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#1 jcta79

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Posted 03 June 2014 - 10:44 AM

Hello everyone,

      I work for a local PC repair shop/I.T. Consultant. I have noticed that the owner likes to mark up the price, well in my opinion way to high. I found a psu for $59 and then he jacked it up to $120 to sell to the customer. I think that is maybe ripping the customer off but we are a business and its about making money. I would like your opinions Thanks



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#2 ElfBane

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Posted 05 June 2014 - 02:44 AM

A 50% markup is quite reasonable.



#3 NickAu

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Posted 05 June 2014 - 03:09 AM

That extra 60 bucks covers things like your pay,, insurance, rent for shop, taxes, electricity etc and a few bucks profit, and I mean a few, I doubt he is making more than about 7 or 8 bucks net profit.

 

PS.

 

With online shopping we tend to forget the overheads business have.


Edited by NickAu1, 05 June 2014 - 03:12 AM.

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#4 Chris Cosgrove

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Posted 05 June 2014 - 06:12 PM

When I worked in the TV repair business - briefly - a number of years ago there was a joke going around -

 

Invoice  -  To repairing TV £50.00

Customer  -  'What was wrong with it ?'

Tech  -  'Burnt out resistor'

Customer  -  'How much do they cost ?'

Tech  -  'About tuppence each'

Customer  -  '£50 for replacing a 2p resistor ! ! !'

Tech  -  'Give me the bill back'

Invoice  - To replacing resistor £ 0.02; To knowing which resistor £ 49.98

 

As Nick has pointed out, selling at the same price as buying in does not cover the overheads. Of course, if you were willing to work for free your boss could reduce his markup, but doubtless you too have bills to pay, mouths to feed and so on.

 

There is also the question of volume, high volume = low margin, and the reverse. Your local supermarket is probably working on an average markup of 5-10%, your local jeweler is probably working on an average markup of 200% or more.

 

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#5 Orange Blossom

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Posted 05 June 2014 - 10:20 PM

To quote Elfbane:
A 50% markup is quite reasonable. [End quote]

Actually, that is a 103.3% markup.
 
Question: Does the owner break things down by labor and parts?  If not, the labor needs to be included in the price of the part.  And as stated, there are a lot of overhead costs in terms of running a business.   The owner also needs to include in the price of the part the time that spent looking for the part, ordering it etc.  That said, a 103.3% markup does seem rather extreme to me.
 
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#6 Kilroy

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Posted 06 June 2014 - 09:42 AM

You really need to look into retail mark up, from the link this is a 50% markup.

 

It has been a very long time since I studied about retail.  I'll give you a great example, go and shop for jewelery.  Every store is offering 50% or better off.  So, you know their markup is better than 50% as they are still making a profit.  As others have pointed out the shop needs to cover their space, your salary, your benefits (even if you don't see them they pay more than your salary to have you).


Edited by Kilroy, 06 June 2014 - 09:43 AM.


#7 the_patriot11

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Posted 06 June 2014 - 09:40 PM

Sounds about right to me. I do a computer shop on the side-and my markup is nowhere near that high, but I also don't have any employees-nor do I rely on it for a living, so I can get away with far lower rates. A store has to pay for the building, utilities, maintenance, employees, taxes, insurance, etc.


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#8 myrti

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Posted 07 June 2014 - 02:24 PM

Interesting to read the comments here.. I had no idea that the standard markup was 50%. Live and lean. :lol:


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#9 buddy215

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Posted 08 June 2014 - 08:03 AM

Quote from the link retail mark up.....This definition of markup was probably developed to avoid using a term that admits to a 100 percent increase. Most consumers would be appalled that you are selling something for double what you paid for it. They would be inclined to ask why you don't carry a gun and wear a mask.

 

In other words the retailers know they are charging double the price they purchased an item for.....100% markup.

If I go to a shop to purchase an item and see a price twice what others are selling it for, I will not buy it unless maybe

it is a fire extinguisher and my vehicle is on fire.

I would expect the shop to charge to install an item if I requested them to. I would also expect that shop to give an estimate

before doing the work.

 

So, back to the OP....if his shop is charging for labor plus doubling the cost of the material....in my opinion it is gouging.


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#10 Chris Cosgrove

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Posted 08 June 2014 - 06:45 PM

Buddy125 #9 says "If I go to a shop . . . and see a price twice what others are selling it for"

 

There are two aspects to this. The first is that you may not be able to buy it at that price because the manufacturer supplies 'trade only'. Or you may be able to buy it at that price but it takes you two hours searching to find a supplier willing to deal with you. And your time has a value to you, even if it is only the opportunity cost of what else you might have been doing in that time.

 

The second is that in this regard the internet has become something of an equaliser in that you can find the same suppliers. I agree, if you can source this PSU at $US 59 AND have the skills and confidence to replace it yourself then why should you pay $US 100 for it ?  But bricks-and-mortar stores have costs which have to be met or else they go out of business and the consequence in so many small towns is streets full of empty shops, or charity shops, and beyond that is the loss of the jobs these shops would otherwise have supported.

 

This is something I am fully aware of - I live in such a town and, commercially, it is a ghost.

 

Chris Cosgrove



#11 mjd420nova

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Posted 08 June 2014 - 07:26 PM

I have a pretty flexible payment system, barter or cash.  I do not mark up on parts for most of them are on fixed incomes.  Others like me who are retired but do a lot of work from home for friends, relative and long time clients and pay a standard rate of dinner and drinks per call.  Barter is important for me, I get all my bakery products on barter, even get parts for my own builds while doing builds for others.  I used to have a price list on the back of a clipboard that included premium charges for instruction and teaching and a double charge if the client helped.  The top commerical service divisions charge site charges of up to $150. besides mileage charges and minimum rates it can easily run $300. to replace a CMOS battery in a laptop.  Some have huge corporate clients involving dozens of techs covering campus's of tens of thousands of machines.  These are often cash cows as the equipment list is confined, distances from one call to the next are short and even some on-site offices are provided along with parking.  Far flung service points for a single client like gas stations becomes more equipment swapping than any repair effort.  I have found that the guy who professes to be the best at his job usually is full of BS.  I've been doing this for fourty years and still learn something new everyday. 



#12 Chris Cosgrove

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Posted 11 June 2014 - 05:42 AM

@mjd420nova #11

 

Like you I am on the pension list and repair / service a few computer for friends and family. My rates are slightly different from yours - a bottle of gin + any parts / software required. It keeps me in booze and I work on 'Lloyd's Open Form' terms - no cure, no pay ! However, there are a couple of points in your post I must disagree with.

 

"corporate clients . . . dozens of techs . . . thousands of machines". Clients like these are very seldom treated as cash cows because they have the power to negotiate fees and charges which are competitive, and are in a position where they can fairly readily replace one servicing company with another.

 

"more equipment swapping than any repair effort". Very often a client with a dead machine - of whatever sort - just wants it back on-line ASAP, and cares little about how this is done. It is very often far quicker to pull the dead equipment, replace it with a known good one, and take the faulty one back to base where it can be repaired at relative leisure and with all the necessary tools and test equipment to hand.

 

I do think your "double charge if the client helped" is a brilliant idea. I learnt to dread hearing the words 'A friend of mine had a look at it, but . . .' !

 

Chris Cosgrove



#13 Netghost56

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Posted 11 June 2014 - 11:10 AM

The company I work for does the same- charges double the purchase price. But we also offer an in-house 90 warranty, even on used parts (depending upon the situation), and since we have contracts with merchandisers that give us good rates and occasional discounts, we pass those along to the customer whenever possible.



#14 mjd420nova

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Posted 11 June 2014 - 11:45 AM

Chris: 

          Those huge clients have the power but have to deal with the ongoing advances in both IT and the research technology arenas.  Most opt for a single monthly charge per unit and just a six month contract.  Most offer the fix time limit of 8 working hours of for the biggest and more lucrative clients, four hour repair or it's free.  Hot swaps are common when units are near the geographical limits of the contract and travel time consumes most dispatch periods.  Six months can make a big difference in technology.  Those big operations have warehouses located regionally and can ship in one day, direct to client if needed.  But large clients often dictate daily onsite support and those contract people don't grow on trees.  Support services for those big systems require complete levels of commitment from contract/sales negotiators tonetwork enginners down to the tech that actually does the repair or the IT guru who loads the newest application on you new machine.  The support has to be complete from old machines to new machines, the generations between and the plethera of peripherals of all ages.

          Yes, I am not wealthy, just retired so I do have to charge for any parts I had to buy but more often than not I have a spare part on hand so that's free.  I still maintain commerical accounts with various parts suppliers and have learned the tricks of how to get bulk prices for just a few items that need to be bought.  In some cases a complete replacement can be had from a major retailer at 10% discount.  I have confined myself to computer products but have had to do some serious hardware learning on the tablets and smart phones but don't plan on doing any service on them.



#15 cat1092

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Posted 14 June 2014 - 01:07 AM

mjd420nova, Very true & this doesn't apply only to IT Pros, also other specialty trades. The "know it alls" are usually the ones who screws up the most. Too "smart" for their own good, so to speak. 

 

I feel that an IT shop can charge only what the market dictates & based on reputation. So if this person the OP is referring to is "overcharging", yet has customers running out of the ears, he must be doing something right. My opinion as to making a profit, make it while one can. None of knows what tomorrow may bring......in my case permanent disability. Good health is not a guarantee in life, neither is a steady income. 

 

If the OP feels that his employer, to whom he should be grateful to be employed, is overcharging, must not have dealt with a vehicle's dealership service dept. Everything is marked up, most of the time double & in the fine print there is a "shop supplies" charge. It's all the same. 

 

The fact is, if a business is truly overcharging, customers will gradually fade away & many will balk at the pricing from the go. Reputation also dictates pricing, if a particular shop does a better job than most others, many customers are willing to pay more because they want it right, the first time. The cheapest shop isn't the best, nor the other way around, reputation & word of mouth advertising plays a part in determining pricing. 

 

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