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Parts Markup?!?


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Hi guys I am new to the forum. I thought this would be a great place to talk to other shop owners about questions we have. Sometimes Alldata doesnt have everything you need and Google and Youtube actually come in handy lol... but hopefully in the future can have some other great minds help us.

My boyfriend & I started our shop in January. I asked a good friend of mine (she does bookkeeping & accounting) how people markup on parts. She said 47%.

 

When I call Napa, O'Reillys etc I ask for list price, but then list isn't what the "average Joe" can walk in and get it for. I cant go off of average joe price because we wouldn't still be in business. I cant sell it at manufacturer list either because that would mean taking an arm and a leg...

 

I meet in the middle, on small stuff markup more cause not a lot of room to move, and big stuff markup less. And dealer I just sell it at what dealer would sell it at, because I don't want someone going into our place or the dealership stating I sold it at less or more than dealer or vice versa. And then aftermarket parts I sell lower than MSRP. So if we do 20% markup we lose money, 45% on small stuff, 30% on bigger items? What does everyone mark their parts up? And just an FYI our labor rate is competitive from the rates other shops charge we are much lower at $80.00/hr whereas others charge $100.

 

Can someone please explain to me auto parts markup or how they markup or how I am doing it is okay for an auto shop?

 

Amanda S

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I want to say first that i dont think there is one right answer to this question, every business and situation requires different standards. You need to find out what works best for you and how to remain profitable without taking advantage of anyone.

 

In the case of my business every job and situation is different, we mark up dealer parts from 15 to 50% and aftermarket parts from 50% to 150%. Lesser expensive parts are marked up higher than more expensive items, but once again every job is different.

 

Good luck

 

 

Hi guys I am new to the forum. I thought this would be a great place to talk to other shop owners about questions we have. Sometimes Alldata doesnt have everything you need and Google and Youtube actually come in handy lol... but hopefully in the future can have some other great minds help us.

My boyfriend & I started our shop in January. I asked a good friend of mine (she does bookkeeping & accounting) how people markup on parts. She said 47%.

 

When I call Napa, O'Reillys etc I ask for list price, but then list isn't what the "average Joe" can walk in and get it for. I cant go off of average joe price because we wouldn't still be in business. I cant sell it at manufacturer list either because that would mean taking an arm and a leg...

 

I meet in the middle, on small stuff markup more cause not a lot of room to move, and big stuff markup less. And dealer I just sell it at what dealer would sell it at, because I don't want someone going into our place or the dealership stating I sold it at less or more than dealer or vice versa. And then aftermarket parts I sell lower than MSRP. So if we do 20% markup we lose money, 45% on small stuff, 30% on bigger items? What does everyone mark their parts up? And just an FYI our labor rate is competitive from the rates other shops charge we are much lower at $80.00/hr whereas others charge $100.

 

Can someone please explain to me auto parts markup or how they markup or how I am doing it is okay for an auto shop?

 

Amanda S

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Low working wages in the area, still crawling out of an economic recession, and a competitive auto repair market here. We charge 30% mark up on MOST parts. You mark up large parts here ($200+) it will throw your estimate to high and say bye bye to the repair job. Every customer seems to be a price shopper and they know the fair market price before they call or enter the door. I don't lose out on too many jobs with this method ($60/hr labor + reasonable 30% mark up). It would help to charge more, but it is either win the bid, or sit on the computer all day.

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      It always amazes me when I hear about a technician who quits one repair shop to go work at another shop for less money. I know you have heard of this too, and you’ve probably asked yourself, “Can this be true? And Why?” The answer rests within the culture of the company. More specifically, the boss, manager, or a toxic work environment literally pushed the technician out the door.
      While money and benefits tend to attract people to a company, it won’t keep them there. When a technician begins to look over the fence for greener grass, that is usually a sign that something is wrong within the workplace. It also means that his or her heart is probably already gone. If the issue is not resolved, no amount of money will keep that technician for the long term. The heart is always the first to leave. The last thing that leaves is the technician’s toolbox.
      Shop owners: Focus more on employee retention than acquisition. This is not to say that you should not be constantly recruiting. You should. What it does means is that once you hire someone, your job isn’t over, that’s when it begins. Get to know your technicians. Build strong relationships. Have frequent one-on-ones. Engage in meaningful conversation. Find what truly motivates your technicians. You may be surprised that while money is a motivator, it’s usually not the prime motivator.
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