Parts mark up another question

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stevekerr

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So my husband goes to home depot and buys a decora switch say for $2.89 .... multiply that by 20% ... ??
One guy told me he thought on smaller parts to triple ... I found a mark up guidelines on Jaffe's software that gave a breakdown using a different multiplier by the material cost ...
Less than 25cents X 2
26 to 99 cents times 1.8
1.-99.99 dollars 1.6 and so on . So am I on the right track. My husband did commerical electrical work for the same contractor for several years. When he got his journeyman's license he was in his late 40s and after reaching an hourly rate higher than they could hire helpers he was laid off. So about 2 years ago we placed an ad, got liability business insurance and then he went to work for another contractor ... then was laid off again last year. So we had everything in place and have stayed with it. Taking his masters exam in March. He's exceptionally good (no bias) at what he does. And what he does best is residential service work. He has ADD and when he gets into the bigger jobs (we are a one man operation) he gets overwhelmed. So service work is what he does best. We got hooked up with one GC who turned out to be nothing but a crook and cost us thoussands. He's now mid 50's and we need to make this work. So any ideas on pricing on parts would be helpful. I finally have convinced him its ok to charge what everyone else does for his labor .... Thanks in advance for any guidance you could give. Dianne Kerr
 
Re: Parts mark up another question

I am in the same shoes.My wages have topped out and looking for work.Here we can not do repairs with journeyman card must have masters.I messed up in letting masters exspire in a county i once lived.There is only one way out and thats retake masters.Really don't want to go that rout as one man shops usually are either dead or too busy.Wish him luck.
And if i stocked that switch on my truck it would be double.They won't like paying time to go buy it.
 
Re: Parts mark up another question

as i mentioned before, material that requires little backup warentee can be marked up the normal 20 to 23 per cent and that should cover the overhead and profit to stock or store and buy the item. this switch sould work for more than a year without problems----if installed correctly and is rated for the current it is intended to carry. many g.c.'s will love to find contractors just starting out to clean up there mess and then not pay them knowing you don't have the time or money to go after them - and since you are not legally licensed you really can't do much because you would have to admit you are contracting without a license in court. i have a markup of 17.5 per cent and it works for me - i'm small with little overhead - i used to charge 23 per cent but i was making too much money and wanted the security to lock my customers in - i did't have time to look for customers because i love working with my tools - we do specialty electrical work - metering - infrared - investigations - correcting other contractor's work.....
 
Re: Parts mark up another question

Here in Indiana we have to warranty a electric job on a house for a year and with some contractors it can be up to 10 years. with out a proper markup we would go broke and with warranties for ten years we charge as high as 100% + what the labor would be to replace the item as it most likely would fail in ten years. get a service agreement at a store for an item like sears or sam's club they charge close to the items original price. this is because they expect to have to replace it at least once. but then you have to cover you labor. Service is what can make or break a company.
 
Re: Parts mark up another question

Just a suggestion.....if you group all of your parts into one category (i.e. material) wouldn't it be acceptable to just indicate on your invoices :

Material : Receptacles, switches, backboxes and wire..............$ 75.00

Labor and services............$ 100.00

If you break down each item and charge SPECIFICALLY for that item you leave yourself open for confrontations such as " You charged me $4.95 for a receptacle.......I could buy that receptacle at Big Orange for $ 0.69". Then you end up having to justify your pricing or negotiating for each item.
 
Re: Parts mark up another question

We don’t do residential, but in our end of the business most customers want to see a break down of their material and labor. We do all our T&M invoices that way.

No hidden charges, such as truck charge, administration or Misc. charges, which I have seen other contractor use. We do charge a rental fee for test equipment as few contractors own the equipment we use and there is a charge involved in, purchasing, maintaining and calibrating this equipment.

I feel we would starve off labor only and use a mark- up to a as noted. We are very fortunate as most of our customers are long term or referred by other contractors, typically we have no problems with our billing, with the exception of GC’s, whom we avoid when possible.
 
Re: Parts mark up another question

brian john,
funny you mention the cost of maintaining test equipment --- i just got one of my data recorders back from the repair shop---repairs and calabration-------$1091.00 i normally charge $35.00 a day rental and never had any complaints - but when you tell the customer "your responsible for the test equipment while on your premise" they ask "how much is this stuff worth" and you tell them "oh about $18,000.00---$35.00 a day ain't much!!! did you say you do infrared?
 
Re: Parts mark up another question

Charlie, $35.00 per day for your equipment?

I charge my own company $40.00 per day for a fluke 189 with "fluke view form software" not including lap top.

Roger
 
Re: Parts mark up another question

Charlie:

I rent my equipment for what Rental companies charge (or charged they recently lowered their rates). It figured out at $980.00 a week, $1680.00 a month, depending on what they do (load survey or PQ survey). The cost listed are for basic set up removal usally a load survey. PQ surveys add up in hours, plus the rental quoted, or at $250.00 a day.

As for IR we get $950.00 a day for man and camera additional $450.00 if we pull covers. Our camera is busy 4-5 days a week 40-50 weeks a year. Plus OT jobs.

Labor is $65.00-$95.00 ST and $110.00-$150.00 OT.
 
Re: Parts mark up another question

We got hooked up with one GC who turned out to be nothing but a crook and cost us thousands... any ideas on pricing on parts would be helpful. I finally have convinced him its ok to charge what everyone else does for his labor.

Dianne, I commend you for trying to help your husband. It's all well and good to ask here what we markup material etc. but the real answer for what you need to do is what do you need to make a decent profit. You guys are going to go into business for yourself and running a business is at least as much work as the electrical work your husband will be doing.

From your comments above I suspect neither of you have much experience operating a business. It sounds like your husband has been taken advantage of and possibly doesn't know what his legal remedies are and that he was trying to price himself below everybody else to get work.

I suggest that you take some small business courses so that you can understand how to determine your own pricing based on your own financial situation. Find out what your legal rights as well as responsibilities are so people won't walk all over you. Learn how to promote your business so you won't have to "low ball" to get work.

I should add that above all you need a good CPA to handle your taxes and finances and a good lawyer for advice.

[ December 26, 2003, 10:22 PM: Message edited by: hbiss ]
 
Re: Parts mark up another question

Good reply hbiss;

Our accountant told us years ago many a contractor has gone bankrupt thinking 10% profit and 10% overhead was the standard. It takes a few years but tracking overhead is important. As for profit depends on what the market will bear.
 
Re: Parts mark up another question

Running a service department for 22 years, I would sugest the following. $1-10 2 2.25%
10.01-30 @ 1.70% 30.01 -50 @ 1.60% and 50-500 @ 1.40 500.01-1000.00 @ 1.25 All other at 1.15%
Collect while on-site if you have to bill after the fact, add 7%...
Big orange may sell a receptacle for 89 cents but you are hopefully using at least a 1.45 cent Hubbell or Levition receptacle anyway...
For jobs under $300.00 list a lump sum total, for over that list labor and material....
Steve
 
Re: Parts mark up another question

Try dropping business cards off to some lighting stores; They have customers who need a Light or C.Fan installed; On ceilings over 16' when a 16' step ladder is needed, may want some help in handling the ladder[I use a single step type vs 2 step and Aluminum weighs about 65#]and add to the rental fee for the ladder If the customer pays $500-700 for a lite the can afford a little extra for the ladder
 
Re: Parts mark up another question

I worked for a contractor for many years who billed all his parts at 1.5x. Currently I'm with a service company that uses a sliding scale, but for parts under $20 the mark-up is 400%.

While that seems extreme at first glance, realize that these small items are often lost or damaged when kept in stock, and require 60-90 minutes of of-site time to fetch if needed. If you lose an hour to fetch a two dollar part, it's got to come back somewhere. Occasionally a customer will tell me "The Depot will sell me xxx part for $5!". Well, sure they will, but they won't come install it, warantee it, and insure your home against any damage caused by it.

Depending on where you operate, the cost of overhead is likely barely covered by hourly service rates. Here in CA we would certainly go right out of business at $85 per man-hour without parts profit. I think the best advice is to carefully consider what it costs you to stay in business, what constitutes a comfortable profit for you pesonally, and work from there.

You are a qualified professional and deserve to make a decent living. Charge accordingly.
 
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