The amount of time I've spent in music shops just hanging out with the guys and playing with new gear with no intention of buying anything, almost in itself is worth the markup they put on their products.
The stores on the other hand, wish they'd marked your products up more
--
Up until very recently, here is the break down of a certain popular US product:
Original US retail: $64 USD ($61 AUD)
US Wholesale to stores (would be less for the Distributor): $34 USD ($32 AUD) ***
Shipping crate: $400 / 100 items = $4 AUD
Import duties on 100 items: $340 AUD ($3.40 AUD each)
TOTAL cost to distributor: $39.40
Local wholesale price: $122.00 (profit for distributor: $82.60)
Local retail price: $189.00
Local average street price: $160 (profit for store: $38.00)
(most stores then do an installation deal, worth $35, as a freebie)
Stores have to:
unpackage box, store the item, add it to inventory, barcode/price it, display it, provide a store front and warehouse, provide staff to talk shit and know their products, add it to their website, have a cash register, an accounts lady, provide an eftpos machine, and installation service, lights, power, water, advertising, etc etc etc.
It clear to me where the profits are going. Ive chosen to simply not have accounts with the worst offenders.
*** Ive seen one of these particular items wholesale in crate quantities (standard sizing for a distributor) for under $20 USD each...