Material Markup

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Mule

Mule

Senior Member
Location
Oklahoma
emahler said:
2) how would your customers get offended? do you line item your O&P on your invoices/bids?
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YES,
"that's why Im out of work and on the soup line, customer dont trust me":rolleyes:[/QUOTE]

it's not a play on numbers...funny thing about math, it's definitive...contrary to what the schools have been teaching us for the last 50 years, there is right and wrong...correct and incorrect...

what is 20% of $120? it's $24....

my main point? know the correct way...if you choose to do it incorrectly, do it with the knowledge of it being wrong...not with the misguided notion that it's remotely correct...[/QUOTE]

Well Ok, I understand...in definitive truth, the bulk of my income comes from sweat, and going OT, you dont want to know what I think about retail...This country is masters at Jack'n it up,(making money and doing nothing for it), and then spending it on something we cant afford...its a endless cycle...that's partialy why we are in such good economic shape...so Im done now, because I know Im about to get bomb barded...
 
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emahler

Senior Member
Well Ok, I understand...in definitive truth, the bulk of my income comes from sweat, and going OT, you dont want to know what I think about retail...This country is masters at Jack'n it up,(making money and doing nothing for it), and then spending it on something we cant afford...its a endless cycle...that's partialy why we are in such good economic shape...so Im done now, because I know Im about to get bomb barded...
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A journalist assigned to her paper's Jerusalem bureau rented an apartment overlooking the Wailing Wall. Every day when she looked out, she saw the same old Jewish man praying. Curious, the jounalist went downstairs and introduced herself to the old man.

"You come ever day to the wall, how long have you been doing this? What are you praying for?"

"The old man replied, "I have come here to pray every day for 25 years. In the morning I pray for world peace and the brotherhood of man. In the afternoon I come back and pray for the eradication of famine and disease from the earth."

The jounalist was touched. "How does it make you feel to come here every day for 25 years and pray for these things?" she asked.

The old man looked at her sadly and said, "Like I'm talking to a wall."
 
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hardworkingstiff

Senior Member
Location
Wilmington, NC
emahler said:
there is no 'one size fits all'...but there is one correct way and one incorrect way...
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I disagree about there only being 1 way (either direction).
know which one you are doing and compensate accordingly...
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agree with knowing what you are doing.
heck, work at a loss...but know the correct way to calculate your loss...
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agreed. Sometimes it is better to recover your overhead and no profit if your goal is to maintain your level of workforce.
 
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emahler

Senior Member
hardworkingstiff said:
I disagree about there only being 1 way (either direction). agree with knowing what you are doing. agreed. Sometimes it is better to recover your overhead and no profit if your goal is to maintain your level of workforce.
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how can you disagree with a mathematical fact?

2+2=5?
 
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Sparky555

Senior Member
I get the idea that when Mule makes his $20 he doesn't really care what the % is. He just knows he made $20.

I target over 20% and end up at the end of the year around 5%, so I guess I'm not doing it right either. Maybe it's the Pie Expense.
 
peter d

peter d

Senior Member
Location
New England
Mule said:
Its all in what you read into it......................
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I'm not reading anything into it. You said "Pride is the fall of man" and then you go own to talk about your pride in your work and your apparent stubbornness to change. I'm just calling it the way I see it.
 
Rockyd

Rockyd

Senior Member
Location
Nevada
Occupation
Retired after 40 years as an electrician.
Electrical is a lot like artwork. Some artists are starving, others are doing extremely well. Sometimes fast is best. It is the customer who is buying your product. You have to sell what they want.

The only specs I impose upon myself are -

1) Is it conceptual?

2) Is it safe?

3) Is it legal?

4) Can I do the work in a good time/dollar/quality manner?
Here is my proposal...
 
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electricguy

Senior Member
Location
British Columbia Canada
When I used to work for a Pool service Company most of the parts were marked up with a 40% Margin
The divisors are as follows

divide by .9=10 percent margin
divide by .8=20 percent margin
divide by .7=30 percent margin
divide by .6=40 percent margin

this was helpful as if you took 10 percent off your selling price you would not lose
but if you took 40 percent off you were selling at less than your cost

IE, marked up item that cost 100.00 + 40 percent margin= $166.00

100.00 + 40 percent =140.00
140.00-40 percent =84.00

but 166.00-40 percent=96.60
still less but more workable
 
2

220/221

Senior Member
Location
AZ
I'm curious, what do you mean by this statement? is this a requirement by a government enity? Or, is it, the warranty your company offers....?
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AZ Registrar of Contractors says 2 years.

Manufacturers have many variables.

If it would close a big deal, I'd offer a lifetime warranty on workmanship.



And again, mark ups of under 100% = not enough. Take one simple everyday item and calculate how much it costs to purchase, stock, inventory, account and warranty it.

A missing 10/32 screw from a fan box will cost at least a buck a minute to replace. Unless you pull one from your bags, you will eat up that 20-30% mark up pretty quickly.

We are contractors, not Home Depots.
 
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emahler

Senior Member
electricguy said:
When I used to work for a Pool service Company most of the parts were marked up with a 40% Margin
The divisors are as follows

divide by .9=10 percent margin
divide by .8=20 percent margin
divide by .7=30 percent margin
divide by .6=40 percent margin

this was helpful as if you took 10 percent off your selling price you would not lose
but if you took 40 percent off you were selling at less than your cost

IE, marked up item that cost 100.00 + 40 percent margin= $166.00

100.00 + 40 percent =140.00
140.00-40 percent =84.00

but 166.00-40 percent=96.60
still less but more workable
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good point...imagine marking a job up just 10% to be fair....then because you need the work, you give the customer a 10% discount with the assumption that you will break even...only to find out you are actually losing 4% on the job?
 
jmsbrush

jmsbrush

Senior Member
Location
Central Florida
For all the people that are having a little hard time with understanding some of the concepts here, Please read 2 books from Ellen Roar, Where did the money go, and how much do I charge. They will help you.
 
Mule

Mule

Senior Member
Location
Oklahoma
peter d said:
you go on to talk about your pride in your work and your apparent stubbornness to change.
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Wow, now that's a compliment, thanks !!!


Surely marking up your material prices can be accomplished more that one way.... I think making sure that your not loosing money is certainly a healthy discussion, but this is fairly simple matter here, or at least is seems to me as one who doesnt do really large jobs since Im a small "one to two person" show.

For me, my markup is designed to pay my overhead, and nothing more. I know what my overhead cost/hr is based upon my billable hours in a week. So if its a short service job, mark up is high, or its a longer job, my mark up comes down.

Seems like most of you operate purely by Bids only, so it lends itself to alot of calculator time, which also is lost time....So far I've been blessed by alot of customers that seem to trust me...so I just tell them up front what the markup is going to be, and the labor rate, and I just look at the job, and do it from the hip....they either take it or leave it..and so far, it seems to work fine.....
 
Rockyd

Rockyd

Senior Member
Location
Nevada
Occupation
Retired after 40 years as an electrician.
Mule,


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

lends itself to alot of calculator time
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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.
 
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