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Just starting a one man small engine repair shop. My previous thread was on shipping charges for parts. Many responded that they mark up their parts. Just curious as to how much is a "fair" or "reasonable" markup?
 

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I'm in a different business (electronic service) but I would say 40% is sort of the old rule of thumb. It can vary anywhere from 25%-100%. Obviously the higher the cost of the part the less markup you can charge before the price becomes absurd. Also depends on whether you are getting the part at dealer cost or have to pay retail for it. Now with the internet I try to stay at manufacture list for things that can easily be purchased online. You'll loose the do-it-yourself guys instantly if you don't. This is where you have to make the tough decision of whether the sale is worth your time in return profit and future business or to let them walk.

Anymore thanks in part to cell phones people calling for parts price and availability costs a ton of time with probably less then 10% buying and the rest going to the internet instead. In our case time taken away from the real business of service and sales. To cut losses we have to filter out the customers some by throwing out a guesstimate based on memory of past sales on like or similar items. If the customer is still interested and willing to put down a deposit on larger ticket or special order items then we do the detailed research and pin down the actual price. If you don't get the deposit odds are good you'll be left holding a part for a fort night for a no-show customer who found it cheaper somewhere else or decided against the repair after ordering. (Customers tend to be to busy and forgetful to make a call to cancel ahead of time. :rolleyes:)

Another rule of thumb for small businesses is if the customer is not b****ing about the price (parts & labor) your likely not charging enough to keep the doors open. ;)
 

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Discussion Starter #3
I'm in a different business (electronic service) but I would say 40% is sort of the old rule of thumb. It can vary anywhere from 25%-100%. Obviously the higher the cost of the part the less markup you can charge before the price becomes absurd. Also depends on whether you are getting the part at dealer cost or have to pay retail for it. Now with the internet I try to stay at manufacture list for things that can easily be purchased online. You'll loose the do-it-yourself guys instantly if you don't. This is where you have to make the tough decision of whether the sale is worth your time in return profit and future business or to let them walk.

Anymore thanks in part to cell phones people calling for parts price and availability costs a ton of time with probably less then 10% buying and the rest going to the internet instead. In our case time taken away from the real business of service and sales. To cut losses we have to filter out the customers some by throwing out a guesstimate based on memory of past sales on like or similar items. If the customer is still interested and willing to put down a deposit on larger ticket or special order items then we do the detailed research and pin down the actual price. If you don't get the deposit odds are good you'll be left holding a part for a fort night for a no-show customer who found it cheaper somewhere else or decided against the repair after ordering. (Customers tend to be to busy and forgetful to make a call to cancel ahead of time. :rolleyes:)

Another rule of thumb for small businesses is if the customer is not b****ing about the price (parts & labor) your likely not charging enough to keep the doors open. ;)
Great Advice, thank you.
 
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