I have a bunch of parts I've purchased, a few things with a very long lead time. The shop I want to use usually makes money selling parts as well as installing them, and I don't want to bring in a project they will lose money on. What is the typical parts mark up so we can make a fair deal on the work?
Depends on the part but we are typically 25-40%.
Are they okay with customers bringing in their own parts? Many repair shops refuse to do that.
I had a deal with a local shop to use my own parts but if I did it was a higher labor rate. No warranty like free replacement if the wheel bearing failed right away.
stuart in mn said:Are they okay with customers bringing in their own parts? Many repair shops refuse to do that.
I think they don't want to because they think they will lose the income from the markup. I want to make them an offer to cover this gap. They would have been unable to order the turbo kit and parts I want to use, I live in Thailand and wanted a USA made EFR turbo kit with a few other parts of my choice. There are many other things they will need to order themselves to complete the work.
The language barrier here makes it harder to negotiate things like this unless I have an idea of the income they are expecting to make on the typical markup. I really don't want to come off as rude, but I also don't want to offer too much. Fair value for fair work.
stuart in mn said:Are they okay with customers bringing in their own parts? Many repair shops refuse to do that.
I've had plenty of shops do it. They just tell me they aren't going to warranty to the part or labor, which is perfectly fair.
User supplied parts are usually a no go because if there is a problem with the part (wrong application, damaged, defective) then the car is dead in the bay until another one is sourced. A lot of people take their sweet time getting a replacement.
One place where I worked bumped labor rate 40%, and if there was a problem, labor rate was charged from when the problem was noted until the replacement part was received. This policy was after an STS killed a bay for over a week while the guy dawdled and dillydallied getting us a rack that wasn't bent.
If you knew how many NEW parts are bad in the box, you'd appreciate not wanting to have to work through a third party instead of just picking up the phone and expediting a replacement. Some suppliers have a 100% garbage rate and we refuse to use, say, non OEM crank sensors or ESIM valves.
In reply to mr2peak :
As others have noted, it's not usually the markup they're worried about. It's the guy coming back when his part failed and wanting it redone for free that's the issue.
40%
I just had the starter replaced on my rover. I dropped it off at the local shop and had the starter delivered, only because I wanted to be sure it would be there and prevent any delays. (Because small town and land rover.) They did not squalk. They just slapped it on. Lots of shop work does not entail parts markups at all. (Flat tires or rotations or electrrical repairs etc) so a shop should not count on that.
I have seen as much as 300% over just walking into the dealer and buying the part.
Customer supplied parts are often wrong.
Then the discussion goes like this:
"why is my project taking so long?"
Because it took you two weeks to get the part I asked for, then it didn't fit, then I had to order the correct one. Here's your wrong parts and your bill.
I know it probably won't happen in your case but there's a lot of "car guys" out there who think changing floor mats counts as "modification".
So there are normally two major concerns that a shop has when a customer supplies parts
1) as previously noted, liability and warranty. I'm not guaranteeing or dealing with warranty concerns when I don't have an invoice with a PO number on it that I issued from a vendor. Regardless of the quality of the part. If a customer or client is willing to sign their life away then that's fine.
2) lead time. Which normally is a different scenario than currently due to supply challenges. Oftentimes customers will find something a few dollars cheaper and want to order it in which on the initial endeavor prior to work on the vehicle starting, isn't of major concern. But when I have your car up on a lift and something additional is needed and I can have it same day or next day and the customer wants to save $6 to get it in 3 to 4 days, I'm making them pay labor for the difference in delivery time in full. If they want to pay an additional 24 hours of labor for the 3 days that that lift is sitting occupied in order to save $6 on a part, that's their prerogative.
(I know that this isn't relevant to your current example or situation, but in a normal supply chain it's a slippery slope where people start looking oh I saved this much on this part I can save this much on this one I want to order this one in as well. And then they also get this sense of arrogance that they can source parts cheaper than the shop and project this idea that they should be working in parts procurement for them. It's a bad look in a normal supply chain world.)
With regards to the parts markup. It depends upon the cost of the part. There are some things that I only mark up 3 to 4%. For example on EFR turbo, if it's a $1,200 part I'm only marking it up 7% because #1 there's MAP pricing, #2 a 7% markup It's less than a hundred bucks, I can explain to you if I buy it and if there's an issue or defect and the invoice is in my shop's name, that I can contact Borg Warner or fullrace explain the defect or what occurred and they will issue a warranty without question knowing the chain of ownership and quality of installation and engine management that was being used and I'll go over the parameters with regards to tuning what wide band was done how we were setting up and measuring the speed density etc when the unit failed. There won't be issues with regards to getting a warranty replacement, that $100 is peace of mind. Whereas if somebody brings in a unit off the street, And I install it and I give the customer all that same information and they take it to the supplier or vendor where they purchase it there's still a difference in chain of ownership and all I can say is it was brought to me and I did this. And I'm only telling the customer that I'm not dealing with the vendor that you purchased it from unless you want to pay labor rate for that communication, which is also going to exceed more than that $100.
On larger stuff such as supercharger kits that can be over 3 grand, That is where sometimes the markup will only be two or three percent for the same reason. Now a little miscellaneous plastic clips and on fluids that I buy in bulk, my markup might be over 80%. I use a parts pricing matrix that is based upon what my cost is if it's a high dollar item my markup is far less than something that costs less than $2. If it's a low-cost item I'm marking it up but I buy them in bulk at a volume where my discount is so significant that you likely cannot even order it from Amazon for what I'm charging you after my markup. And if you can you probably spend 30 to 45 minutes hunting for it and confirming that it actually is the size and fit that you need in order to save 45 cents per a piece. If you decide that your time is worth $0.90 an hour that's on you I'm not here to make that decision. (And again when I say you I mean a customer as a whole, not you personally). I'm not savings of $0.45 per clip is also subject to that same if it takes 2 days to deliver and I literally have it here, that's 16 hours of labor that I'm charging based on the opportunity cost of that vehicle being in my bay.
My general rule is I'll explain the situations and scenarios to me obtaining the parts to a client before they bring their vehicle in and once the vehicle is here, they're not getting any more parts for it themselves unless I specifically say, I've gone through my standard channels, I've searched out into the ether of the internet, and I can't find it from a source that I trust. Here is my best ETA. If you can beat that ETA with a tracking number for delivery, let me know where you would be obtaining it from, send me a direct link. Because if they're able to do that I'll still want to purchase the part for warranty purposes, but I will sell it to the customer at cost with whatever warranty the manufacturer provides on it, because that's the rare instance that I can't get something but the customer has been able to show me where I would be able to get it. Which sounds like your situation. That's mutually beneficial, but I still want to take direct possession of it from the vendor as purchasing it for warranty purposes I'm just not going to mark it up for you.
Typical markup at my shops was 20-25%, but it could be as high as 50% depending on what it takes to make the numbers work. You gotta make X% on every job to keep the doors open.
Keep in mind that shops get wholesale pricing which is often 10-15% cheaper than what you pay, so sometimes it's a wash. The markup in parts is primarily there because you may have a warranty claim. The parts house will warranty the part, but you have to cover the labor. Hopefully, that 20-40% profit you made on selling parts for the last 25 repairs covers your butt when you have to pay a tech to re-fix a problem.
I loved it when people brought their own parts. It means I don't have to warranty the part, the work, or anything about the job. You want your $18 brake pads put on? Great. When they squeal like a mating squirrel, or when they fade while you're towing a boat... tough.
I've worked shops with both hourly techs and flag/book time techs. In the case of flag/book, you need to find a rough percentage that you need to make on every job. In my shops it was about 50%. That is to say, if I have a $1000 repair, I don't want to be paying out more than $500 in tech labor and parts. In the case of hourly techs in my transmission shops, I like to see "parts times ten" or roughly in that neighborhood. So if I spend $180 on parts, I wanted the repair to be somewhere near $1800. Again, super rough numbers.
mr2peak said:I have a bunch of parts I've purchased, a few things with a very long lead time. The shop I want to use usually makes money selling parts as well as installing them, and I don't want to bring in a project they will lose money on. What is the typical parts mark up so we can make a fair deal on the work?
It will totally depend on the shop. Here's the breakdown for when I ran shops.
Parts typically have a small markup. You make a tiny bit of money on parts. Labor is a huge markup. Using 15-year old numbers, I paid my techs about $25/ book hour and charged $100/hr labor. Labor-only jobs made my percentages easy. I was always going to make money, but I'm also not making that last 10 or 20 bucks on the parts markup. So, is it worth it to the service writer to give up the little bit of extra money to completely wash their hands of any liability/warranty? It was for me. It's an easy $75/hour with zero warranty liability
Really appriciated all the detailed responses!
Sounds like somewhere between 10-15% would be fair on the large parts I already have. Giving up a warranty is something I can live with.
And yes, they are all new parts, I'm not a heartless customer!
In reply to Curtis73 (Forum Supporter) :
I am in Thailand, labor costs here are very low. I really think parts markups are where the money is made. There's a good chance markups are different here. At least I can go to them and say XX% is typical in the USA, is this something you are comfortable talking about as a starting point?
Tk8398 said:I have seen as much as 300% over just walking into the dealer and buying the part.
Same here ... local Indy shop wanted to charge me 3x the price for a Bosch reman starter for my Accord vs. what it cost me at the same local parts store that they use, and add labor to that. Luckily I had time to do it myself, this time.
mr2peak said:In reply to Curtis73 (Forum Supporter) :
I am in Thailand, labor costs here are very low. I really think parts markups are where the money is made. There's a good chance markups are different here. At least I can go to them and say XX% is typical in the USA, is this something you are comfortable talking about as a starting point?
Yeah... I really have no frame of reference. I can speak intelligently about Europe, Canada, Central America, and the U.S. Thailand is off my radar. But I'm jealous of whatever you're having for lunch.
I don't see how anyone here would have a good idea of the answer to that question in Thailand. It's very possible the structure is vastly different.
For example, they might pay techs $3 per hour but pay their bills through parts markups of 300%.
The only fair way to do it is ask the shop how much they want, then make a decision whether you are willing to pay that. Comparing to US shops isn't fair.
I like to see "parts times ten" or roughly in that neighborhood. So if I spend $180 on parts, I wanted the repair to be somewhere near $1800. Again, super rough numbers.
This seems not right. A set of pads rotors And calipers can easily exceed this for one axle of most cars. I guess if you can get it life is good but that seems a bit over the top price wise.
In reply to SV reX :
I'm sure it's different, but I don't want to go in blind
In reply to mr2peak :
So, you'd rather go in with completely fabricated information that is totally irrelevant?
Any answer from anyone who has not lived in Thailand or understands business culture in Thailand is meaningless.
Why would the US way of doing this be better than their way of doing it?
For all I know the "normal" markup could be a fish and a respectful bow at the door.
You need to ask local folks.
dean1484 said:I like to see "parts times ten" or roughly in that neighborhood. So if I spend $180 on parts, I wanted the repair to be somewhere near $1800. Again, super rough numbers.This seems not right. A set of pads rotors And calipers can easily exceed this for one axle of most cars. I guess if you can get it life is good but that seems a bit over the top price wise.
You missed the most important part of the quote:
In the case of hourly techs in my transmission shops, I like to see "parts times ten" or roughly in that neighborhood. So if I spend $180 on parts, I wanted the repair to be somewhere near $1800.
I'm not talking about brake pads. I'm talking about paying two hourly techs 2-3 days worth of labor. In one of the shops I had one R&R tech and one transmission builder. One a good day of vanilla builds my tech could R&R two and the builder could reman 1-2 based on parts speed and complexity of the transmission. We're talking about $200 in parts and 20 hours of labor being paid out to two specialists. The way you quote R.O.s for hourly is a completely different paradigm from flag hours.
SV reX said:In reply to mr2peak :
So, you'd rather go in with completely fabricated information that is totally irrelevant?
Any answer from anyone who has not lived in Thailand or understands business culture in Thailand is meaningless.
Why would the US way of doing this be better than their way of doing it?
For all I know the "normal" markup could be a fish and a respectful bow at the door.
You need to ask local folks.
It's not fabricated information. I'm building a frame of reference. Just like the USA a polite greeting helps here just as much as anywhere else. Most things here are very similar to the USA, it's the end of 2021 we all watch American shows, eat pizza and play videogames. There's nothing to suggest markups would be wildly different, and showing up with a bit more knowledge is better than shooting an offer in the dark.
Your joke about offering a fish in trade just comes off as ignorant. I've lived here for 3 years I'm not fresh off the boat. Business is business, the more you can learn the better off you will be.
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