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#176774 - 04/11/08 02:20 PM Systems Markup Question
rcksmith127 Offline
Registered: 04/15/05
Posts: 33
Loc: Danvers, Ma, USA
Hello all... Got a question. I am pricing a replacement residential alarm system. Exisiting one is obsolete and the panel is gone.
My question is mark-up on the parts. Everyone I talk to has a different opinon. I have heard from 15% to 325%... This is a huge difference. Is one end of the spectrum for new installations and the other for a service call???
I don't want to over price and I don't want to underprice either. I am looking to be consistant with other companies.

Look forward to the responses...
Business, Office, Estimating, Legal:
#176775 - 04/11/08 05:20 PM Re: Systems Markup Question [Re: rcksmith127]
HEI_Inc Offline
Registered: 11/19/07
Posts: 23
Loc: Joliet, IL
The only way you could be consistent with other companies is if you knew what they were using for a markup. Typically the percentage of markup is based upon the cost of the material. Something that costs $1.00 could have a markup of 100%. Something that costs $5,000.00 would have a lower markup.

Do you know what your overhead is ? What profit margin are you shooting for ? Knowing these two items will help you determined the percentage of markup to use.

Stop worrying about being overpriced or underpriced. There will ALWAYS be those who are cheaper than you and those who are more expensive than you. Figure out your price, send off your proposal and move on to the next job.
#176780 - 04/11/08 05:46 PM Re: Systems Markup Question [Re: HEI_Inc]
LK Offline
Registered: 01/21/03
Posts: 1429
Loc: New Jersey
Ok for residential alarm system, are you properly insures to do this type of work? alarm dealers charge more because they pay big bucks for insurances, also they never install an alarm system without monitoring, and a contract with liability s of liability clauses, with out these your personal liability is way out there.

a snall 3 bedroom ranch may run anywhere from $199 to install a basic system wich is really no real protection, just a panel amd a pir amd a noise maker, not real security, sold bu mass market companies to get the monthly revenue money, then the $2400 monitored system where every opening in the home has a contact, and each opening is monitored for all conditions trouble, opens, shorts, and alarms, also the equipment used is usually better quality.

Alarm work is nothing like electrical work, they are different worlds, and require special skills and experience before entry.
#176790 - 04/11/08 08:14 PM Re: Systems Markup Question [Re: LK]
twh Offline
Registered: 03/11/04
Posts: 901
Loc: Regina, Sask.
First, lets deal with "margin" instead of mark-up. Margin is the percentage of the sale price that is profit. A 100 percent mark-up is a 50 percent margin. It sounds a lot better if you need to explain it to a customer. A shrewd general contractor, for example, might want to specify profits on a cost-plus job.

I can offer a suggestion based on what I'm seeing. Keep in mind that I'm in a small city. For bidding purposes, take your total bill, at cost, and base your bid price on that. It's too much work to deal with each item.

On a small job, margin will average 30 to 50 percent, depending on how bad you want the work.

On $100,000 job, the margin would average 10 to 20 percent, depending on how bad you want the job. This size job is almost always bid, but a customer who handed you a cost-plus job like this would probably think 15 percent was reasonable.

Labour can be marked-up in a similar fashion but you need an hourly rate that doesn't scare off customers.

Now, the reason that I work for someone else, is that I actually suck at this. I try too hard to get work and end up working for free, or I feel bad when I don't get the job. Here is the best advice that I can think of:

Stop worrying about being overpriced or underpriced. There will ALWAYS be those who are cheaper than you and those who are more expensive than you. Figure out your price, send off your proposal and move on to the next job.

If you are one of three contractors bidding on each job, plan on losing two out of every three.
#176793 - 04/12/08 06:32 AM Re: Systems Markup Question [Re: rcksmith127]
A-Line Offline
Registered: 07/23/04
Posts: 272
Loc: Utah, USA
You could use something like the following chart.
Change the multipliers to what ever you want them to be.

Material Markup Chart

Lower Bound/Upper Bound/Multiplier
$0.00 $0.49 6.0000
$0.50 $0.99 5.7500
$1.00 $1.49 5.5000
$1.50 $1.99 5.2500
$2.00 $2.49 5.0000
$2.50 $2.99 4.7500
$3.00 $3.99 4.5000
$4.00 $4.99 4.3750
$5.00 $5.99 4.2500
$6.00 $6.99 4.1250
$7.00 $7.99 4.0000
$8.00 $8.99 3.7500
$9.00 $9.99 3.6250
$10.00 $19.99 3.5000
$20.00 $29.99 3.3750
$30.00 $39.99 3.2500
$40.00 $49.99 3.1250
$50.00 $59.99 3.0000
$60.00 $69.99 2.7500
$70.00 $79.99 2.6250
$80.00 $89.99 2.5000
$90.00 $99.99 2.3332
$100.00 $139.99 2.2499
$140.00 $169.99 2.1666
$170.00 $199.99 2.0000
$200.00 $239.99 1.8550
$240.00 $269.99 1.8225
$270.00 $299.99 1.7862
$300.00 $349.99 1.7500
$350.00 $399.99 1.7250
$400.00 $499.99 1.6875
$500.00 $749.99 1.6000
$750.00 $999.99 1.5500
$1,000.00 $1,499.99 1.5000
$1,500.00 $1,999.99 1.4500
$2,000.00 $2,999.99 1.4000
$3,000.00 $4,999.99 1.3500
$5,000.00 $9,999.99 1.3375
$10,000.00 $24,999.99 1.3333
$25,000.00 $49,999.00 1.3300

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