Simple question regarding material markup/margin...

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emahler

Senior Member
You purchase an item for a T&M installation (bear with me, it must be a T&M)

Supply house A charges you $10 for this item

Supply house B charges you $8 for this item

You purchase the item from supply house B for $8. When you bill out the material do you base your markup/margin on $8 or $10?

And vice versa. You normally purchase the item from supply house B, but today they were in a bind, so you bought it from supply house A for $2 more, what cost do you use for markup/margin?
 

Dennis Alwon

Moderator
Staff member
Location
Chapel Hill, NC
Occupation
Retired Electrical Contractor
You can charge what you want but if you tell the builder, HO or whomever that you get $xx.00 / hour and, let's say, 30% markup on materials then you should mark it up for what you pay for it. They may ask for an invoice. I have never had an invoice request but I guess they could ask.
Overall I would mark it up on what I pay for it. The invoice is your proof if they want to argue it.
 

emahler

Senior Member
ok.

for the sake of this question, no one will question it. no one will want your supplier invoice. this is just an internal question.

so if you bought it for $8, you would markup on the $8? not the $10 that the other supplier charged.

correct?
 

Dennis Alwon

Moderator
Staff member
Location
Chapel Hill, NC
Occupation
Retired Electrical Contractor
Correct. If you marked it up on the highest price you could probably find someone that will sell it higher than the $10.00. Some contractors use a National Pricing Service. They basically tell you what you should sell an item for, list, wholesale, etc. In that case it doesn't matter what you pay for it because you use the book's price. I think of T&M as the actual cost of materials with my percentage markup.
 

hardworkingstiff

Senior Member
Location
Wilmington, NC
Over the years my thoughts on pricing are starting to change. I started out with the idea that I should get the highest price possible. Now I'm looking more at what is a fair price to both me and my customer. I'm starting to look at it more from my customers perspective.

What I want to do now, is to buy as best I can, put a reasonable markup on it, and give my customer the best value I can. If my net is 10% instead of 20%, it's OK.

It used to be all about the money. I guess I'm getting tired of the "game" (or fight, or whatever) (sign I'm getting mentally old?).

Life is really an interesting journey.
 
If you normally pay $8.00 for an item and for and emergency must pay $10.00. Suck it up for that one time. I sure hope your normal mark up covers that. Let your supplier know that they are costing you money. In the long end its there responsibility. If they want to keep a good customer get the material.
 
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