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To: mac_truck

Mmmm... no, not really... the margins depend on being able to control the ability of competitors to make a functionally identical weapon at a better price.

In economic terms, “rent seeking” is how Colt used to make money on the M-16/M-4. They held the rights to what is called the “technical package” on the M-16, all the specifications of how the gun was made, finished, tested, etc. The government didn’t set all the compliance data, the Colt technical package did.

As long as Colt could control that, they could control what the government paid for them, since Colt effectively gamed their way into being a single-source bidder on the contracts by requiring any competitive bidder to add $X to their bid on each gun to account for the cost of licensing the Colt technical package.

AR’s and M-16’s/M-4’s are now a commodity item. Everyone knows how to make them. Improvements are being made all the time, by a large (and increasing) number of vendors. Colt will never again achieve the level of margins they enjoyed throughout the 70’s to 90’s in making guns for the DOD on contract.

Margins for commercial long guns are good, depending on your market.

For example: Compete with Remington and Mossberg on a no-frill,s cheap-assed pump shotgun? Margins not so good.

Compete with the Italians on side-by-sides and O/U shotguns? Oh, there’s a nice margin in there for those who want to compete.


35 posted on 05/24/2014 2:15:20 PM PDT by NVDave
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To: NVDave
...the margins depend on being able to control the ability of competitors to make a functionally identical weapon at a better price.

Gross margin is the difference between revenue and cost before accounting for certain other costs. Generally, it is calculated as the selling price of an item, less the cost of goods sold.

Colt has a better margin on its military long guns than on its commercial long guns. This information comes from their own literature.

37 posted on 05/24/2014 2:41:45 PM PDT by mac_truck ( Aide toi et dieu t aidera)
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