how much markup?

This is for my fellow contractors. What is your markup guide? A friend who was a hvac/plumbing contractor, all he does now is hvac, gave me his guide.

unit cost per item multiplier
less than 49.99 - 2.30
50.00 to 99.99 - 2.10
100.00 to 299.99 - 1.90
300.00 to 499.99- 1.70
500.00 to 999.99 - 1.60
greater than 1000.00 - 1.55


I have been using Scot Greg's guide from "Profitable Plumbing"


under 10 400%
10.01-15.00 100%
15.01-25.00 75%
25.01-50.00 50%
50.01-100.00 35%
above 100.01 25%



What do you guys think?

prices

I think I would have a problem charging almost $40.00 for a $$9.99 item, but only $20.02 for a $10.01 item.

I bought that book as well but never read it. I incorporate markup on a case by case basis.

I keep it reasonable so I never get questions in regards to my charges for materials.


But, I got stroked by a customer today on rebuilding a 2 handle Delta faucet; they kept trying to whittle my price down over the phone. I would of charged $20 for two seat cups and springs with the attitude they was throwing at me if I would of done the work for them.

# of cars in driveway

When I go do a service call the very first thing
I try to determine is where they are located in our town....
the poor sides or the very rich sides

that can usually tell me what the market will bear......

Also , if I pull up to the house and see a hummer and
a porch in the garage the price usually goes up sub-stantially


and sometimes they are the hardest to collect from


whatever I think the market will bear......works best

Like Rugged said....

I had a lady yesterday literally argueing with me over 20 bucks to clean out
her laundry drain and I sent her on her way...


So if they haggel wth you over the phone
its best to just send them to your competitors.......

Question

When they have a porch in the garage, do you usually have to go onto the Porsche to ring the doorbell?

The biggest reason for a price book, is to keep your pricing consistent.

It shouldn't matter where they live or how much they make.
What does matter, is what you need for your business.

Every business needs a profit to make sure they are not put out on the street and the employess scattered to the winds.



I must be low though, there are outfits in the Seattle area that are charging 2-3 times what I charge for the same things.
They have a nice unlimited hydroplane that they race and offer a $50 coupon on work.
With the coupon, you would still be paying twice as much to them, than you would have paid to me.
I do have toy boats you can watch that will fit in your bath tub.

I guess what I have is like a two for one coupon.
My customers tell me that with me, they get two toilets replaced for the same price that the other guy charges for one, even with their $50 off coupon.

As a consumer some of these pricing strategies are rather suprising. Someone that lives in a fancy house can be just as strapped for cash as someone living in a fixer upper.

I like Terry's idea best, and that is what we use in my line of work (IT). Only difference is we waive our trip charge depending on the size of the job.

jlohrenz said:

As a consumer some of these pricing strategies are rather suprising. Someone that lives in a fancy house can be just as strapped for cash as someone living in a fixer upper.

I like Terry's idea best, and that is what we use in my line of work (IT). Only difference is we waive our trip charge depending on the size of the job.

Click to expand...

Yup. And it's a lot more than just a good idea.
Wealthy people know when you are trying to get in their pocket. I would imagine they are the customers you (plumbers) would most like to keep with their spending power and disposable income.

the big adds in the yellow pages.

I misspelled porsch?? ...oh well....

it had to happen some day


it amazes me how most people will go
to the very largest adds in the yellow pages and literally
pay almost 3 times what I would have charged them.....
like 1500 for a 40 gallon gas heater.


of course the plumber must pay for those adds somehow....

and paying anywhere from 5000 to 15,000 a month for adds in the yellow pages can either make or break a company ...depending on management, ---employees, ---and their FLAT RATE PRICEING

a small add is more than enough if you
have a great reputation

and a large add
is vital if your name is MUDD because you
never get repeat customers.........and you need suckers
walking through your doors non-stop to pay that yellow page bill.


its a vicious circle....

jlohrenz said:

As a consumer some of these pricing strategies are rather suprising. Someone that lives in a fancy house can be just as strapped for cash as someone living in a fixer upper.

I like Terry's idea best, and that is what we use in my line of work (IT). Only difference is we waive our trip charge depending on the size of the job.

Click to expand...

I like Terry's idea best too. As a consumer, if you came to my house, you wont find a fancy new car. My house isnt fancy, and my furniture isnt new, yet if I couldnt afford you, I wouldnt call. You cant judge me as poor by what I own, because Im not! Im not a tightwad either. Im just happy with what I have...it's not ugly, and it does its job well, and I am comfortable in my home and my life, however there are people in my neighborhood who have fancier homes, nicer cars, and better furnishings, yet for some reason or another...maybe a recent medical condition, etc, they are lucky if they can afford groceries for next week. I like one price for all. Nice, clean, fair and easy to remember what you quoted me yesterday.

Here's how I figure mark up; having a plumbing supply house in your driveway while I'm there working on your plumbing comes at a price. Do I charge $10 for a wax ring? No. I charge $2 since I'm buying them for .38 a piece. Don't need to get rich off of a wax ring.

When I install sump pumps or shower valves......I sell them for the same price that a homeowner can go and buy straight from the same place I buy.....but I'm getting them significantly cheaper. PRV's and EXP tanks I sell @ $65 a piece if installed on time/materials or customer asks for a breakdown of labor against materials. You can buy those two devices for under $70.

****If you want better pricing for what the plumber is charging, have the CORRECT materials there, ready to install and more than likely the plumber will install them.****

I won't install hardly any materials off the truck without embedded markup because that is a rolling amount that keeps some insurance that I've covered myself if a defective part comes about. I get the money back for the part, but not my time. I can discount my time down to pennies on the hour in those situations without complaint.....that's just par for the course.


In reference to estimates, here's a sampling of 2 situations I laid ears to:

I did a drain cleaning job yesterday and shot the bull with my customer...really nice guy and we probably talked for an hour after I was done. (you can do that when you're the boss ) Anyway this guy has a huge tree in his front yard and we discussed an incident regarding a tree branch that fell on his daughter's car.

The jist of the statement, "I called just about every tree trimming service in the yellow pages, had like 8 different companies and they all came within $100 of each other." He didn't give rhyme or reason what was the deciding factor to which one he picked....but I'll tell you why I mention this.

How would you like to be one of the 7 that didn't get the job, burned up fuel and time not knowing that you was better off flinging a price over the phone instead of the "free estimate" tragedy.

Fast forward to today; did work for a really nice couple last week, Armed Services Veteran and gave them a good size discount over the top of $600 worth of work. They referred me to another customer and they called me about 11am this morning. First words out of their mouth, "I was referred to you by so and so and I need a free estimate to do work in a home that we are flipping. Moving pipes around and setting fixtures and getting the plumbing back in working order." Basically so they can minimize the expenses to get a higher profit margin on the sale of said home. No problem by me.

Just don't fire the word "free" in the conversation. Don't expect me to drive to said location, waste my fuel and spit out my professional knowledge so you can have the guideline to hire a handyman to do it for a third cheaper....with not even a thank you in return.

Here's how I fixed the problem. I spinned the call away. The person on the other end of the phone was acting shocked, I guess the referral she figured was solid as a rock and it is. I just won't deal with this sort of thing where I'm forced into competition with either the unlicensed or other perils for the sheer convenience of those who are willing to take of me. My first year in business I must of estimated I know about 40 jobs. Drew up isometric drawings, covered all bases and gave top notch professionalism like the trade deserves.

Most if not all the time the plumbers who moonlighted or contractors that don't actually do plumbing as a profession but as a carpenter or general contractor would get the jobs because they could button up the job once the work was done. (drywall, finishing, trim, paint....the whole monte) Basically cheaper than what I can do just the plumbing work for.

So I guess all of my babbling in print should send one clear message to those who have a good working relationship with their plumber....or know of a really good one.....if you wonder why this plumber oddly abandons the idea of working for you,

you've possibly crossed a line in regards to implied thinking that your intent is to shop one's opinion and move on......or brow beat a low price.

Being smart involves being a quick read and using your background knowledge of how people are....and not all are there to take from you. But calls like the one I received today is prime example that I'm just going to victimize myself by being a fool to partake in helping someone gauge their work for the cheapest price they can get it. I'm not the cheapest plumber out there.......why bother? I'm charging for my reputation of being exact, professional, straightforward and honest without wishwash after I'm long gone. Am I the best? Hell no, far from it. Not exactly pleasing to the eye either; made a dog puke the minute they saw me one day. Still going to counseling over that one.

Here is what happened to me monday night. I was going on a softner sales call at a condo complex when another person living in the complex called. I had done work for her in the past. She said she had a toilet with a vibration. I mentioned that I had to see someone in the complex that night and I could come over and take a look.

Silence on the end of the line.

I said I wouldn't charge her for looking as long as she called me to do the repair. Guessing that was what the silence was about. She says O.K.

I went over and spent 15-20 min. checking 2 toilets, the PRV. and talking. The 1 fill valve was bad and both toilets needed flappers. As I'm heading towards the door she says "I wonder if john (her husband) knows how to replace fill valves". I turned, looked at her, turned away and got in my truck and left.

Nothing will be free for her again.

Fine......even though $900 worth of dental work recently was disturbing. I couldn't complain because from business to business....it's just what it costs.

I can see the other side of the fence with others needing estimates. IN your situation it was bullshit to see just how many don't know how to properly set a toilet and they are toting the plumbing name. I guess I expect people to be trusting with me because I know of my reputation.....but they don't. Either they've been burned badly or just raped on something horribly. This is all really why I joined Angie's List. I'm putting it all on the line for those to see that I can be trusted, I can do work on a range of things and offer security that you won't get robbed. You won't be paying another plumber to do it twice. Exact is a word I like to describe myself.

AL is still too new to my area.....it's only 6 years old I believe and the general public has to pay to belong to it. Even though I'm a leader in my area........no one knows.......but the members themselves. That is a very very small group of people and all I can do to promote the title is by my mouth only. I cannot mass advertise the AL logo or anything about it....which sucks.

The only thing I can say is that AL is now running national ads that are grapevining to all states and they are possibly going to start spotlighting the top leaders in the different professions by being a part of their ad...mentioning of company. It will come at a huge price I'm sure but I will do it when the time comes. Just as long as I don't have to put my face to the company name. I let them down lol when I arrive on their front doorstep. When they mention how they've never seen a plumbing truck as nice as mine.......I reply, "I've been told that if I looked as good as my truck.......I'd be dangerous."

If there was a AL in your area.....you could of put the company in the "Neighbors in Action" where they spotlight the service provider...put them in the "penalty box" until they either rectify the problem or else. If they do not make a legit claim to either fix the problem or reach amicable ground between both parties....they get blacklisted. Theres a fellow on this site right now that has an issue where his daughter (not knowing all the facts) might have a situation unfolding where the sewer line was root bound and $3000 later it's crunch time. If there was no indication of how much it was going to be in the beginning....there's a problem by pushing the customer into a corner without options.

Meaning, people can inquire on them but they will get the facts about what they did. Even if they get positive reports they will not show. AL only works like a mediator and doesn't take sides....they just let public opinion do the magical work. And believe me.....if you have any reputation to protect you certainly don't want to end up on such a list. These people give grapes to the grapevine and they share the facts with non-members all the time. They do a great deal more than the better business bureau.

From a service providers point of view it would be hard to pass one over if you are truly trying to screw someone. I myself put the list to use on a electrical contractor that half-assed a wiring job to a garbage disposal. Told the customers to join and expose his actions. AL stepped in, gave both sides choices and the guy got F's for his attempt to glaze one over on both the follow-up electrician and the homeowners. Very hard to remove that black eye once you get it. It's best to follow good workmanship practices at all times and you won't be put in that predicament to begin with.

pricing

one of my customers is a billionaire. He owns a Rolls Royce, a Bentley, a Viper, and several other cars, but he gets charged the same as everyone else.

every job is different

for the love of Jesus Christ..
my post on what I charge was not to be taken 100% literally...

I dont have flat rate priceing which many around here do,
which is usually about 3 times higher than me....


and I usually charge about $90 for the first half hour and 90 for every hour after that......

and sometimes I take it easy and sometimes I dont.......

becasue I own the business and I can show charity if I so wish........

I generally dont mark up parts at all or very little and no
one ever questions my bill ...becasue they are always happy.....

I hope this makes that perfectly clear.......

If they have coffe and doughnuts waiting for me at the door when I arrive I am usually much cheaper... (thats a joke folks)
-------------------------------------------------------------------

every job is different and
some are easy and some are just downright nasty....

and If I go out and see the mess first for an estimate
I usually size up the situation and charge accordingly.

some people are easy to get along with and some are
out right total bu//holes

AND if their about 2 HUMMERS and a
PORSCHE in the driveway
my estimate could reflect that.....
(did I spell that right?)



Honestly ...... I will confess that
Sometimes when a person calls me and I KNOW that they have called the other highest plumbers in town and ask me for a price

YES the price might go up somewhat becasue I KNOW that I am
still substantially cheaper .....and they ar still very happy.

I do this because I CAN...

costs

Cookie said:

I loved your ending. That was funny. I have made my kids roll their eyes and ask me, " who dressed you?" I am known not to be a fashion statement.

Whenever, I need an estimate, I also like it to be free. That is why, I will only call places very near where I live. Then, they are offered coffee, tea, mineral water, lunch even, or donuts in the morning. I do get a couple estimates on things when I need something done. And, being I paid so far 1,200 in having the toilet set down, I feel I have more than paid my dues. But, I have also paid as much as 80 bucks for an estimate, I am talking estimate. And, they did the job, very badly, and cost me another 1200 in setting it down.

But, I loved your ending, that was cute. How is your dog doing?

Click to expand...

If you paid $1,200 to have a toilet set, then maybe you should have paid for an estimate ahead of time. And you might be more selective about who you have do the work. It takes as long, and sometimes longer to do an estimate as it does to do the job, which is why I do not do estimates for anything other than major jobs. Someone called the other day for an estimate. I told them if I drove there to give an estimate I might as well do the job.

Time Release Capsules in Wax Ring

"How it amounted to 1,200 was it would start to leak again, after his initial warranty would run out. "

Cookie,
You should be aware that plumbing supply houses sell special wax rings to plumbers that have time release capsules that create a leak at 10% after the warranty. You can get 30 day, 90 day, 6 month, and 1 year warranty rings.

2 bucks for a 38 cent wax ring is a 500 percent markup. I usually sell mine for 3 or 4 bucks. I am in the process of renting a shop and office. I am hiring two part-time girls to answer the phone, schedule me, keep quickbooks, order material and invoice my customers. I am charging 75 an hour, it's going up to 90. I leave too much money on the table by not remembering what I paid for parts and charging too little, with not enough markup. I also put in too many unpaid hours after "work" is over for the day. My girls will tell the customer "it's a 45 dollar showup charge, the hourly rate is 90 bucks, billed in 15 minute increments, Can we set an appointment?"

I did well these last 24 hours. I looooooooooooooove sump pump weather LOL!

2 sump pump replacements.....a scheduled battery backup install out of one of the calls for next week and finally a easy toilet valve replacement which turned into a PRV and EXP tank install next week as well.

Life is good for the moment but the body is destroyed.

And of course.....I marked up my material a little more for weekend service, as always. I don't think anyone (homeowners/DIY'rs) can buy what I pay for those rings but I bet two boxes of Stove Top Stuffing that they pay around $2 at the store/supply house.

I'd love to do what you're doing kordts along with other plumbers hiring help in the office and all that. I seriously cannot afford it though. I "could" but it kills the 7 year plan I have for my company.