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#157352 - 10/17/05 02:11 PM Materials Price Increases
VinceR Offline
Member

Registered: 04/24/05
Posts: 35
Loc: Edgewood, WA, USA
I Thought I would ask if anyone else has noticed a rather sharp increase in prices of wire and PVC in recent weeks. Our suppliers tell us that it is due to recent hurricanes. Supposedly the damage done to oil refineries is causing plastic feedstock prices to rise and there is a lot of extra buying by folks in anticipation of a lot of rebuilding along the Gulf coast. I guess it makes sense and I am sure my suppliers would not ever tell me anything but the complete and whole truth.
Thanks

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Business, Office, Estimating, Legal:
#157353 - 10/17/05 02:53 PM Re: Materials Price Increases
DYNAMITE Offline
Member

Registered: 12/22/03
Posts: 37
Loc: Winkler, MB, Canada
I was told 30 percent increase in PVC

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#157354 - 10/17/05 10:17 PM Re: Materials Price Increases
macmikeman Offline
Member

Registered: 07/16/02
Posts: 718
Loc: Honolulu, Hawaii
Buy high, sell higher. Make a profit. Simple. Now if you signed your contract a year ago, I am sorry for you. Mostly because you don't remember the last time copper did a big spike and lots of contractors got the hit in the wallet. I think it was about 1986 or 1987. Ever since then I have a price spike clause in any commercial contract I have done. Resi is a different story. Loose a little on the first house, make it back on the second. Keep smiling.

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#157355 - 10/18/05 07:10 AM Re: Materials Price Increases
LearJet9 Offline
Member

Registered: 04/24/05
Posts: 196
Loc: Millis, MA USA
What is the average (if there is one) mark-up? We hove some contracts that specify cost plus 25%. Otherwise we use keystone mark-up. I know the local union shops use contractor net +50%.

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#157356 - 10/31/05 10:15 AM Re: Materials Price Increases
VinceR Offline
Member

Registered: 04/24/05
Posts: 35
Loc: Edgewood, WA, USA
Many thanks for the replys. Sounds like things are going up (again!!)

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#157357 - 10/31/05 11:36 AM Re: Materials Price Increases
bigventure Offline
Member

Registered: 04/27/05
Posts: 38
Loc: ma. USA
25 or 50% material markup? We charge a minimum of a 200% markup for all material. We do service work only.

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#157358 - 10/31/05 07:56 PM Re: Materials Price Increases
macmikeman Offline
Member

Registered: 07/16/02
Posts: 718
Loc: Honolulu, Hawaii
Bigventure, if you guys do only service work, charge 200 % markup, you should shoot for industrial service work. One or two huge xfmr jobs or a few dozen vfd's and you can just retire.

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#157359 - 11/01/05 04:27 AM Re: Materials Price Increases
bigventure Offline
Member

Registered: 04/27/05
Posts: 38
Loc: ma. USA
We do residental work only. If we did industrial we would have to wait the obligatory 90 to 120 days for payment which eats 50-75% of your markup. Not a very good formula in my book.

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#157360 - 11/01/05 06:47 AM Re: Materials Price Increases
A-Line Offline
Member

Registered: 07/23/04
Posts: 264
Loc: Utah, USA
bigventure,

I also concentrate on residential service work. I had been using a sliding scale multiplier for parts markup. The multiplier ranged from 6.00 to 1.33. Recently I came accross an article at the link below. It talks about only marking up material costs 15% because you include all of your overhead costs in your hourly rate. It says to simply divide your materials costs by .85 to acheive your 15% net profit on materials. What do you think of setting up your price books using the method described in this article. http://www.hvacprofitboosters.com/Tips/Tip_Archive/tip_archive16.html

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#157361 - 11/01/05 07:54 AM Re: Materials Price Increases
VinceR Offline
Member

Registered: 04/24/05
Posts: 35
Loc: Edgewood, WA, USA
Interesting stuff, For the record, we mark things up 25% to home owners and 15% for contractors. We have average ratios for the amount of materials per hour of labor for each type of job. This allows us to calculate how much our labor rate needs to cover our overhead and hit our profit targets.

The article on pricing strategy for the HVAC business is interesting and I will think about applying some of his concepts. However, there is a maintenance component to HVAC that is lacking in the electrical service business.

VinceR

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