Markup ?

[krusty the clown]

You say tomaaayto I say tomaaahto.

I say school me on percentages.

$40...
10% is $4
20% is $8
.....
.....
.....
60% is $24

I'll have to go with Krusty on this one.
At johnwills statement the dealer pays 88.575% of the list price.

Ok, someone, be the bus driver and take me to school.

technically "mark up" is figured on what the mechant pay's.
if he pays $15 for an item and sells with a 33% mark up the retail price would be $20.

"percentage of profit" using the same retial price.
$20 less 33% is $14.40 dealer cost.


the $20 scenario gets a pretty close dealer cost with either way of figuring, but if you plug in some other numbers it gets very different. try it with $1000.........there will be a couple hundred dollars difference.


johnwill's math was correct, my use of the term "markup wasn't. i just didn't think we had so many economists around here or that it mattered to a bunch of garage guy's and i forgot this was the internet( the land of picking the fly **** out of pepper).

 

[spencerian]

Step 1

Determine your product/service cost. How much did it cost you? As an example, let's assume the product cost is $1.40.

Step 2

Determine the percentage markup you wish to apply. Research your industry to apply a markup that will be competitive. In this example, we will use 30 percent.

Step 3

Convert the percentage markup to a decimal. In this case, a 30 percent markup would translate to 0.30 (30 divided by 100).

Step 4

Subtract the decimal in STEP 3 from 1. In this example, 1 minus 0.30 equals 0.70.

Step 5

Compute the total selling price by taking the cost from STEP 1 and dividing it by the result from STEP 4. In this example, $1.40 is divided by 0.70. The result is $2.00, which should be the total selling price.

Step 6

Calculate the price markup by subtracting the product cost from the selling price. In this example, the $2.00 selling price minus the $1.40 product cost gives you a price markup of $0.60.



I am still lost.
A $30 socket divided by .70 would make it $42

 

[krusty the clown]

30% markup on $1.40 is $.42 making a $1.82 retail price.

30% percentage of profit on $1.82 retail is $.55 making cost $1.27
Step 6

Calculate the price markup by subtracting the product cost from the selling price. In this example, the $2.00 selling price minus the $1.40 product cost gives you a price markup of $0.60

that gives you percentage of profit. not markup. (and this is why i used the term interchangably johnwill).

 

[mrshaun]

@ 35% a tool that lists for 39.95 costs 25.97.
If you knew what all it took to keep these things rolling you guys would wonder how we feed the family some days. I maintain a higher average than a lot of dealers, but I am only a 2nd franchise to my uncle, so I do not get paid the full amount. I have to plug this truck in when I get home and the electricity it pulls it quite a bit. also we go through 3-4 batteries a year 3-4 tires a year @ over 200 a pop and all the dead beats are killing us.
Not people losing their jobs, just skipping out and never coming back.
I have guys that owe a small amount, but I get calls from 3-4 other snap on dealers telling me that the guy owes them as well from years back. How do people do that?
oh well. thats why I was up at 4:50 am out here getting it done to end a decent year.
no improvement from last year still ran the same numbers.

 

[krusty the clown]

@ 35% a tool that lists for 39.95 costs 25.97.
If you knew what all it took to keep these things rolling you guys would wonder how we feed the family some days. I maintain a higher average than a lot of dealers, but I am only a 2nd franchise to my uncle, so I do not get paid the full amount. I have to plug this truck in when I get home and the electricity it pulls it quite a bit. also we go through 3-4 batteries a year 3-4 tires a year @ over 200 a pop and all the dead beats are killing us.
Not people losing their jobs, just skipping out and never coming back.
I have guys that owe a small amount, but I get calls from 3-4 other snap on dealers telling me that the guy owes them as well from years back. How do people do that?
oh well. thats why I was up at 4:50 am out here getting it done to end a decent year.
no improvement from last year still ran the same numbers.

i know the deal all too well............

 

[mrshaun]

Well I have been at it for 8 years and I plan on going another 8 without thinking about it.
Hardest job I have ever had, but I look forward to it every day.

 

[sberry]

I cant believe you work on those margins. I agree, not a lot of room.

 

[mrshaun]

I make more doing this than any other job i could get anywhere near here.

 

[pfbz]

I say school me on percentages.

The bottom line is percent decrease and percent increase are drastically different. Lets look at an example that hopefully doesn't hit too close to home...

• Your 401K retirement plan value went down 50% in 2008... (Let's say $100,000 originally, now $50,000).
• If your 401K goes up in value 50% in 2009, are you back where you started? Obviously no. $50,000 + 50% = $75,000. It would have to go up 100% to get back were you started.

Same thing with commonly used sales measurements...

Margin is the percent of the final sale price that is profit.
Markup is the percent increase from cost to sale price.

• I buy a widget for $1.00, Sell for $1.50.
• My Profit Margin in 33%. 33% of the final sale price is profit. ($0.50)
• My Markup is 50%. 50% of the original cost is added to the price. ($0.50)

So if a Snapmaccorn tool has a:

• Dealer cost of $60
• List price $100
• Gross profit of $40

A salesperson could say:

"I make 40% on tools I sell for list price". That is Margin.​

or

"My list price is 66% more than I buy for". That is Markup.​

Both are correct...

 

[eborcim]

...all the dead beats are killing us.
Not people losing their jobs, just skipping out and never coming back.
I have guys that owe a small amount, but I get calls from 3-4 other snap on dealers telling me that the guy owes them as well from years back.

You guys need a skip tracer/collection agent. Or maybe just some big guy named Guido to ride (w/a) shotgun in your truck.

The question about multiple trucks and employees...my opinion is that yes it takes money to get there, but the economy of scale after a while makes it easier, and sometimes necessary to go big. It's kinda like farming on a large scale (say 500+ acres), after you plateau on the input costs (fuel, seed, chemicals, labor, equipment) you can take on the extra work which means more profit. You have to keep growing and buying new equipment to stay economically sound.

 

[daveblank]

Step 1

Determine your product/service cost. How much did it cost you? As an example, let's assume the product cost is $1.40.

Step 2

Determine the percentage markup you wish to apply. Research your industry to apply a markup that will be competitive. In this example, we will use 30 percent.

Step 3

Convert the percentage markup to a decimal. In this case, a 30 percent markup would translate to 0.30 (30 divided by 100).

Step 4

Subtract the decimal in STEP 3 from 1. In this example, 1 minus 0.30 equals 0.70.

Step 5

Compute the total selling price by taking the cost from STEP 1 and dividing it by the result from STEP 4. In this example, $1.40 is divided by 0.70. The result is $2.00, which should be the total selling price.

Step 6

Calculate the price markup by subtracting the product cost from the selling price. In this example, the $2.00 selling price minus the $1.40 product cost gives you a price markup of $0.60.



I am still lost.
A $30 socket divided by .70 would make it $42

The math you provided in steps 1-6 are for figuring profit margin. There is a difference in margin & markup.

Think of this.
1.You own a company & you want to maintain a 30% margin on all items.

2. An employee orders an item that cost $140. He does a 30% markup making it $182. & puts a $182 price tag on it.

3. Your brother, neighbor, or whomever calls & says that he needs that item. You say sure, I'll sell it at cost. You now take 30% off the item & sell it for $127.40. A loss of $12.60.

Does this help you see the difference?

 

[bimmer1980]

It's all about what you are multiplying... a couple of you guys hit it on the money.. PFBZ

$100 and a 30% discount will be $100 x .70 = $70.

$70 plus a 30% markup is $70 x .30 + $70 = $21 plus $70 = $91

$70 plus a 42.8% markup is $70 x .428 + $70 = $29.96 plus $70 = $99.96

As with anything, the more people that have their fingers in the pot, the more expensive it will be. That's part of the reason the internet sales can be cheaper. They save on the overhead, cost of sales and the real estate......

 

[daveblank]

As with anything, the more people that have their fingers in the pot, the more expensive it will be. That's part of the reason the internet sales can be cheaper. They save on the overhead, cost of sales and the real estate......

Not always true. If you buy anything online from Matco, Snap On, Mac, or Cornewll, is it any cheaper than your local distributor or a distributor on the board? No, it's not. They sell if for full list. I'm not just picking on the tool companies either. Think sears, Wal Mart, Target, & the list can go on.

 

[mrshaun]

we have a skip trace system, but if the dealer does not put in their full information it may takes weeks or months to match the customer.
Some days it takes a week to match then it will be 2 years later a dealer will call looking for someone.

 

[pfbz]

Not always true. If you buy anything online from Matco, Snap On, Mac, or Cornewll, is it any cheaper than your local distributor or a distributor on the board? No, it's not. They sell if for full list. I'm not just picking on the tool companies either. Think sears, Wal Mart, Target, & the list can go on.

That's simply price protection with a restricted distribution network. SnapOn is protecting there 'exclusive' dealers by not undercutting them on price. It is of course essential that they do, as the truck guys are the bread and butter of their revenue stream.

Take non-oem auto parts as an alternate example. Say an alternator...

• The repair shop charges $$$. Lots of overhead. Local distributor. Delivery costs. Customers rarely comparison shop parts costs.
• The local auto parts shop charges $$. No local delivery cost, more competition. Less overhead
• The on-line parts depot charges $ + shipping, no tax. Maximum economy of scale, minimum overhead per $ of revenue.

If somebody would develop a web based premium-tool, overnight-shipping, direct-to-customer model, it would be game-over for the truck brands IMHO. There is SO much unneeded cost in doing it things the SnapMac way.

 

[benjamming]

pfbz,

You can, right now, select UPS Red (or other favorite Next Day Air shipping courier) from the tool brands. Have you priced Next Day Air? For Snap-on CDR6850 it is $63.95 above Ground costs (which SO doesn't charge for explicitly) to north Alabama.

 

[chadster1]

It is of course essential that they do, as the truck guys are the bread and butter of their revenue stream.

US Franchised dealer sales account for less than half of Snap-on's total revenue.

 

[pfbz]

US Franchised dealer sales account for less than half of Snap-on's total revenue.

The entire Snap On Tool Group accounts for less than half of Snap On's total revenue. My guess is that franchise dealers account for a very large portion of that groups revenues.

 

[FNFS2000]

Funny, I used to ask my snappy driver to price match Chads knipex prices and he said he was selling them for less than his cost from Snap On. I don't know how they do it, most everything from Knipex is 40-50% off list.

 

[Vinko]

Funny, I used to ask my snappy driver to price match Chads knipex prices and he said he was selling them for less than his cost from Snap On. I don't know how they do it, most everything from Knipex is 40-50% off list.

Maybe the SO driver is going through several layers of distributor, middlemen, etc?

Doesn't address your question, but Chad's toolbox appears to have almost zero overhead? Or do they actually stock anything and ship from their location?

A lot of online dealers don't stock anything. It's just some guy in his garage running a website. It f*cks up the market for a lot of things, though it has, I suppose, some very real benefits (short-term?) for the end user.