Mark it up!!!!

Discussion in 'Business Operations' started by SprinklerGuy, Oct 30, 2001.

  1. Does anyone out there know a simple way of developing your markup on materials. This may not apply to everyone here but perhaps Phil and the guy from Compass can help with this.

    It has just come to my attention that I may be a little (LOT) cheaper than my competition on parts. We service sprinklers and I have been selling an item for $27.50 that I buy for roughly $11.00. I have always thought this was huge markup but now I hear that a couple of other competitors are getting $44.00 for the same item.

    Also, some items that I buy for less than .50 , I resell for $1.00 and they are selling for $5.00.

    Is this highway robbery or good business? How do I explain to my regular customers, if asked, that I raised the prices almost 100% of what they are used to because "everyone else is".? Help!
     
  2. Stonehenge

    Stonehenge LawnSite Bronze Member
    from Midwest
    Posts: 1,277

    If the customer finds it valuable enough to spend $5 on it, who's to say what's too much or too cheap? Who are you to say anything above x% margin is too much?

    Charge what the market will bear.

    Was there time involved in learning which $.50 part was the right one/best one to use? Did you have to travel somewhere to pick up these $.50 parts? Are there times when the installation of this part doesn't go smoothly and you end up breaking it and having to use another?


    One thing to consider - are these competitors you're speaking of different than you? Are you going for high volume, low margin and they're low volume, high margin? Do they do better quality work than you? Do they simply have more overhead than you?
     
  3. I guess mostly it is just frustrating to think that my cash flow is sometimes slow all the while thinking about those 1000 or so $25 dollar parts that could have been sold for $44!!! Quick math........$19,000 towards the bottom line and improved cash flow.

    Stonehenge, you are right, it is tough to compare to other companies, I am getting good margins out of my company but......always a but right........don't want to sell myself short.

    Thanks for the imput in advance.
     
  4. Guido

    Guido LawnSite Silver Member
    Posts: 2,085

    Don't forget where your at! Those guys are next door!;)
     
  5. Fine Lines Lawn

    Fine Lines Lawn LawnSite Senior Member
    Posts: 447

    I see you got your logo up on your signature now.
    Looks good :)
     
  6. HBFOXJr

    HBFOXJr LawnSite Bronze Member
    Posts: 1,712

    Around here most guys including myself run approximately list price. Some small stuff may vary. Two items I sell cheap are 1" PVBs and Hunter Pro-C controllers. I'd rather replace some old PVBs than rebuild or put them on where none previuosly existed. I'd rather sell a Pro-C for anything up to 12 zones and get a remote on the job so I make them esy to buy.

    I charge fittings simply. 3/4"- 75 cents, 1" $1, 1.25" $1.25, 1.5 to 4" I look up the price of the most expensive commonly used fitting and charge that for that particular size. On the smaller ones like a 1" slip x1/2"female T or a 1.25"x1" SxS red bushing I charge by the larger size.
     
  7. Ric

    Ric LawnSite Fanatic
    Posts: 11,957

    tony

    A quick off topic Question. Are home owners restricted to so many acre ft per year of water or so many gallons per etc. in your area.

    Thanks
    Ric
     
  8. Harold, that is almost EXACTLY what I do here! I stopped using the pro-c though, having trouble with customers messing with the % feature and causing death and destruction. Also, in the direct sun, hard to avoid here, the pro-c heats up and we can't read the screen. We just went back to Raindial

    As for a restriction on water....not as of yet.
     

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