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IT's Most Outrageous Markups?

Cliff posted more than 9 years ago | from the insane-profit-margins dept.

The Almighty Buck 194

masteritrit asks: "I have seen some really outrageous markups from IT companies. Cisco sells memory for a router I have for $1500 bucks and I bought it directly from Kingston for $56 bucks. I also had someone at storagetec accidentally reveal that their standard markup is 700%. What are some examples of this that others have seen and how do you feel about it?"

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194 comments

Most outrageous is... (1, Funny)

Anonymous Coward | more than 9 years ago | (#7089866)

Here [microsoft.com] ...

Re:Most outrageous is... (0, Funny)

Anonymous Coward | more than 9 years ago | (#7089901)

Or here [sco.com] too.

Re:Most outrageous is... (2, Insightful)

saden1 (581102) | more than 10 years ago | (#7090169)

Sun Microsystems is notorious for charging way too much for their products...so much so that some times their resellers and channel partners sell the same products for 200% less. They need to get their act together.

Re:Most outrageous is... (1)

amcnabb (682951) | more than 10 years ago | (#7090543)

some times their resellers and channel partners sell the same products for 200% less.

Um...

200% less means that they pay you the same amount that you would normally pay them. Are you trying to say that Sun charges 200% more than them (which would mean that they charge 67% less than Sun)?

The obligatory SCO post. (2, Funny)

Jellybob (597204) | more than 9 years ago | (#7089878)

Would everyone who just though of mentioning SCO's markup of 699% please add their post below.

And before the trolls turn up, I know 699% of nothing is nothing, but it was the best I could do at this time of night.

Re:The obligatory SCO post. (1, Funny)

deek (22697) | more than 9 years ago | (#7089937)

  • Would everyone who just though of mentioning SCO's markup of 699% please add their post below.

Actually, I was thinking that a markup of <ERR DIV_BY_ZERO>% was more appropriate.

Re:The obligatory SCO post. (1)

Jellybob (597204) | more than 9 years ago | (#7090074)

Why didn't I think of that one? I've been throwing my machine into inifinite loops all night, and I missed that!

Re:The obligatory SCO post. (0)

Anonymous Coward | more than 9 years ago | (#7089968)

You paid $1 for your Linux?

Re:The obligatory SCO post. (0)

Anonymous Coward | more than 10 years ago | (#7090433)

moooraan! SCO wouldn't be satisfied with just $6.99!

Re:The obligatory SCO post. (1)

bluethundr (562578) | more than 10 years ago | (#7090501)

Would everyone who just though of mentioning SCO's markup of 699% please add their post below.

And before the trolls turn up, I know 699% of nothing is nothing, but it was the best I could do at this time of night.


Slight error in the above figure. I believe the 10th power and 1st power are upside-down.

Video-game companies (1, Informative)

Anonymous Coward | more than 9 years ago | (#7089883)

I heard they profit 0% of their console sells, sometimes a markdown of 20%, 25%.

Re:Video-game companies (1, Informative)

Scott Robinson (108176) | more than 9 years ago | (#7089930)

Video game consoles are sold at a loss because the software licensing makes them much more profit.

Sell the razors cheap, make the money on the razor blades.

Re:Video-game companies (4, Informative)

KMAPSRULE (639889) | more than 9 years ago | (#7090046)

Glucometers for Diabetes are the same way, in a lot of cases the companies Give the meters away because they know that they have you trapped buying the test strips for $50.00 for a bottle of 25.

Re:Video-game companies (2, Informative)

Rick the Red (307103) | more than 10 years ago | (#7090608)

"Informative"? This [gillette.com] is [polaroid.com] nothing [hp.com] new. [oralb.com]

CompUSA Prices (5, Informative)

xWeston (577162) | more than 9 years ago | (#7089894)

When i was a salesman at compusa (a few years back) we sold USB cables for $30+ when they were only $5 or so at cost. I've seen grocery stores selling them for much less than $30. The same thing went for parallel printer cables.

However, there was one adapter (PS2->AT or serial->ps2, i forget which) that we charged ~$50 for when it was listed as $.50 cost in the computer... 1000% profit is not bad.

Re:CompUSA Prices (1)

user no. 590291 (590291) | more than 9 years ago | (#7090069)

Funny, I was just in CompUSA today--they were charging $9.99 for one SATA power adapter. My theory is that retail shops know they have customers by the balls, because there's a new toy and all that's needed is that cable they didn't think of.

Re:CompUSA Prices (4, Informative)

Murdock037 (469526) | more than 9 years ago | (#7090120)

I was a CompUSA drone for awhile there, too.

As I was making price tags for the cable aisle one day, I starting comparing retail and cost. On average, the markup of cables was around 1800% of cost. I'm not exaggerating.

It's a ripoff, yeah, just like those huge CD binders for which they charge $50, but pay $15, or most anything in the Accessory aisle.

It's not totally unjusified, though-- the reason cables are so marked up (and the reason they try to push them on you) is to make up for very low profit margins elsewhere in the store.

The average profit on, say, your average Compaq box is something like $50. If one of those walks out of the store without being paid for, you've gotta sell fifteen more to make up for it. Factor in employee costs and whatnot, and they don't really make any money selling computers. (This made it especially aggravating when Joe Schmoe thought he could haggle prices on the things, as if it were a car.)

Anyways, I'm not apologizing. They're still ripping you off, if all you need is a cable.

On the last day before I quit, I went through that same cable aisle and bought one of just about everything on the shelf-- employees could buy everything at cost. I figured that paying $50 for twenty cables in advance would be better than paying the same for two cables down the line, when I would be desperate and without the discount.

Re:CompUSA Prices (1)

Otter (3800) | more than 10 years ago | (#7090179)

The average profit on, say, your average Compaq box is something like $50. If one of those walks out of the store without being paid for, you've gotta sell fifteen more to make up for it.

Is there a lot of shoplifting of computers? I wouldn't have thought that would be an easy thing to steal, compared to the other items in CompUSA, with much higher price-to-size ratios.

shoplifting (1)

bluGill (862) | more than 10 years ago | (#7090493)

True, but it doesn't take many comptuers to cost CompUSA a lot of money. And Comptuers themselfs are not nessicarly the target. I couldn't shiplift a 19 inch monitor if the gaurd is paying attention, but a 2.5 inch harddrive, memory module, or even the latest sexy teenie bopper CD fits in my pocket. Do your crime in winter and a lot will fit under a coat. (I hope you get caught if you try, it drves the prices up for honest people)

I think cables are marked up so much mostly because the market will bear it. If I need a cable I need it now (or I'd go to the internet for a cheaper place), and I'll pay $25 to get my gadget working before my friends (yeah right...) get here. However there is also the issue of shelf space, cables don't seem to be very high volumn, compared to the shelf space they take. They could put something with less markup that moved better in that place and make the same money - except that If I go for a cable and find it isn't there I might decide they have nothing and not come back. Retail is complex, and I don't even know all the considerations.

Re:CompUSA Prices (3, Funny)

the_other_one (178565) | more than 10 years ago | (#7090766)

Get your aleged girlfriend/wife to carry it out.
Claim that she is pregnant.
The father is a computer geek/Slashdot reader.
Therefore the kid is going to be somewhat square.

Re:CompUSA Prices (1)

randyest (589159) | more than 10 years ago | (#7091553)

That's funnny as hell. With the way mods slop around +1 Funny's, I can't believe you haven't been modded up. Not that it would help your Karma (or that you care), it's just funny.

Re:CompUSA Prices (1)

km790816 (78280) | more than 10 years ago | (#7090132)

Bought a printer at Fry's: After rebate, $40.
USB cable to plug it to my computer: $15.

Bullshit.

Re:CompUSA Prices (1, Insightful)

Anonymous Coward | more than 10 years ago | (#7090215)

Wait till you have to refill the printer.

You're complaining and you haven't even hit the trapdoor yet...

Re:CompUSA Prices (2, Informative)

Repran (560270) | more than 10 years ago | (#7090435)

Profit is not price minus purchasing price. It is price minus cost. Cost can be a lot more then what a company has payed for a piece of equipment. You have to take, labor, storage, handling, capital cost, overhead, office and store rental into account. And those are just from the top of my head.

Re:CompUSA Prices (1)

stefanlasiewski (63134) | more than 10 years ago | (#7090458)

However, there was one adapter (PS2->AT or serial->ps2, i forget which) that we charged ~$50 for when it was listed as $.50 cost in the computer...

That sounds familiar. Friend of mine gave me an old computer, so I went to CompUSA and looking for a PS2 -> AT adapter, and it was over $30. Holy fark! Too expensive for my tastes.

So to save money, I decided to look around some dumpsters at some of the computer businesses around here. Lo and behold, I found my adapter. Works great! Free!

Re:CompUSA Prices (1)

jhoffoss (73895) | more than 10 years ago | (#7090660)

Similar to this, I have several Compaq scsi drives with an SCA (I think) connector and a scsi card with normal dba-looking connectors. The SCA (or whatever it is) connector includes power. I found adapters to make it work without the Compaq drive sleds that the drives were in previously (when used in servers.) Online, three adapters were about $15. I got a fourth drive later and rather than wait for a fourth adapter online, I went to my local geek shop. Well, they had them there, but for about $35. And the one I bought there was much crappier than the ones I bought online (bigger, cheaper plastic.)

Re:CompUSA Prices (2, Informative)

exhilaration (587191) | more than 10 years ago | (#7090706)

According to our manager at THE STORE FORMERLY KNOWN AS COMPUTER CITY (now CompUSA), retail stores make very little money off the high-price items such as computers. They need those items to bring in customers. The REAL money is in supplies and accessories. Customer buys a computer: 5-10% of that is profit. You talk them into getting a printer and more stuff, and you end up with something like this...

Computer: $1500 ($150 profit)
Monitor: $200 ($50 profit)
Printer: $100 ($40 profit)
Printer cable: $30 ($29 profit)
"Photo" paper: $40 ($35 profit)
Plain paper: $10 ($8 profit)
Ink cartridges: $50 ($35 profit)
Surge protector: $35 ($25 profit)
Blank CD's: $40 ($25 profit)
Replacement plan: $300 (~$250 profit)

That's the minimum you want to sell them. Now you're supposed to keep pushing - there's the scanner, digital camera, cable modem, cable/dsl router, joystick, etc. Software too, but there's usually very little money in that - software just brings in potential hardware customers.

Ferengi Rule of Acquisition #2 (1)

Baines (13567) | more than 9 years ago | (#7089896)

The best deal is the one that brings the most profit.

Misc ones (1)

LordOfYourPants (145342) | more than 9 years ago | (#7089910)

CAT5 cable usually selling at a 300% markup in "big box stores" compared to other small PC retailers.

Audio cables named after any sort of "Monster."

Mousepads are probably at a 1000% markup.

Do extended warranties count as markup?

Re:Misc ones (1)

windex82 (696915) | more than 10 years ago | (#7090902)

Why do people always refer to the extended warrenties as rip-offs?

I tell ya i sure do felt bent over when a reciever, car radio, dvd player, tv, etc goes out after 2 and a half years and i get a brand new one to replace it.

I DONT buy anything electronic without the warrenty, ive gone through 3 mini-disc players, how many have a paid for? one with an extendended warrenty, then after the second one broke i spent another 30$ for another three years... yeah let me tell ya they really pulled one over on me... I got in a car accident that cause the front plate of my radio to fly off and hit the shifter killing half the back lighting, brand new radio.... you know it be a shame to go without a fridge because you cant afford a 1500$ fridge right now, if only you hadnt insisted "your no sucker, im not spending 150$ on a 5 year warrenty"

Re:Misc ones (2, Interesting)

LordOfYourPants (145342) | more than 10 years ago | (#7091121)

Some big name electronic stores have manager/salesperson quotas on how many extended warranties are sold, with the idea being that you slim your margins on an electronics item, and get it back on the warranty.

The Future Shop stores I've been to here are fairly pushy with their warranties. I purchased a $500 digital camera and was asked twice by the clerk why I didn't want an extended warranty. Then the clerk went to the manager who approached me and asked me why I didn't want a warranty. If the store is doing this for the customer's benefit, then they're most likely not going to bug you about it unless they can get something in return.

So I do take a chance when I go without paying $50 on a $500 camera for 2 more years of warranty, but at the same time, when I use my CC to buy it, my warranty gets doubled by up to a year anyway. What are the odds of it breaking in year 3 as opposed to 1 and 2? On top of that, my $500 camera would probably cost $150 come year 3.

If I found a set of electronic gizmos breaking down in year 3 from a certain manufacturer, I just wouldn't buy from that manufacturer anymore.

Re:Misc ones (1)

windex82 (696915) | more than 10 years ago | (#7091551)

Some big name electronic stores have manager/salesperson quotas on how many extended warranties are sold, with the idea being that you slim your margins on an electronics item, and get it back on the warranty .... If the store is doing this for the customer's benefit, then they're most likely not going to bug you about it unless they can get something in return.

I also hate this kind of stuff, but its not really a fault of extendended warrenties, just higher ups making stupid rules because they have no clue how much its pissing off the consumer.

So I do take a chance when I go without paying $50 on a $500 camera for 2 more years of warranty, but at the same time, when I use my CC to buy it, my warranty gets doubled by up to a year anyway. What are the odds of it breaking in year 3 as opposed to 1 and 2? On top of that, my $500 camera would probably cost $150 come year 3.


If I were getting a free extra year i would be more inclined to skip over warrenties too.

This is the selling point that gets me:

In three years your camera is probably going to be discontinued and not at the store when you need to take it back. (I havnt checked camera prices for a while so forgive me if im a bit off) Say that 500$ camera was 5.1 megapixel, in three years that camera stops being able to read or write to the memory. You goto the store ro return the camera and check out the new ones, 5.1megapixels are going for 150 bucks but not the one you bought, its been discontinued long ago), but the brand new 10megapixel cams are going for 500$. Congradualtions on getting yourself a brand new 10megapixel camera for only 50$.

The above is the only type of extended warenty I go after and havn't seen many that dont work this way at the major applience stores (BB, circuit city, office depot) I dont see how you could really go wrong.

If I found a set of electronic gizmos breaking down in year 3 from a certain manufacturer, I just wouldn't buy from that manufacturer anymore.

I find its more when I accidently break something. The car radio is a good example, i dropped one MD player and the other got so much dust (pocket lint anyway) inside of it, that it stopped working, i pretty pissed i dropped that last MD player when i did, if it would have been a week later i could have gotten the one that records up to like 16x.. well i guess thats not all that great since id have to use shitty atrec and their copy protection schemes...

Cpu markups (2, Insightful)

revmoo (652952) | more than 9 years ago | (#7089917)

Well, pretty much any cpu you buy is going to be marked up pretty heavily.

It costs Intel or Amd the same whether they are making a 1ghz or a 3, the differences in prices are just their way of recouping development costs.

And of course, specialty cpus are marked up anymore, for example Athlon MP's.

Not *entirely* true. (3, Informative)

OrenWolf (140914) | more than 10 years ago | (#7090289)

AMD/Intel *do* incur higher costs for the faster chips of the family.

When a wafer of silicon comes out of the FAB, they test each chip to see what it can handle. Chips that can only do perhaps 1200Mhz without failure will get marketed as 1 Ghz, 1.3 Ghz as 1.1 Ghz, and so on. This ensures the chips are reliable at their standard clockspeed, and ensures the 3Ghz+ wafers go to the higher end parts.

Obviously, they only have limited control over this process, and when demand for a lower-speed chip increases, they may have to put a 1.3, 1.4, or 1.5Ghz rated wafer down as a 1GHz part, since people want to buy the 1GHz parts (this is also, BTW, the reason why sometimes the 1.4Ghz part is chaper than the 1.3Ghz).

As the speeds increase, you have continually smaller quantities of silicon that will run at the higher speeds, meaning if demand exceeds your supply of these parts, then you have to keep the prices higher to keep that demand in chack, and also because you may end up tossing out large parts of the wafers (This, also, is an issue when people purchase 1.4/1.5Ghz chips, and they have a glut of lower-rated silicon. They keep quite a bit of it, but eventually if the surplus grows to great, there's nothing to do but dispose/recycle the stuff).

So there *are* costs incurred with going up in speed.

Supply and Demand (1)

Zelet (515452) | more than 9 years ago | (#7089939)

I say let them charge wahtever they want because the market will decide what the price should be. When something is over-priced there will always be a competitor that is hungry enough to take a smaller profit margin. Of course this is null and void when there is a monopoly in the market.

We all love Adam Smith - with some rules.

HTML is bad enough... (4, Funny)

phraktyl (92649) | more than 9 years ago | (#7089941)

But XML markup is the worst!

Not *that* kind of markup. (1)

fm6 (162816) | more than 9 years ago | (#7090047)

Though the markup on markup [arbortext.com] can be pretty horrendous!

zones.com (0)

nocomment (239368) | more than 9 years ago | (#7089953)

I used to work at zones several years ago, and the standard markup varied. They often sold their full computer systems at a loss, and so had to recoup the cost by marking things up _a lot_ . A $1.50 ethernet cable would balloon up to $30 or more sometimes. Of course you'd also buy the computer at $100 less than retail though. That's pretty standard practice. CompUSA does the same thing. Sony sells their playstations at a loss as well, then inflated the costs of accessories to stay in business. Your example is pretty freaking extreme though. I wonder if it was just a fluke. I saw things like that at zones all the time. All of a sudden a $1,299 computer would be $12.99.

Not an answer, but... (3, Interesting)

LordOfYourPants (145342) | more than 9 years ago | (#7089984)

I would absolutely *LOVE* if someone could tell me how much both USR and retailers are making on external 56k modems:

Future Shop (Canada's version of Best Buy) is selling an external one for $170 CAD (~$120 USD?). It seems hard to believe that the price of one hasn't come down in what, over half a decade?

Re:Not an answer, but... (1)

MBCook (132727) | more than 9 years ago | (#7090015)

USRobotics makes very high quality modems, and the fact that it's external means that it's NOT software (which is how everyone else manages to make modems so cheap these days). So basically, you're paying for quality and not getting ripped off with a software modem.

Doesn't seem too bad to me, but I haven't modem shopped in a long time.

Re:Not an answer, but... (2, Informative)

LordOfYourPants (145342) | more than 9 years ago | (#7090055)

Non-USB Cable and DSL modems are also hardware-based, and can communicate at speeds 20-30x faster than a 56k modem. Given that, I paid $150 for my DSL modem 2 years ago. Is there something unique in a USRobotics external hardware modem that makes it that much more expensive than a DSL/cable modem despite being around for 5+ years now?

The internal USR 56k modems go for $80 here and are not winmodems. Is there an additional $90 worth of circuitry/plastic/shielding that goes into the external?

Re:Not an answer, but... (1)

MBCook (132727) | more than 10 years ago | (#7090147)

Oh, didn't relize the differnce was that big. I guess that is very high. Hm. Sorry, don't know.

The fact that not many people are buying analog modems might have something to do with the price of modems in the first place, but still...

Re:Not an answer, but... (1)

Otter (3800) | more than 10 years ago | (#7090201)

If I had to guess -- 56K dialup modems are an end of the line technology. There won't be any next generation, and the people who need one need one so there's no Moore's Law and no competition driving down prices.

Legacy equipment doesn't get cheaper over time -- the opposite, actually -- and 56K modems are now in that category.

That answer doesn't cut it (1)

Tau Zero (75868) | more than 10 years ago | (#7090858)

If I had to guess -- 56K dialup modems are an end of the line technology. There won't be any next generation, and the people who need one need one so there's no Moore's Law and no competition driving down prices.
As someone who's sitting here looking at a 56 K external modem, and who also knows that there is about as much electronic stuff in it as in your $5 Rat Shack telephone, I'll disagree with you.
  1. This is not legacy gear. There are plenty of people out there who still don't have computers, or are replacing older modems (the same way people are replacing older phones with the $5 Rat Shack model). The market is not exploding, but there are going to be steady sales for years. This is not a legacy market, it is ready to be a commodity market.
  2. Given that it is a commodity-market-in-waiting, anyone who comes to market with a good product at $35 is going to carve out a big chunk of USR's $70 modem market. Ditto the company that hits the $20 price mark. Eventually the reality of low sales will prevent the kind of radical margin shaving that characterizes RAM chips, but there's plenty of room to move down.
The other reality is that electronic gear lasts a reasonably long time. If it truly is a legacy technology and not improving, the new gear will face stiff competition from its older models. This means the price is likely to come down, at least for the careful shopper.

I find it amusing that I can buy... (1)

leonbrooks (8043) | more than 10 years ago | (#7090816)

...a miniature optical scrollwheel mouse for AUD$23 retail inc (10%) GST from Big W stores, but the wholesale price of just the USB interface chip is AUD$25+GST.

The manufacturers could sell a lot more of those mice if they made the interface chip Flash-programmable and padded and pre-scored the circuit board so you could snap off the mousey bits and use the rest as a generic USB interface.

Re:Not an answer, but... (2, Interesting)

Detritus (11846) | more than 10 years ago | (#7090303)

If it's a Courier, you're paying for the firmware, performance and the features of the modem. The market for these modems is relatively price-insensitive. It is much more important that they work reliably. I've used them for commercial applications where a few minutes of down-time would wipe out any cost savings gained by buying cheaper modems. In my situation, some people at the other end of the link tried to save money by buying Sportster modems. They ended up ripping them out and replacing them with Couriers after everyone wasted huge amounts of time and money on trying to make the communications links (international dial-up) work reliably.

RE: USR External Modems (1)

gremlin_591002 (548935) | more than 10 years ago | (#7091041)

I use a lot of External USR modems in my business (embedded systems). It pisses me off every time I have to buy one. They haven't changed in years and they still cost a fortune. Nobody needs them any more for PC sales so overall sales are low but why are them more expensive than say a TI-81? It's about the same level of complication.

What about the opposite? (3, Funny)

Chris Brewer (66818) | more than 9 years ago | (#7090045)

Here's an opposing view [dansdata.com] (Scroll down to the second-last letter - lucky b'stard).

Re:What about the opposite? (1)

Quikah (14419) | more than 10 years ago | (#7090640)

Your sig is quite appropriate for that story.

I'd watch out. (1)

Inoshiro (71693) | more than 10 years ago | (#7091310)

Some businesses have insurance to cover that stuff, but they tend to fire people who make mistakes like that.

By not walking off with all the extra free stuff, you are giving someone their job back.

There was that keyboard on Amazon a week ago... (1)

Dancin_Santa (265275) | more than 9 years ago | (#7090082)

One million dollars.

Buyer beware (5, Interesting)

bscott (460706) | more than 9 years ago | (#7090095)

That $1,500 Cisco memory is, I think, good for everyone - it contributes to Cisco's bottom line by ripping off the ignorant and lazy, thus keeping them from having to raise prices for the rest.

But for a contrasting situation: about 5 years ago I worked for a dominant office-equipment supplier in the Rocky Mountain region (name left out not to protect the guilty, but to avoid self-embarassment...) in their PC/printer repair depot. We outsourced our monitor repairs, and would routinely double whatever the price was - whether it was mainly parts or labor - for no good reason other than that we could. We sold Laserjet fusers for a decent markup - until we changed from geniune HP to remanufactured parts, and kept the prices the same... so a $180 fuser we sold for $215 became a $40 fuser sold for $215... I could go on. They did that 'cos they were sleazy, and I hated working there.

I've been on the lookout for a 4-pin to 4-pin Firewire cable at a decent price for awhile now; usually I see them for a ridiculous $40-$50 most places. Recently when my need became more urgent, I swung by Fry's and found them for $9. That's just a case of buyer-beware - if you're concerned about saving money, make sure you're not being fleeced before plunking down your cash. Do some legwork if the price difference is worth your time.

Another example: inkjet printer makers sell the printers at a loss and make it up by selling carts at inflated prices. That's OK by me, when alternative sources for carts and ink are available. When they started putting ICs into the carts to prevent "counterfeiting", that's where I draw the line, and it turns out that inkjet printers from 2-3 years back (available for dirt cheap on eBay and Craigslist) still work just fine with $3 cartridges (also from eBay)....

The really outrageous markups are in the financial business anyway. $35 because they let your credit card payment check sit for 3 days before processing it? Bah!

Re:Buyer beware (1)

ottothecow (600101) | more than 10 years ago | (#7090544)

firewire cables have HUGE markups...I had to buy one 2 years ago (shool project, needed movie off the camera NOW) and it was $54 for one pretty short 6 to 4 pin firewire cable. I have seen the same length online for prices that come down as low as $5. When I recieved my nomad jukebox about 9 months ago, it came with the exact same cable (in addition to a USB cable) and I highly doubt that the cost of the nomad was raised $50 to include a fricking cable. The same time it was purchased, best buy still had the same price on the firewire cables. It is completely an "I need this now" type of deal, I only wish the store price was double the online price, not 4-5x as much.

PRINTER INK! (4, Insightful)

Dr.Dubious DDQ (11968) | more than 9 years ago | (#7090105)

Numerous stories have been posted on this - I'm surprised "Printer Ink" isn't half of the posts here...

Re:PRINTER INK! (1)

BrynM (217883) | more than 9 years ago | (#7090126)

That's spooky. We posted [slashdot.org] that at the same exact time. What else are they putting in that ink?

Pointing out the obvious... (1)

BrynM (217883) | more than 9 years ago | (#7090110)

Printer ink/toner. 'Nuff said.

Infinite Markup in some instances (1)

Hamster Of Death (413544) | more than 10 years ago | (#7090245)

I've seen this before.
You receive some rather neat toy from your distributor for selling X widgets during their promotion. Said toy is rare and unusual and sought after.
Boss takes said toy and sells it in the store as a 'Collectors Item' for pure profit.

None of which you get.

I'm sure that happens all the time elsewhere too.

IBM RAM upgrades... (5, Funny)

MightyTribble (126109) | more than 10 years ago | (#7090319)

...for one of our AIX RS/6000 servers. I forget the exact quote amount, but it was, I think, around $1,200 for 512MB. We bought the same RAM from Kingston for less than $400 (after the IBM rep almost blew his top arguing that if we didn't buy from him, we'd void the warranty).

So we crack the case to put in the new RAM, and what do we find? The *exact same* Kingston RAM module is already providing us with our first 512 MB of memory. Priceless.

Re:IBM RAM upgrades... (1)

mabhatter654 (561290) | more than 10 years ago | (#7091191)

in your case, ram is tied to performance & and IBM includes that increase in your "support and service" cost. IBM is really the all time master of the hardware markup, and the locked-in customer racket. What's worse is that IBM's software cost based on hardware features...go faster and pay more $$$$.

On the flip side, I'm addicted to IBM iSeries [as400] They absolutly rock. They "just work" like no mear PC [or AMD/Intel] harware can match. But they are REALLY, REALLY PRICY. But it's no different than dealing with a Cisco or SGI...If you need the power, you get what you pay for and be willing to pay it.

HP/Compaq Spare Parts (2, Funny)

wang33 (531044) | more than 10 years ago | (#7090365)

Just for giggles when a hdd in one of laptops crapped out, I went to HP's website to find out what they had to offer, i found this $1073.00 10 gig laptop hard drive. [hp.com]
I just about fell off my chair laughing so hard. I think we bought an equivelant hdd through compgeeks for
wang33

Double is standard (4, Informative)

bluGill (862) | more than 10 years ago | (#7090371)

Don't forget the cost of doing buisness. If you count only the cost of food, McDonald's as a 200% markup. Food and labor is about 100% (these two were about half the costs in the resteraunt I worked at). However after all the other little things add up, profit of 5% not obtainable no matter how hard we tried, and some months we lost money. Overhead gets you every time...

I used to work at StorageTek, and I don't know if I believe the 700% markup. Only because how do you figgure that. If just the cost of making the parts, that is beliveable. They don't have a lot of volumn (compared to say DELL), but all their systems have a lot of engineering in them, so they have to recover a lot of costs from each sale. I know many smaller products never directly became profitable, and were only worth it because they helped drive a bigger sale.

I don't think Cisco wants to be in the RAM buisness. They are used to selling either big machines for a lot of money, or small machines to re-sellers. Call them up for a $50 ram module, and they may have more than $50 in overhead just to answer the phone, get it off the shelf, and ship it. The salemen selling it may require more than $50 himself just to make it worthwhile to write up the stupid order. (time is money, and that time could be spent trying for a big sale) Call them direct and you might get a vice president more inclined to sell in lots of 1000 than single lots, and you have to pay for his time. Their processes don't support selling memory, but they know they have to. They charge to make up for their process, plus some extra to either profit or make you go elsewhere. (one other point is they have to keep memory for old systems around ever after it is hard to get, you may be paying for an assumption that they have made their last order of that part and have to conserve inventory)

Buisness is complex. That doesn't excuse you from not looking for the best value. Don't buy the expensive parts if a cheap one is just as good. Unless your time itself is worth more than the effort it would take to find a cheaper supplier. If you are a high level executive, getting memory from Cisco may be a better use of your time than searching for memory suppliers. I could find them on google and 5 minutes latter have the order done, but if you don't do that I could see it taking 20 mines, which means the executive would need to make $250 an hour - cheap for a CEO. (though why a CEO isn't telling an underling to do the job I don't understand - something they should know how to do in one minute)

Re:Double is standard (1)

FFFish (7567) | more than 10 years ago | (#7090865)

I've recently been seeing inventory sheets lying around the local Wal*Mart. By appearances, Wal*Mart manages to score a good 50% markup on almost everything. I was rather surprised it was that high.

Ink Cartridges (1)

Doctor Sbaitso (605467) | more than 10 years ago | (#7090384)

I was in Future Shop yesterday since my printer had run out of ink. They wanted $90 for a colour cartridge, and $40 for a black cartridge. Damned if I'm paying $150 (when tax is included) for a small capsule of ink that's going to last me maybe two months...

I ended up buying those do-it-yourself ink kits where they give you a couple of syringes and some containers of ink. It was cheaper, but, clumbsy fool that I am, I ruined my shirt...

I don't know about computers (1)

WTFmonkey (652603) | more than 10 years ago | (#7090391)

because I usually just pay the price at the local retail store because it's close and easy, but the markup on guitars is RIDICULOUS. You can talk guitar salesmen down thousands of dollars. Sometimes, I like to go in, haggle my way to under a grand for a (marked as) $3000 guitar, then walk out. The salesmen expect that kind of thing, but it's fun to spend a day playing very expensive guitars, and if you look serious they show you the *real* nice ones. Fun.

Overhead (1)

Detritus (11846) | more than 10 years ago | (#7090396)

In any business, especially a retail store, the per-item overhead can dwarf the wholesale/bulk price of an item. You are paying for ordering, inventory, floor space and other costs. With a vendor like Cisco or Sun, they have to specify, test and qualify the item, assign it a part number, stock it in warehouses, provide packaging and documentation, etc.

I work at a hospital... (3, Informative)

Anonymous Coward | more than 10 years ago | (#7090445)

and a similar situation occurs there. (slightly OT) You would not believe the hospital markups on perscription drugs. We routinely charge as much as a 6000% percent markup over the actual cost. (one particular one costs the pharmacy $1.50 per tablet and sells for over $95/tablet to the patient(!) Some of this accounts for waste, and some pays for the basic infrastructure, but that is certainly a significant margin considering we move hundreds of that particular drug a day. Some of the IVs we make cost hundreds of dollars each.

And this doesn't even take into account the enormous profit the drug companies make on that product that costs them less than pennies to produce. You wonder why health insurance costs so much.. here's part of it. This is a case of markups in a situation where the consumer has little choice (if they are bedridden in a hospital). And this in an industry that is supposed to be helping people (and a non-profit at that). Abuses aren't necessarily limited to the likes of SCO. At least most of the time in the IT industry you have a choice as a consumer.

Re:I work at a hospital... (0)

Anonymous Coward | more than 10 years ago | (#7091110)

You do of course realize that the markup helps pay for a nurse to administer the medicine to the patient, check for any contraindications, and then monitor the patient to ensure he or she has no adverse reaction to said medication? Perhaps you think the hospital is a hotel, and the medical staff is just there to change the linens?

I don't know how outrageous this is but, (2, Interesting)

Sevn (12012) | more than 10 years ago | (#7090446)

Those of us that used to make redboxes [inforeading.com] ended up paying 25 bucks for the 33 memory tone dialer and another 5 for the new quartz timing crystal. When I was busy making and selling about 50 a week, I found a better source at asiansources.com [asiansources.com] and started getting them from the same place RadioShack ordered them from for 3 bucks a piece quantity 100 without the lame RadioShack logo on them. The quartz timing crystal I found for 49 cents a piece but I can't remember where. It's been too long. I never could find a great price for mercury switches (the only way to do it right) but my boxes looked completely normal from the outside so they were worth it. :)

Backwards mark-up (1)

MountainLogic (92466) | more than 10 years ago | (#7090520)

I went to buy my daughter a Compaq CPU and LCD from Circuit City. The sales guy asks if I want the free inj-jet printer. As she already has a laser I knew she has little use for it, but what the heck. I'm sure I'll find someone who wants one. The sales guy then goes, "oh, because you bought the CPU, LCD & printer bundle here is your $100 rebate slip." Go figure?? I guess I should have gotten a dozen more printer and neted the system for zilch. I'd love the free-market if it didn't hurt my head so much.

Re:Backwards mark-up (1)

ckd (72611) | more than 10 years ago | (#7091209)

I had another backwards markup deal at Circuit City a while back. Bought a new DirecTiVo to replace an older Sony receiver...it was $399.99, or $400 with a $50 gift card if you bought a "system" which included the $0.01 single LNB dish.

So I hauled home a dish I didn't need, and spent the $50 on DVDs later that week. :-)

A Compaq CPU?!? (1)

Wee (17189) | more than 10 years ago | (#7091617)

I went to buy my daughter a Compaq CPU and LCD from Circuit City.

And here I thought Tru64 was dead [securityfocus.com] .

-B

Check out Radio Shack margins (2, Interesting)

MerlynEmrys67 (583469) | more than 10 years ago | (#7090631)

Worked there in the late 80s. Note the margins on simple resister/capacitor packs (realize that the most expensive thing in them was the cardboard holder too).

The pack might only sell for 0.25 - but they gotten for about .0025.

Re:Check out Radio Shack margins (0)

Anonymous Coward | more than 10 years ago | (#7090906)

Now if I just could sell 3 resistors per day - I'D BE SET FOR LIFE!

Re:Check out Radio Shack margins (1)

mabhatter654 (561290) | more than 10 years ago | (#7091201)

Yeah, but again, you have the overhead issue. I used to work at an ECM [Electronics Contract Manufacture] and yeah, pieces were in the fraction of a penny a piece.....on a full reel of 10,000....bought a dozen reel at a time. After dealing with that stuff,[and crawl on the floor to find one sot23 because we delt with engineering samples of EXACT PIECES...go figure] I wouldn't wish anyone to have to package all those little Radio Shack packs....that's insane...

here's a good one (2, Funny)

Anonymous Coward | more than 10 years ago | (#7090638)

I actually paid $150 for a copy of Windows. Can you believe it? $150 for an operating system? It must've cost about $0.05 for the media, plus a few bucks for the programmer who copied the code from VMS, BSD, and MacOS.

Believe me, I never made that mistake again!

Re:here's a good one (1)

sql*kitten (1359) | more than 10 years ago | (#7091796)

I actually paid $150 for a copy of Windows. Can you believe it? $150 for an operating system?

Almost as outrageous as people paying good money for a copy of Red Hat!

It must've cost about $0.05 for the media, plus a few bucks for the programmer who copied the code from VMS, BSD, and MacOS.

Or downloaded it from the net...

best buy (1)

windex82 (696915) | more than 10 years ago | (#7090650)

best buys standard markup for large televisions is 100%... they buy for 700 your buy for 1400

Slow boat from china (1)

smoon (16873) | more than 10 years ago | (#7090670)

Blackbox and other outfits like that have just about every oddball convertor, splitter, etc. you might ever want.

The reseller I used to work at seemed to do a lot of this kind of business. We found a taiwanese firm with an office in CA and were able to order stuff like VGA splitter boxes (still > $100 most places) for like $9.

We got tons of stuff from this place -- 1000's of printer cables and the like. If the going retail price was $25 we'd buy them for $0.27 ($0.25 for 100 or more).

Problem is we'd have to stock a bunch because they only had so much then it was wait for the next boat from China.

But we really needed the margin. We'd net more dollars on the cables and network hubs than we'd make on a $10k server, especially if it was a name-brand server.

Somehow my boss never got the idea that service is where the _real_ markup is made -- $100 an hour for a tech we paid maybe $20 an hour to. Business is funny that way.

Sun Microsystems Memory (1)

kmahan (80459) | more than 10 years ago | (#7090721)

Sun charges outrageous prices for "Sun" memory. You can buy the same memory far cheaper from Kingston (or anywhere else). Of course Sun gets you by saying that they won't sell you a service contract if you're not using "Sun" memory.

Printer Ribbons (1)

PHPee (559830) | more than 10 years ago | (#7090735)

I work at a call center, doing tech support for Epson products. I actually had a customer today call, asking about the retail price for a ribbon for a certain point-of-sale receipt printer. Apparently, they were paying almost $200 for each ribbon from their reseller. I couldn't believe this, so I did a quick check and found that they were listed for sale on our website at $39.99... for a case of 10!

Go to the mall (1)

jonadab (583620) | more than 10 years ago | (#7090756)

You want HIGH markup, go to the mall. Worst I've ever seen was at
a shop called "Bath and Body", which sells mostly (I swear I am not
making this up) bottles of colored soap. I compared some of their
prices to a reasonable retail store and determined that B&B was
charging 1000% more than the other store's price, which presumably
was already marked up at least a little. For example, B&B would sell
you a box of four vanilla votive candles for $10; they would be $.25
each at Deane's, $.20 if you buy them when they're on special.

Somebody as making a serious killing.

HP Heatsink - $972.00!!!! (3, Funny)

seigniory (89942) | more than 10 years ago | (#7090762)

No lie - we needed an HP heatsink to replace one that was (ahem) "dropped". Turns out that the heatsink costs $3 more than the processor (P3 1Ghz) itself (which CAME WITH A HEATSINK).

I just don't get it.

Re:HP Heatsink - $972.00!!!! (0)

Anonymous Coward | more than 10 years ago | (#7091083)

The big OEMs really hate it when you go buy a cheapy upgrade CPU on Pricewatch.

Another good example is those proprietary VRMs for server computers. By themselves, they usually cost 90% of the price for the entire processor upgrade kit.

Apple RAM (1)

Goo.cc (687626) | more than 10 years ago | (#7090828)

If there is one thing you never want to buy, it's RAM from Apple. Their prices are crazy!

Re:Apple RAM (1)

trouser (149900) | more than 10 years ago | (#7091020)

Ditto replacement hard drives, optical drives, cables and pretty much anything else they sell that you could buy from the local PC shop for a fraction of the price.

Macs themselves aren't exactly cheap either. What kind of a crazy person would buy an iMac. And a G4 tower. And an iBook. And Panther will be out soon. And......

Re:Apple RAM (1)

danaris (525051) | more than 10 years ago | (#7091156)

Well, I haven't checked out Apple RAM for a while, but while loading up my fiancee's Dell laptop, I discovered that I could get an extra 512MB DIMM bundled & preinstalled for around $330...or I could buy the same DIMM from Crucial for $130. Guess which I did?

By the way, if the prices aren't quite that outrageous, I don't mind paying a little extra to get stuff straight from Apple--or, for that matter, from most locally-owned stores, and other places I think are worth it. So long as the money's going to a "good cause," whether that cause is actually a charity or is just a business I want to see prosper, I don't mind paying a little extra.

Dan Aris

I mark stuff up all the time... (1)

vudufixit (581911) | more than 10 years ago | (#7090836)

I buy Realtek cards from Ebay vendors for $5 - $8 each, and sell them for $20-$25 each. I also buy various cables, such as USB for super low prices and mark them up to near retail. In addition, I charge $5 for just about any length Ethernet cable I make. The kit I bought was on special - 1000' of Cat5E, with a crimper and some RJ-45 heads - total cost - $60. Ethernet and USB cables are so bloody expensive at retail - buy them from Ebay vendors, guys!

local shop... (1)

chewedtoothpick (564184) | more than 10 years ago | (#7090839)

A local computer shop has an extreme-beyond-extreme markup well over 100%... The retarded owner sells $2 USB cables for $15-$30 depending on if he has it in stock or not. He also sells $35 wd (to him) BB (2mb cache) 40-gig drives for $119. That is an example of the markup and idioticy that exhists in small american businesses.

rule of 3's (1)

mabhatter654 (561290) | more than 10 years ago | (#7091221)

from raw material to manufacturing cost is 3X markup. From Manufacturer to Distributor is 3X markup. From Distributor to Retailer is 3X markup. From Retailer to YOU is 3X markup.

the hard drive is right on, but the cable is a bit high...but it's a convienance item...so the markup is higher.

Re:local shop... (1)

Loosewire (628916) | more than 10 years ago | (#7091675)

local pc shop - compaq 486 machines 200..... (no screen or cd drive)

You have to make a profit somewhere (2, Insightful)

Crashmarik (635988) | more than 10 years ago | (#7090916)

The question seems to be talking about gross markup in I.T., the problem is I.T. is a very funny business where almost all the cost is in figuring out what to buy. A particular cable or part may cost 25 cents, having someone around that can tell the customer that its the cable they need is not cheap at all.

If the part is to be installed on site the actual profit becomes much less. There seems nothing a customer loves more than wasting a field techs time with little things after the paperwork has been filled out.

Oh and for most markup I once charged a customer $300 for a 20 cent fuse for a printer. Call it penalty markup for plugging the thing into an outlet I insisted was bad.

Re:You have to make a profit somewhere (1)

bakes (87194) | more than 10 years ago | (#7091612)


'X' mark: $1
Knowing where to put 'X': $9,999

Consultant (1, Insightful)

Anonymous Coward | more than 10 years ago | (#7090919)

I work for a consultant firm that charges the clients 10 times what they pay me. That's a markup.

Water (1)

Ratbert42 (452340) | more than 10 years ago | (#7091028)

I know it's not an IT product, but we buy a lot of water at like 5,000,000% markup.

Markup != Ripoff (3, Insightful)

NanoGator (522640) | more than 10 years ago | (#7091091)

Listen dudes, just because it's got a high percentage of profit, doesn't mean it's a rip-off. It's an example of supply and demand. If $5 USB cables are being sold for $30, then it's because enough people are spending $30 a piece to buy them. When people stop paying $30 a piece, the price will drop.

It really is important to understand this concept of business. Just because they can sell it cheaper doesn't mean they should. Remember, they're not just selling you small quantities of material, they're selling you a tool that helps you do a job.

Large markup means market failure (1)

ChaosDiscord (4913) | more than 10 years ago | (#7091261)

Listen dudes, just because it's got a high percentage of profit, doesn't mean it's a rip-off. It's an example of supply and demand. If $5 USB cables are being sold for $30, then it's because enough people are spending $30 a piece to buy them. When people stop paying $30 a piece, the price will drop.

It's both a rip-off and a sign of an inefficient (malfunctioning) market.

Say the real cost to put a USB cable into my hand is $5, but you charge me $30 for the privledge. Well, with a markup like that some enterprising businessman else should be able to undercut you and sell me USB cables for $25. Of course, he'll get undercut to $20, then $15, and the cycle will eventually drive the price down to just a tad over the actual cost to put it in my hand. This is the theoretical magic of the free market.

Of course, theory and practice aren't on speaking terms right now, so enjoy your $30 cable and your malfunctioning market.

Re:Markup != Ripoff (1)

Scarblac (122480) | more than 10 years ago | (#7091648)

It's not a case of supply and demand. If the high prices were caused by lack of supply, then the stores would have to pay the factories high prices as well. Supply and demand can't explain a huge resale markup on an unchanged end product.

Your main point though, "they sell at this price because people are willing to pay this" stands, of course. But that's not because of supply and demand, that's because of how people work (putting $30 on top of an already large bill is less of a problem than paying $30 for something on its own), and the fact that they don't have complete information about the market.

Whether that makes it a rip-off or not, decide for yourself.

firewire cables.. (1)

Myself (57572) | more than 10 years ago | (#7091213)

A year or two ago, a friend of mine from work bought his first computer, something to accompany his DV camera. It had a firewire card in it, but neither the computer nor the camera had included a firewire cable. Back to the store we went.

Best buy wanted $50 for a 4-foot cable. That struck me as obscenely high, so I drove around for a bit, and eventually found one at Radio Shack for $15, which I deemed acceptable for a retail outlet.

Just the previous month, another friend of mine had purchased a firewire card online (some pricewatch vendor) for $14 and it came with two cables... *sigh*

Every big company does it. (0)

Anonymous Coward | more than 10 years ago | (#7091510)

From SAP to Oracle, from IBM to Microsoft. Every one of these have middle managers that do not have a *clue* about their own customers and the product they support. They throw out numbers to satisfy the whims of their own feel-good agenda that may or may not translate into a promotion.

I'm posting AC because I'm afraid that my company will find out. But, the latest projects we've been working on have seen 50 ~ 70% profit margins. Do you know how insane that is?! Even during this downturn ... 50 to 70 percent! The latest debacle is that one of our projects' customer wanted to move up the installation schedule 2 weeks. And you know what number was thrown out? 300k. That's right, 300 friggin thousand dollars for the "cost" impact. Come on.

I got on the phone with my managers and suggested that they actually quote what it really cost us. The number? 60k or so for extra people and extra flight costs. (Customer is in Asia.)

Welcome to Corporate life, where the markups let the top boys buy their toys.

-Out.

Sun and Cisco (1)

bow (300451) | more than 10 years ago | (#7091627)

Just ordered yesterday, including rather large reductions for educational institutions:

10/100 MBit NIC from Sun : 350 Euros (List price is 800 !)
10/100 MBit NIC for a Cisco PIX : 145 Euros

I then asked for one of those serial cables from Cisco (to connect to their console ports)... Listed as 100 Euros, the salesman had a hard time explaining the quality of said cable to me ;)


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