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Re: Material Markup #70149 10/03/06 01:51 PM
Joined: Apr 2005
Posts: 197
L
LearJet9 Offline
Member
When possible 100%. I would not mark up a $1000 transformer to $2K That might be a 30% mark up. So, 30% to 100% sounds like the proper range.

Work Gear for Electricians and the Trades
Re: Material Markup #70150 10/03/06 02:07 PM
Joined: Jan 2003
Posts: 1,429
L
LK Offline
Member
"When possible 100%. I would not mark up a $1000 transformer to $2K That might be a 30% mark up. So, 30% to 100% sounds like the proper range."

Exactly, not all items are marked-up the same, it is based on your cost burden. for handling, stocking, and inventory of the material, and it may be difficult, for someone that is not in business, to understand, all the burden costs, associated with handling material.

The $4200 boiler, cost the plumber $2200, but remember, he has to cover any labor, or other costs, of replacement should there be a problem, he also has to pay the sales tax, and must recover that, in his mark-up, the sizing, and ordering time, and finally the profit, he is entilted to earn on that sale.


[This message has been edited by LK (edited 10-03-2006).]

Re: Material Markup #70151 10/03/06 03:57 PM
Joined: Nov 2005
Posts: 507
M
mahlere Offline
Member
Quote
I expect an electrical contractor to keep an inventory of common materials in his truck. The cost of maintaining that inventory should be close to 5% not 100%. Considering his discounts from retail, I would expect to be charged RETAIL for common materials.

welcome to 2006. There are no real discounts for contactors anymore. The only discounts are from manufacturers listed Retail Pricing. Do you think that I pay 50% less for a receptacle at the supply house than you would pay Retail at Home Depot?

You can earn easily 6-10% in a Mutual Fund. The smart contractor would put their money their and just purchase invetory as needed for each job. But for someone to assume that we should front the money, store the product, utilize it on their job (for their convenience) and only mark it up 5%?

George don't feel bad, I would never work for someone who presumed to know my expenses to provide them with quality work and great service.

Good luck.

Re: Material Markup #70152 10/03/06 04:16 PM
Joined: May 2005
Posts: 706
T
Tiger Offline
Member
Electrical wholesalers are going out of business because hardware stores sell for less (of a limited inventory). If you consider the hardware store as "retail", the wholesaler is "over retail". If an electrical contractor buys from a wholesaler and sells at hardware store retail, he's taking a loss.

Dave

Re: Material Markup #70153 10/03/06 09:33 PM
Joined: Apr 2006
Posts: 83
E
ExpressQuote Offline
Member
At the end of the day, or year (when it comes tax time) the only thing that matters is - Did I make the money that I wanted too, and did I do the number of projects that I wanted too.

It doesn't matter how you spin your pricing, you have a business to run. It has overhead and expenses and there needs to be some profit built in for the owner.

I see many contractors try to price based on retail...

Bill's contracting is charging $XX.xx per hour

Big Box Retailer is charging $X,xx per such and such

It doesn't matter where you purchase materials, or how much your competitor is charging per hour.

What matters is that you present your customers with a reasonable price that includes your - I repeat - YOUR costs for labour and materials, plus an appropriate mark-up for Overhead and Profit.

I tell my customers when it matters that they can probably purchase the materials that are needed for their project cheaper at the big box, than I can get it for at wholesale. If they choose to buy it, and want me to install it, that is fine... but it doesn't affect my calculation for overhead and profit, as I build that into my labour prices. The minimal fee that I charge for picking up the materials and financing the costs, the customer can pay if they so choose.

Just my opinion.

Re: Material Markup #70154 10/03/06 10:58 PM
Joined: Jan 2003
Posts: 1,429
L
LK Offline
Member
"I tell my customers when it matters that they can probably purchase the materials that are needed for their project cheaper at the big box, than I can get it for at wholesale. If they choose to buy it, and want me to install it, that is fine... "

My view is different, i don't bring my spark plugs, to the service station, because i realize that parts sales are part of his profit center, and if he did use my parts i would expect him to charge me more for his services, and if that part failed, was it the part or his installation?, what an argument that can turn into.

Re: Material Markup #70155 10/03/06 11:27 PM
Joined: Jul 2004
Posts: 9,577
G
gfretwell Online Content
Member
If you are not making profit on the parts you should make it up in the price, you are not supposed to get hurt here but bear in mind you should only be marking up the profit, minus the money you didn't spend getting the parts in the first place.
There is a difference between markup and profit.
Of course using the customer's parts comes with it's own pitfalls. If they don't bring you the right stuff your labor is higher and you will still need to get the right thing on the clock so the saving for them may not really be there.

The reality is, they may actually be saving you a lot of hassle by spending the day at the BORG, assuming they get the right parts.

If I was a customer I might shop around for the big ticket items that you would have to special order anyway (like a big genset).
It might even be a personal preference for a brand your distributor doesn't handle.
I wouldn't want to fool with the standard stuff you carry, even if I could save a few cents per wirenut or a dime a foot on the wire. It would be too easy for my job to grind to a halt because I forgot something or measured wrong.


Greg Fretwell
Re: Material Markup #70156 10/04/06 08:21 AM
Joined: Nov 2005
Posts: 507
M
mahlere Offline
Member
FWIW, this thread is a great example of why T&M pricing is getting more difficult to make money at. When your average residential customer can walk into HD/Lowes and either buy the material for less than you can (or at the least, know the retail price) then it makes it difficult to make money on a markup. I don't know anyone in our industry who can charge a high enough labor rate on T&M to make up for this loss and still cover all the other expenses.

Re: Material Markup #70157 10/04/06 10:43 AM
Joined: Apr 2005
Posts: 197
L
LearJet9 Offline
Member
We replaced a few ballasts for a commerical customer. The customer supplied the ballasts and lamps. About a month or 2 later we were called back for more lights out. The Facility Mgr asked if any of the new failures were the ones we had done on our last visit, I advised him one of them was. He actually asked if we would replace the ballast under warranty and send the failed ballast back to Advance!! I advised him, when the customer supplies the materials the customer is responsible. We offer no warranty of any kind.

Re: Material Markup #70158 10/04/06 12:31 PM
Joined: Jul 2004
Posts: 9,577
G
gfretwell Online Content
Member
Unless Advance is providing reimbursement for labor I don't think you had any responsibility, even if you did sell him the ballast. At that point this would just be a customer good will issue.
The labor for swapping it out should not be on your dime unless you want to show them what nice guys you are. (not always a bad thing)


Greg Fretwell
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