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Author Topic: Pricing and Markup and Profit! Oh My!  (Read 586 times)

Offline tcarmen

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  • Member Since: Dec 2018
  • Posts: 81
Pricing and Markup and Profit! Oh My!
« on: March 05, 2019, 07:57:22 PM »

I've been analyzing the profit margin on the parts I buy, and have come to the conclusion that the "List Price" I get from the parts distributor isn't actually useful for anything. Sometimes it leaves me a good profit margin, sometimes it doesn't cover the cost of going into town to pick the part up.

Also, it's way too low on small parts. If I've going to drive around with a $0.50 part in inventory, "just in case I need it", I certainly want to make more than $0.20 when I sell it, since that doesn't even cover the cost of the space in my vehicle.

So I've been looking into creating my own "list price" on a curve that would give a higher margin percentage on the very inexpensive parts, and reduce the percentage as the part gets more expensive, so the larger parts (compressors, etc.) still have about the same list price as the they would normally have.

Have any of you tried creating your own "list price" and ignore the MSRP? Was there any push-back from the customers? This would make the small parts more expensive than the manufacturer "suggests", but I'm not sure if this would be a real issue or just in my head.





Offline rkious1

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  • Member Since: Oct 2018
  • Posts: 81
  • Country: us
    • K-ICE Heating and Cooling and Appliance Repair
Re: Pricing and Markup and Profit! Oh My!
« Reply #1 on: March 05, 2019, 08:34:33 PM »
Depends on the area that you live in . Flat rate pricing works for some area,s and a servicer comes out ahead  in the long run . I seen some Samsung parts cost $11.00 and sell for $13.45 as far as MSRP . No business can run on that margin on a part you have to pick up or Stock .  I use one markup for bellow $20.00 one for $20 to $99.00 and one for $100.00 and above .


Ross
K-ICE Appliance Repair
Ross Kious
870-351-2847

Offline tcarmen

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  • Member Since: Dec 2018
  • Posts: 81
Re: Pricing and Markup and Profit! Oh My!
« Reply #2 on: March 05, 2019, 09:45:31 PM »
I seen some Samsung parts cost $11.00 and sell for $13.45 as far as MSRP .

That's what actually got me going on this.

Some of the margins are just unusable.


Offline Bearcat

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  • Member Since: Jan 2019
  • Posts: 78
  • Country: us
Re: Pricing and Markup and Profit! Oh My!
« Reply #3 on: March 06, 2019, 11:56:13 PM »
I obviously can only speak for myself.   We do upfront pricing, and do not detail a part cost at all.  It works for us.  $XXX.XX to fix your appliance sir.

Offline haroldsappliance

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  • Member Since: Nov 2011
  • Posts: 848
  • Country: us
  • No bull no excuses keep it simple
    • Appliance Repair
Re: Pricing and Markup and Profit! Oh My!
« Reply #4 on: March 07, 2019, 04:58:04 AM »
I do not itemized invoices. I charge a flat rate price which includes service call parts and labor. Sometimes I'll throw in a $3 part at no additional charge and write an invoice for service call and labor for $119 with say 20 to 30 minutes involved. Sell your service but also sell yourself. I like to often say "I'm convinced I want you to be". Also I'll say if you have a continued problem call me and I'll break the speed limit getting out here just like I did today. I tell that the cops all the time they always laugh. With time comes confidence. There's always going to be that one customer that doesn't like the way you operate to those I tell, and in a fairly courteous manner that if they're unsatisfied with the way I operate then I would recommend that they call somebody else next time.
« Last Edit: March 07, 2019, 05:03:39 AM by haroldsappliance »

Offline tcarmen

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  • Member Since: Dec 2018
  • Posts: 81
Re: Pricing and Markup and Profit! Oh My!
« Reply #5 on: March 07, 2019, 03:32:26 PM »
I obviously can only speak for myself.   We do upfront pricing, and do not detail a part cost at all.  It works for us.  $XXX.XX to fix your appliance sir.

That's interesting. I'm not sure I'm allowed to do that (in NY State) but I'm going to check into it.

Thanks,

Terry