For the mechanics out there, I'm curious as to the mark-up percentage put on parts when repairing equipment. I have a pretty good idea what the dealers charge but am curious about the independant shops. Thanks.
the avarage around here is 30%, the small stuff up to bout 50 bucks just double the price paid.
Retired the wrenchs about 25 years ago and it was 30 & 50 % then
Depends on the price of the item. As stated, small items, double or better, middle of the road cost, around 30%, thousand dollars or better for item. could range 15 to 30%.
Are you asking what an independent mechanic might mark up the price of a part if he was supplying it? Years ago I decided to not buy any parts at all. If a machine needed something it went on the owners account or I got a price and they supplied a check to pay for it. I've been bit a couple of times on dead beats that wanted someone else to finance their repairs and that was the end of the issue.
Yes John, that's my question. For years I've been doing $0-500.00 = 30%, $500.00 - 1000.00 = 20 % and $1000.00 and above = 10-%. I've always thought it was very fair if not low. Now with the economy what it is, my costs keep rising but I can't raise my hourly rate so I'm looking at other options. I've had several larger customers in the past that I charged all the parts to, but I supply most every thing now. In over 20 years I believe I 've only had one time that I didn't get paid and I knew going in that I probably wouldn't. It was a LinkBelt 5800 CII that lost all hydraulics while parked on a dirt pile. 3 other mechanics had looked at it and couldn't figure it out so there was a challenge involved. Only lost 3 hours of time and no parts. I've also been in the position that I don't have to take every call that comes along, so I can screen my customers. That's a big help.
It all depends on the pars, the customer, and if I have to go and get the part.
I have been working for myself as a rent a spanner for about 36 years now, I must say that I am the same as john C on the parts deal, as doing the job and getting paid for that is tough enough, compounding the Bill with all sorts of "tuck em up" parts would leave me a target to get my pants pulled down in a big way, the turn-over through the year is a lot lower without the parts thing, but the profit edge is impoved, plus the stress levels are minimal through slow or bad paying trade, some months the cash amount of parts I can get involved in might be anywhere from a few hundred £'s to £50'000, so unless the customers name is on my birth certificate in the box marked Mother, Father, they can swing for their own bits, the customer knows the price of the bits, so stuffing 20-30-or 50% on top is just like kicking him up the backside, so I avoid this doom trap, this is how things are in the U.K. other locations might not understand or trade in this manner
well iam in the parts business and well to be frankly honest on a lot of the parts from main stream supplyers its over 300-500%
I'm with Tctractors. Before I came to the US I charged the actual price of materials and sometimes a surcharge if I went out of my way to pick something up. When I moved down here, I was told I needed to add more to the materials charge. Personally I think it's just nickel and dimming people, your doing something if you need to charge more just cause something went through your hands. I know, I'm in the minority. Tom
:usaIf ur not doing 25% it not worth it just sayin.... 15-30 rules:usa
Yair . . . If the customer can walk into the dealers and buy the part for the same dollars I can I wouldn't risk pi##ing him off by adding any mark up. If I was in the position of being able to get some sort of trade discount I would most likely pass that on too . . . and have it show up on the invoice. The few bucks involved are usualy niether here nor there but can go along way with word of mouth advertising and repeat business. I believe the little bloke dealing with day to day repairs is selling his expertise, equipment, and his tools. When possible I think it's always best for the client to supply the bits. Cheers.
I always seem to make my money, maybe I need to start thinking I need to make 25% more. Cheers, Tom
TEC, the best way of impoving your yearly earnings is to work 7 days a week, when the weather is mild get out early and come home late, do the jobs well and do them right first time, if I had to flog bits to earn my coins I would be skint (potless broke) in a few months, as everyone would be getting me to supply all their big dollar chunks, then not paying my bill for months if at all?? in the UK it has rained near every day for 2 1/2 months the machines can hardly work on most sites so things are getting very tricky on the coin front, lucky for me I travel to where the work is.
I totally agree with you. That's the way I learned to do it when starting out in Canada, and that's what I'm comfortable with. I don't agree with people nickel and diming, so why would I do it to them. Cheers, Tom
im reading the responses to this & asking myself a few questions. #1 is if you dont mark up parts, are you charging the customer for your time going to pick up the parts? #2 how can you get the customer to have the parts setting there waiting on you to come & install them, till you get the parts list made? #3 all the small parts that are on the truck that you use somebody has to go to the supply house to pick up/purchase, who pays for that time/fuel? just dont make alot of sense to me especally around here, most of my customers want me to pull up, have parts to fix it, get it going so its makin them money not costing them. i know its differant if your rebuilding a peice of equipment in the shop vs getting it going in the field the customers will be more than happy to supply the parts in the shop.
Yair . . . FSERVICE. Yes mate if I have to go into town to get bits its invoiced at hourly rate and where ever possible charged to customers Acct. No skin off my nose, the little dieso ute doesn't use a lot of fuel.
FSERVICE, I charge for listing parts also activating the ordering of them if I am asked to, if I collect any parts etc for the job, this is also charged on an hourly rate plus travel ex's at so much a mile, I am very skilled at getting parts for my Customers at sharp prices even off CAT, the CAT parts Manager can issue a good discount if you play him right, the CAT parts man has only a small movement on the RRP, so always sort the deal with the Parts Manager, loyalty with parts agents also has its roll to play, I always treat the parts person well and show them good manners, again this gets me extra coins off, this might be to the benefit of my Customer, but then the Customer has me back for the next job, inside shop jobs are not the common thing for me, just the other day I stripped out a High drive transmission on the back of a trailer, that is fairly good for me as usualy its on a bit of boad or a Pallet.
Well I'm not a heavy equipment tech, I'm a general contractor, but don't do have much to sub out since about '05. Most of my work Is word of mouth, less chance of people not paying with the reference. Most customers set up charge accounts with my supply houses and I provide them with purchase orders. Orders are delivered or picked up and my billing starts at the first point of contact, eg. On the phone to order, supply house to pick up or arriving at the job. Working this way has gotten me a select group of clients that pay their draws on time, pay as soon as they get the final bill, no fine print contracts or change orders. I provide insurance certs., waivers of liability for them and sometimes me, at the end of the day they know what to expect with the job from start to completion. If I need more money I could just raise the rate, I'm sure they would prefer that to finding a 30% surcharge on materials, I could probably add a charge for fuel too. Hmmm, now you got me thinking. Tom
with my customers i either charge mark-up if i supply the parts, or they pay my rate while i order parts for them on there account. If i go get the parts they pay full rate, most of the time i continue working while they send the operator or a laborer after parts (there is always repairs to be done). How can you not charge mark-up? example: I purchase and install a "reman" hydraulic pump from the dealer, in lets say a timbco like the one TomV just posted, you get it in and it will only put out 3500 psi, obvious reman flaw (probably controller), you take it out they don't argue (ha-ha) you get another one and put it in...at this point i don't know of any customer that will pay for the second install and i don't know of any dealer going to pay my labor, so the $1,000 i marked up that pump pays for my warranty work. let say that pump blows up 3 hrs into the next day and fills the hydraulic system with macroscopic pieces of stuff!!! good thing i marked up my parts for the last ?years because now i get to spend the next 200 hrs of my life cleaning up a hydraulic system at no charge to the customer because the dealers waranty only covers the part and not any damage caused by its failure (fine print)......maybe we should change the name of "mark-up" to "risk and return" this is actually what it is. Its not a four letter word, its fair and excepted way of doing business. As for how i mark things up, i am generally in the 30% range, higher risk jobs like the example i mark up more, lower risk jobs like installing cutting edges i mark up less. Just think, you roll in a set of main bearings in a cummins truck engine ($400 bucks in parts) and while the oil drips in your eyes you install the lower bearing in the cap and install the other bearing in the package in the upper position not realizing they put two lower bearings in the same package, argh!!! you can't mark the parts up enough, after you remove the motor to replace the crankshaft that a main bearing just siezed to and ruined. your lawyer isn't going to be able to prove that one...........theironoracle
I totaly agree the only customer i have that bitch about mark up are the ones that all ways complane most are buisness men and under stand how it works
I wouldn't be too terribly concerned about parts markup if the customer is being taken care of. I know in shop labor, dealers can mark labor up 75% on top of parts markup. If that's taken into consideration, you as an independant are givung the customer a better deal than the dealer is.
There is another side to the supply and mark up thing, that is by not suppling a "Reman" hydraulic pump that fails to put out the correct whatever, the customer is left to sort his crap out, he is paying the bill for fitting and removing as many times as needed to sort the fault, I feel sure the parts supply thing is good for some people in some locations, but for others its a sure way of being tucked up through not getting paid or very slow to get paid, perhapse I might sound a little negative on this way of dealing, but it would be like throwing a seal to a pack of sharks in the U.K. you would be eaten inside a month.
wouldn't it be interesting if i we got paid for our services from our regular customers as fast as we responded to there needs? i am not complaining about my grade A customers, but the the grade B or C that expect (need) you there in less than 24 hrs but pay after net 30 but before net 60!............theironoracle
As an independent farm mechanic doing 15-20K labor business a year on top of a full time job, I think it is dishonest to mark up the price on parts. I am a mechanic, not a retail store. I sell my labor, experience, and expertise, not parts. If you are a good mechanic, stay covered up in work, and are trusted by the community, you can make enough through repeat customers and the almighty referals without screwing them by hiding extra charges so they can't see them (until you get one that knows the part prices, then what?). If you can't, raise your rate until your backlog disapears. My customers are friends and neighbors trying to make it just like I am. My conscience (maybe that is a bad word here) won't allow me to put the screws to them and it shows as my lot is full. I have no problem paying for time spent and materials used, but don't hide extra profit in parts so I can't see it. I add in parts running to labor, and interest and shipping on the parts bill. Dead beat customers are a whole different issue than this to me and padding parts only adds to the problem of nonpayment.
wrwtexan, for you this may work, for those of us doing this for our living it is just part of business. the choice would be to raise our rates to compensate for the lack of income from the parts to cover the risk taken when these parts are provided, but what then if the customer decides to provide there own parts and take there own risk? It is only dishonest if you tell the customer you are going to mark up the parts 30% then mark them up 50%. In regards to you no being a retail store this is only kind of true, you are in the service industry which is retail, if you don't believe me look at how your taxed by your state or the feds. i don't hide charges or screw my customers either, my customers all know how businesses make money and expect to be covered by me if a part that i have provided fails. I have a perfect example: today i drove 222 miles round trip to a customers job site to R&R a head with parts HE provided, why because he likes to take the risk on the parts and doesn't want to pay my mark-up, guess what he got a head gasket not a head set!!!! i guarantee it would have been cheaper to pay for my experience to order the parts for the project than to pay me $582 (he knows exactly what the trip costs been working for this guy for years) for that trip on monday!!!!! your right, what am i thinking i should never buy parts for the projects i am doing!!!!!!!!..................................................theironoracle
u said it " on top of a full time job" u dont have any overhead to cover like the rest of us health insurance, u have a retirement from ur "job" if your running a business everyone pays mark up it gets passed along. its not dishonest its business. go to the grocery you are not paying what the store paid for it. the store couldnt stay in business very long doing that neither can any other business.
Fservice, thanks for the support. So i was wondering how do you get the original quote to appear above your post? Never done this..........theironoracle
Thanks for the response to my question. I guess it's up to each person how they want to run their business,but to say that we are taking advantage of customers by adding a mark-up on parts is just wrong. When you call a contractor to come and do a job for you, whether it's build a building or lay some pipe ect, they're going to mark-up the cost of the materials. This is part of doing business and when we are repairing these contractors machines, the good ones expect the mark-up. A wise customer once told me, "Yes, you have to be fair to your customers but you also have to be fair to yourself and your family." That's a customer who know's the value of your services and is in turn a valued customer. They realize that for us to remain in business helping them out, we need to make a decent living also. Thanks again.
Yair . . . It's obvious there are different strokes for different folks. As I said up thread a fitter/diesel mechanic working out of the back of a tilly with a set of tools a welder and an oxy-set is selling his expertise not parts. He wouldn't last long in business around here if he started adding fancy markups to parts that his clients could buy for the same price. It's the same for most trades in rural areas. My electrician supplies all the wiring conduit and fittings and fixtures to power up my sheds or what ever and I don't expect him to mark them up beyond what I can buy them for in town . . . in fact it generaly works out a little less. As far as the hypothetical given by theironoracle of not being paid to remove a pump that did not come up to spec. that's just plain B/S. Its not his problem and it gets sorted with the client and the parts supplier before the faulty unit is removed . . . and how the hell he could ever be lumbered with the clean up if it fails at three hours beats me. It don't work like that around here.
For all in this discussion. i am sitting here this sunday afternoon paying my bills for the second time this month and i have an interesting scenario that doesn't happen to everyone, one of my bills is from by fuel supply guy, guess what he is also a customer!!! i know fuel is very important to everyone and i want this guy to be there tomorrow to so i can buy fuel to go to work i expect that he is not giving me the fuel for what he buys it for at the rack (wholesale distribution area). also this month he was wanting me to work on one of his distributer trucks and i did not have the time but told him i would order the parts on his account and have them shipped direct to him and tell him over the phone how to install them (none of which would of been worth writing an invoice for), he said no, order them on your account so you have an opportunity to mark them up (HIS WORDS) and then ship or deliver them to me. we both have accounts at the same kenworth dealer and i would venture to guess his buying power is better due to him owning many more kenworths than i do..........hmmmm now what?..........................theironoracle
SCRUB PULLER, i turned over one of my invoices today and want to share with you what is says, this is my local john deere store cat house is the same. LIMITATIONS OF WARRANTIES. Any warranties for parts supplied according to the terms herein are strictly given by the manufacturer. Copies of a manufacturer's warranty, if any, which may apply to the parts sold hereby, can be obtained from the parts department of Vendor's store from which they were purchased. blah blah then.......IN FULL CAPS: VENDOR SHALL NOT BE LIABLE FOR ANY LOSS, INJURY, OR DAMAGE TO PERSONS OR PROPERTY RESULTING FROM THE FAILURE OR DEFECTIVE OPERATION OF ANY PART OR SERVICE FURNISHED HEREUNDER; NOR WILL VENDOR BE LIABLE FOR DIRECT, INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES Of ANY KIND SUSTAINED FROM ANY CAUSE.........................theironoracle
Yair . . . theironoracle . Exactly mate and I assume you have the same on your invoice? That is to say......all care and no resposibility. That's what you pay your liability insurance for. If an unforseen foul up happens it's out of your hands. Your insurance company pays some one to fix it, you don't bear the cost on majors . . . or that's how it used to work over here. Cheers.
Scrub Puller, i don't have the same on my invoices, perhaps i should..regardless i would want the problem remedied asap for my customer which would probably be me fitting the bill and doing the repairs until the insurance company paid, this would be expensive and rough til it was sorted. i take risk i expect the reward, i fail (or parts i provide) i will stand up and make it right, this is part of the service i provide and why i have the customers i have. in regards to the limitations of liabilities i do know that there are oxygen breathing blood pumping people that work at these parts suppliers and most will do in there power what that can to go above and beyond what is written to make things right...this wording is to protect the parts suppliers against the negligence of the owner or operator, i just heard a story last week an excavator style machine had a partial hydraulic motor failure (not a recently supplied part), the operator continued to use machine until the hydraulic filters filled up and the bypasses opened up, the pieces then went into the main pump and got chopped up and distributed throughout the entire hydraulic system...at $100,000 of shop time and parts at the dealer the customer decided to trade machine in for a new one.....................................cheers theironoracle
Yair . . . ironoracle . Points taken mate. As I said we all have different ways of handling problems. All we can do is work in good faith and do the best we can with what we have. If it works for you that's fine . . . we all have to remember that we can't fix stupid. Cheers.
" u said it " on top of a full time job" u dont have any overhead to cover like the rest of us health insurance, u have a retirement from ur "job" if your running a business everyone pays mark up it gets passed along. its not dishonest its business. go to the grocery you are not paying what the store paid for it. the store couldnt stay in business very long doing that neither can any other business. " So if my repair business were my primary job, I should mark parts up to help make up for not having an "8-5" day job? I may be a small timer compared to most on here, but my repair business is a major part of my income (30-40%) and I work my butt off for it, and my customers are very greatful for the work I do. Granted, you may do business mostly with companies that can pass it along, but the "passed along" stops at my customer's (farmers and ranchers) PERSONAL finances. Should I look for the most expensive parts I can find for a better markup or replace worn but not failure prone parts to add more on the bill? Following some of the logic posted, no mechanic would want customers who provide their own parts as there would be nowhere to pad the bill. As Scrub Puller noted, big markups would put some of us out of business. I may not have the "overhead" you do, but I do have expenses to cover. I have had parts fail, but my dealers have been there to help, even with the parts affected by the failed component*. How can you mark up a $350 hydraulic pump enough to cover the $800 in gears alone it ate when it failed (see above dealer note *).
theironoracle, its best to say that how you paddle your canoe is some what differing to how I paddle mine, a good way of increasing my earnings is by breaking up for parts CAT iron, the selling of the parts plus the fitting of them is a double earner for me, I have been working for myself now 36 years and keep to the "Set in Stone" rule to never supply anything other than standard consumable parts i.e. gasket goo, copper grease and the likes, nothing worth more than about the £20 point, obviously your customer base are good and loyal to you, in the U.K. for me things change fast as local work is a bit crap at the moment due to the continued rainfall getting on for 3 months, so a good bit of travelling to jobs is the common thing, this is often about a 160-200 mile round trip with the longest travel being 1'180 miles, so you dont want people that are a good distance from you owing a small fortune in parts, lucky for me the biggest rouge and con artist in the Earthmoving Plant game comes from just close to me, so he cannot catch me for nothing, he would love me to do work for him but I would rather knock nails in my Man Bits, its sad to say the way you trade would leave you skint fast in the U.K. always smiling tctractors
As an owner/operator my goals in my business are as follows 1: earn more per hour than a payroll job (hasn't happened yet) 2: get a RETURN on investment (truck, tools and parts when required) above that hourly rate 3: cover all of my RISK that i incur while doing business 4: freedom to make my own decissions, many more but minor goals. We all live in different parts of the world and have adjusted the way we do business for the customer base that is available. i want to emphasize "mark-up" is just a word used to calculate "risk and return" you incur risk when you provide parts and this MUST be covered, and you must get a return on your money because it is not free. i never thought i was going to be part of a business morals discussion when i joined HEF but am very glad i have participated, i do think we all need to be sure we are participating in a "discussion forum" and not an "argument forum" and hope i have not crossed the line with that.......................theironoracle
theironoracle, please dont think that any of my posts are anything to do with business morals or the right or wrong way to earn a few coins, but clearly there is a trading difference with the way things are in the U.S.A. to Europe-U.K. its great to see and hear about the way things "Spin" for other people in other locations through out the Globe thanks to Forums like this, I think its important to as you said "participate in a discussion" about how the bread on the table gets paid for, I often wish I could supply parts as a money generator also continuity of the job in hand, but it would be a risk to big with about 90% of the customers I work for, as I travel all over the U.K. working, it would seem this is how things are for me?
What do the different brand dealers make their money on in the states and Canada? In our part of the world the big name dealers like Volvo, Cat, Doosan and Komatsu make their money on parts primarily, then service (mechanics hours) and last but least sales of new machinery.
I have a repair business for cars and other vehicles, on the side after full time job duties. I have also done some large engines and trans jobs on the side, the way i do it is if the customer supplies the money up front for parts, there is no markup, if my money is used , there is a markup. If I run parts and they go on their acct, they pay hourly rate. Never had any complaints and if asked to do a shortcut repair, , just happened, there is a signed workorder before work starts stating no warranty. Sadly, my shortcut repairs are usually better than the dealers overhauls, knock on wood.
I know this is an old thread but I thought of this when I was pulling a truck tranny today for the third time. a customer called a couple weeks ago and asked if i'd do a automatic tranny swap on his trash truck. he bought a reman unit from a local distributor. I put it in the first time and as soon as I started it the front seal immediately leaked. pulled it back out, and sent it back. the distributor said I bolted up the torque convertor wrong? but fixed it and warranteed it. when it showed back up I unwrapped it and found a plug on the side got smashed during delivery. it went back again and got fixed. showed back up a couple days later and I installed it. it went good for about 900 miles and this morning it started shifting funny right before it had a major melt down. now we're waiting to hear what their going to do. I've got 31 hours total in this job so far and lucky for me i'm getting paid no matter what. If I had supplied the tranny and went through this mess I would be counting on parts mark-up to keep my head above water.
Tony, I have had a good chuckle at your "verbs" on this.......nice one
Richard, glad you liked my bit of script, please comment on the topic as you might have some good ideas?? its easy to stretch your own cash reserve to the point of strain financing other peoples "Drama's" the profit margin on not getting paid is a bit on the Low side, its hard enough to get paid for working in puddles all day without the extra strain of picking up the parts bills, a good customer of mine has just been Handcuffed up for some fiddle job, he is expected to cop a 5 to 10 year posting to the big house, no one new anything about this untill the Cuff Gang turned up, I am just glad that I stick to "if their name is not on my Birth Certificate in the box marked Parents " I ain't supplying nothing.
I reckon it depends on who you are working for. 99% of the people I work for have been clients for 20 years plus. Most of them are friends as well. I made a rule a long time ago,if they are slow payers I don't work for them. I often supply bits if it suits them and make a handy few dollars when I do.
As Tony says the folks (Ag/Ce contractors) here that I know on our bankrupt little rock in the North Atlantic are a bit canny about their bills - some of them even squeek when they walk. With the exception of dealerships the 'done thing' is for the customer to pay for his own parts......perhaps because if they had gone to the dealership first then they probably can afford not to scrutinise the bill so tightly and also ring round and tell you where you could find the bits cheaper. The other thing you hear of is folks put machines on jobs and the customer will supply the diesel. Just yapping to the blokes you hear of the odd stories of being taken to the cleaners, so its all about minimising the financial exposure. If you were doing it simply to increase the turnover then you could be eligible for VAT deductions (above the threshold turnover) - claim the VAT back on fuel used for work etc..........apart from that they are only paying for your labour