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Make Extra Money with your FFL License [2022 Tactics]

There are a lot of ways to make money with an FFL, and you don’t have to have a giant warehouse of inventory to do it. Plenty of opportunity exists for a handsome profit even for the average home-based FFL.

Once you have your FFL in hand, doors will open to multiple avenues to create a side income. You’ll be able to set up accounts with wholesalers and manufactures directly, thus giving you access to wholesaler pricing. As has been mentioned before in our other posts, these prices are often around 30% lower than retail. Of course, this is no hard and fast rule and you’ll quickly discover that pricing varies from wholesaler to wholesaler.

You don’t have to worry about doing a lot of shopping around, though. One of the benefits of using the FFL123 guide is that the shopping around has already been done for you! Not only do we list some of the best firearms wholesalers in the industry, but we also give you a heads up on who has the best pricing for different items. That way, you can maximize your profits (or minimize the cost of that gun you’ve always wanted).

Another way to help reduce cost is to shop around for the best pricing on shipping. There are many different shipping companies, so it makes sense to see which company works the best for you. Also, see if there are any programs you can join which may reduce your cost or give you a discount for loyalty or volume. We have discovered a way to save 45% on shipping on our firearms, which has given us a great competitive advantage.

Ok, so you’ve got your FFL – that’s great! Now what?

Well, ideally you’ll be making money because that is, of course, why you got an FFL in the first place. It’s one thing to get your license, set up a business location, and open up shop, and another thing altogether to actually turn a profit. So how do you make money with your FFL? Here is our updated guide for 2021, so take a look and start earning more!

Making Money with Your FFL

There is an old saying that the best way to make a million dollars selling guns is to start with ten million. The implication is that you’ll lose a lot of money with your FFL. Unfortunately, this can be very true if you start out on this journey because you’re just trying to make money with your hobby. Guns can be your hobby, but you’ve got to treat it like a business. We can show you ways to minimize that risk selling guns because we’ve perfected our methods over the decades.

If you are working on a side hustle for supplemental income, then it is even easier than a full-time business because your expenses are lower. If you are operating out of your home, it can be extremely hard to lose money selling guns, simply because of nearly nonexistent overhead.

Profit margins on different guns vary widely. It would be nice to stock and sell only the ones that give you 30% profit or more, but that’s a very limiting approach. If you don’t have the gun the customer wants, then you won’t make the sale. If, however, you have lower-profit guns at great prices that you can sell a lot of, then it makes up for it in the end.

People think of an FFL as just selling guns, but that’s short-sighted. Remember that accessories and ammo have higher profit margins, and are often consumable items, or at least things people keep buying. How many holsters do you have for your carry pistol? How many rounds of ammo did you buy this year? Exactly. When people buy guns, they also buy holsters, ammo, etc. so you might as well set yourself up to profit from those additional sales that are going to be made anyway.

Another thing to keep in mind is that it is possible to make money on guns without ever having a single gun in inventory! How? By doing transfers. We’ll talk about that in a moment. First, let’s break down the main revenue sources for your FFL: retail gun sales, ammo and accessory sales, and transfers – plus a couple of others and see how you can optimize them.

Retail Gun Sales

The whole reason you have an FFL is to sell guns and make money, and to enjoy a few small perks along the way. That means you almost always want to have guns on hand to sell (we’ll talk about the exception to that later.) This means acquiring inventory, which means buying guns from distributors.

Now, each of the distributors all have different rules and policies. Some won’t do business with small home-based FFLs, others may require a minimum purchase, or some will just happily sell you guns and might even extend lines of credit. It all varies based on your sales volume, business size, and other factors. But if you are looking to make money with your FFL, then you are always going to start here.

Distributors sell you guns at wholesale prices. Sometimes they’ll have special sales or special offers where the factory is dumping inventory or promoting a new product. Most of the time they’ll be selling you guns at a pretty predictable price and volume rate.

So here is the thing: You’ll get markups of up to 30% on new guns. Some guns won’t have much of a markup for various reasons, while others will stand a higher margin. It depends on a lot of economic factors including popularity, cost of production, manufacturer’s pricing, and other things including your location. Unfortunately for a brick-and-mortar store, there’s not a lot of margin on some guns.

Used guns can carry a much higher margin as long as you can purchase them at a good price, and they are always popular with your customers. However, that good price is key. Sellers always want what you’re going to charge the next customer, not what you’ll pay them so that you can make a profit.

Basically, unless you have a steady supply of used and surplus guns, your inventory will be mostly new guns and you’ll really want more than just guns in your inventory.

Accessories and Ammo

Here is where you can start seeing bigger profits and make money with an FFL. Many brick-and-mortar FFLs (home-based FFLs have entirely different practices we’ll touch on) see guns as a way to get people into the store and then turn into upselling opportunities. Everyone needs ammo, holsters, slings, optics, magazines, cleaning kits and supplies, and even parts.

Many FFLs take advantage of the popularity of AR-style rifles and sell an assortment of parts for repair, upgrade, and build-it-yourself projects. This has the added advantage of bringing people in for a small part which always brings the chance to sell other things. Might as well get a couple of hundred rounds and another mag to go with that ten-cent spring, right?

Transfers

This can have a lot of opportunity for nearly pure profit. Many distributors now offer direct-to-FFL sales for individual consumers. This works in a couple of different ways. A person can order a gun at retail from a distributor who ships it to an affiliate FFL or one the customer picks. The FFL either collects a flat fee from the distributor for handling the transaction or charges the buyer a fee for the transfer. Either way, since you don’t have to purchase and hold inventory, this is a great way to make money with your FFL. It becomes even more profitable if you use modern digital inventory management systems which make handing the gun even easier.

Many states have also outlawed private sales between individuals. This requires people selling used guns to use an FFL as an intermediary to do a background check on the purchaser. Some states have fixed a maximum fee for this service, while others are what the market will bear. Again, when done right, this can be a pretty profitable opportunity.

For either set of transfers, you always have the chance to sell ammo and accessories. Make sure you have a good selection of popular ammo and accessories.

The two most popular types of FFLs are the Type 01 and Type 07. The first time you get them, they cost $200 and $150, respectively. Let’s say that you charge a competitive transfer rate of $25. That means you’ve only got to complete six or eight transfers to pay for your license that is good for three years!

NFA Items

Things like silencers and SBRs are incredibly popular right now, and they can be very profitable. You’ll need an SOT to go with your FFL, and that will run you $500 in general. Transfer fees for NFA items are a lot higher – often $100 or more – so you only need to sell five in a year to make your money back!

Unique Opportunities for Home-Based FFLs

The way to make money with an FFL is different for people with a storefront than with a home-based FFL. Many home-based FFLs have little or no inventory and only order guns on demand for their customers. Or they may stock a few very popular items or shop distributor sales for discounts and surplus or police trade-in guns in order to offer a bargain to their customers. There’s nothing wrong with either approach

Home-based FFLs have really benefited from online gun sales and sites like GunBroker and Armslist. Since all online sales other than antiques require an FFL to do a background check, those required transfers are a lucrative way to make money with an FFL. Otherwise, the same basic rules for inventory apply. New guns have lower margins than used guns, and accessories and ammo can be a good source of profit. You have to be careful about what inventory you have on hand though, as home-based FFLs often do not have the ability to keep a lot of capital tied up in inventory.

Small home-based FFLs can also more efficiently serve niche markets and provide less common ammo or oddball guns on the kind of small scale they are uniquely suited to handle. We all know that one small little hole in the wall gun shop that seems to have all the weird stuff you might want because they can afford the smaller volume of sales.

Making Money Selling Guns in this Political Climate

Politics have made the gun business a very interesting place over the last few years. Much of it started with Obama’s election in 2008. Lots of gun shops hung up his picture with the caption “Gun Salesman of the Year” – and they weren’t wrong.

This has become what seems to be a cyclical tradition every four years of panic buying anything that doesn’t look like Elmer Fudd’s shotgun. We saw a similar trend in 2012, but much more in 2016 with the election between Clinton and Trump. Then, in 2020, everything changed with the election of Biden. Coupled with the pandemic, the sale of guns, ammo, and accessories are at an all-time high.

We’ve seen FFLs profit from this increased demand and others go out of business because they couldn’t get inventory to sell during some of the worst of it. Some FFLs price gouge and only add to the nasty fever of politics during this time.

But at the end of the day, increased demand is increased demand. You simply can’t refuse or ignore people walking through your doors wanting to buy guns, ammo, or magazines. If you don’t have them, they’ll go to some other dealer who does. With some careful effort, you can ramp up to meet increased demand. We’ve previously written about how to handle short-term increases in sales and customer interest, and the advice applies here, too. Don’t overextend yourself or you might be caught holding the bag, but don’t ignore the increased demands either.

As unpleasant as panic buying is, these short-term politically motivated boosts in sales can be a good way to make money with your FFL, and develop a new and larger customer base, or reach out to markets that you might not normally do business with.

Try to stock your inventory similar to the way customers often do: by dollar-cost averaging. If you buy a few mags or boxes of ammo at a time and build up a supply, even if the prices vary, you’ll end up with a lower average cost and a more even profit margin.

Other Revenue Streams

There are other ways to make money with your FFL too. Gunsmithing, training, onsite ranges, sighting in optics and scopes, bluing or other coating services, engraving, reloading equipment, and even clothing and tactical or hunting gear are just some of the many other products and services successful FFL’s have used to boost their sales and profits.

Only you know what will work best for you. A small home based FFL probably won’t operate a full service gun range, but might do really well with a laser engraver. Don’t go overboard filling your business with different things though. It simply overwhelms you and the customer. Add services and products to compliment the kind of focus you have. If you are mostly selling tactical guns, you probably aren’t selling much fine gun leather, so keep your product lines compatible with each other and your main market.

Become An Affiliate

Become an FFL123 affiliate and earn 30% on every qualified buyer you send our way! Know more about FFL123 FFL affiliate program here.

The FFL123 Advantage

As you can see, there is no one way to make money with your FFL. For many people, sticking to just a single revenue stream is a recipe for disaster. So is too many. There is a lot of opportunity to make good money or plenty of extra side money with your FFL, but it takes a little bit of study.

FFL123 understands that your passion for guns and entrepreneurial spirit combined with a desire to make money with your FFL. In fact, there is no other reason to get an FFL than to make money. That’s why when you buy any of our FFL license kits, we work with you every step of the way from understanding ATF paperwork, to providing industry connections for distributors, wholesalers, and even modern digital inventory and bound book management software.

No other FFL license program offers the extensive industry insider knowledge we have. Our founder, Brandon Maddox, holds an MBA from Duke University and brings his unique skill set as a firearms industry consultant and background in pharmaceutical sales to help you get your FFL business off to a running start.

So what are you waiting for? Are you ready to make money with your FFL? Well then, let’s go! You get expert guidance from industry insiders and business leaders that are not available anywhere else for any price. So let’s get you started today!

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