Parts Markup

[JIMRPT@AOL.COM]

Clyde wrote:
<<"In my opinion it depends on how much a person needs to depend on the 
markup to
stay in business.">>

Clyde I am not picking on you, or anyone for that matter, just using your 
quote for a takeoff point in my response to this thread...............

 Any business that does not figure a 'profit margin' is going to go out of 
business...period. Since most techs want to run a business there must be a 
"profit margin" in any work they do. Yes............ that includes any 
miscellaneous parts that might be used.
 To sell a set of caster cups at cost + shipping is to lose 
money.............The only thing that techs really have to sell is their 
time......all the knowledge, skill and training in the world is not gonna do 
anyone any good unless there is time available to apply that knowledge, 
training and skill.

 So what do we charge for tuning?......and is it "marked" up?   We should 
charge what we need to stay in business, pay current expenses, save a
little and have a little left over to use as 'disposable' income. We wouldn't 
think of charging just expenses plus travel for an ordinary tuning ....would 
we? Yet that is just what we would do if we figured in no "Mark up"...isn't 
it?

  Not the same thing you say? Well think about it a little before you jump in 
with a response..................... Let us say that a normal tuning charge 
for you is 60 dollars (just to round it off and make figuring "cost' easier)
 During tuning you stop working to discuss a set of caster cups with your 
customer...kinda normal thing to do isn't it?  Well lets assume that you 
spend 3 minutes discussing casters and then when you get back to the 
shop/house you have to look in the catalog to find the right order number 
lets say..... 2 minutes to find them and look up the price......... there is 
5 minutes of your time invested in these caster cups already or @ your $1 a 
minute rate for tuning, $5 dollars of your time and these cups aren't even 
ordered yet :-)


To continue the cup saga you have to make yourself a note of the correct 
order No., and color, and remember to include these thingees on your next 
order. Let's say 30 seconds.  Now  Finally!  your order has come in and you 
check to make sure that the cups are included, price is correct.... unwrap 
each one to make sure that they are the correct ones, rewrap each one to 
protect them from scratches, set them aside for future delivery....let's say 
1 minute 30 seconds.
Next in line is the process of looking up the customers phone number calling 
them to let them know that the cups have arrived and making an appointment to 
deliver them...........let's say 3 minutes.

 So in the receipt/inspection/appointment mode you have spent another 4.5 
minutes of your $1 a minute time on these cup thingees and added to the 
previous $5 this amounts now to $9.50.........the cups still aren't delivered 
yet though............ Huh?

 But before we go further let's look at the cups themselves...OK?
A reputable manufacturer who suggests a 40% 'mark up' has a set of three cups 
for sale at tech prices and with the "mark up" is priced (suggested) 
@28.35...after doing the math you will discover that the cost of these 
thingees is $20.25 + shipping for a set of three.
 To this we should add the prorated shipping charges...... which for ten 
items was $7.50 or .75cents per item.   Now our cups have cost us $20.25 + 
.75= $21.

 Now with that scandoulous 40% markup we sell the cups to the customer at 
the $28.35 suggested price and .75 for the shipping for a grand total of 
$29.10...........so where do we stand as far as "profit" is concerned?..... 
well we have 9.5 minutes invested @ $1minute and we have paid $21.00 for the 
cups which we are gonna sell for $29.10 but we have a total 'real cost' to us 
of $30.50......................and the danged thingees are still not 
delivered..............that's OK though we will just drop them off at the 
house during the day good enough? 

 Well let's say that you figure your total operating cost per mile is $.35 
for your favorite service vehicle. On the way to Mrs. Jones house you detour 
to drop off the cups...... distance 4 miles total and 11 minutes due to 
traffic. To figure such you would add your .35 X 4 and your 11minutes for a 
total of $12.40 additional 'real' costs. These cups have now cost you $21 + 
$9.50 + $12.40 or a total of $42.90 even though as a customer service you 
have agreed to sell them for MSRP + shipping amounting to 
$29.10...........................

Now I ain't too awful smart here butttttt if'n I sells sumphin fo $29.10 that 
has cost me $42.90 seems to me that I has done lost $13.80 ain't dat right? 
Am I missing something here?

 Just looking at the economics here it would seem that while customer service 
is valuable as the dickens to us all that along with customer service must 
come the wherewithal, from some source, to continue in business for the 
ability to provide "customer service".

 Finally it is up to each of us to decide whether we will "mark up" misc 
merchandise/parts/accessories...........but if you don't "mark up" these 
items you sho won't have far to look to find out why you can't afford to 
attend the PTG convention, take that vacation, buy that new car..........but 
y'all get the idea right........ :-)
My view.
 Jim Bryant (FL)