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Be Part of the Magic

postheadericon Behind the Scenes of the Magic Biz I

Dollars & Cents
Many myths surround the Magic Dealer. Most assume we are wealthy misers and don’t care one bit for the people who buy from us. In reality, it’s not true at all.
Most shops buy their wares from distributors like D. Robbins, Mak Magic, Murphys Magic and Fun Inc. 40% is our cost on goods. At times, we can swing an extra 10% if we buy an item in dozens. The formula isn’t 50% off, it’s Retail less 40% less10%. On top of this we are charged shipping no matter the size of the order. This is industry standard and does not change no matter who the buyer may be; The Trickery, Penguin Magic, Hank Lee, Hocus-Pocus, etc.
There are only a couple manufacturers that will sell at jobber pricing to magic dealers. Here you need to order 50-100 pieces of an item to get that pricing. Jobber pricing is 60% off retail.
Very few magic dealers can do these kind of numbers.

Out of the 40% profit on goods comes several things.
1. Employee payroll
2. Advertising – print media, on-line media, affiliates
3. Utilities – electric, heat
4. Telephone
5. Rent/Lease
6. Computer software/hardware
7. Electronics – Video Camera, Digital camera, lighting, audio, etc.
8. Shipping – FedEx, UPS, USPS
9. New inventory
10. Server/bandwidth costs
11. Web site maintenance
12. Medical benefits
13. Shrinkage
14. Office supplies
15. Shipping supplies
16. Credit Card Fees
17. PayPal fees
18. Automobile
19. Bank Charges
20. Depreciation Expense
21. Dues and Subscriptions
22. Interest Expense
23. Accounting Fees
24. Travel and Entertainment
25. Subcontractors
26. Convention Expense
27. Misc. Expense
28. Repairs and Maintenance
29. Insurance – liability, property and internet
Profit margins above 40% are made when arrangements with a manufacturer are agreed upon for exclusive items or large quantities. If you manufacture your own props, higher margins can be expected, but you also incur large fees upfront for the R&D, cost of materials, labor and of course serious quantities, not to mention marketing.
Next time, we’ll talk about price-matching.

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