The reality is the shops will buy something at cost and then double that to get their selling price. In at $100 out at $200. That's how the shop I worked at did it and from what I understand still does.
The thing was, any employee was authorised to give up to a 10% discount but encouraged to only do that of the customer was getting ready to walk out the door. I didn't like the pricing but I know big ticket items don't necessarily move so you need as much profit as you can make off of each one. Still seemed high though.
One other thing that affected price, or so I was told, was the marketing (?) Requirements of the manufacturers. ScubaPro was supposedly notorious for this. The owner told me that if they sold SP great for less than a certain price they could lose their distributorship. I don't know how true that was but that's what I was told.
I understand that a local shop might only sell one BC or regulator every couple days or a week so they need to make as much profit as they can. That makes it hard for a local shop to compete with an internet seller who has less overhead and may sell a hundred BC's a week. They can afford lower margins and the volume they purchase from the manufacturer gets them a better cost price too.
Still, some local shops really price higher than is palatable to me. Well, before I started shopping Craigslist and ebay anyway.
This is true. SP has an MSP (minimum selling price). Different than MAP (minimum advertised price), where a dealer can't advertise a price lower than a competitor, but if you walk in or make a private deal over the phone, the mfg has no say over that. Sell something with an MSP for less than that, and the customer goes to another dealer and says I got it for less than that, and here's the receipt, they can and often do complain to corporate and the dealer can lose his dealership. Same with service kits. Sell an SP service kit to a diver and they find out, they can yank the dealership. Illegal in the EU but in the US, they get away with it.
There is also the deal that if it says "SCUBA" or for diving, an item is going to be marked up 50-200% or more. Especially those little things that they try to add on. Mouthpieces for example, unless it's a moldable one or such, cost the dealer around 2 bucks for a standard one. I've seen them sold for up to $12. Bolt snaps that are sold in Tractor Supply with the good stainless springs and body for 7 bucks are sold at some shops for up to $20 each.
When I was working with the original shop I got certed through, we got a deal in from the mfg for a reg. Cost was 120 bucks for 1st stage and 2nd stage. DEMA special or something along those lines. I asked the owner to get me one. This is after spending a week after my real job, setting up the store in a new location. I expected to pay more than that. When it came in, he charged me the MAP price of 275 bucks. That was the last item I ever got from him. After that, SCUBATOYS, Tech Diving Limited, and Leisure Pro became my LDS even while I was still DMing for him.
He'd also refuse to order things I wanted that he could get because he didn't dive the way I was going. Would not get me a 7ft hose because "you don't need that." Other things like that. I tried to get him set up to carry Deep Sea Supply BPW's and wings. I even ordered two of them direct from Tobin and paid for them myself. He let me use them but never followed through. After enough of that, his attitude and way of doing business cost him somewhere in the neighborhood of $10,000 of lost gear sales just from me. Not to mention the classes and trips I might have done.