Hello. This is my first post on this site (great site, by the way) and I thought I should share what little experience I have. I have my own part-time one bay shop with me as the do-everything guy. I started out my first 2 years being concerned that someone would look online and see what a part costs and complain about my price so I always charged the same or slightly less than the customer-accepted lowball Autozone price (I have a master-installer account with the local NAPA so I get better prices than even Autozone). I have realized now in the last few months that I can't and won't survive with little or no parts markup. I've started with a modest (in my opinion) 25% markup on all parts regardless of price. I only have a couple of exceptions to that rule: oil filters; if my cost is under $5.00 then the price is $5.00 if my cost is over $5.00 then I mark it up 25% (that is because I charge $26.95 for an oil change with specific pricing on parts and labor). The other is small items like light bulbs. I have a standard price on general light bulbs of $2.48. All of my generic bulbs are under this price by a lot but if they aren't (like a headlight bulb, for example) then it gets the 25% markup. I lost way too much money by trying to be nice and I don't even have any overhead (I work out of my father-in-laws garage and he pays for electricity and heat). I already have the lowest labor rate in the area and I had the lowest parts price too. I'm only in it part-time but will be going full time in about 6 years when my oldest son can start to help me. I think the lowest markup you can do without losing money is 25%, no less. I have also gone to using the flatrate for labor no matter how much I can beat it by, and if it takes longer to do a job (I live smack dab in the center of the rust belt) then I charge actual clock hours. Those are my limited experiences, so take them with a grain of salt.
Oh, by the way, a lot of my customers are friends and even they tell me "You NEED to mark up your parts, I expect it. If I wanted to go to Autozone and buy the parts to fix it myself I wouldn't be in your shop. What I don't expect is when a shop quotes a price on a part and it is 2 or 3 times what I can buy it for over the counter"