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#155096 - 12/09/04 08:55 PM Percent Markup
Sparky_1 Offline
Member
Registered: 11/20/04
Posts: 14
Hello,

I have recently started my own business and now I'm getting into some bigger projects.
I'm doing a T&M job for a elevator, where we are adding a vfd starter that cost me $1000 + TX.
What kind of % markup would be fair for this item? The salesman told me the retail price was
$1388. I have been marking up all of my material at 40% above my cost. I'm a one man shop,
working out of my garage, with a charge out rate of $35 per hour, pretty much the standard
rate in this area.

Thanks,

Sparky_1
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Business, Office, Estimating, Legal:
#155097 - 12/09/04 09:16 PM Re: Percent Markup
slumlordworker Offline
Member
Registered: 12/20/03
Posts: 84
Loc: south bend indiana
I say mark it up to 1400 that seems fair if they know they can get it for 1388 them selves they won't probly mind the extra 12 bucks figuring they still saved because 1388+ tax is more than 1400

also 35 is kind of low for charge out rate isn't it??
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#155098 - 12/09/04 09:41 PM Re: Percent Markup
nesparky Offline
Member
Registered: 06/21/01
Posts: 642
Loc: omaha,ne
Hourly charge rates are very muchly a regional item. Some areas especally higher cost of living places $35.00/man hour would bankrupt you in a short time but some of the low cost of living areas that would be a little low but unfounatly common.
_________________________
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#155099 - 12/10/04 04:28 AM Re: Percent Markup
Sparky_1 Offline
Member
Registered: 11/20/04
Posts: 14
Slumlordworker, Nesparky is right, we live four hours south of Minneapolis / St.Paul area, where
there charge out rate is $80+ a hour, union shops also, but the cost of living is extreamly high in the twin cities,
and you have to deal with the rat race every day, not for me. The normal charge out rate is
$ 33- $ 35 per hour around here.
Nesparky, what is your advise on the markup of the vfd?
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#155100 - 12/10/04 09:44 AM Re: Percent Markup
A-Line Offline
Member
Registered: 07/23/04
Posts: 272
Loc: Utah, USA
Sparky_1

I was charging T&M at the going rate and it was killing me.
I would strongly suggest going to a flat rate system if at all possible. This will allow you to charge more than the going hourly rate. Calculate your expenses and find out what you need to set your hourly rate at. Don't set it at the going rate.
Learn how to become better at sales and marketing to sell your jobs at this higher rate. Don't think you can do it? There is another discussion on this site about a contractor whose prices are well above the norm but he has plenty of work and is making alot of money so it can be done.
See the "Flat Rate Pricing vs. T&M" topic.

My flat rate software comes with a markup table. According to my markup table an item that costs $1,000.00 would be marked up with a multiplier of 1.5 This would be a markup of $500.00 for a total of $1,500.00
An item that costs $1.00 would have a multiplier of 5.5 and would come to $5.50
[This message has been edited by A-Line (edited 12-10-2004).]

[This message has been edited by A-Line (edited 12-10-2004).]

[This message has been edited by A-Line (edited 12-10-2004).]
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#155101 - 12/10/04 05:37 PM Re: Percent Markup
Active 1 Offline
Member
Registered: 02/22/03
Posts: 687
Loc: Grayslake IL, USA
Sparky 1,

Take a close look at your costs, hours of work done in a week, and what you want in pay, vacation, and proffit. An emploiee in IL that makes say $24 an hour will cost me $33 per hour with taxes, vacation & workers comp insurance IF he billed out 100% of his hours. At a 75% efficentcy my labor cost is $44 an hour with out any over head.

To bill out $35 an hour -24% for tax and WC, vacation, at 75% efficency would pay a electrician $12 an hour and give the company $0 for OH and proffit. If the other EC are always charging a strait $35 an hour eather they have a huge material MU or they are not doing very well. If they are not doing well then don't follow them.

You could charge $35 an hour and have a big mark up. There is a formula for working your numbers backwords to the MU needed for your bisness to work. I am guesing because your a new EC you don't have last years numbers to work off of. You might end up guessing what your nubers are and would not be much good.

Like A-line said you might have a better time just selling a price. I understand it is hard to come up with good estomates for you costs and time especially starting out or doing a different type of work.

To make things simpler try breaking down your costs, pay, & proffit per day. Estomate the number of days you'll have and then your material MU.

A-line,

What flat rate software do you have?
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#155102 - 12/11/04 08:42 AM Re: Percent Markup
A-Line Offline
Member
Registered: 07/23/04
Posts: 272
Loc: Utah, USA
Active 1,

I am using Flat Rate Plus. It can be purchased at www.flatratesystems.com It costs $2,500 It has appox. 1300 tasks or jobs already included. You can modify them to better reflect your time & expenses. Your can also add more tasks.
They have a free demo you can download.

[This message has been edited by A-Line (edited 12-11-2004).]

[This message has been edited by A-Line (edited 12-11-2004).]
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#155103 - 12/11/04 09:28 AM Re: Percent Markup
OreElect Offline
Member
Registered: 03/05/04
Posts: 98
Loc: Salem,Oregon.USA
We buy wholesale so our markup is 100%. In some cases , there might be a reduction.
Service rates are 77 hr.The clock starts at the shop when loading.Driving time is charged + mileage over at .35$.

Bid jobs range from 68 to 77.
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