MATERIAL MARKUP

[shorts]

WITH THE COST OF MATERIALS ON THE RISE,WHEN ESTIMATING JOB HOW DO WE HANDLE THE MATERIAL
MARK UP. IF WE PAY $10 AND PUT 50% MARK UP
TO SALE AT $15 THEN THE COST GOES TO $13
DO YOU STILL MARK IT UP 50% TO 19.50 THE WAY I
SEE IT THAT WITH THE COST OF CASH FLOW YOU NEED TO COVER THE INCREASE COST.OR AM I PRICING MY SELF OUT ??

 

[hbiss]

Re: MATERIAL MARKUP

First of all please turn off your caps lock, all caps implies that you are shouting.

If we pay $10 and put 50% markup to sale at $15 then the cost goes to $13.

Must be the new math or something. You buy it for $10, sell it for $15. You make $5, where does the $13 cost come from??

-Hal

 

[1793]

Re: MATERIAL MARKUP

I feel it would be in everyone's best interest to keep the personal editorials out of this professional forum.

I would have to agree with Hal. If you pay $10.00 with a 50% mark-up I get $15.00.

Shorts, if you would, please explain where the $13.00 comes in.

Norb

 

[shorts]

Re: MATERIAL MARKUP

this is about if materials goes up 30 % should
i still mark up the same rate? we have
customers that are saying they should not have to
pay the same % of markup
10x50%=15 $ 5.00
13x50%=19.5 $ 6.50

 

[69boss302]

Re: MATERIAL MARKUP

I think what he is trying to say is (without shouting and getting people upset to start with), if you quote it for the original $15 when the cost would be $10. Then after your quote is accepted by the customer you go to buy the part and the cost rose to $13 you now only get $2 instead of $5. Do you eat it or pass the cost on to the customer with an additional charge?

[ March 22, 2005, 05:33 PM: Message edited by: 69boss302 ]

 

[shorts]

Re: MATERIAL MARKUP

ok
this is from job to job, not the same job
say we wire a house,the next house the wire goes up 30% like it has the past week,we give the customer a price and it has went up from the last house,they are saying that i should not mark up
the increase by 50%

 

[bigjohn67]

Re: MATERIAL MARKUP

The markup should apply at the point of sale for service type work

For bid work:

Get a formal quote from your supplier to lock your price in. Im sure they will work with you to work out a delivery schedule after you commited to purchase. Usually quotes are good for 30 days for you to commit to the purchase.

Take this for example:
We need 20000 ft of 12/2 romex for a job. But not all at once. We make a commitment to purchase this amount of wire over a 2 month period. The supplier will purchase the wire for you and hold it until you need it and bill upon delivery to the site. This locks in your price as you have committed to purchasing what they stocked for you at the time it was purchased from their supplier. It's kind of like an "extended Will Call" You are not billed until you pick it up.

Now if you finish the job and only used 18,000 ft. You are required to purchase the remainder 2000 ft per the commitment. But Im sure you will have other jobs to wire.

 

[tshea]

Re: MATERIAL MARKUP

they are saying that i should not mark up
the increase by 50%

How does your customer know you marked it up 50%

By letting the customer know that, you are letting him run your business.

To answer question: pass the price increase onto the customer. Use your standard markup. DO NOT tell the customer your markup percentage. Tell them there is a price increase in the job because your supplier had a price increase.

 

[69boss302]

Re: MATERIAL MARKUP

I'm on a customer end, and I don't think I have any business knowing your mark up, and I would consider myself out of line if I tried to tell someone that they can't charge something different on the next job, even if it is doing the exact same thing. The cost's of supplies are jumping everyday. If your cost last time must of gotten you the job, I don't think it will stop you this time. Since you must of had the better quote before, what makes your customer think that the others that quoted won't have a higher quote also. Is he using their previous quote to say that your price is now to high? If so perhaps he needs to get a new quote from the others also.

 

[hbiss]

Re: MATERIAL MARKUP

I think what he is saying is that he gave a customer a price based on the cost of material for a previous job. After he wrote (or gave) the quote the material cost increased. Can he pass that increase on to the customer at his normal markup?

It depends. You certainly want to and you are entitled to but it all depends on how you write your proposals and contracts. You do provide written proposals and contracts right?

All of your proposals should state that "all prices are valid for a period of XX days from the above date". We normally give 30 days but with the current economy 14 wouldn't be out of line.

What happens if during those 14 days your cost for something increases? You eat it. This is also good reason to always include a time limit for acceptance of the proposal. I remember a case where like two years later the customer decided to accept a proposal. There was no time limit on the proposal and the customer took the contractor to court and actually won.

Now, what happens if the proposal is accepted and you and the customer sign a contract. Unless your contract spells out how price increases are to be handled you will wind up eating them too.

Moral of the story is to get everything in writing and make sure the customer signs it.

-Hal

 

[sparkster]

Re: MATERIAL MARKUP

I must be missing something, what is th etrade norm markup, I am presently at 20 %, is this too little?