Perspective on gun dealers and FFL transfer fees

[Bubbles]

An FFL transfer fee is basically free money for the FFL. He doesn't have to buy it, he doesn't have to pay to ship it, he doesn't have to display it. All he has to do is hand you the paperwork and call in a quick background check, which he would have to do anyway if you bought it from him.

There's more to it than that. We're home-based and since firearms typically arrive signature-required, someone has to be here to meet the delivery truck. While we know something is coming in, it can arrive any time between 0900 and 1900 (and later around the holidays).

Once the firearm arrives we unpack it (hijack - I hate packing peanuts), inspect it for damage, log it in, and notify the purchaser it has arrived. While it's here it's covered by our insurance. If everything goes well the purchaser shows up in a day or so, his background check is approved instantly, we generate an invoice (because WV hits that transfer fee with sales tax), he goes home with a gun, we log it out, and we retain the documentation for 20 years.

If things don't go well - the gun isn't as described, the gun was damaged in shipping, the purchaser is delayed, the purchaser is denied, the gun isn't legal to own in your state and neither the buyer nor seller realized that - things get dicier. Then you're stuck with a gun taking up space in your safe while the buyer and seller try to work things out, or in the case of a denied purchaser, you end up consigning it.

Also, even at $25 apiece transfers don't net us nearly as much money per hour as other activities like gunsmithing, parkerizing, custom builds, etc. It certainly doesn't pay for the hassle of an ATF compliance inspector crawling through your books every year either.

So why do we only charge $5 for transfers? It's known in retail as a loss leader - we take a loss to lead you into buying something where we'll make money. We'll take the hit on transfers because we're not a retailer, so there's nothing "on the shelves", so to speak, to bring people in. But, we need to bring people in so we can show off our other work - and about 10% of those folks do return to us for the high-$$$ services.

There is nothing stopping you from getting an FFL except several hundred dollars and a storefront (separate area from your home to conduct business.)

Not a requirement. Our den/home office is accessible only from the living space. The IRS cares more about it (for the home-office deduction) than the ATF does.

 

[dogsoldier0513]

My dealer just uped his transfer fee from $20 per transfer to $30 per transfer.

 

[porterdog]

I've been paying $15/transfer for the past 6 years. I admit that's a good deal, and honestly, if it went to $25 I wouldn't quibble.

I won't pay more than that, and you shouldn't have to either:

Enter your zip at the bottom of this page.

 

[Freedom_fighter_in_IL]

Thankyou for that link porterdog. I just found one that is much cheaper that is not listed in my books here. 20 bucks for normal long gun transfers!! Heck of a lot better than the average 50. Saw on that list that some actually charge up to 100!!! I get the point that some here are making that it isn't, nor should it be, a free service. But to charge someone 50 dollars or more to simply do a couple of minutes of paperwork (yes there are times when it is more of a hassle with some buys but not the norm) is just price gouging and should not be allowed. In some parts I agree with the original poster in the fact that they are kind of stupid for turning away business in ANY fashion in these economic times. Seems to my small inept mind that every 20 dollar transfer is dinner for the family. Gouging it up to 50+ is not going to get someone to buy your guns at your shop from 99.9% of people. It will more than likely cost you any return business for ANY items you may have in your shop that that upset customer would possibly have purchased in the future.

 

[skipbadger]

Cash flow and Return on Investment

Not sure why so many posters are getting on the OP's case.

I cannot understand why a gunshop wouldn't do transfers. Retailers across all markets are looking for ways to offer high margin, ancillary services to their customers. Transfers are a textbook example of this.

Transfers do the following:
1. Improve cashflow - this is cash coming into a business, NEVER a bad thing when the cash coming in is greater than the cash going out, especially in retail.
2. Leverage existing infrastructure - gunshops already have everything needed to process these transactions. Makes use of that investment in infrastructure.
3. Increase foot traffic - people may not be able to get the gun they want for the price they want it from a shop, but they will have to go in to pick it up with a transfer. This may lead to purchase of accessories, future gun purchases, or word of mouth advertising. If you can't get someone into the store, you can't get them to spend their money in your store. (the internet is second semester stuff, gents).

This is a perfect example of bad business skills. I see it all the time with retailers across various markets. It is the sign of an owner that doesn't understand the basic tenants of retail and doesn't understand basic accounting principles like cash flow and return on investment.

It's either a case of stupidity, ignorance, or entitlement. Most likely a combination of all three.

But the beauty of the free market is that he can do whatever the hell he wants. If he is happier not doing transfers, more power to him. The other beauty of the free market is that his customers and prospective customers can go elsewhere if the gunshop isn't meeting their needs.

 

[skipbadger]

...But to charge someone 50 dollars or more to simply do a couple of minutes of paperwork (yes there are times when it is more of a hassle with some buys but not the norm) is just price gouging and should not be allowed.

The irony of a person with your username posting what you did about FFL fees gives me a pretty good chuckle.

 

[Lakeshore]

Actually $20 seems reasonable to me. My FFL charges $30. That's not pure profit for him because his employee has to receive the package from FedEx/UPS, log it into inventory and store it the vault, call me (usually) to let me know it's arrived, and then do the transfer paperwork that takes about 10 minutes.

I have made a number of purchases from my FFL, who's also a retail dealer, and he's been fair and reasonable. My occasional online purchase/transfer transactions are just a gentle reminder that I can and will do business elsewhere whenever I find a better deal.

 

[waterhouse]

I agree that stopping transfers will likely be bad for business. Transfers bring in a lot of new customers.

I can also understand why someone would stop doing transfers. Before I got an FFL, I thought "Why would I pay someone $35 for 5 minutes of paperwork and a phone call?"

Now that I have an FFL, I realize that the 5 minutes of paperwork and a phone call is what the customer thinks is happening. Unpacking a gun alone can take 15 minutes depending on the packing method and materials used.

All told, the work for a transfer averages closer to 20 minutes, but in some cases where something goes wrong it can be hours. If a gun arrives without paperwork it can take an hour to track down who shipped it just so I can log it in. If a gun is damaged in shipping Fedex won't talk to the customer who bought the gun, they'll only talk to the recipient. They come out, inspect the box, inspect the damage, and take pictures. They call me, ask follow up questions, and issue the insurance check to me. This entire time I'm relaying information to the actual gun owner as well as the seller.

You deal with too many cases like that over a few weeks and suddenly transfers are a huge waste of time.

An FFL transfer fee is basically free money for the FFL. He doesn't have to buy it, he doesn't have to pay to ship it, he doesn't have to display it.

No, it isn't basically free money. It is money paid for a service. If the dealer isn't transferring your gun, he can be doing something else. Don't get me wrong, I appreciate the money coming in from transfers, but if I wasn't doing a transfer at the moment I could be typing code or watching TV or reloading ammo or boresighting a customer's rifle or making my daughter's lunch. How much professional work do you do every week without expecting compensation?

The OP went to law school. I don't know if he is currently practicing law, but let's say that he is.

Would anyone say "I just spoke with my lawyer for 30 minutes while he was eating lunch. That's basically free money. I mean, he was going to eat his lunch anyway, why should me getting legal advice while he was eating cost me money?"

Providing a service for money isn't anything new, but for some reason gun buyers often seem to think that FFLs are getting something for nothing. They provide a service, and you can choose to pay for it or not.

Maybe he should recognize that it's free money, charge a reasonable amount, and make his prices competitive enough that, after shipping, it would cost MORE to buy it from another retailer, have it shipped there, and pay the transfer fees. If he's marking up a gun so much that, after $25+ shipping and a $20 transfer fee you can't get it for the same price there, then he's price gouging.

Once again, it isn't free money. It is money collected for performing a service.

As for price gouging, you forgot about state sales tax.

I can beat Bud's on just about any price, and I charge $10 for my transfer fees. So if Bud's sells a gun for $600 shipped, the customer's cost out the door is $610. I can sell the same gun for $580, which should save them $30 right, and net me a profit? Wrong, because after tax that comes out to $628. The state gets that extra money, not me, but most people will buy from Bud's to save the $18. One way I could combat this is to . . . jack up my transfer fees. If my fees were $35, it would be cheaper for people to buy through me even with the sales tax. I won't do it, because I'm happy with my life as it is, and I dream of a day when anyone can order a gun directly to their door without using a dealer so I try and make it as cheap and painless as possible, but there is a lot more that goes into this than "free money" and "price gouging."

FFL's can view transfers either as a hindrance or an opportunity. If they view it as an opportunity, they can make money at no hassle to them.

I agree with your first sentence. I disagree that providing a service is no hassle.

If they view it as a hindrance, they're going to be seeing people take their business elsewhere and NEVER buy something in their shop.

You say this, but I don't see it in reality. A gunshop in Austin last year was charging $75 for transfers. I know the owners, and they still do a lot of business, although they do very few transfers.

Gouging it up to 50+ is not going to get someone to buy your guns at your shop from 99.9% of people.

It will if you can't find a lower price for the transfer. If every single dealer in your area happens to charge $50, people will know that they need to add that number into their cost. They see a gun online for $650 shipped, they know their out the door cost is $700. Now they call their dealer, and he can get the gun for $685 after tax. If $50 is the only option, 99.9% of people will take the cheaper $685. If $50 isn't the only option for transfers, people will shop around until they find a cheaper option, and the free market will dictate where business flows to. No price gouging, just the free market at work.

 

[Frankl03]

I do agree that a transfer fee is a fee for service. The free market system works.

The FFL I deal with charges $20 for long guns and $25 on handguns. They are great people to do business with. They are not a standard gun shop. I order off the net and they call me when its in. They are just outside of KCMO.
http://www.simmonsle.com/

 

[leadcounsel]

So that there's NO ambiguity, I'm not complaining about paying a reasonable fee. And to me, $20-$30 is reasonable. Heck, I might even pay $40... but not as often. Seems that they would be better off doing it as a volume business, even as a loss leader.

I'm on the side of "opportunity" to make money. If it's a hinderance they are in the wrong business.

All of the 'hassels' you've mentioned are just part of the profession and why an FFL gets paid. Some are easy, not so much for others. It's averages.

Yep, as a civilian lawyer I would charge folks... however, I wouldn't gouge them for routine stuff... in fact, for routine easy stuff I delegate that to a clerk or secretary and charge a very modest fee. Most FFLs I've seen have hourly employees who are not so busy they cannot handle the transfers. Nearly every time I walk into an FFL, there's some hourly employee standing there with his hands in his pockets or basically not being productive. There is PLENTY of time for an hourly employee to 'earn his wage' and conduct the FFL transfers.

That being said, comparing an FFL (which requires zero education, a storefront, and an FFL; and obviously no head for business) to a licensed attorney (high marks in highschool, high marks in a 4 year college, 3 years of law school, and a state bar exam and probably $50,000 -$200,000 in educational expenses, not including the OFFset from not working for 7-8 years of college/law school [not working for 8 years means that these are years of wages lost], meaning the value of a law degree is probably around a quarter of a million dollars to a half million dollars) is apples and oranges. So, yes, as an attorney I could justify charging $5 per minute for my time, but for something easy it would be delegated to my clerk/secretary.

It will if you can't find a lower price for the transfer. If every single dealer in your area happens to charge $50, people will know that they need to add that number into their cost. They see a gun online for $650 shipped, they know their out the door cost is $700. Now they call their dealer, and he can get the gun for $685 after tax. If $50 is the only option, 99.9% of people will take the cheaper $685. If $50 isn't the only option for transfers, people will shop around until they find a cheaper option, and the free market will dictate where business flows to. No price gouging, just the free market at work.

Nope - in the free market a new dealer moves in and does the transfers for $10 and score big. Ironically, that was one of the REASONS this dealer told me when he opened shop. He wanted to capture the FFL transfer market.

Oh well, his loss. I'll spend my money elsewhere... and that's the bottom line is that he's missing out on his bottom line. The thousands I spent there in the last couple years will go elsewhere.

 

[Broken Anvil]

There's an old saying that goes somethng like this, "You can shear a sheep many times but you can only skin it once". Those guys are upset because they don't get to skin you over and over.........cry me a river. My FFL-Pawn Shop only charges $15......that's it. I asked him how he makes a living with that and he says $15 is better than $0 and every time it gets someone in his store at least twice. Now THATS a smart businessman.

 

[rbernie]

in fact, for routine easy stuff I delegate that to a clerk or secretary and charge a very modest fee.

In this case, the 'routine easy stuff' can get an FFL license pulled by the .gov if the bound book records are not kept 'just so', and should not be so readily trivialized.

Each log book entry is audited by the ATFE. The greater the number of bound book entries that exist, the greater the risk for an error to exist in the recordkeeping. While every dealer that I know works very very hard to minimize paperwork issues, we human being are fallible and mistakes are occasionally made. Sadly, the .gov does not trivialize those mistakes, and each bound book row (transfer) represents a potential risk to the FFL. The simple fact is that the reward/risk calculation heavily favors gun sales versus transfers.

My experience has been that most larger storefronts (with lots of inventory, and a fair bit to lose if their FFL is pulled) tend to be very conservative and either charge high fees for transfers or they do not do them at all. Most 'reasonable' transfer fees tend to be charged by the smaller home-based FFLs or the newer stores, who have less to lose if the .gov pulls their license.

 

[LubeckTech]

No one is forcing you to business with this guy - him SELLING your ladyfriend an overpriced CZ is your fault not his. It is up to the buyer to shop around not the seller to give it to you for what you want to pay! If you check around you will probably find an FFL holder within a reasonable distance and you might just find someone who is a whole lot better to deal with!! Check GunBroker's list of FFL holders who will receive for you - those dealers can also order for you too. There are many dealers hidden in the nooks and crannies of our rural communities who are great to deal with but you've got to find them.

 

[Freedom_fighter_in_IL]

The irony of a person with your username posting what you did about FFL fees gives me a pretty good chuckle.

Chuckle away sir, Price gouging is in fact a crime. Look at all the companies that got nailed back in the 70's during the gas "crisis". While I do believe firmly in freedoms in the market, this is clearly a case of taking advantage of a faulty legislative process of gun control. As I said earlier in my first post, gun control through our wallets instead of a legal process and voting. Taxing and feeing the less wealthy out of the ability to afford a rifle.

 

[oneounceload]

.But to charge someone 50 dollars or more to simply do a couple of minutes of paperwork (yes there are times when it is more of a hassle with some buys but not the norm) is just price gouging and should not be allowed.

There is NO such thing as price gouging when it comes to paying for a gun transfer - GET REAL.

Someone WILLINGLY pays the price - it is NOT gouging

Just because YOU think it is too much - does NOT mean it is gouging.

If ONE person is willing to pay the price, then the market has set the price

Never ceases to amaze me how many folks who do not own a business think how this is all free money or the owner is gouging - just like the gun shows - whether the price is too low or too high depends on which side of the table you're on. I see it here time and time again about how folks get something for nothing and claim how they scored, but if the price was more than THEY wanted top pay, then they were getting screwed - just like transfer fees.

Don't like them? Go elsewhere, or better yet - get your FFL and do them for $5.00.

According to your thought process, that should be a no-brainer and reap untold riches

Taxing and feeing the less wealthy out of the ability to afford a rifle.

Then save up more money, get a second job, or buy something you can afford- owning a rifle is NOT essential to staying alive like food and water during a hurricane - there is NO gouging if folks WILLINGLY pay the price

 

[MrOldLude]

Here's how it would go down with me.

"We're not doing transfers anymore."
"Okay, thanks."

Then I'd find someone else to do it.

 

[Freedom_fighter_in_IL]

Then save up more money, get a second job, or buy something you can afford- owning a rifle is NOT essential to staying alive like food and water during a hurricane - there is NO gouging if folks WILLINGLY pay the price

And "silver spoon" statements such as that is partly what is wrong with our economy. If businesses do not take into account the people of lesser means then they are not thinking clearly or ahead. Not everyone can afford excessive prices. Having owned and operated my own business for nearly 30 years has taught me that. I see companies around me charging anywhere from 30% to 60% above what I charge yet have less than half the business I have and they wonder how I get by on what "little" I charge. Well the fact is I make a pretty darn good living and I give my customers a quality service at a REASONABLE rate that they can afford so I get their business as well as their advertisement for more business. Just because one "rich" guy can afford it and is "willing" to pay a stupid price should not be the basis for the price set. Partly what is wrong with our country's economy is thinking just that way. Just my opinion but it seems that it is not just mine alone.

 

[nalioth]

I know one close to me. $10 a page for veterans (and he cards, so just saying it gets you nothing)

"Cards" what, exactly? I'm a combat veteran and have no "card" from the government saying so.

Does he expect folks to carry their DD214 around with them?

 

[snubbies]

FFL Home Based

I have been an FFL for over 4 years operating out of my home (living quarters). $20.00 is cheap for a transfer.

 

[justashooter in pa]

as an FFL i think 20 + 5 is damned cheap. no wonder he quit doing it. then there is the NICS call charge...

 

[nalioth]

then there is the NICS call charge...

Lots of states don't have "NICS call charges".

 

[jdowney]

In my neck of the woods, $20 is about average, maybe a bit low.

FFL holders are not required to do transfers for you, and as earlier posters pointed out, there is some liability and expense involved. If they are willing to provide the service I'm grateful for the convenience of being able to shop online, get the best price on exactly what I'm looking for rather than what the local dealer just happens to have. The handful of transfers I've had done realistically take 30 minutes or so by the time all is said and done - including waiting around for the tardy client (me) to show up for the appointment at the home based FFL's office. Its easy to find the home based guys, just check gunbroker's list and start emailing them.

Now all that said, the OP is not out in left field being a bit torqued at this dealer. The guy basically took a good professional relationship and trashed it, and its not unreasonable to expect his business to suffer. If he's doing transfers at the cost of other, more profitable business, then the move makes sense, but that would be a rare case in my experience. I think the guy's shooting himself in the foot, transfers are good money and can easily be worked into an efficient business model.... for example, you already know what a whole bunch of regular customers have bought - start stocking ammo and accessories for their guns specifically... like having inside marketing info on guys who are going to come back in to the store.

 

[leadcounsel]

I've also asked him to stock certain guns more but he refuses. He stocks very vanilla guns - Glocks, XDs, SW revolvers and 1911s.

I've repeatedly suggested stocking CZs but he just won't do it. I've ordered several CZs now through him and also via online with him doing the transfer...

Dunno.

In a year I'll see if he misses the business

 

[Hanzo581]

My FFL here charges $30 per transfer and proclaim on their website they happily accept transfers. It is a simple fact that as consumers we want the best deal.

Would they rather I spend $200 more on something in store than buying online cheaper and getting them to transfer it for $30?....sure, but they aren't stupid, they know they cannot compete with online and they are content with making their money on those that don't know any better and pay close to MSRP.

 

[52grain]

Never ceases to amaze me how little folks here know about running a business and how they think transfers should be basically free because they buy a box of ammo once in a while................

I wish more Americans understood how businesses work and that profits are not normally nearly as high as they may appear.

You could argue that FFL transfers should be treated as loss bringing items. (Kind of like oil changes, get them in the door with cheap oil changes and then find other things that need fixing) But, if someone bought a gun on the internet, they'll probably buy their accessories and ammo that way to, so I have no problem with an FFL making money from these "customers" as well.

Even though transfers may have very little incremental costs, the fees for FFL transfers are not pure profit. The shop still has operating costs that have to be paid. If you say that an FFL transfer is pure profit to the dealer, then the markup on any sale is pure profit as well (after all one sale has very little impact on the overall operating costs of any medium sized store) and I do not know anyone with any business sense that would make that argument.