How is markup determined on parts installed?

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Old 04-17-09, 06:38 AM
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How is markup determined on parts installed?

I had major repair work done on my 92' Ford Ranger. I have my car serviced by an owner/mechanic. The repair invoice listed 2 quantity of coolant at $22.77 each for a total of $45.54. NAPA charges about $12.00 for its most expensive coolant. So this seems excessive.

I know service garages often charge you more for an installed part than they paid for it. What is the customary markup on parts? How does this work? Is is whatever random figure he decides. or are there industry guidelines for this practice?
 
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Old 04-17-09, 08:47 AM
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I'm not positive, but I think they use list price or they charge whatever the market can bear.
 
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Old 04-17-09, 09:30 AM
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Did they buy it from a dealer? Or maybe they just charged dealer pricing. A buddy used to work at a parts dept for a dealer back in the 70's and even then he told me markup on maintenance items (oil, plug, filters) was 200%. They charged $3 for a $1 plug.
 
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Old 04-17-09, 09:47 AM
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He is an independent auto shop owner and mechanic. I believe he uses NAPA, not the dealer. He is very professional and has a perfect record with BBB. But I am going to talk to him about this.
 
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Old 04-17-09, 02:17 PM
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You are going to talk to him about how he charges you? If you don't like the prices, go somewhere else.
 
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Old 04-17-09, 04:41 PM
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I've never gone for this markup business. To me it is un-Christian, unethical, what ever you want to call it. If they can't make enough money at their labor rate and have to bs you with the mark-up the product - that I'm sure they are actually even getting a discount on, below retail! -then be honest and forthcoming with people, and tell them that their labor rate is (not $65 an hour, but is) $87.50 an hour, or whatever. And they should say that for little jobs (say under an hour) they have to have even more to make it worth their time, so therefore their labor rate is like $25 for every 15 minutes up to an hour.

But do not insult our intelligence (especially the little old lady who knows very little) and tell us coolant costs $22, when I get the same stuff at my big box store for a fraction of that. Or saying the used starter cost them $80 (ya, right)

Want to here a good ripoff story?:

Neighbor has starter trouble. Drives it to shop who then put in a used starter. Used. Says right on the bill. Bill says $80 for starter + $40 labor. The used starter grinds like the old one! However, at least it started the car to the mechanics satifaction. But the starter still makes a grinding sound like the old one. But the mechanic says he cannot tell where the sound is coming from, so he sends the neighbor home! The mechanic simply gave up!

A week goes by and every once in a while the car does not start, again. And one day it never did start. So the mechanic had to come and get it with his tow truck. He ended up putting in a new starter, so the bill says. New. Problems are ended.

But get this: He said he gave the neighbor a deal, since the used starter they put in obviously was not good either -or -an incompetant mechanic laid the 2 starters next to each other on the floor, and reinstalled the same old one!

Irregardless, the first starter work cost $120. The new starter with the good deal cost only $140, parts and labor.

So, the grand total for both jobs came to $260. A good deal? Well, not bad if the mechanic really put in a new starter. Not so good a deal if the mechanic put in a reman. starter.

I called up Advance, and they said that starter is $88 for a reman, and $175-225, for a new one, quoted by Advance and one other parts store. He said that very seldom do mechanics actually put in a new starter.

He said you could find out what was put in, by looking on the sticker on the starter.

If a reman was put in, then that means that the good deal starter job(s) cost him about $160 labor! My neighbor almost does not even want to discuss this with me anymore, as the whole ordeal makes him look like a sucker. But I'm dying to know what is under that car engine.

Now - they wrote new on the bill. But I bet they could say, if cornered, that it was really a reman one, that in essence, it is a new starter - if you know what I mean.

Mechanics therefore should, IMO, be required to say if a part is a used, reman or new one. And level with people what parts really cost.

You don't suppose that by doing it the way they do, that they somehow cheat old uncle Sam with this process, do you? Seems like the IRS would have caught onto this though. Unless some see what they can get away with? If all they are required to do is show their billing receipts, they could get away with it. If they have to show purchase receipts, then no -not if they were audited. But, perhaps some take that chance?

Sorry for the length. This will be my big post for the week?
 
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Old 04-17-09, 04:53 PM
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Originally Posted by ecman51` View Post
I've never gone for this markup business. To me it is un-Christian, unethical, what ever you want to call it.
I somewhat agree with you to a point, but a business is there to MAKE money, not break even. I guess I'm more cognizant of what people are trying to charge me, because I research almost anything I buy, beforehand. Doing this saves me alot of money, and if I think a business is trying take advantage of me, I will just leave.

I also understand these businesses have overhead. They are not just having to pay for their employees, but the facilities, insurance, parts, etc, so marking up product is a easier way of paying the bills.
 
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Old 04-17-09, 06:36 PM
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bluesbreaker,

Before you slam your mechanic for being a rip-off artist, an unethical tradesman or even, heaven forbid (pun intended), a bad christian, you need to put something in perspective.

You came to a do-it-yourself forum for advice on what a pro mechanic charges??? ..........Think about it.

What a tradesman pays for a part is not the primary deciding factor in what he charges you.
As said, he has many costs that have to be covered and does not operate his coolant business on Walmart volumes.

I would suspect that the "2 quantity coolant" is a flat rate fee which is how all major garages charge.
 
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Old 04-18-09, 07:35 AM
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You don't really think the local baseball team paid $5 for that beer they sold you at the game, do you?

I get to hear "too expensive" just about every day. Lady two days ago thought $75 was too much for a 16 mile in-town tow. Sorry, but it costs a lot more to operate than the $5 in gas it takes me to drive that distance.
 
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Old 04-18-09, 07:51 AM
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I don't have a problem with SOME markup. But most places just see what they need, call the parts house, see if its in stock, get it on their account (at lower than I'd pay), and it gets delivered w/i 15 min.

Granted, smaller town like mine, it does quickly, bigger places they may have to send someone to pick it up.

And what kills me, is some places will install a part you bring to them, but there's no warranty..even though its the exact same part they would have purchased. Could I get an explanation on that? lol

I just got a quote from a well recommended shop 2 weeks ago to replace the master cylinder and bleed the brakes..no ABS.

$400!!!! I was so shocked, I didn't even ask for a breakdown. Even the most expensive MC was only $125, and its at most a 2 hr job. I did it in the driveway in 2 hours, and I had to take off 2 wheels to reach the bleeder. Prob would have been less than an hour in a shop with a lift.

I don't mind a markup, but can you imagine if everything was marked up that much? How about $25K Sportsters and $50 shovels...lol
 
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Old 04-18-09, 01:29 PM
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Originally Posted by HotinOKC View Post
I somewhat agree with you to a point, but a business is there to MAKE money, not break even. I guess I'm more cognizant of what people are trying to charge me, because I research almost anything I buy, beforehand. Doing this saves me alot of money, and if I think a business is trying take advantage of me, I will just leave.

I also understand these businesses have overhead. They are not just having to pay for their employees, but the facilities, insurance, parts, etc, so marking up product is a easier way of paying the bills.
I agtee that they deserve their profit.

Just tell us how they are getting it, truthfully -that's all. Why say a part costs 2X when it costs X? That is a blantant lie - plain and simple. If they ahd to send a worker to get the part, pout that on the bil also if need be. (Albeit many shops have a service where they get the parts driven to them from parts store for free, if I'm not mistaken)

If they need more money to turn their profit, have them tell us their labor rate is $135.50 and hour, if that is what it really boils down to. But don't lie about parts cost. To add insult to injury, I suspect they even get a deal below retail. And then they mark it up even way above retail?

One could argue that I'm splitting hairs, because the final bill is still going to be the what the final bill is. But here is where that logic is wrong: People may shop around for a garage's labor rate. But how many people are going to learn what a shop marks the price up at, for various items? One garage could charge you a little mark-up, while another garage might be a lot. One garage you shopped and decided to use might claim $45 an hour labor, so you go to them. Only to learn (after you get the bill)they tacked on $50 more dollars on the fuel pump or whatever? That is deception.
 

Last edited by ecman51; 04-18-09 at 01:43 PM. Reason: added last paragraph
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Old 04-18-09, 01:35 PM
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Originally Posted by the_tow_guy View Post
You don't really think the local baseball team paid $5 for that beer they sold you at the game, do you?
No. But they don't ever claim on any receipt that the price breakdown was $4.50 for them to acquire the beer + 50¢ for them to walk in the stand and hand it to you. If they did so, wouldn't you feel similarly cheated? You'd feel like saying, "I tell you what, you bring me the $2 beer from out back, and I'll give you more money for your delivery -say $1.50, rather than the 50¢ you are now charging me!"
 
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Old 04-19-09, 07:09 AM
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I'm in a service business myself and I can tell you that even thou some businesses practice
this markup technique, I can also tell you that from my point of view that is a load of crap!

Well, maybe not in all cases, like say...
If I charge my customer a mark up on a product then it lowers their labor cost,
now if I charge no mark up then I might have to charge more labor, so be it...

But in the end I only charge for the actual work I had to do,
whether I tack it on to the parts or bill it separately into the labor
that is just a bunch of formality as a way of making out the bill.
In the end, my customers pay for MY cost on the product plus ALL labor.
Yes, ALL labor means if I had to run to NAPA then I will get paid for this.

But 45 bucks for 2 gallons of antifreeze LOL!
I could have done that for $30 and made out like a bandit.
In an automotive business they can probably afford to buy the crap 20-50 gallons at a time,
lowering their cost, not to mention commercial accounts.
Ain't like they gotta run to NAPA every time they need 1 puny gallon of every day antifreeze.

But I might still charge you $5 for the trip
Plus the labor of mixing it 50/50, and filling it in your car, $15.
And my cost on a gallon of antifreeze, $10.
What are we up to, $30?
Beats 45 thou, I'll check the vital fluids for ya.

So...
Any businesses that aren't willing to lower their cost reasonably
don't need to be in business, my strict but fair and honest opinion.

It ain't rocket science.
 

Last edited by 8307c4; 04-19-09 at 07:54 AM.
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