What is a Fair Mark Up on Repair Parts?

[Travelover]

This is sort of a gripe and sort of a question. I recently had a wheel bearing replaced on my truck (Ford Escape) and they charged me $265 just for the bearing ($465 total). I can buy that assembly for half that at any local parts store or even less on the internet at retail. I am talking about a quality, brand name part, too, not Chinese stuff.

So my question is - What is a fair mark up on parts? Don't repair shops buy wholesale anyway and mark up from there?

 

[sixdogs]

It's fair since the buyer and seller agreed on the price. I'll agree it is an outragous amount and would tick me off enough that I would do the work myself. Unfortunately, most people have no tools or place to work--let alone technical skills and gumption to get the job done. So the price is highway robbery but until people stop being willing to be robbed, the price shall remain. That's capitalism.

But I wonder....I went to a Ford dealer auction last year and included were a number of special tools for mechanics to do repairs on Ford proprietary parts. In other words, if your widget breaks, you need the $500 Ford tool to do it and since you don't have it, you pony over to the dealer for the work. But most of these 1970's tools were nearly new in the box which tells me the customer found a way around Ford and it's proprietary gimmics by shopping elsewhere. Rest assured, some other car maker--likely foreign--will find a way to capitalize on your unhappiness. I would say it helped put that dealer out of biz...

 

[Travelover]

Sixdogs, you are right about the special tools. I have the shop manual and it shows a bunch of special tools used to press the bearing assembly in and out. I would have winged it if I'd had the time. I really don't mind paying a fair wage with markup, but the parts thing kind of put a burr under my saddle.


Is this large markup a common practice?

 

[smstonypoint]

So my question is - What is a fair mark up on parts? Don't repair shops buy wholesale anyway and mark up from there?

A "fair" price, like beauty, is in the eye of the beholder.

For the garage, a "fair" price allows the owner to cover his/her variable and fixed costs and earn a profit.

Based on the "Jobber Matrix," the ATI suggests a markup of 100% for parts costing the garage $75.01 to $150 (see Automotive Training Institute | About ATI | Mission Statement | Increase Profit Margin | Service Writer | Shop Owner | Seminars | Training and click on the "Making Parts Profitable" article), so your garage's pricing policy appears in line with the ATI's suggestions.

Again, what seems "fair" to the garage may not seem to be "fair" to you.

Steve

 

[Travelover]

Thanks, it looks like I have my answer - a big markup is standard and if I don't like it, I should take my business elsewhere or do my own work.

 

[skipmarcy]

Unless you can find one made with SKF or Timken bearings you WILL be buying cheap Chinese stuff, brand name or not !!! Most people don't have a clue what it costs to run a professional auto repair shop, they all think we in the trade just roll in the money hand over fist. Not even considering regular expenses like - rent, electricity, phones, insurances, data information subscriptions, rags & uniforms, parts cleaner rent/servicing, bank account fees, basic shop supplies, advertising, taxes, tools & equipment etc. etc. you have all the free time "just looking at this real quick" or "let me just tell you what it does" ... The hours we spend every week doing this for free in hopes that we will get a paying job out of it. How many of you hourly employees are willing to go into work for the first hour or two for free, before you start getting paid ? We do this every single day.Most of the parts we buy are warranteed but not the labor - how about doing a 4 hour job twice because of a defective part, how about an 8 hour part replacement for free ? How big is your paycheck then ? I've got well over $100k invested in just my HAND tools in my toolbox, not shop equipment, and I'm constantly having to buy more all the time and still never have all that I need to do the jobs that come in. In a small town like where I work I buy a special tool for $100 or $200 and I may not see that particular job again for a couple of years - how much profit was there on that job ? Been doing this for over 40 years and it's always been the same .... Does the corner restaurant sell you the eggs & bacon for what they paid for it ? Of course not. Does that parts store sell you the parts for pennies more than what they bought it for ? Of course not, they wouldn't be in business long.

 

[crazyal]

Usually, at least around here, the garage will either sell the part at the retail price or mark it up a little. Of course they are not paying retail, usually you wouldn't either if you bought the part. They use that profit when they set the hourly rate so it looks like their rate is cheaper than dealerships. When it comes to dealerships they sell the parts at retail. I know that's at least 30% over their cost as I use to buy OEM parts at a body shop price of 25% off. Of course you pay more per hour at the dealership.

I have a few of Toyota's specialty tools. Most of them are not that special. I bought an assortment of tools to do work on 4wd Toyota pickup axles. Most of them are either seal drivers, pullers, or other tools that generic tools would also do the job, just not quiet as easy. Only one is something that is unique.

That being said I bet it's not cheap to operate a garage. Now you need lots of tools, like the tool needed to reset the computer when you change a tire pressure sensor, that 50 years ago were never seen in a garage. A cheap tps reset tool can be had but for a garage you need one that's not going to break, one that will work on all brands, and one that can be upgraded.

 

[brain55]

Unless you can find one made with SKF or Timken bearings you WILL be buying cheap Chinese stuff, brand name or not !!! Most people don't have a clue what it costs to run a professional auto repair shop, they all think we in the trade just roll in the money hand over fist. Not even considering regular expenses like - rent, electricity, phones, insurances, data information subscriptions, rags & uniforms, parts cleaner rent/servicing, bank account fees, basic shop supplies, advertising, taxes, tools & equipment etc. etc. you have all the free time "just looking at this real quick" or "let me just tell you what it does" ... The hours we spend every week doing this for free in hopes that we will get a paying job out of it. How many of you hourly employees are willing to go into work for the first hour or two for free, before you start getting paid ? We do this every single day.Most of the parts we buy are warranteed but not the labor - how about doing a 4 hour job twice because of a defective part, how about an 8 hour part replacement for free ? How big is your paycheck then ? I've got well over $100k invested in just my HAND tools in my toolbox, not shop equipment, and I'm constantly having to buy more all the time and still never have all that I need to do the jobs that come in. In a small town like where I work I buy a special tool for $100 or $200 and I may not see that particular job again for a couple of years - how much profit was there on that job ? Been doing this for over 40 years and it's always been the same .... Does the corner restaurant sell you the eggs & bacon for what they paid for it ? Of course not. Does that parts store sell you the parts for pennies more than what they bought it for ? Of course not, they wouldn't be in business long.

Well said

 

[stingray1]

Usually, at least around here, the garage will either sell the part at the retail price or mark it up a little. Of course they are not paying retail, usually you wouldn't either if you bought the part. They use that profit when they set the hourly rate so it looks like their rate is cheaper than dealerships. When it comes to dealerships they sell the parts at retail. I know that's at least 30% over their cost as I use to buy OEM parts at a body shop price of 25% off. Of course you pay more per hour at the dealership.

I have a few of Toyota's specialty tools. Most of them are not that special. I bought an assortment of tools to do work on 4wd Toyota pickup axles. Most of them are either seal drivers, pullers, or other tools that generic tools would also do the job, just not quiet as easy. Only one is something that is unique.

That being said I bet it's not cheap to operate a garage. Now you need lots of tools, like the tool needed to reset the computer when you change a tire pressure sensor, that 50 years ago were never seen in a garage. A cheap tps reset tool can be had but for a garage you need one that's not going to break, one that will work on all brands, and one that can be upgraded.

I Agree.

 

[MHarryE]

Curious as to why SKF and Timken brand names make a difference as both have a large presence in China and produce bearings in China for sale around the world. I have not visited their Chinese factories but have had their reps give a presentation stating why I should not be concerned when particular bearing sizes I was using were being relocated to Chinese factories.