ECN Forum Forums General Topics of the Trade General Discussion Area Material Markup

Bob
They can get what they want for the fries as they have a captured audience. I know food service in the CStore industry gets at least 100%. 7-11 has more money in a big gulp cup than they do in the Coke or whatevers in there.
I generally get 20 to 30 % in my parts but if you get 100% I see no problem with it.

OK I agree they have a captive market.

How about 'designer' anything?

A pair of sneakers for $250.00 etc.

I should remind everyone I am just an employee not a owner.

That said why aim for low prices, charge what the market will bare and steer toward those customers that can afford it.

Nothing wrong with making a good living as long as your honest and upfront about it.

JMO, Bob

In response to mahlere:

I have a limited understanding of the finer principles of accounting, so I have some "hillbilly" ways of doing things which may only make sense to me.

In markup I think about my time involved in getting material to the client's door. I actually prefer thinking of it as "burden" which LK talks about. With common items like duplex receptacles or switches which are continually stocked, my time involved is minor. However, think of the material markup required to recover your time when the item is less than $1.00.

Then I think of items that I rarely use. A good example in this area is a 240 volt dryer power cord. Most dryers are gas...nearly all of them. I usually don't have a dryer cord on the truck. It may take an hour for a special run to the supplier for a power cord. How much do I have to markup that item to recover the time? What if it is a $1 item that takes an hour run to a supplier?

Rather than thinking in terms of percentage markup to recover the cost, I add a labor line. It's easier for me because I'm using time to bring that item to the client's door. I want to recover that time.

Now that I've recovered all the time it takes to bring the materials to the client's door without thinking about the multiple variables in material markup, I add a profit line to the job. This profit is what helps me build my business and reach my financial goals.

Dave

In response to skipr:

Maybe my previous post will illustrate for you the challenges of residential service. As a commercial/industrial contractor, you may call a supplier for $10,000 in materials which they will ship to your jobsite. You may have a Purchase Order, material takeoff, and a phone call involved in this. You may also have material handling on the jobsite.

Your 30% may be much more profitable than someone in residential service trying to recover the time of a low-cost special-order item.

Dave

"Your 30% may be much more profitable than someone in residential service trying to recover the time of a low-cost special-order item"

Yes it is, usually more profitable, that 30% on a job with low burden, can usually cover the burden cost and allow for a small profit.

Mark-up should also include, a burden amount, on the material, to account for Guarantees, and warranties on material, and the recovery costs of any labor needed to provide these services, some states require you to warrant your work for 1 or 2 years.



[This message has been edited by LK (edited 10-01-2006).]

We mark up 50% on everything listed. I say listed because we do not list every wire nut and fender washer on every job. This also helps to cover time & mileage to the parts house and shrinkage.

Fair enough, I guess that would make sense for residental. My problem with residental (which I did at one time) was the customer wanting too much for too little (a steak for the price of a hamburger). And after they pay you, "oh while you are here can you do this for me real quick?

Speaking of residential customers, If the customer is going to try and get me to do the work for "charity" then I am not going to do them any favors. If they try that angle, then I will always bid a high amount for all costs. Sometimes they will bite, and other times not, keeps me safe from getting involved in any "charity" jobs.

OK, I'm assuming that these 100% mark-ups are based on products you are buying in bulk at wholesale prices... right?

If you're buying products at full retail prices (i.e., at CED for a specific job), then a 100% mark-up is absurd. Wouldn't you be a litle upset if you found materials that a plumber charged you $1000 for at Home Depot for $450? I sure would be...

I only add 15% to 25% if I buy materials for a specific job, and then add my time at the supplier (including travel time) to my labor price.

My return customer and referal numbers are very impressive. I attribute this to the fact that I WORK for my money, and don't use every possible excuse to extract every dime possible from my clients.

As for the analogy about the price of a coke and a hot dog from an entertainment or sporting venue, I would rather not keep company with people who do business like they do. Just because they rip people off at every opportunity DOES NOT make it ok in my book.

I'm just sayin...

"As for the analogy about the price of a coke and a hot dog from an entertainment or sporting venue,"

The word there is convience. Convience is worth something.

On the otherhand ...

I expect an electrical contractor to keep an inventory of common materials in his truck. The cost of maintaining that inventory should be close to 5% not 100%. Considering his discounts from retail, I would expect to be charged RETAIL for common materials.

On special purchase materials he is entitled to charge for HIS time to find and deliver the materials.

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On long term jobs I would never hire any contractor who is going to charge above retail for parts.

On short term jobs there is some convience factor.