Question on List Price

[Carguy]

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[autoguy]

Frist, great new forum! We needed this.

 

My issue is with list price on parts. Some shops use the list price, other shops use thier own list. What is the best way to go about this.

 

My fear is that customers may call if I charge over list.

 

Need help!

 

I think manufacturer list prices are fictitious and you should use some sort of formula to mark up your parts accordingly.

[Joe Marconi]

Charging list price may or may be correct for your business. You need to sit down with your accountant and establish your “breakeven”. After that is determined you will find what mark up you will need to achieve not only breakeven, but to make a profit.

 

Shops that I speak with usually look for a GP% on parts any way from 45% to 55%, but every business is different. Don’t’ be afraid to charge over list and don’t change your entire business model because one or two people may call around to check your prices. Those people won’t care when you don’t have enough money to pay your bills.

 

Joe

[xrac]

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[Joe Marconi]

Most shops that I speak with do charge over list, any where from 35% to 55% depending on the part. I do the same. For example; I just bought a pre-molded transmission line assmebly for a Subaru that cost $38.00, the dealer list was $44.00. That's crazy. My matrix bumped it up to $81.00. A fuel injection relay that cost $21.00, can easliy be sold for $48.00. Even though the list is $29.00

 

The only time I charge list are for wheel covers, some side view mirrors, some body parts, etc.

 

List price has nothing do with what you need to make a profit. You can't be out of the ball park, but you need to make a profit. It's a delicate balance.

[Joe Marconi]

I want to add one thing. There are areas that we need to be more competitive where pricing is more sensitive to the consumer, such as; brake work, LOF, tires, etc. That's why we need to be profitbale in other areas such as check engine lights, electrical work, suspension, steering, etc.

 

We need to understand the mindset of the consumer before we build a pricing stradegy.

[Charlie]

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[Joe Marconi]

A parts matrix is the only way to insure that you achieve your overall GP on parts. And, I agree, those items that are price sensitive are the ones that we need to be more competitive with.

 

As far as fees are concerned, are you talking about hazmat and supply charges?

[Charlie]

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[Charlie]

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[Joe Marconi]

We use to charge a supply charge. We had some customers complain. Plus, New York has a few restrictions on how to charge supply charges and enviornmental charges. According to New York, you can charge supply and other charges only if you document what the charges are for, and, you are only allowed to recoup your expenses, not generate a profit.

 

It may be different where you are.

 

It looks like the supply charge really works for you, that is great!

[xrac]

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[Charlie]

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[Joe Marconi]

Where I am in New York (less than an hour north of NYC) you can expect to pay about $2500.00 per bay for rent. So a 3 bay facility will run about $7500.00 per month.

 

I had too much negative feedback when I used to charge supply charges. The customer did not mind paying the $400.00 brake job, but had an issue with the $3.00 supply charge. I guess it's like those annoying line item charges you find on your phone bill and electric bill.

 

I calculated what I was making on supplies charges and then amortized that number and raise my prices slightly and spread the charges over all the invoices. I achieve the same results, but just behind the scene, and a few pennies here and there is not noticeable to your customers.