Gear package markup and profit

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RAL61

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I have an industrial client that likes to buy big ticket items up front. We've been working with him since Dec. '06 doing warehouse/workshop remodeling, like replacing lights over an assembly line area. He buys the lighting package, we supply the remainder of the material and labor to install. He's also putting on a large addition - don't know yet if it will be awared to us. Some other guy bid the job at about 1/3 the price of our bid which won't even cover the direct job costs. At any rate, he wants to see if he can save money buying the gear for the new addition thru us and wants a quote. The quote we got is 34,520 (shipping included) tax 2,589. What kind of markup/profit would you add to this?
 
I would chare a minimum of 12.5%.If you have to handle it then I would charge 20%.If you have any problems with gear he is going to you not the supplier.
You did not get your licence and insurance to give great deals to anyone.
Good Luck
Rick
 
I agree, and I'm perplexed as to why the deviation from his SOP? Is there anything particulary unique about this equipment? Assuming the customer expects you to mark it up, what could the customer be expecting in return as the benefit?
 
LawnGuyLandSparky said:
I agree, and I'm perplexed as to why the deviation from his SOP? Is there anything particulary unique about this equipment? Assuming the customer expects you to mark it up, what could the customer be expecting in return as the benefit?
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I don't know what his angle is. Maybe he thinks I'm just going to let him use my account and not mark it up, even though I didn't give him any reason to believe that. I think that maybe the supplier he buys his lights from is getting flack from other suppliers re:allowing this guy to circumvent EC's in buying the gear.
 
First what is Gear? Exactly what is it he wants you to supply.

Is he expecting you to layout $30K plus for equipment with little or no return on investment ? could it be his own credit line is maxed out? did you run a credit check ? Lets say you purchase this equipment, and mark-up 30% which is about what most distribuitors net, then he decides to either not pay, or slow pay, money, costs money, that 30% will not even cover the intrest, after a few months pass.


Quote: "I have an industrial client that likes to buy big ticket items up front"

No one like to pay up front, they usually have to pay up front, because of poor credit.
 
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RAL61 said:
Some other guy bid the job at about 1/3 the price of our bid which won't even cover the direct job costs. At any rate, he wants to see if he can save money buying the gear for the new addition thru us and wants a quote.
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This reads as it reads; he's inquiring if your supplied price (inclusive of any markup) is lower than what he can buy it for himself.

Before quoting this, you really need to find out what sort of deal he gets for the stuff when he buys it. If he has a better deal than you at the supply house ('cos he's the better negotiator) and you slap 20% on an already higher price, you're going to look a bit silly, and it will call into question all your materials pricing.

This could be a minefield, tread very carefully.
 
satcom said:
First what is Gear? Exactly what is it he wants you to supply.

Is he expecting you to layout $30K plus for equipment with little or no return on investment ? could it be his own credit line is maxed out? did you run a credit check ? Lets say you purchase this equipment, and mark-up 30% which is about what most distribuitors net, then he decides to either not pay, or slow pay, money, costs money, that 30% will not even cover the intrest, after a few months pass.


Quote: "I have an industrial client that likes to buy big ticket items up front"

No one like to pay up front, they usually have to pay up front, because of poor credit.
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actually, with current interest rates, 30% would cover 4 or 5 years worth of interest.
 
Some other guy bid the job at about 1/3 the price of our bid which won't even cover the direct job costs. At any rate, he wants to see if he can save money buying the gear for the new addition thru us and wants a quote.
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I think his "1/3 the cost" quote is through a fly-by-night or a "trunk slammer" who cannot get credit either. So, this "competitor" suppys the cheap unlicensed labor, you supply the material and the contractor's discount, and the customer is laughing all the way to the bank.
 
Since Dec 06, so you have only worked for this guy for 4 months. You really don't know him that well. This can be the kind of thing where you think there is a pot of gold at the end of this rainbow. This guy sounds like the typical dangle a carrot in front of you GC. Everything is based on a future promise for the big catch.

I would markup the package at least 25% and feel like I was doing this guy a favor. That is about the minimum we do things.

Who laid out and designed the switchgear package? If you did then it should be worth something for your knowledge.

I think I would have to go ahead and let Mr. 1/3rd to have the job. They are way too low because they do not know the true costs of running a business. They can only be that low for so long, then it catches up.
 
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