Basic Law of Mark up

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69spark

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I am just starting a new business, I would like to know what system other contractors use to mark up their material. I don't want to gouge any customers but I also don't want to leave any money on the table either.
 
69spark said:
I don't want to gouge any customers ...
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There's no such thing as gouging.

Sliding Scale Markup Multiplier Table, Per Item:

$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
 
cadpoint said:
Why does the Scale of multiplier go down as the "$" Scale goes up, my Friend ?
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Try and get 6x on a $100,000 item :)
Likewise...enjoy the Chef-Boy-Ardee on $0.49 @ 1.3
 
Joe R said:
I guess u haven't watched WWF SMACK DOWN before.
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The last time I watched WWF, Tony Garea and Rick Martel were tag-team champions, so that's how long that's been.

I meant price gouging. I mean, after all, you're not exactly going out and holding a gun to people to make them let you do electrical work.

My chart is for service and T&M jobs. Bid work is a completely different horse of another color.
 
Don't most price guide books just double up every item. u might go with a price guide book supplier 69Spark
 
MD did you come up with that chart?

I assume you use the chart for individual items making up a whole job?

or do you total the materials for a job and then apply the multiplier?
 
As for gouging even in Florida during the hurricanes, if someone can get 3 times the price for a generator, why should the government stop him/her?
 
brian john said:
As for gouging even in Florida during the hurricanes, if someone can get 3 times the price for a generator, why should the government stop him/her?
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I believe you can get in trouble for changing too much. Now I think the government might allow more than usual markup but during times of emergency I have seen builders in NC arrested for taking advantage of the situation by gouging.

I don't know the breakdown but I am quite certain you can get in trouble during a disaster. Perhaps it is statewide-- don't know
 
I believe that during an emergency that it's a federal law.

When the earth quake hit here in '94 a young mom went into a 7-11 to get some milk and the owner wanted $5 for a half gallon. A couple of bikers were in there and heard that and told him no that milk was free today and had some of there buddies show up to enforce that price all day.'

As for mark up, it's hard to mark things up to much any more when a cutomer can just walk into one of the big box stores and see how much it really cost. I don't think that most wholesalers, unless you are a huge customer, can beat those prices.

Yes I know you went down and got the parts, etc.
 
If you give someone a price up front and the customer accepts it, then do not increase it after the job is complete, how is that gouging?

I think most gouging is charging to much after the work is done with out an upfront price.
 
Gouging occurs when the the customer has no effective choice. Utilities make good gougers, as do governments.

In a competitive marketplace, gouging can't happen, as customers have a choice, they can go elsewhere. In a competitive marketplace, you can charge what you like. Of course, if customers do the sensible thing, and shop around, then they'll note you're more expensive than the competition and will preferentially use the lower cost bidder.

So, you may choose to have a 300% markup and only find enough customers to work 15 hours a week, or be the guy that's really busy, works over 40 hours a week with a 20% markup, but you need to ask yourself who makes more money and who has the better work/life balance...?

(There is no law of markup, but the law of supply and demand is inviolate)
 
jimport said:
That sure doesn't stop the auto repair shops from charging 100% or more markup. They even have the parts delivered, we have to go get them.
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You bet, and they have been charging it for years, with success, and the excuse that the customer can find out the price, dosen't hold water, try to bring in your own spark plugs, for a tune-up. For some unknown reason electricians have a problem asking both, their worth, and return on investment.
 
I know the gov. gets upset over what hey claim as gouging and IMO takinig unfair advantage may not be the most moral of things to do during times of emergency, but in a free market I ask if you are willing to pay 3 or 4 times what a generator cost, where's the problem?

A customer has unlimited funds and needs his flooded service cleaned, serviced and tested and on line ASAP, if he is willing to pay 3 times the going rate, would I be gouging?

For necessities I see the issue (food water), but the big thing I saw in Florida the state was upset about were generators. So lack of planning on your part should hamper my income because I bought 20 last fall?
 
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