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Service. Say i bought a water heater for $450 how much would you mark up that for the customer. Excluding labor costs which i would work out separately.
A water heater is a rotten example, the market is flooded with people that will install them for next to nothing, from Sears to your local big box store. A service company will sell the heater for a low mark up, and make it's mark up on related parts if they are doing T&M, or it is all a moot point if they are flat rate.
 

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Discussion Starter · #5 ·
A water heater is a rotten example, the market is flooded with people that will install them for next to nothing, from Sears to your local big box store. A service company will sell the heater for a low mark up, and make it's mark up on related parts if they are doing T&M, or it is all a moot point if they are flat rate.
I have to deal with customers every day telling me that they can get a water heater installed from lowes, or home depot for less than what i am charging, but i tell them that their price is for the most basic installation, theses people don't even look at the job before they give a price, I tell them that it needs to be brought up to code and inspected by the city, maybe it needs new venting, maybe new gas cock and gas line, these are all added onto the price by the tec that comes out to install your water heater after they give you the original price to install.
The customer says "well I dont care, I'll just have them put it in and to hell with all the extra stuff, the old water heater worked just fine for 10 years"
Then i tell them that when the water heater that is installed incorrectly causes a fire or it killes somebody in your house from C02 the insurance company will ask you if you had it inatalled by a licensed tec and if you had it inspected ny the city. If you didnt then too bad they wont cover you. They quickly decide to have it installed properly. I also spred the $1500 or so to install it over the life of the water heater, 10 years, only $150 a year, it not that bad really!
 

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Aw, geez, but I love flat rate. Customers like nothing better than to find some way to squeeze the plumber. So, you buy a junker from Homey and mark it up and charge by the hour. What if the customer decides that they can get the heater and then you shouldn't be able to mark it up?

You can't let the customer run your business, and that's just what they're trying to do. They think that if they can rationalize your price, they can get you to work for less. Poke at it and whittle it until it's smaller and who wins and who loses?

They don't know what it costs you to run your business. You are supposed to. With flat rate, I give them the price, they tell me I'm crazy and I leave. :cry:

Costs have been climbing over the last couple of years and I can't buy a water heater at my cost for what customers want me to charge them for the entire job.

When I was T&M, I usually put 1/3 markup on the heater. When people started buying them at the box stores and wanting me to put them in, then decided that I shouldn't be allowed to mark them up, I could no longer afford to be a plumber. At flat rate, I have a price for a customer-supplied heater and I don't make less money than if I supplied it. Works for me. If someone wants it for even less, they can let their fingers do the walking. When the box store heater fails, they're going to call me, not the box store. And they're then going to hem and haw around about having to deal with the 1-800 number to get it replaced. And I'm going to have to finagle and fudge to figure out a way to actually get paid for the job. I don't think so.

When I was T&M, my material markups varied depending on what I was selling. Usually, any part that was really small like washers and so on were about 100%, faucets and so on were about 33%, and so on. When customers started supplying their own all the time, I decided my best safety net was to go flat rate.

Imagine this: You're charging about $75 per hour. You make about $40 on a toilet markup. Out of that $75, you might make $25 after expenses - truck, gas, shop, phone, etc. By adding that $40, you have more than doubled your income on the job.

And when you take into consideration that material markup is so much of your actual income, you aren't making expenses when you don't get it.

Frank Blau used to rail about this. He said you should base your rate, whether flat rate or hourly, on what it costs you to do business and get out of depending on material markups to make up what you weren't charging. He was right, except that customers then compare your hourly rate with other hourly rates and see that you're the expensive one. They don't see that the competition is marking up material on top of the hourly rate. It's obviously an unfair comparison and a sly way of doing business.

WIth flat rate all that disappears. You get the markup whether the customer supplies the item or not. Or, better stated, you get what you need to survive without trying to tack on all the material expenses you can.
 

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www.DunbarPlumbing.com
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It's all based on the product.


PRV I charge $75
EXP tank I charge $75

Ball Valves, $9.89 or $10

3/4 DUF's $6/apiece


400A's $9.89

Supply line $6

1/4 turn stops $9.37

Wax Ring $4

Bolts $3

Delta seat cup and spring $4.68

Mansfield flush Seal $4.64

Replacement flapper $5.67

Toilet Bowl Caps $122.40
 

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How much do people here mark up items bough wholesale for resale to a customer?
read Herk's reply, then reread it. Then memorize it. Then live it or you will not make it. You will get by at t&m pricing, but you can get by workin g for someone else too. If you want better for yourself and family...READ HERK'S REPLY:thumbup:
 

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Here's something I'd like someone to explain to me, since I'm T&M.


I've done 2 water heater replacements in 7 days, both heaters were sitting in the basement next to the old ones, no me having to go get them and there's an hour minimum, me not paying for the heater which I want, completely.


I told both of them, 3 hours minimum and if there's a lot to rework on top that heater, it always takes longer. So, 3 times $75 is a measely $225 and I tell them materials, simple stuff or a pressure reducing valve, expansion tank will jack that number up accordingly.


The fellow I did that heater posted on here for $656, absolutely NO WAY he would of paid that price with him having that heater there. If I would of flat rated that heater on a stretch, $350-$400.....he would of cringed and tried to find someone else.

Someone else would of done it, and they would of lost their ass because it was a total rework and the only way they could of got out of it was not put it in. There were tons of unexpecteds on that heater replacement with the heater being taller. My wages protected me on that install correctly.


Fast forward to yesterday, this was a PowerVent replacement and PRV install, Expansion tank replacement. Customer supplied me with the heater, the PRV and the Expansion tank, I supplied the labor and the remaining material to get it installed. No steps, just rolled the old one out to the edge of the garage, new one sitting next to the old. Doesn't get any easier than that.

I now own no responsibility for the failure of 3 items he supplied me with, all 3 came from the supply house I referred him to because I don't turn over 100's of dollars unless I can make money on it. Since I knew he was getting the heater, I told him I charged extra for my PRV/EXP tank but that is because I warranty it. Letting him know this factoid gave him a buying decision to his own to save money and he took it. I won his trust however on many levels on this job, that was one of them.

1. Diagnosing a pressure problem
2. Getting away from a sealed shot/power shot saved almost $600
3. Savings on the PRV/EXP tank

Same thing happened on this heater, took considerably longer because there was additional work on top the heater, *saddle valve removal, total rework of the PVC exhaust, reverse the expansion tank location, ball valve replacement* and this put more time into the job, including this guy's refusal to run and get me parts. That put at least an hour into the job I got paid for because he didn't want to leave.

$455.17 I was paid to replace that heater. If you tell someone that with them supplying parts, you won't be installing that for that kind of price.

The economy is suppressed right now and I'm getting brow beaters left and right, still working however. I can't afford to drive around getting doors slammed in my face because IF I gave these two prices to these two customers?

I wouldn't of gotten either one of them, and I'll bet the business on that statement. The time involved to do both became an acceptance of sorts that the job did entail something more than a quick changeout, and I explained to them as I'm spouting the numbers off that I can do some of these within 2 hours if they all line up, but most times they don't because of the changes from old to new.


So between 2 jobs, $1111.17 is what I made.

Ask yourself if you're a one man band, did I make money? Out of that number, almost a grand is labor alone, the rest materials. All I supplied between those two jobs was a pressure reducing valve, copper pipe and fittings, ball valves, gas valve. That's it. Both customers were happily satisfied with my work, my attention to detail and my efforts to get it done correctly.

I don't know about any of you, but I need that money more than ever right now, and I didn't drive to these houses to get the word NO put at me, which I would of if I would of given these numbers out.

The customer was already committed because I gave the notion that these water heater replacements can take longer than expected, which is always it seems. Flat rating would of had me working more for lesser money and the customer with a better savings. Me with considerably less income.

And the time? What is your time worth after you lose the expected number you're trying to average by hour? Of course, you can take averages of one job to another and do a blend, then it measures out.

I flat rate drain cleaning all the time, get turned down. I don't think I could do it hourly, but I guess that would jumble what is expected from me. People want a set number on those and I always say, "$165 for main drains up to the first hour, most if not all are always completed in the first hour."

20-30 minutes to get there, a solid hour in the home, 20-30 to get back to where you was, $165 gets broken down real quick to your time factor.


I get tossed a lot on calls for drains above $140, and that's okay. I'm not playin' in crap for no less. Let somebody else have the calls.
 

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Discussion Starter · #12 ·
People seem to think that because you are a plumber, they are allowed to haggle with you about price. You don't haggle with the grocery store manager over the price of a box of tissues. You don't negotiate with your doctor on the price of your colonoscopy. That's why i like flat rate pricing, you take a book into the customers house filled with prices and options for them to look at and let them make the decision. My original question about marking up goods is because I wanted to get an idea from people here an average rate that I can plug into my spreadsheet that I use to help determine my flate rate prices.
I guess what I should be doing is logging how much time i spend running for parts, time restocking the truck, how much I spend in gas, and time deaing with invoices and vendors to work out a percantage.
 

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People seem to think that because you are a plumber, they are allowed to haggle with you about price. You don't haggle with the grocery store manager over the price of a box of tissues. You don't negotiate with your doctor on the price of your colonoscopy. That's why i like flat rate pricing, you take a book into the customers house filled with prices and options for them to look at and let them make the decision. My original question about marking up goods is because I wanted to get an idea from people here an average rate that I can plug into my spreadsheet that I use to help determine my flate rate prices.
I guess what I should be doing is logging how much time i spend running for parts, time restocking the truck, how much I spend in gas, and time deaing with invoices and vendors to work out a percantage.
Yeah, it is really something you have to figure for yourself. If you figure that a 10% markup is adequate to cover all your expenses and time dealing with inventory....then do that. If you feel that you should be payed more for all your time dealing with inventory and matrials, then mark them up accordingly. I markup my materials depending on the item. Small items get marked up 100% or more. Large items like water heaters, get marked up 25%. Its a sliding scale for me.

In the end, though, its up to you as the business owner to decide how to set your prices.
 

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Sliding scale for the most part. 500% to 5%.

Ex. 20 cent item is sold for $1.00 (500%)
$10.00 item is sold for $15.00 (50%)
$100.00 item is sold for $130.00 (30%)

Water heaters, garbage disposals, and a few other items are handled differently due to consumers being very aware of the cost. Mark-up is less on these items.

I would say our overall average comes to 18% with everything factored in.
 

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You know, I'm enjoying this thread but it really is starting to become something that should be in the business lounge imo. I understand that that doesn't help the op at the moment so maybe everyone should just pm him or he needs to get busy posting. Am I wrong here?
 

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You know, I'm enjoying this thread but it really is starting to become something that should be in the business lounge imo. I understand that that doesn't help the op at the moment so maybe everyone should just pm him or he needs to get busy posting. Am I wrong here?
What's the business lounge imo?

There's nothing here that's a national secret. We are a retail business and retail marks-up the price of everything. That's Business 101. If a customer complains about mark-up, you had better switch tactics or get the heck outta there.
 

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You know, I'm enjoying this thread but it really is starting to become something that should be in the business lounge imo. I understand that that doesn't help the op at the moment so maybe everyone should just pm him or he needs to get busy posting. Am I wrong here?
I see your point. Hindsight being 20/20, I wouldn't have posted.

I won't edit however - compared to many other industries all mark-ups quoted in the above posts are very reasonable. The mark-up in electronics, clothing, food etc. is much greater.

Perhaps the HO or DIY'er would benefit knowing how little plumbers really make. Mark-up and profit again are not the same thing.

Mark-up covers the time to order, stock/inventory it, put it on the truck, pay for it up front, and when it sells, do it all over.

That 20 cent widget is delivered to our shop. I sign for the order. Someone else (sometimes me) checks the packing slip against what was delivered. Then it is put in our shop until one of the trucks needs that widget. By this time, 3-4 people have touched this 20 cent widget. If it doesn't sell, the IRS wants us to inventory it at the end of the year and pay taxes on our stock.

Our plumbers are so busy keeping track of the expensive items that a lot of the times the 20 cent widget never even makes it to the invoice. :eek:

And that's business! We aren't going to take a lot of time tripping over dollars to save pennies.
 

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Please bear with me as I vent.....because I received a text from my customer that they thought that my price "seemed high" and that they wanted an "exact price breakdown of everything, including a recept for the water heater and tank". I replaced a 30 gallon elec water heater...the short model, that sits on a shelf above the clothes washer. I charged the customer $893.00 for this job which included a new alum pan, and new exp. tank. I always use a brass tee/ nipple on the tank to screw the ex tank into. The rest of the job was pex. CPVC off the Relief valve and 1" pan drain to the laundry box. (this is a slab house). My exact cost of all the materials and heater from Noland Co was $567.50. My labor was 3 hrs @ $85.00..$255.00 .. So $567.50 PLUS $255 equals $817.50. I charged the customer $893, so my actual profit was $70.50. This is a young professional couple that I have known for many years and was trying to give them a fair price because I like them alot.
 

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If your customer is so interested in the cost of goods, suggest he go to the local hardware store and price things out there with the understanding that he will be responsible for delivery and warranty and any lost time on your part due to any inappropriate or missing material.
 

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It just amazes me that there are some people that think that everyone is trying to gouge them. Even when I thought that I was giving the above mentioned customer in my rant/ venting, a break. Sometimes it just doesn't pay to help someone.
 
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