Hypocrites

Hockey is an elitest sport.  Of all the sports, hockey has made its way out of the middle class.

In order to play hockey, one must go to the store and buy every piece of equipment from head to toe.  Even if you're just playing roller hockey, in order to be "safe", you still need a helmet, stick, gloves, shin guards, elbow pads, and skates.  It's not like baseball/softball, basketball, football, or soccer, for example.  Those sports, you go to the store and you buy:

baseball = bat, ball, glove
basketball = ball
football = ball
soccer = ball

So why is it that when large hockey stores decide to manufacture and bring in their own branded hockey product from Asia, in order to bring down the price of hockey equipment down, they are chastised?

What these stores are trying to do is provide privately branded products to the masses at lower, affordable prices.  Part of that is the hope that doing this will allow more parents to afford hockey equipment, which will bring more and more kids to the sport.

I hear people complain that hockey equipment is so expensive and yet, they complain that these stores are creating their own products.  Manufacturers such as Bauer make great products.  There's no denying that.  However, they make product in order to make money as a for-profit business.  They mark it up for profit in selling them to retailers, who buy and mark it up for profit in selling to the consumer.

Say a product costs $100 to make.  Company X, who employs people like many other companies, takes that cost and will want to make a 40-50 profit margin.  What is profit margin?  Well, the best way to explain it is that many companies, manufacturing or retail, do their calculations based on markups. This is not the same thing as margin. This is often a source of confusion - but only because percentages are difficult until you understand them.

Margin
The percentage margin is the percentage of the final selling price that is profit.

Markup
A markup is what percentage of the cost price do you add on to get the selling price.

These are different, a selling price with a margin of 25% results in more profit than a selling price with a markup of 25%.

With margins, a 50% margin means that half the selling price is profit. In markups, that is a 100% markup (you have added 100% of the cost price to make the selling price). With margins, a 100% margin is only possible if the cost price is zero.

To understand why margins are higher, imagine an item that costs $50. If you sell it with a margin of 50% - that means fifty percent of the selling price should be profit. If you sell it at $100, half the selling price is profit - margin 50%.

If you sell the same item (cost $50) with a markup of fifty percent, you add fifty percent of the cost price. Fifty percent of the cost price is $25. This makes the total selling price $75. 

A fifty percent margin is higher than a fifty percent markup.

So, back to our example.  It costs Company X $100 to make a product and they want a 40-50 profit margin.  So, $100 at a 40 margin becomes $166.67, and 50 margin becomes $200.  They most likely set a price to their retailers at $200 and they will create a discount program based on total volume purchases, that will bring the price of this product down to $170 (15% discount). 

Dealers then mark up the product for their standard retail profit margin, which is most times at 40, for a sale price of approximately $333.50.  Here, everyone makes money.  The manufacturer makes their cut and the retailer makes his.

These larger retailers that bring in their own product, they source a similar product, with, in many cases, similar performance characteristics.  What they don't have is a name brand and distribution beyond their own location(s).  What they do have is a price $133 less instead of the name branded Company X product, that in many cases, can be bought at the same store and is usually located on the wall next to the private branded item.

Some of these larger stores offer an unreal guarantee!  "Try it for 30 days, and if you're not completely satisfied with the performance of this product, return it to us and we will fully credit the original purchase price (excluding shipping), no questions asked!"

So why not try it?  Why chastise it?  Why complain that prices are so high when one doesn't want to give these products a try?  Why be a hypocrite and complain that hockey equipment prices are so expensive?

Will these items work for everyone?  Maybe not, however, it might be something to look into, and, at the same time, just might bring more people into the greatest sport in the world!