Material Mark-up: Above retail or above contractor price?
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I don't get the whole charging a percentage on materials. I charge them retail price just like they would pay if they bought it themselves.
I would assume most do it on top of their contractor price though. Adding a percentage to the retail price would be robbing the customer. I would be jacked if I found out I could've saved 20% on the cost of 30 gallons of Duration if I just bought it myself. :yes:
I would assume most do it on top of their contractor price though. Adding a percentage to the retail price would be robbing the customer. I would be jacked if I found out I could've saved 20% on the cost of 30 gallons of Duration if I just bought it myself. :yes:
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But what about your time to get it? Is that worth nothing? I bump mine up on retail. Most of the time when I figure a job I have a set price per gallon which includes the price of paint, and the time to get the paint.
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I read alot people charge say "20%" for having to go get the materials. This makes no sense to me either. Some jobs the material price is only $75 & some are $3k.
So I could be spending an hour or two of my time for $15 - $600? :laughing:
$15 won't pay my bills & $600 would be the reason why I didn't get that job. Instead I rather bill them for the estimated time I'll spend driving to the store & back. Call the store on the way & tell them to have it ready. Much easier & honest that way.
So I could be spending an hour or two of my time for $15 - $600? :laughing:
$15 won't pay my bills & $600 would be the reason why I didn't get that job. Instead I rather bill them for the estimated time I'll spend driving to the store & back. Call the store on the way & tell them to have it ready. Much easier & honest that way.
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I custom match most of my colors for exterior into Cabots ProVt in which I have the option at my small mom and pop store to do myself. My time at the store can get lengthy while matching. My 20% covers that time and my time to goto store and how about gas? that ain't cheap these days either. I am fine either way with how ever people do it. If I lose a bid on a job I am thinking boy I shouldn't of put that 20% on the materials. I am thinking the people where looking for a lower price and maybe they'll pay for it maybe not.
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Since you feel this way, there's no sense in trying to convince you other-wise, so I won't try
But...please realize there are different ways of doing business, and you seem to understand some sort of material mark-up is a necessary part of it
Lets just say, that the numbers don't always work out, and sometimes you need to charge more that that "retail" number that some store decided to pick for whatever reasons
Let's just say that that would be a way of doing business that you don't care for
Let's state the reasons why
Let's not call this legitimate, honest business practice, done my legitimate, honest business people here on this site, "robbery"
And the legitimate, honest, business people "dishonest"
It's not, and they are not
Ah...now there's a legitimate complaint w/o insulting people
#1) Are you your target customer?
If not...you opinion doesn't really matter
#2)Do you get jacked at the garage for charging you $235 for an alternator when you know you can get one from Autozone for $198?
If so...then you really need to settle down and look at the big picture
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Lets say your company needs to make $60 an hour to survive. If you know you're going to spend around 2 hours working on getting your materials together, you know you need to make $120 off your materials. What are the chances of your 20% mark up happening to be $120 on every job?
You can usually guestimate the amount of time & mileage it will take. I do when I write up the estimates. I rather just add those hours into the total job hours. I couldn't go by a percentage of the materials to figure that same number out when every job is different. Just don't make sense to me as I'd be wasting too much time adjusting those numbers at every job. If it works for you though, that's all that matters. :thumbup:
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JNLP
If you are using Quickbooks, it should be pretty easy to find. In our case, we know that "marked up" materials over the past five years have represented X% of every job. Its easy to back into it for estimating purposes if you look at past costs and adjust for current increases. I think making it a labor cost artificially inflates labor costs.
If you are using Quickbooks, it should be pretty easy to find. In our case, we know that "marked up" materials over the past five years have represented X% of every job. Its easy to back into it for estimating purposes if you look at past costs and adjust for current increases. I think making it a labor cost artificially inflates labor costs.
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Actually the garage I goto charges you retail for parts, then nail you with their labor rates. Atleast their honest when they rob you instead of trying to hide it in the parts cost.
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It's this kind of thinking that has destroyed the local garage business to the point where I can't make enough to cover my expenses...my best tech takes home more than me...
...oh wait, I meant the local painting companies....uh....whichever...
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i am sure that garage show a retail price is from a dealer or such which is still more than retail at Auto discount store that you would buy it at.Actually the garage I goto charges you retail for parts, then nail you with their labor rates. Atleast their honest when they rob you instead of trying to hide it in the parts cost.
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Was the only thing I was getting at in trying to understand those who charge a percentage. Was how it works out for them? To me I like to be dead on with everything. So even though it would probably even itself out over the year, between big jobs & the little, it would drive me crazy inside knowing I was off on the current job. Or that the guy who underbid me & won the job by $500, I could've beat if I didn't charge them an extra say $600 on material & just charged them for my time. I'm just like that though.
I guess if we didn't do such oddball jobs it would be different. Like only doing decks, or doing new construction, or something where your average materials are the same for each job & you have a repeating system down. We bounce between so many different types of jobs with such differences in materials & their costs that it would be next to impossible to predict a percentage simply to cover time spent & costs. Now if somebody were to say I charge 20% for a profit on being a re-seller, I would see it completely different & wouldn't debate on it with them. However I myself would simply choose to not make a profit on it OVER the cost of retail. That's what works for me though just as my prices wouldn't work for some of you or could even be double what some of yours are.
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I markup my cost by 25%-30%. With the way I buy, that brings the cost just a little above what a H.O would pay if they were to get the materials themselves.
If you are doing a job that has $3K+ in materials the odds that something is going to go wrong and cost you dearly, rise. We had this discussion on our board about a similar topic. The customer cares about the bottom line price. How you prefer to break it down is simply a matter of persoanl choice. (if you are listing materials with a price, you had better be collecting sales tax in most states)
If you are doing a job that has $3K+ in materials the odds that something is going to go wrong and cost you dearly, rise. We had this discussion on our board about a similar topic. The customer cares about the bottom line price. How you prefer to break it down is simply a matter of persoanl choice. (if you are listing materials with a price, you had better be collecting sales tax in most states)
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I mark up materials 60% over what I pay. I don't know what retail is, and I don't care to keep track of it.
I've tracked what our average time is to get materials, as well as our average purchase. Some quick calculations showed me that we needed to mark it up 60%.
I don't recall the exact numbers, but it went like this: we buy on average 5 gallons at a time and it takes 1.5 hours to go to the store and get back to the job. If the supervisor is making $25 an hour, then we need to get about $38 per trip to recover his wages, or an average of about $7.50 per gallon.
Like I said, the numbers aren't exact, but that was how I did the analysis.
Brian Phillips
I've tracked what our average time is to get materials, as well as our average purchase. Some quick calculations showed me that we needed to mark it up 60%.
I don't recall the exact numbers, but it went like this: we buy on average 5 gallons at a time and it takes 1.5 hours to go to the store and get back to the job. If the supervisor is making $25 an hour, then we need to get about $38 per trip to recover his wages, or an average of about $7.50 per gallon.
Like I said, the numbers aren't exact, but that was how I did the analysis.
Brian Phillips
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Actually the garage I goto charges you retail for parts, then nail you with their labor rates. Atleast their honest when they rob you instead of trying to hide it in the parts cost.
I worked for a wholesale parts distributor for many years. Retail is what you pay. Wholesale is what they pay. If you buy lots of the same thing, or lots in general, you get a better price still. Believe me when I tell you that selling at suggested retail is NOT what they pay.
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