 Poster: A snowHead
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Five questions:
1. How much does it cost, in 2010, to design, manufacture and deliver a pair of skis, or a snowboard, to a retail store in a rich country?
2. What is the bill-of-materials cost?
3. What is the ex-factory tax-free wholesale (trade) price?
4. What is the point-of-sale retail price?
5. What, in %, is a rough average operating profit margin for a ski maker?
It can be a low-, mid- or high-tier model of ski.
Facts, ballpark estimates or outright guesses are all fine.
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Obviously A snowHead isn't a real person
Obviously A snowHead isn't a real person
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Well it's gonna be more than you think and less than you were hoping... Maybe Kiwi1 could help you out?
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Well, the person's real but it's just a made up name, see?
Well, the person's real but it's just a made up name, see?
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The answer to all those questions is...
.... 42
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You need to Login to know who's really who.
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Oooo. A guessing game. Prices ex VAT:
1. £120.
2. £20.
3. £160
4. £320
5. 10 net
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Anyway, snowHeads is much more fun if you do.
Anyway, snowHeads is much more fun if you do.
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achilles, I'd say that's not far off. The answer to 5 probably varies between -5 and +15. Also some makers sell direct to the retailer, missing out the middle man margin. Retail margin must vary wildly depending on the sell through rate and amount of stock left at season end. Money left on the shelf will affect the margin a lot. And what about bindings? Some are included already and others require packaging up - ski might go out at full margin but binding is a loss leader.
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You'll need to Register first of course.
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| achilles wrote: |
Oooo. A guessing game. Prices ex VAT:
1. £120.
2. £20.
3. £160
4. £320
5. 10 net |
Assuming that this is correct - the next question could be,
With ex factory costs £160 (€192) to make a a pair of skis
What the cost of hiring a pair of skis
Now that is where the money is, basically sell a set of skis, then a week later get them back and sell them again.
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I'd imagine that the majority of the cost was in the machinery. The BOM cost is pretty low. I reckon the design cost isn't that great either as there are no major leaps in design.
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Wayne, Hire skis are sometimes a different ski to a retail ski, having thicker edges and a bases, the construction needs to be stronger.
My guess is the following for lets say a £500 retail price point ski.
1 = £80 (criteria write off design, development over a 3 year period of ski design)
2 = £50
3 = 170 (this is as you say ex factory price)
4 = £500
5 = 20 to 30 % Any company with margins below this could not last very long.
As most skis are made in the far east these days, there will be a number of distribution models, almost all makers will have a distributor for each country, therefore there is another % profit point in the equation. Plus the number of skis sold is critical to the equation.
% margins in retail supply differ across market places and product groups, for example, your pack of Weetabix in ASDA will attract a margin of about 2 to 3% for Asda, where as a perfume sold at the airport duty free is more like 700% margin for the retailer.
Many years ago I made my own plastic toys in China, they cost me 70cents( then approx 45p) to make and ship worldwide the retail price in the UK was £5.00
But I am sure there are a number of  's who will have a better idea of the ski market than me 
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You'll get to see more forums and be part of the best ski club on the net.
You'll get to see more forums and be part of the best ski club on the net.
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I'm thinking it is probably a lot less for the bigger ski companies to manufacture a pair of skis than you think.
Considering you can buy a pair of skis at the end of season and through the following summer for around 60 - 70% of their original RRP, it's a given that a retailer will not be losing any money on them.
So.... my guestimates... and #4 is model dependent
1. How much does it cost, in 2010, to design, manufacture and deliver a pair of skis, or a snowboard, to a retail store in a rich country? £150
2. What is the bill-of-materials cost? £50
3. What is the ex-factory tax-free wholesale (trade) price? £300
4. What is the point-of-sale retail price? £500
5. What, in %, is a rough average operating profit margin for a ski maker? £100
I also don't have a clue what i'm talking about apart from that the ski wouldn't be there in the first place if all parties were not making profit!
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| livetoski wrote: |
| .....5 = 20 to 30 % Any company with margins below this could not last very long..... |
Must warn the CEO of Tescos  Their profit margin is about 5%
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snowHeads are a friendly bunch.
snowHeads are a friendly bunch.
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achilles, the joy of deminishing returns
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And love to help out and answer questions and of course, read each other's snow reports.
And love to help out and answer questions and of course, read each other's snow reports.
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Ellis Brigham figures
Annual turnover: £31,092,000.00
Annual profit: £1,633,000.00
So profit 5.25%. Looks like I was being rather optimistic suggesting 10%.
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| achilles wrote: |
Ellis Brigham figures
Annual turnover: £31,092,000.00
Annual profit: £1,633,000.00
So profit 5.25%. Looks like I was being rather optimistic suggesting 10%. |
Not comparing like with like. the figure you quoted above is the Net profit rate. Gross profit rate (ie not taking account of the indirect costs but only comparing purchase price with sale price is going to be much higher.
25 years ago, when I worked in the trade, the generally applied mark up for ski equipment was 55%. So if a product cost £100 it would be sold for £155 plus VAT. That said, most of the main equipment ranges were ordered centrally by our head office, so no doubt better deals were often arranged. The mark up for ski clothing was far higher. It was drummed into us by the directors that the chain could only keep operating because of the profits generated by ski clothing. Everything else, ski equipment, climbing, camping, canoeing stuff contributed virtually nothing to the bottom line.
On the point about end of season sales of ski equipment. This was frequently sold at below cost in the summer. It was more important to be seen to have a full range of skis, sizes and choices in the main buying seaon, than to ensure that every single item sold made a profit.
I'm sure margins have changed, and everything is no doubt much more sophisticated, but the underlying principles will remain the same.
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You know it makes sense.
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Tesco Figures http://www.tescoplc.com/plc/media/pr/pr2010/2010-04-20/
Annual TO £62.5 Billion
Annual Profit £3.4 Billion approx 6%
Above the line, below the line, write offs, one offs, pensions, dividends etc etc etc
Overall Company performance is not really the same as individual product margin
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Otherwise you'll just go on seeing the one name:
Otherwise you'll just go on seeing the one name:
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** CAUTION: Following post contains vague and possibly inaccurate accounting references **
Yes total profit of around 5.25% on turnover, but I'd say their margins are better than that, as profit will include deductions for wages (5.8m), store costs etc.
Their revenue stream is 31m so their markup would be the difference between the 31m and the total cost of the stock sold.
So if they buy a ski in at £200 and sell for £400 thats a 100% markup, but the cost of selling said ski for transport, storage, floor space, advertising, staff etc is £150 then the profit on that ski is £50, so the margin is 12.5%.
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Poster: A snowHead
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I notice that everyone is running around second-guessing what the OP wanted to know and he/she/it hasn't checked in to help things along. He asked for operating profit whereas he's getting pre tax profit and that's a more meaningful measure. How long's a pair o' skis? The financial story of a pair of Rossis popped out of a mould in Tunisia will be far removed from that of a hand-made boutique brand that's sold direct to the end user.
I can't wait to click into a pair of Whitegolds.
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Obviously A snowHead isn't a real person
Obviously A snowHead isn't a real person
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I am well aware of the concepts involved in profit and loss. Whitegold asked what was the rough average operating profit margin for a ski maker. I quoted retail companies where the net profit is about 5%. I don't know what it is for a manufacturer - but I would still guess at not much more than 10%.
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Well, the person's real but it's just a made up name, see?
Well, the person's real but it's just a made up name, see?
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Amer Sports own Salamon
Report January–March 2010:
Net sales EUR 372.6 million. EBIT (earnings before interest and taxes) of net sales, 2.5%
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You need to Login to know who's really who.
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achilles, Most of their sales would have happened in the 6 months before that period though. That figure would most likely include a lot of their non-skiing lines.
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Anyway, snowHeads is much more fun if you do.
Anyway, snowHeads is much more fun if you do.
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Bode Swiller, yup. Care to ring the CEO for clarification on the skis figures?  However you cut it, in todays world you are doing well to make a 10% or better net profit.
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You'll need to Register first of course.
You'll need to Register first of course.
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OUCH Amer Sports not really to do with the thread but their gearing and equity figures were way out last year thats maybe why they raised 150 million euro through a rights shares issue
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Making ski gear is not profitable but retailing or renting the stuff can be.
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Spud9, interesting to here from someone from the industry, we should chat in tignes...
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You'll get to see more forums and be part of the best ski club on the net.
You'll get to see more forums and be part of the best ski club on the net.
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There was the chap making custom ski's to your design out of a trailer for $333 - http://www.333skis.com/
You have to imagine that if he can it them for that price in USD, then the majors mass manufacturing in Eastern Europe should be able to knock out kit at maybe 30 euro a pop, or less. I bet that they spend almost as much per pair on marketing.
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david@mediacopy, it was pretty well established in some length that the 333 guy couldn't do it and while it was a good idea he didn't have the experience or some might say the cogency to make it happen in any way that someone would want to buy.
achilles numbers probably aren't that far off for a bog standard model I'd guess. Ski manufacture isn't a route to infinite riches but there are payoffs in terms of higher margin clothing, accessories etc. I've spoken to some ski shop owners who say they wouldn't choose to sell skis if they could get away with it, too much tied up in stock, buying risk if you've not selected the hot brands and models, no real service aspect, punters who know better, tyre kickers, undercutting rampant from internet sales etc
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snowHeads are a friendly bunch.
snowHeads are a friendly bunch.
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fatbob, I was reading his site again and noticed that he couldn't ski at the start of the project, but thinking back maybe he was a boarder. Anyway it would appear he's still in business - and good luck to him.
I suspect that numbers 1 and 3 from achilles are a little high, but I agree with the retailers - it must be a tricky business. Interestingly we've noticed a dramatic reduction in stock on display in some of our local 'outdoors' retailers, no doubt a sign of the times.
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And love to help out and answer questions and of course, read each other's snow reports.
And love to help out and answer questions and of course, read each other's snow reports.
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Thanks, all.
Good stuff.
Consensus seems to be about £100 -300 to make a pair of skis, which deliver single-digit or perhaps low-double-digit OM.
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| Bode Swiller wrote: |
I notice that everyone is running around second-guessing what the OP wanted to know and he/she/it hasn't checked in to help things along. He asked for operating profit whereas he's getting pre tax profit and that's a more meaningful measure. How long's a pair o' skis? The financial story of a pair of Rossis popped out of a mould in Tunisia will be far removed from that of a hand-made boutique brand that's sold direct to the end user.
I can't wait to click into a pair of Whitegolds. |
Sounds like you'd be better suited to a pair of Marigolds 
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You know it makes sense.
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Whitegold, such a relief to see you've almost developed humour.
So, having cracked the ski issue, how much to make a pair of rubber gloves? What's the industry average EBIT for rubber glove companies? I really need to know.
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Otherwise you'll just go on seeing the one name:
Otherwise you'll just go on seeing the one name:
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| livetoski wrote: |
As most skis are made in the far east these days,
But I am sure there are a number of 's who will have a better idea of the ski market than me |
well that is just untrue,
the only ski brand that was recently making skis in the far east was K2, not even sure that they still are
But rossignol, dynastar, salomon, atomic, blizzard, volkl, head, fisher,dynamic, volant, nordica, storm, scott, Black Diamond, and a whole heap of others are all made in or around europe
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Poster: A snowHead
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FWIW the Finnish company Amer owns Wilson, Suunto, Mavic in addition to its winter sports brands - Salomon, Atomic and Arcteryx. In 2009 operating margin on its winter sports division was 3%. My organisation, which researches such things, estimates that it will improve to 6.4% in 2010.
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Obviously A snowHead isn't a real person
Obviously A snowHead isn't a real person
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CEM, I stand corrected "A few skis are made inthe Far East" 
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Well, the person's real but it's just a made up name, see?
Well, the person's real but it's just a made up name, see?
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| Quote: |
But rossignol, dynastar, salomon, atomic, blizzard, volkl, head, fisher,dynamic, volant, nordica, storm, scott, Black Diamond, and a whole heap of others are all made in or around europe
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Or the chinese have learnt how to put "Made in Europe" on their skis
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FAQ
