Hornady American Gunner Price Increase

[DDRanch]

Ouch!

I bought some to play with while working up loads. Was a good source of brass.

[TNhuntsman]

That's a huge price increase, I can buy Hornady black for that.

[Harpoon1]

Bummer!

[Sticks]

Here is to hoping that it's a Sportsman's Warehouse thing, not Hornady. Really don't want to see Black jump in price.

[bravo5two]

Wow that's a huge increase! I guess no more Sportsman's Warehouse AG then...At almost a buck/shot, might as well shoot Hornady Black ELD @ $184.90 case of 200 shipped.

[Labrat198]

Ouch! Makes me wish I had added a few more boxes to my order last month.

[rebby]

IMHO, they just priced themselves out of the game. As was previously mentioned, we can buy Hornady Black for that making the AG pointless.

[kcb38]

That's nuts. I can't imagine anyone buying it at that price. It was a good deal, especially if you were saving the brass but now, not so much.

[VASCAR2]

I’m curious if Sportsman Warehouse is going to loose exclusive distributor rights to American Gunner 6.5 Grendel ammo. I know when E-Lander released 6.5 Grendel mags, Alexander Arms was the sole source for about a year. The Hornady American Gunner 6.5 Grendel ammo might hit other retailers and drive the price back down. Sportsman Warehouse might have bumped the price up till other retailers show their price. I can’t believe SW does not watch what other retailers do in regards to pricing.

Time will tell but if SW remains the sole distributor they are going to see a drastic reduction in sales at that price.

[jaybee1669]

IMHO, they just priced themselves out of the game. As was previously mentioned, we can buy Hornady Black for that making the AG pointless.

Kind of makes me wonder if that was the point. Maybe Hornady didn't want to support the custom one-off runs and decided to jack the prices up on Sportsmans so demand softens and they can justify not selling it anymore and only focus on Black and SST's.

[rebby]

Kind of makes me wonder if that was the point. Maybe Hornady didn't want to support the custom one-off runs and decided to jack the prices up on Sportsmans so demand softens and they can justify not selling it anymore and only focus on Black and SST's.

I was wondering that myself. I was digging through the 2019 announcements from Hornady today and really expected to see a 6.5 Grendel in the Frontier line after this. Sadly, it doesn't look like they released that (yet?). I ordered some more ammo today too, I was going to get some AG but ended up with Black instead. Hornady probably prefers it that way. I'd assume that they have a better margin on the Black than they did on the AG (at the previous price anyway).

[LRRPF52]

Let's say it costs them $70 to make 200 rounds of AG and and $10 to make 20rds of Black.

They sell 5 x 200rd AG boxes per day, and 10 boxes of Black per day.

Which is the better for margins?

[rebby]

Let's say it costs them $70 to make 200 rounds of AG and and $10 to make 20rds of Black.

They sell 5 x 200rd AG boxes per day, and 10 boxes of Black per day.

Which is the better for margins?

Doing a little CA math (I say CA because it's easy enough for somebody educated in CA to do)...

$70 == 200rnds AG
( $10 == 20rnds Black ) == ( $100 == 200rnds Black )

Assuming a markup at 150%...

Selling price for AG is $105 / 200rnds == Net profit of $35 / 200rnds == $0.175/round
Selling price of Black is $150 / 200rnds == Net profit of $50 / 200rnds == $0.25/round

Now looking at your sales numbers...

5 x 200rnds AG == 5 * $35 == $175 / day selling AG
10 boxes Black == 200rnds @ $50 == $50 / day selling Black

This is pretty lopsided towards the AG in $$ / day (but we're making some pretty big assumptions). The downside to the higher "profit" however is that it's a lot more work to make an extra 800 rounds of AG, especially when the net profit is so lopsided (Black yields an additional 30% unit for unit).

There are 2 elementary ways to fix this...

- Increase the margin on AG so you net the same on a unit by unit basis. This makes your sell point $120 / 200rnds instead of $105 / 200rnds (roughly a 15% increase which, interestingly enough, would result in a retail price roughly 30-40% higher).
- Sell MORE Black, even if this means selling LESS AG. For example, if you sell 600rnds / day of Black you net $150. To make the same $225 / day, you only need to net $75 on the AG (somehow).

Usually the best solution is to combine 2 good ideas and see which way the market tells you to go. So, how can we make that additional $75 in the second scenario where we sell MORE Black and LESS AG (since we can't assume the market will bear more than 1200rnds / day and, perhaps, we're already capped at capacity)? Keeping the desire to triple the output of Black, of course (which will likely reduce the production costs and increase yield even more, which we'll ignore for now - remember this is CA math)...

If we keep the $0.175 / rnd profit on AG, we only need to sell an average of 429rnds / day. We can easily achieve this by limiting supply which should have the offset affect of driving up demand (and thus sales) for Black. Since we have limited capacity, we need to cut production of AG anyway so this is a no-brainer. Now we're only producing a total of 1029rnds / day which saves us a little work (171rnds / day) and doesn't cost us any profit. This is a win-win but.. wait, supply side issues are frustrating for consumers. Maybe the supply / demand curve can give us another solution?

Instead, let's elevate the profit of AG to $0.25 / rnd (which is inline w/Black), now we only need to move 300rnds / day. Our total production is now only 900rnds / day and our bottom line is unaffected (and we're making 300rnds less / day). Customers are initially annoyed with a price increase on AG so a number of them move to a better round at a similar price point (they'll probably buy Black, especially considering the limited number of choices in this cartridge) which helps drive up the demand on that side and, subsequently it drops the demand for the AG so there aren't supply-side issues due to the reduction in total production. Now for the best part...

We just freed up production capacity so we can either reduce production overhead (shorter shifts, fewer machines, less staff, etc == higher profits) or... we can make more ammo. Assuming that shooters needed the 1200rnds / day that they were previously buying and that they'll continue to buy at the new prices, we can still make that much and our net profits will increase ($75 / day in this fictional scenario). This will allow us to continue increasing production and/or we can divest and enter new markets. Hmm... how does a 300PRC sound? Or an expanded Outfitter line? Or maybe, let's just throw this out there, we start selling gun safes?!?!

As was previously mentioned (before the thread got whacked)... sometimes price hikes are due to a desire to shift the market toward another solution. On the surface, it appears that Black would yield the better margin on a per round basis so if you can move some customers to that line while freeing up production capacity for something else (and/or a product with better margins), the company wins in more ways than one.

[Bevo]

Is Hornady even making 6.5G in the AG line? Their website doesn't list it at all.

https://www.hornady.com/ammunition/american-gunner#!/#product-line

[Wargrendeleagle]

Is Hornady even making 6.5G in the AG line? Their website doesn't list it at all.

https://www.hornady.com/ammunition/a.../#product-line

It's a sportsman warehouse exclusive