The State of the HPA

[A & P]

Hey Mow,

I agree that other companies will enter the market. There is actually one company I've seen with $99 silencers! That means the tax stamp is 2x the can! I won't mention names, but I did get some of their cans in. I'll first say that I haven't shot them or tested them or anything else. But, when you hold their can and then hold a SilencerCo Sparrow, for example, you'd probably be willing to fork over the extra $300. As for silencer companies coming down on their products, I'm not sure that'll really happen. What I suspect might rather happen is that every guy with a garage and a trust fund will set up a CNC machine to make $99 silencers too. We will be flooded with "Walmart silencers". Without disparaging the brands, consider that if you want a 9mm, you could buy a Hi Point, a SCCY, a Taurus, a Bersa, or probably dozens of other names for under $200. So why in the hell would anyone spend $500 on a Glock or $900 on an HK made out of plastic?! Nevermind paying $1000 - $4000 for a steel frame 1911. There's no way a Wilson Combat 1911 in 45 is 20 times better than a Hi Point in 45. Hell, they shoot the same bullets and are just as deadly, right? You'd have thought when HP came out and showed the world a 45 could be made for $100 or so (retailed for $170), WC would have quit price gouging and dropped that $3500 price at least in half.

Same for ARs. Our $499 Diamondback AR with quad rail versus our $1600 Daniel Defense versus our $2500 LWRC...? Can the LWRC justify the 5x markup over the Diamondback? Don't they know they can build $500 ARs and still make a profit?

Point being, and (while I am an engineer) I'm no silencer maker, I don't know exactly what goes into the difference between $900 (our retail price) on an Omega and $99 on the other can. Sure, one is full auto rated and comes in a nice box instead of a plastic sleeve, but for $800 more? Well, possibly it's the same concept as the difference between $179, $500, $1000, and $3500 guns. So maybe the "real" silencers won't actually come down much (other than the economies of scale I mentioned before) but rather the market will be flooded with cheap, aluminum, "better than nothing" novelty cans...that will sell at Walmart and Academy.

And to that point, at least silencers have "parts". $300 for a Noveske billet receiver? It's just a block of metal carved out with a CNC machine, right? Should be $50. I bet many guys with $60 Anderson lowers can outshoot the Noveske lower owners (assuming same uppers and barrels, etc).

In short, I don't know what will happen but I don't think all these silencer companies will think "shit, we're going to have to cut our 95% profit margin down to 20% or so...foiled again!" Time will tell...or not, since I don't think HPA will happen unfortunately.
Of course, I'm sure many more SCCYs are sold than WC too so maybe that's not even a bad business model. Low margin, super high volume sales versus "mil spec, ninja warrior" cans.

 

[Mowingmaniac 24/7]

A & P,

Perhaps, the future world of suppressors may be what you conjured - low cost, cheap material, low quality overall suppressors will come on line, while the superior ones will keep demanding and getting big bucks.

Maybe.

Maybe, high quality, low cost suppressors will come on the market too.

I doubt the suppressors made and used extensively in foreign markets are all pot metal crap. If they were, they too would fall by the wayside of those demanding quality suppressors. Our foreign fellow shooters aren't stupid. Too, they obviously have the discretionary income to pay for their guns, ammo, range fees, etc. They aren't going to then buy junk suppressors. Yet, the cost for their suppressors aren't even close to what U.S. manufactures and distributors get.

I also understand why you don't want your very high cost suppressors to be challenged. You've got a good thing going. Currently a gold mine.

I hope HPA passes, it's going to be fun seeing which way this suppressor cookie crumbles..

 

[Younggun]

Sigh


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[A & P]

A & P,
I also understand why you don't want your very high cost suppressors to be challenged. You've got a good thing going. Currently a gold mine.

Well, as I said before, the huge markups aren't on our end. Our margin is basically similar to firearms...about 10-15%...maybe a little more at boutique shops. We sell pretty much everything at MAP where applicable. If we are stocking stuff, realize that the margin we make is our "return on investment". A hardware store is making 40% markup on tools. A clothing store is making 200% markup on clothes. We're making 10-15% markup on guns/cans. And we have to pay rent and employees out of that profit. That's 10-15% gross margin. But, there are shops that sell at premiums. The SiCo Omega is MSRP at 1130; a shop up the road sells it for 1050; we sell it for 900. Not sure who is more foolish: them for pricing so high or me for pricing so low. They make more on one can than I make on 2-3 cans. And I doubt I do 2-3x their volume to make up for it.

So to claim that we don't want the high priced items to go away because it's a gold mine for us...well, that's a bit off the mark. I'd rather sell three cans for $400 with $40 profit than one can for $1000 with $100 profit. That's a 20% pay raise for me. Same margin, but more buyers at $400. In fact, we finally (begrudgingly) brought in some Hi Points just because there are people who will buy a $180 gun because they only have $200 to spend. Walmart sells more than Neiman Marcus for a reason. We sell Wilson Combats and Hi Points. Go figure. Everyone is different. And, oddly enough, they have similar margins.

One example that is kind of glaring though is that we carry a lot of AR build stuff here. The cost of a basic A-2 birdcage flash hider is like $10. How can the proprietary devices for attaching cans cost $90?? They're almost the same device! And on a $10 FH, my cost is probably $6. On a $90 device, my cost might be $70. It's not like I'm paying $10 for the fancy one and charging $90 for it.

Then, for us B&M (bricks and mortar) stores to stay competitive, we get constantly barraged with "well, Sportsman's Guide/Buds/OpticsPlanet/etc have it for $X". That pretty much keeps us retailers on paper thin margins. In fact, I'd guess it'll put most B&M stores out of business in the next decade if they don't have a range or something else unique or unable to be outsourced to the internet. Just look at Gander Mtn filing bankruptcy (maybe). JC Penney's is closing over 100 stores too. It's affecting ALL B&M retailers.

The real "victims" of the HPA will be the gun trust guys like Sean. While they have other legal business, who in the hell will buy a gun trust with HPA? The few SBR guys and the even fewer MG guys?

I wish I was sitting on a gold mine selling cans. But we have another business that pays the bills here. Oddly enough, it's another low margin business...but much higher volume.

My other concern is that if all of these fly by night can companies come out and start flooding the market with cheap crap, well, this could be a safety issue. Some guy making $100 cans in his garage that blow up in your face...well, are you going to sue his mom because she owns the house? It's one thing to buy a cheap pen that won't write. It's quite another to buy a cheap product that is containing a high explosion just a foot or two from your face. And getting an FFL07 doesn't necessarily require a bunch of proofing and qualifying. The ATF doesn't test for safety or long term reliability.

Time will tell, but we all agree it'll be interesting if HPA passes. And to my earlier point, with all the people waiting on HPA, guys who are buying now might be pleasantly surprised with low wait times on F4s. Once we get through the 7/12 submissions, I bet things will move quickly. In fact, I'm betting a submission today will be back in 4 months. That's my guess.

Oh, and I honestly don't know anything about the foreign suppressor market. I wasn't avoiding the comment, I just don't have an intelligent commentary on it since I know nothing about it.

Happy shooting!

 

[41magnut]

Sounds like a matter of fact explanation of retail marketing.


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[Mowingmaniac 24/7]

It does.

Thanks A&P for your business primer.

As for guys like Sean being a victim, (if HPA passes) nope, not a victim, just business evolution.

Some lose out and some gain, it's all part of business.

Losers in the game can still do well if they're creative and innovate in some manner, shape or form.

 

[Younggun]

...

 

[V-Tach]

...........

 

[40Arpent]

Another great day...at the range....

 

[Younggun]

...........

Great minds think alike.

 

[A.Texas.Yankee]

Great minds think alike.

So do shitty ones... Vis a vis Obama.

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[A & P]

It does.

Thanks A&P for your business primer.

As for guys like Sean being a victim, (if HPA passes) nope, not a victim, just business evolution.

Some lose out and some gain, it's all part of business.

Losers in the game can still do well if they're creative and innovate in some manner, shape or form.

Ya, I doubt Sean or any other lawyer went to law school for the purposes of drafting NFA trusts. But they saw a market and offered a product to fill that need using skills they were probably already using (contracts, wills, trusts...)

What's funny, though, is that as matter of fact and fundamental as my business explanation is (not to imply that anyone on here didn't already know that), it's amazing how many people think businesses should operate for free. 90% of small businesses fail in the first 5 years. Nobody sheds a tear for them and there's no government bailout. But if any of those remaining 10% succeed in any capacity, well, they must be getting rich and gouging. I hate when people I know (usually relatives) envy me but then aren't willing to take risks and work 80 hours per week either. I've had employees think I'm getting rich because we do $7000 in one day in sales. So I start letting them check in inventory and see the $10,000 invoice I get or drop off my $2500 rent check. Kind of puts it in perspective for them. As for price gouging, look how outraged so many people were when 22LR was so hard to find. That's just basic econ. If I am the only one who has a product and everyone wants it, well, the price goes up. It stabilizes where I have just enough supply to meet the demand. Can't gouge someone if they simply can opt not to buy it. Now, if, let's say, the government mandates that you buy insurance and then your insurance premiums go up 150% in just a few years, well, that might be gouging. But nobody makes anyone buy ammo. And frankly nobody makes anyone buy silencers either. It's like us complaining that pro athletes make $20mm/yr but then we go pay $80 for Rocket's tickets or $2500 for Superbowl tickets or whatever. They couldn't make outrageous money if the customer support wasn't there.

 

[Mowingmaniac 24/7]

A&P,

I have a question for you, sir.

If you aren't making a bundle off silencers, priced at $800 on up, who is?

Are you implying domestic manufacturer suppressor costs as compared to foreign suppressor manufacturers cost widely differ? I doubt it.

I'm sure some entity in the domestic business chain IS making quite a handsome profit off suppressors and if it aint you, who is it?

I'm a fan of the free enterprise system. That said, as far as I know no one NEEDS a suppressor, so if the cost were say a million dollars per suppressor, well good for the seller.

As long as the HPA remains in limbo, I won't buy one.

I'm not be snarky.

I don't need one. Sure, I'd snap one up for almost every one of my firearms if I didn't have to go through the paper work, plus wait time aggravation and I'm sure as hell not willing to pay a $200.00 tax for the privilege of paying through the nose for something I don't really need.

OK, I'm rambling, so back to the real question: If you aren't making a bundle off suppressor sales, who is?

I assume you know..

 

[Younggun]

Damn capitalist pigs.


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[Younggun]

My question to those convinced someone is making a bundle.


If there is so much money to be made by just turning a chunk of steel, why don't you go in to that business? Sounds like a no brainer.


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[Shady]

As in all non home businesses the cost of parts you produce is the cheap part of doing business. Add to that Property, equipment, Utilities, R&D, Payroll for your office staff for your shop staff for the tax preparer, Insurance,Healthcare, printing, Advertisment, Equipment repair and upkeep it aint cheap on CNC stuff, The costs of the correct licenses to actualy make Class III,Cost of cutters and other tooling, Programmers for the CNC eq. Cad software a guy to use the cad system, The list goes on and on and on.

 

[Jakashh]

My question to those convinced someone is making a bundle.


If there is so much money to be made by just turning a chunk of steel, why don't you go in to that business? Sounds like a no brainer.

I'm not disagreeing nor agreeing with you, but that's like the classic "oh, you think 32 ACP is substandard for carry? Why don't you stand on the other end of the muzzle then?" argument lol.

 

[Mowingmaniac 24/7]

Shady,

Yeah, I get that, so my next question is, how are foreign suppressors makers able to make and sell for such low comparative cost.

Yes, I'm sure they have different laws, taxes, etc, but they too have a lot of fixed and various others cost to contend with also, but they sell their suppressors for significantly less money.

YG,

I know my questions and/or posts in general annoy you, but for the life of me, I don't know why?

You seem unable to keep from commenting with a heavy dose of snark to almost, not all, but almost all of my posts.

I hope I'm as entertaining to you as you are to me.

 

[41magnut]

Questions-the HPA proposes to remove suppressors from the NFA. I'm assuming that is at a consumer level, i.e. taxes, BATFE approval, and what have you.
I've not read the legislation, which is kinda pointless since you never know how it reads until it is voted on, reconciled etc. I have not heard how or if this will have any regulatory relief for the manufacturing sector.
While there is no argument that removed hurdles & expenses for the end user will drive demand, I'm not sure if the manufacturers will see that any much difference.
Yes increased demand increases volume, and buying your raw materials in larger quantities should lower per unit cost, but if the regulatory expenses are still there I'm not certain prices will drop as much as we would hope.



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[Mowingmaniac 24/7]

41,

If the HPA passes and you're correct about the prices not dropping in the domestic market, maybe the foreign market will get to compete.

I hope..even if they sell here for higher (tariffs, freight costs, etc) than they do in their own domestic market they'd probably cost us way less. Maybe.