Healthy margins are reseller nirvana — higher ones even better. According to Anyware’s Peter de Wever margins on hardware don’t come any higher than those on cables and consumables.
He says in 1997 it cost about $3 to produce a printer cable which could be sold for around $10. Today’s numbers are comparable, opening the door to mark-ups running to hundreds of percentage points.
“A network cable would be produced at around $1.50,” says de Wever quoting an example. “It would sell for around $19 in the shops, giving a margin of well over 1000 percent. There is a huge area in cables where people can make money.”
Cheap cables can also be used to bolster the value of other products, while at the same time increasing the margin. For example, bundling a cable with a printer gives the perception of delivering a benefit worth an additional $10 or so, but at a cost of a few cents.
Cables are not the only accessories with large margins, according to de Wever. “A generic, multimedia keyboard would normally sell at around $20, while only costing about $5 to produce. You could cut the price in half and still have a 100% margin.”
Not all products that Anyware offers have high margins, however. “There are definitely lower margins for us in some products, especially computer cases. But we don’t sell our cases — especially the Lian Li branded ones — on price, we sell them on quality.”