Material Markup

[Mule]

Mule,


Stubborness is not going to win any bids. I read the comment-



Maybe you've never been around an etimatimg department that already has "assemblies:" by the dozen, and can furnish a bid in less than 5 minutes, for 90% of the work we do. No one has the time to itemize every house service change, everytime.

It costs less for a customer to pay for little "extra items" that are padded into the bid, than to pay you to burn the time up justifying your every move.

Quit being so defensive, and move to an evaluating position. Try some of the better stuff that gets put out in the threads. First part of being a professional, is knowing what all the professionals know. Second is knowing what, and when to apply it. There are $100's of dollars worth of great ideas bounced around in here, use them!

Really, this forum is designed to help, not hobble all those in th industry.

Apparently my opinions have no value on this forum, and you've made up my mind.....thanks

 

[petersonra]

charge whatever you figure you can get. big ticket items will probably have a lower % markup than 20 cent cover plates.

charge sales tax if your state requires it.

 

[Rockyd]

Apparently my opinions have no value on this forum, and you've made up my mind.....thanks

Not going to be part of a pity party.

This forum is the best one on the net. I have had OT comments, and others I thought might be legitimate postings deleted. For the structure of the forum, it was probably considered the best option. I accepted it as "Okay, won't make the mistake again." Learn, move on to the next task at hand. Don't be thin skinned. Buck up, and get ready to ride!

Riding across the desert by one's self is not considered wise...So you don't have to love us, but the ride will be smarter, and safer, if you ride with us! So dust off your saddle, take a chill pill, and come back as soon as you are able.

 

[Greg Swartz]

No one has the time to itemize every house service change, everytime.

It costs less for a customer to pay for little "extra items" that are padded into the bid, than to pay you to burn the time up justifying your every move.

I actually used to do this (key word here is: USED)
I would price my panel change out, itemize every thing, and give a proposal to a HO...
Questions I got were:
Why is that so expensive?
I have one of those, can you use it, and reduce my bill?
It does not cost that much at HD...
If I do "this" myself, how much less will it cost?
Do you really need to pull a permit?

I learned that when I did all this, people wanted it for less. I actually lost bids being the lowest. I raised my rates, did not itemize, and gave a more professional look... now, I am not the lowest (don't want to be) and win bids quite frequently... not being the lowest. And I do NOT apologize for my rates.

When I itemized, I did indeed have to justify EVERY move. That got time consuming, and I was not making any money. And I took everything personal... (big mistake!!!)

When I itemized, I found that I attracted the wrong type of customers... the ones that would sign with another contractor for a dollar less. It didn't matter if I did a better job, it didn't matter if I had more in the bid... they wanted the lowest $$$... and that's it.

That is not the customer I want to attract.

If I am not the lowest contractor, I walk away... I don't reduce my rates. I tell them to call me if they have any problems with their electrical contractor. And sometimes... I get those calls... and I tell them right up front, it is probably going to cost more than the original bid.

Just a few random thoughts from that line above...

Greg

 

[Greg Swartz]

Don't look at me, I already shoot my flair on this one...!!!!

Look Here for retail math

Your first equation if you 100 / 142.87 gives you .6999 right at your thirty percent. and you questioned 30 dollors at the end ?

Profit margin
Mark Up % = (Selling Price - Cost) x 100 / Cost

Mark Up % = (49.95 - 30.00) x 100 / 30.00 = 66.5%

But I'm going to throw out another term gross margin

Gross margin
GM % = (Selling Price - Cost) x 100 / Selling Price
Example: You sold an item for $49.95, and the cost of the item is $30.00.

GM % = (49.95 - 30.00) x 100 / 49.95 = 39.94%

two very similar equations but different

I'm not a retailer or a wholeseller, I don't think most EC's are either,and I'm not one of those either

Ok, I am finally starting to understand the difference between markup and margin...
And, as stated earlier, if QB does this automatically, then I am already covered. I use QB, and have huge lists of items in there, and already have different price lists for varying customers.

Greg

 

[Greg Swartz]

...The retail community has just about burned themselves with the public IMO...

That's what I used to think.
I know that jewelers have a 1000% markup.
Some restaurants have a 300%-500% markup.

But I started thinking about it...
If they paid $2 for an item, and charged $3 or even $4 for it, there's a good chance that they will lose money. Reasons?
Labor to unload / unpack / move the item.
Inventory labor.
Warehouse / store rental costs.
Heating costs.
Electricity costs.
Salesperson labor / commission costs.
Advertising costs.
Accounting costs.
Management costs.
Payment by credit card costs. (If acclicable.)
General employee labor costs.

The list just keeps going on and on and on... And that is if the item actually works. There's a lot more involved if you need to return the item and get a new one.

We just finished a basement, and the GC asked us to come back and fix a broken receptacle cover...
That 22 cent broken cover just cost me 2 man hours to replace... What would I have needed to charge for that? 35,000%?
(Yes, I know, beat the journeyman that let it slide... )

 

[quogueelectric]

After all of these posts and sencelessly beating up on the Mule. No one has still come up with better than the old 1/3-1/3-1/3 rule. 1/3 material---- 1/3 labor---- 1/3 profit or overhead whatever you want to call it. This seems to fit in almost every example. All of the fancy pants math trying to confuse the IRS... It can be simplified, snake oil salesmen would blush at this.:smile:

 

[Greg Swartz]

After all of these posts and sencelessly beating up on the Mule. No one has still come up with better than the old 1/3-1/3-1/3 rule. 1/3 material---- 1/3 labor---- 1/3 profit or overhead whatever you want to call it. This seems to fit in almost every example. All of the fancy pants math trying to confuse the IRS... It can be simplified, snake oil salesmen would blush at this.:smile:

I guess I need to raise some numbers, because as of late, it's been 40/40/20 ... and if I read things right, my 20% is only 16.7%. And that's only if I actually get my 20... (*goes to find a hard wall to bang head on*)

 

[220/221]

That 22 cent broken cover just cost me 2 man hours to replace

Even @ 100% mark up, that cover will cost you money just to account for it.


@ $80 an hour you have about 10 seconds to write it up, calculate it, reorder and restock it. That is your break even point. Charge a buck for it and you might even make a quarter......unless you don't yet use nylon covers and it gets broken on the install :grin:

 

[FlyFish]

I actually used to do this (key word here is: USED)
I would price my panel change out, itemize every thing, and give a proposal to a HO...
Questions I got were:
Why is that so expensive?
I have one of those, can you use it, and reduce my bill?
It does not cost that much at HD...
If I do "this" myself, how much less will it cost?
Do you really need to pull a permit?

I learned that when I did all this, people wanted it for less. I actually lost bids being the lowest. I raised my rates, did not itemize, and gave a more professional look... now, I am not the lowest (don't want to be) and win bids quite frequently... not being the lowest. And I do NOT apologize for my rates.

When I itemized, I did indeed have to justify EVERY move. That got time consuming, and I was not making any money. And I took everything personal... (big mistake!!!)

When I itemized, I found that I attracted the wrong type of customers... the ones that would sign with another contractor for a dollar less. It didn't matter if I did a better job, it didn't matter if I had more in the bid... they wanted the lowest $$$... and that's it.

That is not the customer I want to attract.

If I am not the lowest contractor, I walk away... I don't reduce my rates. I tell them to call me if they have any problems with their electrical contractor. And sometimes... I get those calls... and I tell them right up front, it is probably going to cost more than the original bid.

Just a few random thoughts from that line above...

Greg

I did exactly the same thing and I couldn't believe that I was getting bids that I wasn't the lowest bidder. I don't low bid and customers get a high quality job at a reasonable price.

 

[bradleyelectric]

I did exactly the same thing and I couldn't believe that I was getting bids that I wasn't the lowest bidder. I don't low bid and customers get a high quality job at a reasonable price.

Are you trying to tell me that if you provide perceived value you can charge more money?

 

[Greg Swartz]

Are you trying to tell me that if you provide perceived value you can charge more money?

That's a whole 'nother thread...

But I think so...

 

[220/221]

Are you trying to tell me that if you provide perceived value you can charge more money?

Are you going to pay a Lawyer $300 an hour if he shows up wearing a tee shirt?

 

[FlyFish]

Are you trying to tell me that if you provide perceived value you can charge more money?

I recommended a book in an earlier post,
http://www.markupandprofit.com/books_mark.html
I followed what the book said and became more confident in what I was selling and the price. People purchased me! I kept my appointments to the minute, returned emails and phone calls promptly. I also passed out hundreds of business cards.
This new pricing started 8 mo. ago and I am having the most productive year to date.

 

[Greg Swartz]

I recommended a book in an earlier post,
http://www.markupandprofit.com/books_mark.html
I followed what the book said and became more confident in what I was selling and the price. People purchased me! I kept my appointments to the minute, returned emails and phone calls promptly. I also passed out hundreds of business cards.
This new pricing started 8 mo. ago and I am having the most productive year to date.

Haven't read the book. Still have to finish e-myth: Contractor's edition, The Absolutely Critical Non-Essentials, Instant Cash Flow, and The Business Coach...

But I am:
Keeping my appointments... to the minute! (Well 15 minutes really. I give a window... but usually show up at the first minute.)
E-mails... return promptly
Phone calls... return promptly
Business cards... pass out regularly

And, by the Grace of God, we have grown 400% in the last year!