profit on material

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Trouyano

Member
what is a fare charge to a customer for material? If you buy a 1000 ft spool of wire for $100, and you install 100ft, what is a fare charge?
 

kbsparky

Senior Member
Location
Delmarva, USA
...if you buy a 1000 ft spool of wire for $100, and you install 100ft, what is a fare charge?....
A fair price on your materials depend on a lot of factors:

1) Is the rest of the reel easily usuable on another job?(asked in previous reply)

2) Is this type of wire readily available, or was it special ordered for your job?

3) What is the per-foot price on that same wire at your local home-horror warehouse? Whatever they charge is fair game for your business as well.

IN any case, your material mark-up should reflect some profit or else you are wasting your time and money by giving it away.
 

brian john

Senior Member
Location
Leesburg, VA
Out of the initial 1000' there will be some waste hard to use 1000" of a spool without some waste, assuming 25% waste 100' x 1.25 x per foot price marked up 1.45 or better (or what ever your accountant has told you to use based upon profit margins you need to operate continously0 and then there is TAXES
 

emahler

Senior Member
or....you can give them a complete install price with whatever markup you want, but not give them the opportunity to compare material price item for item...

i.e. "the price to install this wire for and device is $300" vs. "labor - $150, wire - 100' at $1/ft" and giving them the opportunity to say "home depot has that wire for $0.12/ft, why are you charging me $1?"
 

mdshunk

Senior Member
Location
Right here.
Trouyano said:
... what is a fair[sic] charge?
Fair is a relative term. Fair to you or fair to your customer? You need to be fair to yourself first. If you feel the need to charge for the whole spool, then they own the rest of that spool. Leave it there. If it's usable, charge them for what you used plus markup. A flat rate for the job, as emahler proposes, eliminates all these worries.
 
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profit on material

There is some good advice already on this thread but we wanted to share how we do it.

We add 25% markup to all materials. If we paid $100 (including tax) for 1000' of wire then the new marked up price would be $125.00 for the whole roll. If we can re-use this wire on another job then we would charge the customer by the foot, which works out to $.125/foot.

If we used 100' of wire we would bill the customer $12.50.

When we write the invoice we use a materials line and put a total materials price, but in the description we list what materials were used. We generally do not list each material item out individually with it's own price.

Generally speaking, if you over charge your customer on materials, they may not say anything to you about it...but they probably won't use you again. They probably also won't pass your name on to friends and family.

Hope this helps.

KB
 

mdshunk

Senior Member
Location
Right here.
bakerbrotherselectric said:
Generally speaking, if you over charge your customer on materials, they may not say anything to you about it...but they probably won't use you again. They probably also won't pass your name on to friends and family.
Which is also another good reason to not breakout the materials price if you can figure out a way to not do that. Flat rate for the whole "job" and a lump line item called "material" are two such methods.
 

dduffee260

Senior Member
Location
Texas
bakerbrotherselectric said:
There is some good advice already on this thread but we wanted to share how we do it.

We add 25% markup to all materials. If we paid $100 (including tax) for 1000' of wire then the new marked up price would be $125.00 for the whole roll. If we can re-use this wire on another job then we would charge the customer by the foot, which works out to $.125/foot.

If we used 100' of wire we would bill the customer $12.50.

KB

If you markup wire 25% you will lose money on it. IMO there is too much waste in wire for a 25% markup. We usually go at the minimum 50% and most of the time double it or a 100% markup.

Why worry about pennies in a bill. Do good work and charge what you want. If the work is good most of your reasonable customers won't complain about price.
 

macmikeman

Senior Member
I have a hard time grasping the concept of fair. Most of my customers own two or three Mercedes, and have marble flooring throughout their entire mansions. I would charge double the price of the 1000 foot reel if I could get away with it, and not loose a teensy bit of sleep.
 

Brady Electric

Senior Member
Location
Asheville, N. C.
profit on material

I agree with Marc, I don't usually break down and list material. I just put down material and labor. Of course if you are doing service work that is different. I have found as long as the customer is happy with your work they don't care about a breakdown just the bottom line. A few post back Marc posted a price sheet about mark-up which I copied and I think is reasonable in most cases. Marc if you remember it would be good to list it again. I have found it to be helpful.
I don't care how much money what kind of car and what kind of house a customer has it doesn't effect my price. I give senior citizens 10% off. I just treat everyone equal even my friends.
Had a friend once say to me (Your not going to make money off me because we are friends are you?)
I replied "YES".
I HAVE TO MAKE MONEY OFF MY FRIENDS BECAUSE MY ENIMIES DON'T CALL ME. Semper Fi
 

bkludecke

Senior Member
Location
Big Bear Lake, CA
Occupation
Retired Electrical Contractor
Senior discounts are a marketing tool but they are unfair, discriminatory, and just plain wrong on their face.

I work in a community where there are alot of seniors that could really use a break (along with alot of younger single parents who could use one too) and there are also alot of multi-millionaire seniors who come up twice a year to play in their $2million 2nd home. Guess who usually wants a discount?:cool:

For that reason I don't advertise discounts. If someone seems to need a break, and I'm in the mood, they will get one.:)

Senior discounts....HUMBUG!!:mad:
 

satcom

Senior Member
All the auto repair shops in this area, mark-up min 100% and small parts can be as high as 300% plus, I also notice the repair shops mark-up labor costs on top of their overhead, serious about making a good living, at that they do, most of them run the business on a pro scale, all business, and a serious attemt to make profits on every part of the business.
 

LarryFine

Master Electrician Electric Contractor Richmond VA
Location
Henrico County, VA
Occupation
Electrical Contractor
Another example of "it depends": a couple of years ago, one of our residential customers had us install about a dozen networking drops throughout his home, as well as about the same number of phone and cable-TV outlets.

For the networking, he insisted on us using CAT-6 cable and keystones, so we had to buy a 1000' reel, and it wasn't cheap. I explained that, due to lack of demand, we would have to charge him for the entire spool.

However, I also offered that, for any additional installations down the road, we would not charge him for any additional CAT-6 cable. In other words, the cable was "his" although we keep it. He was in total agreement with me.

Sure enough, this past spring, he called us back to add about a half dozen mixed additional outlets, and true to our word, we supplied the CAT-6 at no additional charge. The CAT-3 and RG-6, well, that's a different story.
 

brian john

Senior Member
Location
Leesburg, VA
Generally speaking, if you over charge your customer on materials,

First what is overcharging? We mark up a certain percentage I know another contractors that marks up twice what we do, is he overcharging? No, his customers pay and do not complain, for the most part.

K-mart had a certain woman's top for 5.75, my wife bought it, our neighbor NEVER shopped K-mart only Macy's she bought a similar top cost 25.00 more or less, they both wore them to a party (Won't even discuss this) anyway in comparison they looked IDENTICAL, both made in China. Did K-Mart lose money on the sale? Most likely not, Did Macy's overcharge NO, they charged what someone was willing to pay to shop their store.
 

dduffee260

Senior Member
Location
Texas
brian john said:
K-mart had a certain woman's top for 5.75, my wife bought it, our neighbor NEVER shopped K-mart only Macy's she bought a similar top cost 25.00 more or less, they both wore them to a party (Won't even discuss this) anyway in comparison they looked IDENTICAL, both made in China. Did K-Mart lose money on the sale? Most likely not, Did Macy's overcharge NO, they charged what someone was willing to pay to shop their store.

If your wife and your neighbor got into a cat fight which top would last the longest without being torn to shreds? That would be the true comparison test.
 

ITO

Senior Member
Location
Texas
I avoid material breakouts as much as possible (it?s the only thing I will ever admit learning from a plumber), there is nothing worse than having some client start counting wire nuts to make sure you did not over charge them 30-cents.

If possible I like to lump all the material into one line item.

Labor X hours at X = Y
Martial cost + markup = Y
Tax @ % = Y

Total = Z

Mark had a great pricing scheme that seems to work well for service work.

mdshunk said:
$0.00 to $0.49 x 6
$0.50 to $0.99 x 5.75
$1.00 to $1.49 x 5.5
$1.50 to $1.99 x 5.25
$2.00 to $2.49 x 5
$2.50 to $2.99 x 4.75
$3.00 to $3.99 x 4.5
$4.00 to $4.99 x 4.375
$5.00 to $5.99 x 4.25
$6.00 to $6.99 x 4.125
$7.00 to $7.99 x 4
$8.00 to $8.99 x 3.75
$9.00 to $9.99 x 3.625
$10.00 to $19.99 x 3.5
$20.00 to $29.99 x 3.375
$30.00 to $39.99 x 3.25
$40.00 to $49.99 x 3.125
$50.00 to $59.99 x 3
$60.00 to $69.99 x 2.75
$70.00 to $79.99 x 2.625
$80.00 to $89.99 x 2.5
$90.00 to $99.99 x 2.333
$100.00 to $139.99 x 2.25
$140.00 to $169.99 x 2.166
$170.00 to $199.99 x 2
$200.00 to $239.99 x 1.855
$240.00 to $269.99 x 1.823
$270.00 to $299.99 x 1.789
$300.00 to $349.99 x 1.75
$350.00 to $399.99 x 1.725
$400.00 to $499.99 x 1.6875
$500.00 to $749.99 x 1.6
$750.00 to $999.99 x 1.55
$1,000.00 to $1,499.99 x 1.5
$1,500.00 to $1,999.99 x 1.45
$2,000.00 to $2,999.99 x 1.4
$3,000.00 to $4,999.99 x 1.35
$5,000.00 to $9,999.99 x 1.3375
$10,000.00 to $24,999.99 x 1.3333
$25,000.00 to $49,999.99 x 1.33
$50,000.00 to $99,999.99 x 1.3
 

emahler

Senior Member
PROFIT is not a dirty word...in fact it might even get you better customers.

some people actually believe that making a profit is a good thing...go figure
 

john_axelson

Senior Member
Location
MN
Interesting...

Interesting...

emahler,

Thanks for the link. Kind of helps explain why some people will only buy Chrysler when Dodge has the same product (Mini-Vans) or GMC when Chevy has the Same truck.

Does Higher price really mean better quality? I know that wasn't the point of the article, but it does make one think a bit. Why am I continually cutting my prices to beat my competition.

Maybe we all need to realize that each contractor is selling service and not a commodity. Price ourselves based on the service (hopefully it is mostly value added - at least in our minds it is) and then we should become more successful in our accountants eyes.

So, mark-up your material what YOU feel is fair and that in turn should be YOUR definition of fair!
 
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