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Material Markup 20% Or 10%

84K views 102 replies 48 participants last post by  readydave8 
#1 ·
Hey everybody I am a newly licensed contractor in the state of NJ in the trade 15 non-union 15 union but I'm still learning about pricing can someone please tell me the markup on material is it 20% or 10% I would appreciate it.:001_huh:


Joseph Spina
SPINA ELECTRIC
 
#3 ·
Hey everybody I am a newly licensed contractor in the state of NJ in the trade 15 non-union 15 union but I'm still learning about pricing can someone please tell me the markup on material is it 20% or 10% I would appreciate it.:001_huh:


Joseph Spina
SPINA ELECTRIC

You tell me.

If you bought a recessed can for $20, why would you sell it for $24, if you could sell it for $120?

How much can YOU sell that can for?
 
#55 ·
Are you an electrician or parts salesman? There is a point where it becomes ethically objectionable. What would you tell your friends if you had your oil changed at a place that advertised $20* and got charged $20/gal "disposal fee" after markup raising your bill to $40?
*disposal cost extra

Do realize that many customers don't even know the actual cost and exploiting this is ethically objectionable and I think its harmful to the success of your business in the long run. Also, do take into consideration that you're not the only player, so if you consistently bid the highest price, you'll consistently get turned down.
 
#9 ·
The second column multiplier in 480's chart contains the multipliers I use, based on the cost of each item. I don't have a hundred thousand to one million row, though. I've never sold an item that costs over a hundred grand.
 
#38 ·
The second column multiplier in 480's chart contains the multipliers I use, based on the cost of each item.
I think that chart is a good reference to use for materials.

I don't have a hundred thousand to one million row, though. I've never sold an item that costs over a hundred grand.
It sure makes your day when you do. Requires buying cold beers.
 
#11 ·
I don't hold it against anyone who wants to use a flat percent across the board, but I've found the sliding scale to be most useful. If I sell a 25 cent piece of hardware, it's going to bill out at a buck fifty. If I sell a 2-dollar receptacle, it will bill out at 10 bucks.

Works for great items that I only use a few feet of. If I pay 100 bucks for 1000' of cat5e, and I use the whole box on a job, I bill it out for $225. On the other hand, if I carry that box around for months, selling 50 foot drops here and there, it bills out at ($5 true cost x 4.25) $21.25 per drop. Selling it that way, I get $425 off that box of cable selling it piecemeal, versus $225 selling the whole box outright. Gotta get paid for hauling this crap around every day.

Works for stuff like connectors too. If I use a whole box of connectors on a job, I make one price. If I sell them a few at a time, over many jobs, I make even more.
 
#12 ·
OK, question for those of you who use the sliding scale. Say you do a service call and have a standard service call rate of $99 (or whatever.) You do a service call for a broken receptacle. It's a $1 receptacle but you sell it for $8 and maybe you use a few wirenuts and some pigtails and sell them for $5. So your bill breaks down:

Service call $99
Material $8
Misc Hardware $5

Do you ever have a customer who says "$8 for a receptacle????" and the tirade begins.... How do you handle this?
 
#28 · (Edited)
I used to bill out itemized with labor and materials, I would say at least 1 out of 10 would nit pick either the labor or materials.

I switched to giving them 1 price, here is an example

"Troubleshoot breaker tripping for parking area lights. Found bad ballast in light pole and replaced it. Lights are now functioning ok.

Cost $364"

I have yet to have a complaint yet, in fact it seems as though people like the price better this way. I usually give the price up front for most things but there are some jobs where I will give a ballpark and write the bill up as above

I also mark up materials differently depending on what it is. The customer never sees the material price
 
#34 ·
I went to McDonald's this morning. I bought a hashbrown. I didnot ask what the hourly rate was nor the markup on materials. The sign said $1. How much can an ounce of potatoes cost? I can buy 12 hashbrowns at Wal-mart for $2 frozen. The bottom line is the customer doesn't need to know my costs for anything. All they need to know is it's $480 to change the light bulb over the kitchen sink.
 
#40 · (Edited)
Service-service-service

Let the others install for peanuts. what 10-15% total, money tied up for months.

Come in after, maintain-repair etc. parts and labor,strong mark ups. Someone else has done the hard work.
Most Install folks can't be bothered for the return calls.Their guys are tied up on the next fast paced project. unless it is for final payment.

Batting clean up is very good.

Low over head and high mark up.

Commercial/industrial- sometimes resi.
 
#42 ·
Do you guys mark up each item on a service call separately? For example say you change out a bedroom worth of outlets and a switch. Do you mark up and use each column separately or as an end total of the material price. Say 6 receps and the switch ring out at 7 dollars your cost do you use the 7.00-7.99 column or do you use the 1.00-1.49 column 7 times?
I agree with not itemizing. My work has invoices that contain itemizing and when i have to itemize I make it so vague and non-laymen so as to be completely unreadable to the customer. Going so far as to use blueprint symbols and catalog numbers. When I worked for my Dad there were a few times where a screwdriver got dropped down a wall or something of that nature. It's very easy to bury a catalog number in a bill for a screwdriver but much harder to explain why you charged them for a screwdriver.
 
#47 · (Edited)
No, that is an entirely different business matter then losing, breaking or needing a tool on a job and charging the customer for it. In that case you should be using a small percentage multiplier for waste and theft of material on every job, 1%, 2%, 5%....whatever you think.

And yes on some jobs you will need specific tools to accomplish a task, and if the job is large enough you just might be able to cover the purchase of the tool in the price of the job. However if I am cutting four cans in an inaccessible ceiling in a kitchen I am not going to hide the cost of a see snake because I think their might be plumbing in there.

Once again your hourly or percent per job overhead is what should cover the cost of your tools, pretty much every one of them. I did not make this up, and I am not trying to ruffle feathers, it is the standard and common business practice.
 
#48 ·
I don't bill every screwdriver used to a job. But if the situation warrants it I will bill for it. If I lose a tool in an attic, that's my problem. I eat that cost. If how I broke or lost the tool saved the customer time and money they can darn well pay for it. The specific situation I talked about I could have billed 8 screwdrivers and still not hit the cost it would have taken them to patch the plaster and wallpaper to open up the other side. I probably should have made it clearer but I charge if the situation warrants it. And for that matter I can think of a few situations where I would not feel one bit bad about billing a seesnake to a job. 4 cans probably not, but a portion of a seesnake, or a "tool rental" could certainly be in order depending on how comfortable you are with what you need to do.
 
#52 ·
when they ask why you charge $8 for receptacle tell them as far as you know that receptacle didn't magically appear in your truck - it does take time which equals money to procure each item and what happens if the receptacle is faulty in your warranty period. The vendor should replace it no charge but does he think you should come out and replace it for free.
 
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