Supply house confidentiality on prices

[Clyde Hollinger]

Susan,

Part of the mark-up problem is that there is no universal standard that
crosses all service-type occupations.  An HVAC guy told me his company
marks parts up 25%.

If one is in an occupation where the typical mark-up is 100%, then to a
client that may seem excessive in relation to 25%.  (One could mention
that it is rumored some retailers in some businesses have some mark-ups
of 300% or more.)  The service technician may know there are very
defensible reasons for the higher mark-up, but the client will not.
Rather than having to go through all the reasons, it seems easier just
to say nothing.

I make almost nothing on parts as it is, aside from Dampp-Chasers.  Even
if I would mark up some little part like a hammer shank 300% (I don't,
other than using a $1 minimum charge), my profit is barely enough to pay
for the time it takes to write the item on the invoice.

In relation to your "Percentage markup..." paragraph, there appears to
be a mix of parts markup and labor charges.  In addition, I think we use
percentage markups just to keep some sanity in our lives and a
reasonable consistency in pricing.  How would we feel if we were on the
receiving end of someone who prices differ, depending on how heavy the
item is to carry?

And if I charge depending on how long I had to keep an item in stock, I
could end up charging three times as much for a set of small cork bridle
straps compared with medium cork.  That doesn't seem fair, either.
Although I favor using a standard markup, on occasion I will reduce my
markup on a more expensive item such as a piano truck.

My conclusion is that although I see some deficiencies in using a
standard markup, it's simple, and that in itself has merit.  Life is
complicated enough as it is.

Regards,
Clyde

Susan Kline wrote:

> It seems to me that the only reason for complaint
> is that we don't want customers to know how much
> we mark up.
>
> What would happen if we let it all hang out, and just
> told them that we mark up X%? Is the markup defensible,
> or is it not? If the size of the markup doesn't embarrass
> us, there's no reason to worry -- just tell the
> customer that if they want to order the stuff directly,
> and Schaff will sell to them, go ahead -- but if they
> have a problem with it, or if it's too much nuisance
> for them to order it themselves, the cost of us handling
> it will be X. They already know that if they buy
> something in a store, the store bought it wholesale
> and marked it up. Why should it be different, buying
> from us?
>
> Sometimes we seem embarrassed even to be in business.
> Why should we?
>
> Percentage markup versus a handling fee ---
> Is percentage really the best way to mark up items?
> Shouldn't we mark up something depending on how much
> time and effort is needed, how much trouble is
> anticipated, and how long we have to keep it in
> stock? Do we need to measure for the item? Will it
> have to be fitted? Is it heavy for us to carry?
> Can it be drop-shipped or will we have to haul it
> ourselves? Does it need installation?
>
> I drop-shipped several Edwards string covers, and
> the owners put them on. They were made to fit from the
> model number -- I didn't need to measure for them.
> On the other hand, if they hadn't fitted (they did) it
> would be a hassle to pick them up, measure the piano,
> and return them; but the shipping would be very little.
>
> I drop-shipped a narrow door piano truck -- I had
> to show the people which trucks were available,
> get them a quote for the narrow doorway truck
> with estimated shipping cost, explain to them that
> they were going to have to install it themselves,
> measure the piano, order it, pay for it ... it was
> delivered, and they didn't see how it was supposed
> to go. I had to go back, measure the truck, measure
> the piano again (perfect fit) and then phone them
> to explain how they should go about installing it.
> I also had a week or so of wondering if I'd made
> a mistake with the measuring, and if so, who was
> going to pay for it. (One guess ...)
>
> In retrospect, I should have marked it up a lot
> more than I did, and the string covers didn't need
> as much markup.
>
> I believe it was Tuners Supply which issued a price
> list which included 100% markup. This always seemed
> sleazy to me, since the only reason I saw for it
> was to show to customers, to try to pretend to them
> that retail was wholesale. I'd much prefer for
> everyone to know exactly what was going on.
>
> Just MHO.
>
> Susan
>
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