fireplace/pool/spa dealership.

DK117

That is not what I said.

The total percentage markup MANUFACTURER to PURCHASER is still there.

As for your face to face time, go to Costco and ask a chemical question, or ask for help programming your controller. ;)

You know what it costs to make a low end 7 ft spa? About $1500 before shipping.

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Do you really believe Costco has the same margin as a local dealer? That completely ignores economies of scale and the entire reason big box stores exist and thrive. If you don't like the tubs Costco sells, that's fine, just say so. Point out the lack of dealer support and the lack of wet test. I suppose everyone is entitled to their opinion, and I promised to play nice, but saying that Costco has the same margin as a local dealer is just absurd.

As far as the face to face time, I guarantee you that I spend more time face to face at my local Costco than your average spa owner spends at the billiards/fireplace/pool/spa dealership.

DK117

That is not what I said.

The total percentage markup MANUFACTURER to PURCHASER is still there.

As for your face to face time, go to Costco and ask a chemical question, or ask for help programming your controller. ;)

You know what it costs to make a low end 7 ft spa? About $1500 before shipping.

Wow, so now Costco has a 300% markup on Spas? Fascinating. I'll cut up my Executive Membership card right away.

DK117

PS, if we can't agree that Costco's size affords them purchasing power (bulk) and operates on slimmer margins (though volume) than a local mom and pops, then we're just going to have to move on. :wacko:

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Costco sells a 7'x7' floating bubble blanket for $24.99

I sell a 7'x7' floating bubble blanket for $17.95

That may be so but how much do you charge for a 5 lb box of pretzels or a 64 oz jar of mayo?

Ya got me, I also don't sell karoke machines :(

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