Too many smoke shop owners get into this business thinking it’s all about glass pipes, rolling papers, and vapes. Then they sit down with a vendor, hear terms like MAP pricing, keystone markup, or shrinkage, and they nod like they understand—when they don’t have a clue.
Here’s the no‑BS truth: if you don’t know the language of this industry, you will get played. Vendors will overcharge you, employees will BS you, and you’ll keep making rookie mistakes because you never took the time to learn the basics.
That ends today.
This glossary is your crash course in speaking the language of the smoke shop business. Learn it. Use it. Stop being the dumbest person in the room.
Retail & Business Basics
Cost of Goods Sold (COGS)
The actual cost you pay for inventory. If you buy a pipe for $5, your COGS is $5.
Gross Margin
The difference between your selling price and your COGS. If you sell that $5 pipe for $15, your gross margin is $10.
Keystone Markup
Industry term for doubling your cost. Buy it for $10, sell it for $20. Keystone is your bare minimum markup.
Net Profit
What’s left after every bill is paid—rent, payroll, taxes. This is the number that matters, not “total sales.”
Shrinkage
Losses from theft, damage, or screw‑ups. If you’re not tracking it, you’re bleeding money.
Vendor & Supplier Lingo
MAP Pricing (Minimum Advertised Price)
The lowest price you’re allowed to publicly advertise a product. Vendors use it to protect brand value. Break it, and you risk losing your account.
Case Pack
The minimum number of units you must order at once. Example: wraps may come in case packs of 25.
Net Terms (e.g., Net 30)
You get the product now, and you have 30 days to pay. It’s basically short‑term credit.
FOB (Freight on Board)
Tells you who pays shipping. If it’s “FOB Origin,” you’re covering freight from the supplier’s warehouse.
Private Label
Products made by a manufacturer but branded with your store’s name. Great for building loyalty.
Sales & Marketing Jargon
Conversion Rate
How many customers actually buy vs. how many walk in. If 100 people enter and 40 buy, your conversion rate is 40%.
ATV (Average Transaction Value)
Total sales ÷ number of transactions. If you did $1,000 in sales from 50 customers, your ATV is $20.
Loss Leader
An item you sell at or near cost to bring people in. Example: discount lighters that push customers to buy glass.
Promo Calendar
A scheduled plan for running promotions all year (holidays, events, etc.). It’s how you stay consistent instead of winging it.
Merchandising
The art of displaying products so they actually sell. If your shelves look like a yard sale, your merchandising sucks.
Compliance & Operations Terms
Tobacco License
Required to sell tobacco products. Don’t operate without it.
Age Verification
Systems (digital or manual) to make sure you’re not selling to minors. Screw this up and you’ll lose your business.
POS (Point of Sale) System
Your register software. Tracks sales, inventory, and employee activity.
Cash Reconciliation
End‑of‑day process of counting drawer cash and matching it against sales reports. Prevents theft.
Dead Stock
Products that haven’t sold in 90+ days. Dead weight that ties up your cash.
Industry Slang You’ll Hear
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Glass – Pipes, bongs, rigs.
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Wraps – Blunt wraps, hemp wraps, flavored wraps.
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Disposables – Single‑use vape pens.
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Headies – High‑end, artistic glass pieces.
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Munchies – Snack items some shops carry to boost add‑on sales.
Why This Matters
1. Protects You From Getting Hustled
If you don’t know the terms, suppliers will sell you garbage at inflated prices.
2. Makes You a Better Leader
Your employees won’t respect you if you don’t even know the language of your own business.
3. Helps You Make Smarter Decisions
Once you know the difference between margin and markup—or COGS vs net profit—you can actually see where your money is going.
Common Owner Mistakes
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Confusing Revenue With Profit – Just because you sold $100K doesn’t mean you made money.
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Not Knowing Vendor Minimums – Leads to over‑ordering and killing cash flow.
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Ignoring Shrinkage – Pretending theft or mistakes don’t happen is how you lose thousands.
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Not Training Staff on Terms – If your employees don’t understand ATV or upsells, they’ll never improve sales.
Final Word
Ignorance is expensive. Every term you don’t understand is another way for money to leak out of your business.
You don’t need to be a walking dictionary, but you damn sure need to understand the language of your own industry. Learn these terms, train your staff, and run your shop like a pro—not an amateur.
Call to Action
Want more no‑BS guides that cut through the confusion and help you run a smoke shop that actually makes money? Dive into the full library at ChadWadeTV.com—your playbook for mastering this business.