Theres only 1 distributor I can think of that works on a pre VAT markup of 50% with a few of its lines. Factor in VAT and youre looking at 30% markup surely? Highest top rate buying 100k of bikes a year would probably get you a 36% markup, but to shift 100k of bikes youve gotta pack um high and sell um cheap.
In an ideal world where everyone sold at RRP youd make a gross profit of maybe average 30%, but everyone price shags, so in reality on bits 15% on a bike, 20%, but then factor in the time building it and the first free service which comes out of the price originally..
+1
this is the most sensible explanation of LBS mark ups I have seen on here. Correct me if I am wrong but are trade purchase prices pre vat usually in the region of 50% of RRP (loosely). Adding vat and possibly dealing with price match/discount and the mark up isnt great. I know the big shops get better prices on bulk buys but not massively so.
In fact, I do wonder how LBS manage to keep afloat, especially here in the NW where we are surrounded by quality shops and also big discount retailers (Merlin, Ribble, Winstanleys) and shops like Leisure Lakes, Evans, Edinburgh Bike Co and so on.