ECN Forum Forums General Topics of the Trade Business Related Discussion Material Mark-UP

I'm in the same boat as aryton. My main customers have a lot of work done, are fairly cluey on how much things cost and will jump on me if I put on too much markup. I prefer working for someone who knows what he wants, has some idea how he wants it done and pays me to make it happen rather than having to spend ages explaining all the possible options to someone who hasn't the faintest idea.

Just in case you feel you aren't doing enough "number crunching:"

I think you need TWO 'prices' to keep in mind.
The first- the price the customer should see- is a figure reasonably close to the price he's likely to get himself. No $10 aspirins, please.
The other is the burden stocking the item places on you. Now, this is a litle harder to figure- and it goes up dramatically if the item is 'back at the shop' and not on the truck.

I can't speak for every contractor, or every job, but....many times the cost of my trip to the parts house is paid by the customer. Many times the part has already been "bought;" that is, paid for by another customer, and left over/ salvaged from another job.
Other aspects of stocking parts...such as losses /damage over time, are items you control, and need to keep track of.
Sometimes you're better off throwing things away!

"never in all my working years , did i have a commercial, or industrial account question material prices." (quote)

Good for you, but that doesnt mean it doesnt happen. Most companies are always looking to save money. For example: a large industrial complex I work for, has a maintenance guy who does general things. Changing lamps he can reach no higher than a six ft ladder are one of them. They buy all there lamps, because they get better discount than me, because they buy them in bulk quantity. Every once in a while maintenance will change a ballast, or egress.
They than obviously know what these items cost. So for us to mark up these same items drastically, doesnt always go, with out question.

"They than obviously know what these items cost."
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They may know what it costs, for them to buy the item, but when you supply the item , the burden costs need to be added, to cover the cost of your time ordering, stocking, pick up, or delivery charges, and a small profit, these costs add up.
If they are in business, they know the costs.

That is why I said "markup drastically"
People are stating on this post, some pretty high markups. Cannot always be done

When you try charge the customer for a trip to the shop, or supply house, they can get pretty upset, and usually do, so in order to avoid this, we mark up the material eniough to recover these costs.
Our invoicing of one contract price, helps avoid conflict on charges, T&M billing always leaves the customer with stress, as any unknown expense would.

what LK is really getting at is that the markup should be on all your costs for acquiring the material.

You are not marking anything up 50%, 70% 300%. You are only marking up your true costs 10% or 20%.

The material may cost you $100. But the burden to acquire that material my be another $100 (time in the office finding the right part, phone calls to get pricing, creating a purchase order, receiving the material, handling the material, etc.)

So the true cost of that material to you is $200. So you mark up the total cost. You can either markup your cost 10% and bill the material at $220. Or you can make 10% profit on that material and bill it out at $250.

Now if you bill out the $100 burden as labor, just markup the $100 material cost.

So, it may look like a 100%+ markup on material, but in reality it's only 10% of your total cost.

Yup, that is the way to recover your costs.

Well, that is again what's tough about these type questions..You don't know who's perspective is from what side of the industry..

Resi service guys have one way of doing it, by breaking down everything into sub-catagories..

We just lump time as time, materials as materials and were done with it.

ayrton, I don't anyone who gets that much mark-up on that big of an item...

Dnk....