Question:

How do pawnshops make profits?

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How do pawnshops make profits?

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  1. A pawn shop buys merchandise they feel they can market at a price well below market value and resell this item at the highest price they can get.

    Say you take in a radio you paid $100 for to pawn. You really have no intention on buying it back. The pawn shop operator will offer you around $10 for this radio. If you wish to buy it back, be prepared to spring for around $25. After a period of time, set by the states, your radio will be put up for sale at around $100. No one will pay that, except some fool who doesn't research his purchases, but will offer less. After some dickering, the radio will sell at a price mutually agreed upon.

    Hench, the pawn shop owner makes a profit from either charging interest on items he pawns or on items he sells.

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