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
