Mark-up (was Steinway parts)

[David Skolnik]

The world can surely accommodate more than one business 
model.  Before we make the mistake of assuming that there is only one 
kind of client base, realize (as I'm sure you do) that we're just 
talking about which column to list that "padding" under. (Like what 
Dave Love just said) The decision would be based upon our own 
organizational sense, as well as taking into account what the 
particular customer base finds more acceptable.  And it would all be 
moot unless you're talking about how this information is presented to 
a client. (unless you want to debate the ethics of profit.  I 
don't.). Assuming that a particular price is not out of reach for 
that client, is there a meaningful difference if that price is 
comprised of a higher parts price and lower hourly price, or in 
reverse?  Similarly, what do you suppose the difference in client 
response would be if the material costs, including mark-up, were 
clearly spelled out, vs. having this information hidden?

A business that is less service and more sales oriented will 
obviously be more dependent upon the profit derived from larger 
mark-up.  The confusion perhaps derives from the difference in kinds 
of materials subject to mark-up.  Parts for a rebuild vs. a bench or 
metronome.  Also, it may not always be reasonable to mark-up by a 
fixed percentage.  For example, even allowing for the rationality of 
concept, why should there be a difference in the actual mark-up 
amount between two similar items, one of whose price is already inflated?

David Skolnik  RPT
Hastings on Hudson, NY




At 09:47 AM 2/13/2008, you wrote:

>On Feb 13, 2008, at 5:39 AM, Dean May wrote:
>
>>Failing to set a markup only means you are losing money (or failing 
>>to value yourself), unless you pad your standard labor rates. It's 
>>simple economics.
>
>I charge for every single minute we work on the pianos and more; I 
>put in a big "pad," which is NEVER a pad, for the inevitable extra 
>work and Murphy's Law stuff that happens....every time. And it works 
>out to much more than adding a 40% markup to parts.
>
>David Andersen
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>2/13/2008 9:41 AM