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after6tuning@aol.com

Parts category pricing strategy??

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OK. Not to start another parts markup thread but I would like to look at this from another angle. What percentages do you aim when marking up parts when you look at the part categories? 

Just an example below:

Brakes 70%

Struts 30%

Shocks 50%

Tires 15-30%

Maintenance, etc ,etc

 

The reason I ask is because even a standard parts pricing matrix can blow certain items out of reasonable sale price. I am aware that less expensive items can net larger profits, which also makes up for more expensive items but I am trying to see a base line of what parts markup looks like with these categories.

Thanks

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Except for oil change parts, we stick with the same parts matrix on ALL parts. On tires we use a matrix specifically design for tires.

Parts matrix: 0-10  70%,  10.01-20  65%,  20.01-75  57%,  75.01-150  51%,  150.01-750  47%,  750-up  36%.

Tire matrix:  0-49.99 39%, 50-74.99  36%,  75-99.99  33%, 100-124.99  29%,  125-149.99  28%,  150-174.99  26%,  175-199.99  25%, 200-224.99  23%,  

225-249.99  22%, 250-274.99  21%,  275-299.99  20%,  300-up  19%.  This markup includes installation and all future tire tire services.

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We have a matrix based on parts cost, but we menu price things we call comparables, like oil changes, brake jobs, trans service, flushes, initial testing. We keep a few things that people are likely to be able to have a comparable price in mind at a market or below price, then price everything else according to our matrix. We have the highest labor rate in town, but still get reviews about how reasonable our prices are. Seems to be working ok.

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We use the standard parts matrix, but I will adjust the labor or the price to make a sale. 99% of my customers don't care about parts/labor they just want a price to get their car fixed. I have the ability to price match competitors. 

For tires I mark them up $20 which covers the mount and balance labor, I do charge for the weights.  I went this route to avoid putting other people's tires on off the internet, they won't save anything. Plus it's super simple to quote tires and pick up on scammers "your guy quoted me x $$" nope he didn't. The manufacturer volume bonuses help out with tires. 

Edited by alfredauto

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On 11/7/2017 at 5:23 AM, alfredauto said:

We use the standard parts matrix, but I will adjust the labor or the price to make a sale. 99% of my customers don't care about parts/labor they just want a price to get their car fixed. I have the ability to price match competitors. 

For tires I mark them up $20 which covers the mount and balance labor, I do charge for the weights.  I went this route to avoid putting other people's tires on off the internet, they won't save anything. Plus it's super simple to quote tires and pick up on scammers "your guy quoted me x $$" nope he didn't. The manufacturer volume bonuses help out with tires. 

It always amazes me why guys use a parts matrix and get a hefty GP on parts but are willing to sell tires at cost or a few dollars above. If you are marking them up $20 as you say, which is indeed the price of a mount and balance, then you are selling them at cost. Why in the world would you do that? Hell. at least mark them up $30 so you are making $10 on the tire plus a mount and balance. As for putting internet tires on, you would make the same amount of money and not have to stand behind the product. Sounds great to me. Thru yesterday, we have sold 133 units this month, at an average profit of 38.94/unit. That's $155.76/set. That's a whole lot better than $80/set. And don't tell me it's because I don't have competition. I can throw a baseball from my bays into a Super Walmart's bays. Okay I'm exaggerating, it's probably 150 yards. And I also have an NTB 1/2 mile down the street. Lastly there is another strong independent 1.5 miles up town. Using my matrix that I have outlined on this forum, we can compete with anybody. I just tell the customer that we will meet anyone's price if the total package [lifetime tire services] is comparable, and we do. Sometimes we have to knock a few bucks off to compete but it's not much. The only thing that still grips my ass is that they won't level the sales tax field when competing on the internet. It's coming though and that will hit the Tire Racks of the world hard. Lastly, I never consider the back end manufacturer's money into my markup. That's mine, period.

 

Edited by tyrguy
wrong data
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And one more thing as long as I'm on my rant. Consider this..... At an average of 38.94/unit versus $20/unit, I can sell half the units and make the same amount of profit. Lastly, Whenever I think that just maybe I'd sell more tires by lowering my price I do this calculation. Lets say I lower my retail price 10%. JUST 10%. In this case that's about $16. That means my profit per unit is now $22.94, a 41% decrease. That means my friends that I now have to sell 226 units instead of 133 units to make the same profit. That's 70% more units with just a 10% retail price decrease.

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As for tire markup.

Up to $75, $20

76 to 115, $25

116 to 150, $30

Anything over over 150 we play it by ear.

 

Mount, balance, disposal fee, & DEQ fee is $ 25 per tire. We don’t sell a lot of tires, maybe 120 to 150 per quarter. I am trying to change this with banners, advertising, and posters in customer waiting area. We are on a main highway so it should catch on eventually.

 

 

Sent from my iPad using Tapatalk

 

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