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Home > Archive > Heating and air conditioning > April 2006 > New Here, And Need Advice
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New Here, And Need Advice
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| JERKBALL622 2006-04-22, 1:21 am |
| Good Evening Everyone,
I just started a DBA with my son doing HVAC work. My son graduated
from tech school and has the "brains" of the business, I have years of
"do it yourself" experience, and the Fund$.
My question is about parts markup.. My son and I are bidding on a
job doing filter replacements for a state (Southwest) job. What is the
typical markup on parts? He is trying to tell me 30% over wholesale
(Grainger, MSC, Johnstone, etc..), but that seems way out of the water
to me.
Again, I just want to make sure we are competitive and are doing right
by the industry. Judging by some of the recent post here, there are
some who may know the answer and some who may just junk me for posting
here. But this is where I was told the "old pro's" hang out. So I ask
the question of you.
Sorry if my lingo is off and such, I am still in manual mode, like
the old days!
Thank you to anyone who can help to answer my question.
Lanark Johnson
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| aka-SBM 2006-04-22, 1:21 am |
|
"JERKBALL622" <jerkball622@aol.com> wrote in message
news:1145678793.518119.20840@z34g2000cwc.googlegroups.com...
> Good Evening Everyone,
>
> I just started a DBA with my son doing HVAC work. My son graduated
> from tech school and has the "brains" of the business, I have years of
> "do it yourself" experience, and the Fund$.
>
> My question is about parts markup.. My son and I are bidding on a
> job doing filter replacements for a state (Southwest) job. What is the
> typical markup on parts? He is trying to tell me 30% over wholesale
> (Grainger, MSC, Johnstone, etc..), but that seems way out of the water
> to me.
If you are buying from Grainger, you ARE getting fucked.
>
> Again, I just want to make sure we are competitive and are doing right
> by the industry. Judging by some of the recent post here, there are
> some who may know the answer and some who may just junk me for posting
> here. But this is where I was told the "old pro's" hang out. So I ask
> the question of you.
>
> Sorry if my lingo is off and such, I am still in manual mode, like
> the old days!
>
> Thank you to anyone who can help to answer my question.
>
> Lanark Johnson
>
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| JERKBALL622 2006-04-22, 2:21 am |
| Who is better than them in NM? We just got onto a Contractors
program with them where we get I think 15% off of the "book" price?
Which means we can go 15% above on the invoice, but what is the general
rule of thumb? I want to help to set this up correctly and make sure
everything is consistant. Things are a lot different now than they were
in my day.
I used to do landscape engineering, and the cost was the cost, to do
the drawings and workups, no parts involved.
Thank you for your response. I am amazed at the wealth of information
that is out here, just a matter of finding it and using it correctly!
LJ
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| .p.jm@see_my_sig_for_address.com 2006-04-22, 2:21 am |
| On 21 Apr 2006 21:06:33 -0700, "JERKBALL622" <jerkball622@aol.com>
wrote:
> Good Evening Everyone,
Fuck off, Jay, you're not fooling anyone.
--
Click here every day to feed an animal that needs you today !!!
http://www.theanimalrescuesite.com/
Paul ( pjm @ pobox . com ) - remove spaces to email me
'Some days, it's just not worth chewing through the restraints.'
'With sufficient thrust, pigs fly just fine.'
HVAC/R program for Palm PDA's
Free demo now available online http://pmilligan.net/palm/
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| .p.jm@see_my_sig_for_address.com 2006-04-22, 2:21 am |
| On 21 Apr 2006 21:22:28 -0700, "JERKBALL622" <jerkball622@aol.com>
wrote:
Fuck off, Jay.
--
Click here every day to feed an animal that needs you today !!!
http://www.theanimalrescuesite.com/
Paul ( pjm @ pobox . com ) - remove spaces to email me
'Some days, it's just not worth chewing through the restraints.'
'With sufficient thrust, pigs fly just fine.'
HVAC/R program for Palm PDA's
Free demo now available online http://pmilligan.net/palm/
| |
| gofish@gonefishin.net 2006-04-22, 3:21 am |
| On 21 Apr 2006 21:22:28 -0700, "JERKBALL622" <jerkball622@aol.com>
wrote:
> Who is better than them in NM? We just got onto a Contractors
>program with them where we get I think 15% off of the "book" price?
>Which means we can go 15% above on the invoice, but what is the general
>rule of thumb? I want to help to set this up correctly and make sure
>everything is consistant. Things are a lot different now than they were
>in my day.
>
> I used to do landscape engineering, and the cost was the cost, to do
>the drawings and workups, no parts involved.
>
> Thank you for your response. I am amazed at the wealth of information
>that is out here, just a matter of finding it and using it correctly!
>
> LJ
If, like you say, you're a legit hvac contractor just getting your
feet wet, I suggest you join some PROFESSIONAL trade organizations,
esp ones that cater to the smaller companies.
try http://www.serviceroundtable.com/ for starters
ask your questions in that forum and you'll get answers from hundreds
of other hvac BUSINESS OWNERS who have no problems whatsoever sharing
their knowledge and experience with you.
in alt.hvac its hardball, and you're more likely to get beaned than
anything else.
myself, I mark my parts up anywhere from 100% to 1000%, and I am 99.9%
commercial, with a boat load of service & maintenance accounts.
If you want consistancy in pricing, set up a flat rate pricing
program.
Oh, and I DO NOT purchase a damn thing from Grainger. Ever.
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| On 21 Apr 2006 21:06:33 -0700, "JERKBALL622" <jerkball622@aol.com>
wrote:
> Good Evening Everyone,
>
> I just started a DBA with my son doing HVAC work. My son graduated
>from tech school and has the "brains" of the business, I have years of
>"do it yourself" experience, and the Fund$.
>
> My question is about parts markup.. My son and I are bidding on a
>job doing filter replacements for a state (Southwest) job. What is the
>typical markup on parts? He is trying to tell me 30% over wholesale
>(Grainger, MSC, Johnstone, etc..), but that seems way out of the water
>to me.
>
It is and youre fishing. Take a hike.
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| BSemail2006@gmail.com 2006-04-22, 10:21 pm |
| How bout the typical markup on installs? I see units on the internet
for well under 3k yet firms are bidding the jobs for 6k min and most in
the 10k range.. Do most customers haggle over the price of installs or
is the price...the price. I would think that if most customers haggle
over the price then you would quote the system higher in the first
place like car dealers. Buying a comfort system is such a major
purchase, yet it doesnt seem to get much publicity.
| |
| aka-SBM 2006-04-22, 11:21 pm |
|
<BSemail2006@gmail.com> wrote in message
news:1145751856.633965.76330@u72g2000cwu.googlegroups.com...
> How bout the typical markup on installs? I see units on the internet
No warranty that way either...you DO know that right?
> for well under 3k yet firms are bidding the jobs for 6k min and most in
> the 10k range..
Labor, insurance, licence and all...just grows on trees right?
> Do most customers haggle over the price of installs or
> is the price...the price. I would think that if most customers haggle
> over the price then you would quote the system higher in the first
> place like car dealers. Buying a comfort system is such a major
> purchase, yet it doesnt seem to get much publicity.
>
Buying a car...installing a system...lets compare:
Your gonna buy a Dodge Pickup.
You have at least, 4 engines, 4 transmissions that Im currently aware of, 9
(I think I recall correctly on that) rear diff ratios.
You have 3 different trim levels, with various options like heated seats,
mirrors, power goodies.
You have 3 different mirror styles.
at least 5 different wheel combinations, with at least 3 different tire
sizes that can affect the final drive ratio..
What radio combination you want?
Tow package?
running boards?
etc
Now...if you are looking for a truck, do you REALLY sit down with the sales
monkey and go: " Ive looked over the various combinations I can get, and you
dont have it, but how about doing a dealer search, find me one, get it, and
Ill take it?"
or
How about ordering me this combination, and I know its not listed but Im
willing to wait up to 5 months for it to get here.
No.
You walk in, see the truck you want, dont give a rats XXX what running gear
its got, its the color you want and altho you wanted leather heated 19
position seats, you will live with the cloth ones that only go back and
forth and fold forward.
If you "haggle" at a dealer, you are getting screwed, BTW..what looks good
on paper to you, looks GREAT to them.
Pretty much, in other words.....a truck, is a truck. You can personalize it
to a point, but its still made on the same line, probably at the Mexico
plant and gets shipped up here and you buy it....pretty much as they tell
you you are getting it.
A comfort system, installed correctly, is a bit more involved than buying a
truck or car.
Each unit has to be sized to each home.
Each unit has to be modified to fit each home, and situation.
There are as many kinds of install situations, as there are homes.
Yet, you expect to get a unit off the net, and have a contractor spend up to
a week in some cases installing the thing for free?
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| gofish@gonefishin.net 2006-04-22, 11:21 pm |
| On 22 Apr 2006 17:24:16 -0700, BSemail2006@gmail.com wrote:
>How bout the typical markup on installs? I see units on the internet
>for well under 3k yet firms are bidding the jobs for 6k min and most in
>the 10k range.. Do most customers haggle over the price of installs or
>is the price...the price. I would think that if most customers haggle
>over the price then you would quote the system higher in the first
>place like car dealers. Buying a comfort system is such a major
>purchase, yet it doesnt seem to get much publicity.
most successful contractors shoot for 50-80% gross margins.
buy a box of frozen hamburger patties at sams club and take them into
macdonalds for them to fry up for you. try haggling. if ya get good
at it mebbie you can jew-em-down from their regular pricing. moron.
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| BSemail2006@gmail.com 2006-04-23, 1:21 am |
| Sounds like I struck a nerve and for that...I apologize. I have owned
car repair shop. I had a customer locate his own own engine and ask me
to install it. That was a pretty good deal because I told him upfront
what the labor charge would be and their would be no waranty because I
had never even heard the engin run. All I was doing is installing it
and getting paid for my labor. That being said, I would not expect
anything close to that from a respected HVAC company. When you buy a
car, you can pretty much go to your local credit union and see the
dealer invoice. You might not see all the dealer incentives, but you
can pretty much tell what the price is gonna be. If you go to a jewelry
store, it is common knowledge that the mark up is at least 100 percent.
I realize you may have difficult customers and spend a lot of time
answering their questions and then they go elsewhere. That is part of
life. Real Estate Agents deal with that all the time. In a real estate
transaction you know that 6% of the transaction is going to the buyers
and the sellers agent.
In the HVAC industry it looks as though things are different. I have
never met anyone that had a system installed, so I have no one to ask.
If I am quoted 12000 for a top of the line 3 ton York 18 seer unit with
all the bells and whistles....should I just sign the paperwork? Are
your proffit margins as a bussiness owner that tight where the price is
the price and you accept the proposal or decline it? Or on the other
hand would most cutomers come back and say 'Well...could you accept
10k" and you meet at 11k.
Take Care
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| aka-SBM 2006-04-23, 2:21 am |
|
<BSemail2006@gmail.com> wrote in message
news:1145764485.719739.73800@i39g2000cwa.googlegroups.com...
> Sounds like I struck a nerve and for that...I apologize.
No need. And you didnt.
Im ASE in 6 areas, and not that it means anything, but I joke around that I
can build more HP out of one cylinder of my 426H cars than most have in the
entire block...
> I have owned
> car repair shop. I had a customer locate his own own engine and ask me
> to install it. That was a pretty good deal because I told him upfront
> what the labor charge would be and their would be no waranty because I
> had never even heard the engin run. All I was doing is installing it
> and getting paid for my labor. That being said, I would not expect
> anything close to that from a respected HVAC company. When you buy a
> car, you can pretty much go to your local credit union and see the
> dealer invoice. You might not see all the dealer incentives, but you
> can pretty much tell what the price is gonna be. If you go to a jewelry
> store, it is common knowledge that the mark up is at least 100 percent.
Actually, you will NEVER actually see the invoice. You see ONLY what the
dealer, and the maker, WANT you to see.
After being around automotive all my life, this one is a given. Dont believe
it? Find a Dodge tech that PDIs the trucks, and he MIGHT tell you about all
the actual invoices from factory left under the drivers side seat by someone
pissed with Chrysler.
>
>
> I realize you may have difficult customers and spend a lot of time
> answering their questions and then they go elsewhere. That is part of
> life. Real Estate Agents deal with that all the time. In a real estate
> transaction you know that 6% of the transaction is going to the buyers
> and the sellers agent.
Actually, difficult customers are no issue. Water off a ducks back. Pay me
or its broke again, and this time, we might have to red tag it.
Real simple actually. Difficult customers are difficult for a reason. Find
out why and fix that too.
>
> In the HVAC industry it looks as though things are different. I have
> never met anyone that had a system installed, so I have no one to ask.
> If I am quoted 12000 for a top of the line 3 ton York 18 seer unit with
> all the bells and whistles....should I just sign the paperwork? Are
> your proffit margins as a bussiness owner that tight where the price is
> the price and you accept the proposal or decline it? Or on the other
> hand would most cutomers come back and say 'Well...could you accept
> 10k" and you meet at 11k.
If you are quoted 12K for a CYK model, you getting fucked hard.
But..to answer your question...
When I price one, it IS the bottom line. You want lower, go someplace else
that sells Goodman shit, and dont bother me again. If it breaks under
warranty, and you got the Goodman from someone else, wellllllll.......tough.
ill fix it, but again, the price you get, is the price you pay.
I have set up accounts with several of the larger employers here, and the
employees get a margin off. When they hold a QUOTE and I mean a QUOTE...not
some bullshit estimate, they will never pay more than it says, altho, many
have paid less. But thats up to me. If I get in and dont have to do
something, or we are not sure about how difficult a run will be...etc...some
buffer has to be built in, but EACH HOME and SITUATION IS DIFFERENT.
You CAN set up a flat rate install price...but its gonna looks like this:
ANY 14SEER unit, INSTALLED: $13,000
I mean, that covers it...they know what they are getting up front. Do what
you want....this isnt the place to get pricing structure ideas.
Where you live, however, IS.
When I first moved back here from Southern CA, I knew my prices from there
would never fly here, so,
One morning, I moved all the vans out to a friends home, the house we bought
was gonna get a new York system anyway, but I needed to know prices, and it
had a new ThermoPride oil unit and Goodman unit. I just called ALL the names
in the book, got free estimates from most of them. Asked for specific
equipment along the lines of what I was selling, and went from there. No one
in town knew who I was at the time, nor that I was gonna have a mini fleet
showing up. Even had one hardcore diehard kinda salesman show up one day and
ask why I went with some out of town company (York, no dealers here since
the last ones owner died and the kids killed it) and why I wasted his time.
I kinda looked at him funny and just said simply: Thanks, now I know how bad
you are fucking the county, handed him my card, and went out to change
things. did it work? Maybe. Im making money where others are not. Last
winter EVERYONE had a slow run. Its not busy season here and we are covered.
Call and if you get the cellular voice mail, it will tell you we are at
least 4 weeks behind....now, maybe more like 7. A couple of the companies
that estimated some really stupid numbers are out of business. One other one
has lowered his prices and gone Goodman. Another....packed up and we dont
know where he is. Now, there are 9-10 ESTABLISHED companies here, myself
included. Thats just in this area. We service the entire 20 county area
here....20 out of 100 and have no problems getting customers by word of
mouth. This morning, went 4 counties down, wasnt the low bid, and had a guy
up and running by noon. Now, hes so satisfied with the work, hes wanting us
to come back and install 4 more units...one in his moms place, his brothers,
his in-laws, and his daughters.
You HAVE to feel the area out, know what works in your area, and not really
worry too much about whats happening on the others side of the country.
Bottom line:
Try to retire on one job, every time, and you will be forced to early
retirement.
Try to undercut the next guy on every job, and you might as well offer to do
it for free 5 or 6 times and declare insolvency.
OR
Join a local org that is designed to help you make it, and take their advice
thats worked for othrs and use it.
No one here can give you a magic number.
BTW....be prepared, if you are a decent guy, to give a few units installed,
complete, with all the bells and whistles AWAY for FREE each year to the
older folks and kids just getting started that deserve em.
In order to do that, you BETTER be making money, and you BETTER be a damn
good judge of character.
>
> Take Care
>
| |
| Nathan W. Collier 2006-04-23, 3:21 am |
| "JERKBALL622" <jerkball622@aol.com> wrote in message
news:1145678793.518119.20840@z34g2000cwc.googlegroups.com...
> I just started a DBA with my son doing HVAC work. My son graduated
> from tech school and has the "brains" of the business
youre message is vague, but since you mentioned he graduated "tech school" i
assume he is a new graduate. if he has just recently graduated tech school
and youre going into business with him, youre getting ready to get royally
FUCKED. at BEST, tech school will prepare him for an entry level position.
before you even THINK of going into business with him he needs to earn
journeyman status. if you dont listen to me now, remember i told you this
later when it collapses around you.
sorry.......the truth sucks sometimes.
> My question is about parts markup.. My son and I are bidding on a
> job doing filter replacements for a state (Southwest) job. What is the
> typical markup on parts? He is trying to tell me 30% over wholesale
> (Grainger, MSC, Johnstone, etc..), but that seems way out of the water
> to me.
$1 - $10 X 3
$11 - $50 X 2.5
$51 - $200 X 2
$201 - $1000 X 1.8
is my standard parts markup, and its all subject to change depending upon
your payment history (i double my markup for one restaurant in particular
because their contractor payout is on a 90 day basis) and just how much of a
pain in the XXX you are in general. anything above $1000 it depends on the
customer.
--
Nathan W. Collier
http://UtilityOffRoad.com
http://7SlotGrille.com
http://InlineDiesel.com
http://BighornRefrigeration.com
http://ConcealedCarryForum.com
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