Material pricing

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nizak

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Do most here price their material from an "material price guide" or from the actual invoice price ? I got a SQ D xfmr that i purchased from my local wholesale house, it was $167, I was curious about the price so i went online and found the same product anywhere from $240-$329. I would normally add 30% and bill it as such, $217.00. If I used the $329 figure I would have billed it at $427.Am I cutting myself short by going my route, or would it be unfair(or maybe unmoral) to charge the higher price? This was not a bid job, it was a T/M job that was called in from a commercial client who needed their exterior lighting fixed after a snowplower hit a light pole and took the existing xfmr off. Thanks.
 
I agree with Peter. If the job is T&M the material is cost plus agreed upon mark-up. A fixed price job would be another story. If you bid with the higher price and then found it cheaper you would not be obligated to pass the savings on.
 
Occasionally, if I'm unsure of the price of an item ( because I've had it for a long time, or my record keeping is poor ) I'll check Grainger to see what they're selling it for. I'll price it in that same range. But I don't normally buy from Grainger. I almost certainly got it cheaper than Grainger's online price. I know my customer can go online and find the price of an item as easily as I can. So he'll compare my price to Grainger's price and feel ok.
If there's no agreed upon mark-up with the customer, I'd sell your Sq D transformer for about $260
 
nizak said:
Do most here price their material from an "material price guide" or from the actual invoice price ? I got a SQ D xfmr that i purchased from my local wholesale house, it was $167, I was curious about the price so i went online and found the same product anywhere from $240-$329. I would normally add 30% and bill it as such, $217.00. If I used the $329 figure I would have billed it at $427.Am I cutting myself short by going my route, or would it be unfair(or maybe unmoral) to charge the higher price? This was not a bid job, it was a T/M job that was called in from a commercial client who needed their exterior lighting fixed after a snowplower hit a light pole and took the existing xfmr off. Thanks.
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The price you buy it for, and the price that you sell it for, unfortunately do not have anything to do with each other. There is no guarantee that you will be able to "sell" your transformer for a 30% mark-up. What you can get when you sell something has to do with the customer(Market) - what it will bear, not the price you sell paid for it, or how much money you need to make.

Of course, T & M / Service Work / Construction all price differently.
 
bumpity bump bump

wondering this now and good to see it answered.

but how can some owners not do a web search and get the same prices i can? for example Econo-lite. instead of them finding HIGHER priced lites, they end up finding the lowest price one.

i have searched and seen mark ups much lower than 30. infact, that's about the highest. i had started out at 25, but then i thought 20. but it they are going to let me buy them at the cheapest place on earth, i should be able to mark up more, yeah?
 
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bullheimer said:
bumpity bump bump

wondering this now and good to see it answered.

but how can some owners not do a web search and get the same prices i can? for example Econo-lite. instead of them finding HIGHER priced lites, they end up finding the lowest price one.

i have searched and seen mark ups much lower than 30. infact, that's about the highest. i had started out at 25, but then i thought 20. but it they are going to let me buy them at the cheapest place on earth, i should be able to mark up more, yeah?
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The good and the bad of the internet!
 
Sierrasparky said:
The good and the bad of the internet!
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And Home Depot. I've had customers question the cost of something because they sell it cheaper at HD when I've purchased it the supply house. My standard response is I don't buy supplies from HD. :roll:
 
The price you get when you purchase partially has to do with how many markups it has endured before you purchased it, how high of volume it was purchased with, and how fast of a seller the item is.

Some items like copper wire are not necessarily large profit margins for supply house but they buy and sell large quantities and are ok with that. Some items may only sell a few in a years time, they are going to want to make more profit on this item especially if they are stocking it just to have it available when needed.
 
nizak said:
Do most here price their material from an "material price guide" or from the actual invoice price ? I got a SQ D xfmr that i purchased from my local wholesale house, it was $167, I was curious about the price so i went online and found the same product anywhere from $240-$329. I would normally add 30% and bill it as such, $217.00. If I used the $329 figure I would have billed it at $427.Am I cutting myself short by going my route, or would it be unfair(or maybe unmoral) to charge the higher price? This was not a bid job, it was a T/M job that was called in from a commercial client who needed their exterior lighting fixed after a snowplower hit a light pole and took the existing xfmr off. Thanks.
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You have to give a warranty on an item like this so what would it cost to get a replacement if something were to happen to this one in the next few months. I would call another supply house and see what the average price is because this item may have been stocked a long time and the replacemen part ( if needed ) may be much higher.
 
I strongly agree that at what price you sell for has little to do with how much you purchased it for and more to do with what the market bears and what your putting into that markup. If your just upping the price to seem like your making more money and not because of the obvious stuff like delivery or warranty and such than I dont understand. Although I cant speak on this a great deal as 90% of our work is fixed price large commercial but the little bit of service work we do get i mark it up based on my ole buddy "MD Shunk" sliding scale markups!!!! lol..:p I dont actually but if you ever saw his model its very similar to what we do. But mine is already built into our invoicing template so i dont know exactly what we mark at, to be honest:?
 
220/221 said:
100% markup.


Remember, you have to warranty it.
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100% is good but, never less then 50%.
Think about all the products we purchase, many of them are marked up at every point they arrive the warehouse, the distributor, the wholesaler, the retailer, the only expection when it is not marked up is when the electrician resells it.
 
How are any of you getting any business with 50 & 100% markups? I charge 20% & have trouble selling jobs. I may sometimes charge 50 on a lower priced item, maybe 7.50 for a 5.00 something. But on bigger items, 50 to 100% seems like robbery to me.
 
jmellc said:
How are any of you getting any business with 50 & 100% markups? I charge 20% & have trouble selling jobs. I may sometimes charge 50 on a lower priced item, maybe 7.50 for a 5.00 something. But on bigger items, 50 to 100% seems like robbery to me.
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It may seem like robbery buyt you need to make money. small items mark up at least 50% 200% you are not doing this for free!
 
jmellc said:
How are any of you getting any business with 50 & 100% markups? I charge 20% & have trouble selling jobs. I may sometimes charge 50 on a lower priced item, maybe 7.50 for a 5.00 something. But on bigger items, 50 to 100% seems like robbery to me.
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Trouble getting jobs can be the cause of many things, such as how your business looks to the customer, if you want customers with the ability to pay well you will have to look at things like the area you are planning to sell, is it an upper scale area with expensive homes and owners with high figure income, or are you planning to work in an area where the homes are small with even smaller incomes, in short how you fish is not the issue where you fish is. and remember if your fishing in the upper pond, a nice clean well lettered late model truck, clean and neat dressed crew, along with prompt and neat work on the jobs, this helps secure better qualified customers anywhere big pond of small pond
 
I would mark it up as high or higher than the prices you could find on the internet. You knew what transformer you needed, you knew where to get it, you ordered it or went and got it, you made sure it was the right one, you paid for it, you transported to the job, and you will have to come back, take it down, return it, get another one, and come back and install it again for free, if it malfunctions. That's worth quite a bit. Not to mention you have a business to run.
 
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jmellc said:
How are any of you getting any business with 50 & 100% markups? I charge 20% & have trouble selling jobs. I may sometimes charge 50 on a lower priced item, maybe 7.50 for a 5.00 something. But on bigger items, 50 to 100% seems like robbery to me.
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You mean robbery like the price of a drink at any restaurant, or snacks at any theater, or the candy and magazines at the grocery checkout? If you provide a warranty for your clients, track your cost for providing that warranty.
 
T&M Markups

T&M Markups

I always have my Time and Materials Standard Billing Sheet (8.5 x 11) on hand, which I have the customer sign before I begin the T&M Job. It lists the hourly rates (Std. and O.T. with exact hours for "standard work"), and mark up of materials, equipment, rental costs, and permit/plan check fees. If the customer doesn't want to pay a mark up for permit/plan check fees, I ask for a large enough deposit check to more than cover those and apply the overpayment to the rest of the bill at final time. My standard for Materials is End Column (Column 3) plus applicable sales tax plus 20% markup. If the customer starts picking apart the End Column Price, I allow them to load and use my Vision Infosoft Pricing Service and and print out any materials sheets they want to. It shows a target price quite a bit lower than the End Column Price, and I let them see it. Then I explain that the Target Price is for large lump sum bid projects, where we bring in full cartons of all the common fittings, bundles or job lot deliveries of conduit, strut, wire, etc. The left overs go the warehouse and get stocked, which means they are handled 4 times by us before being used on a small T&M job. I also show them the manufacturer's catalogs that show "carton quantity" and "standard package quantity" and explain that the End Column pricing is what the market rate is for that item when you buy "standard pkg. quan.", which is usually 500 or 1000 of a fitting. After about 30o minutes of this, the Purchasing Agent or Facilities Engineer is usually satisfied that I use the pricing as stated.

When you have a customer comparing your pricing to Home Depot, etc. I always explain that they can pay us the $80.00/hr. to go pick parts, maybe at 2 or 3 HD's, to get what they want, unless it includes 3P CB's, Motor Starters, anything bigger than 2" XXX, etc. And that I will add 20% to my cost at HD for the knowledge factor.

As far as transformers, and bigger things like UPS's and Gensets, I usually only buy those for Lump Sum Bid Jobs and don't reveal any pricing. Like the OP said, any customer can go online to Grainger, etc. and get a price (for common large $$ CB's, xfrmrs, some panelboards, etc), but I can always buy it cheaper.

And finally, I totally agree with the need to explain warranty/inventory/layout and engineering to a customer. We are all in the business to make a living, not for the experience.
 
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