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Reasonable Parts Markup?

kctyphoon

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I find it curious you can walk into most shops, and find the labor rates clearly displayed.. Not a sign that says “ $110/hr labor rate + double the cost of parts”. It’s a coincidence i guess....

I cant imagine why that part would be left off, if its considered an honest business practice by the owners. You said it yourself, if they are happy with the price, they agree to the job. Would a fair amount of people NOT agree to the job, and thats why its commonly NOT disclosed the parts are drastically marked up ??

It’s like walking into a deli - ordering lunch - and when you hand over a debit card AFTER the food comes, they move the tip cup - so you can see their little sign taped to the register that says “additional fee for credit cards”.. OK, no problem - and then you come to find out they are charging people an additional 10%.. theres a REASON why these things aren’t on a big sign for everyone to see - cause you KNOW it would cost you business if people knew BEFORE hand, and the less people know, the better. That’s why nobody is going out of their way to make sure people know that - and its the “well THEY should have looked up the prices themselves” justification being given. Same deal with book rates. Your not gonna tell ANYONE - that the book say 4 hours, but we did it in 2 - here’s a bill a for 4 hours labor..

Seems kinda ironic to accuse customers of being cheap - while you double the cost of their parts, and then charge them labor rates, for time not spend on labor..
 
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four.cycle

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Wow!

I'll confess I didn't read all the posts in this thread after the first page, but it's clear there are an awful lot of people in the world who don't really have an understanding of how the auto parts or the auto repair business world works.

That EV-455 Moog is $76.03 up at my local O'Reillys Auto Parts. They don't have it in stock, but they can have it there from their DC tomorrow by 3:00 PM.

As has been noted several times, standard minimum markup on parts (purchased from an auto repair shop) is about 40%
do the math: $76.03 x 1.67 = $126.97 (this is a 40% markup from the shop's cost for the item, if the shop paid $76.03 for the part.)

O'Reillys and the other large mass-merchandiser auto parts retailers may offer some nominal discount to their wholesale shop accounts, but it isn't nearly as deep as it was in the 1960s or 1970s. Some of them only give a 10% discount to shops.

Most reputable shops (for reasons which have been explained) don't install customer-supplied parts. Their business model depends upon the markup they make on the parts.

What you can buy the part for from Amazon or some other online retailer is irrelevant, unless you intend on installing the part yourself.
 
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Yarpo

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I cant imagine why that part would be left off, if its considered an honest business practice by the owners. You said it yourself, if they are happy with the price, they agree to the job. Would a fair amount of people NOT agree to the job, and thats why its commonly NOT disclosed the parts are drastically marked up ??

Are you failing to understand the basic concept that everything you by is marked up, or do you just hate mechanics/shops? The deli you keep insisting on, do they tell you what they marked up the turkey, the lettuce, the bread? Does a plumber tell you what he marked up his fixtures? Does Walmart sell you a Samsung TV at cost? None of those places give a breakdown of how much the product was marked up.

Same deal with book rates. Your not gonna tell ANYONE - that the book say 4 hours, but we did it in 2 - here’s a bill a for 4 hours labor..

Seems kinda ironic to accuse customers of being cheap - while you double the cost of their parts, and then charge them labor rates, for time not spend on labor..

...You know a mechanic beats book time because hes a skilled mechanic, with knowledge, training and proper tools right? Not because they arbitrarily set it higher? You know how many jobs I do for the first time that I don't beat book time on, because I've never done it before? Most of them. Ever installed a sunshade on a 2018 S550 in the door and the one for the rear window? No? Me neither until last week. Took me probably 3 hours over what it paid to do it properly and not break ****. Book time is pretty balanced from everything I've seen.
 

kctyphoon

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Are you failing to understand the basic concept that everything you by is marked up, or do you just hate mechanics/shops? The deli you keep insisting on, do they tell you what they marked up the turkey, the lettuce, the bread? Does a plumber tell you what he marked up his fixtures? Does Walmart sell you a Samsung TV at cost? None of those places give a breakdown of how much the product was marked up.



...You know a mechanic beats book time because hes a skilled mechanic, with knowledge, training and proper tools right? Not because they arbitrarily set it higher? You know how many jobs I do for the first time that I don't beat book time on, because I've never done it before? Most of them. Ever installed a sunshade on a 2018 S550 in the door and the one for the rear window? No? Me neither until last week. Took me probably 3 hours over what it paid to do it properly and not break ****. Book time is pretty balanced from everything I've seen.

First off - did you read all my posts or just the last one, and start typing??

Secondly - when someone pays the bill for auto repair - they are essentially trading labor. The guy paying traded his labor for someone else’s money. The shop is trading their labor FOR that same money..

If you got a job at a company and was paid hourly, arrived 2 hours late - and the boss said He was gonna dock you half a days pay - I’m pretty damn sure you wouldn’t be happy about working six hours and only getting paid for 4.. But somehow “only in the eyes of mechanics” - its “ok” if they work 2 hours and get paid for 4 - cause a “BOOK” says its ok for them to do that.. so the fruits of my own labor are being taken away from me, cause a book exists somewhere that says you can overcharge the labor time? Explain to me how its even legal - that a place can conceivably bill out 12 hours of labor if they work an 8 hour day? Tell me where else on earth someone can do that and not be sued..

If your skill enables you to finsh in less time, the reward for that skill anywhere else - would be the ability to pick up another job - and make the income on THAT job too in the same day. There’s nothing you can say that will justify overcharging people on labor rates cause “your own book” that has no legal jurisdiction anywhere, said its ok.

If i get billed for 4 hours of labor - did i, or did I NOT just BUY someone’s time - for 4 hours?
 
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Yarpo

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First off - did you read all my posts or just the last one, and start typing??
Yes, I've read your posts. You're continually upset about the high price markup in the automotive industry and it not being displayed, but have failed to address why you think this industry should show that when few others do?

Secondly - when someone pays the bill for auto repair - they are essentially trading labor. The guy paying traded his labor for someone else’s money. The shop is trading their labor FOR that same money.. If you got a job at a company and was paid hourly, arrived 2 hours late - and the boss said He was gonna dock you half a days pay - I’m pretty damn sure you wouldn’t be happy about working six hours and only getting paid for 4.. But somehow “only in the eyes of mechanics” - its “ok” if they work 2 hours and get paid for 4 - cause a “BOOK” says its ok for them to do that.. so the fruits of my own labor are being taken away from me, cause a book exists somewhere that says you can overcharge the labor time?
Explain to me how its even legal - that a place can conceivably bill out 12 hours of labor if they work an 8 hour day? Tell me where else on earth someone can do that and not be sued..

Every industry where a bid is submitted....? Let's say the boss estimates 10k worth of labor and his workers come in under that. The contractor tells the customer its 10k to plumb his house. He accepted our bid, we go to work. Now we plumb it and it take us 95 hours of labor and not 100. Our profit margin is greater. It takes us 105 hours instead of the 100. Our profit margin is less?

your skill enables you to finsh in less time, the reward for that skill anywhere else - would be the ability to pick up another job - and make the income on THAT job too in the same day. There’s nothing you can say that will justify overcharging people on labor rates cause “your own book” that has no legal jurisdiction anywhere, said its ok. If i get billed for 4 hours of labor - did i, or did I NOT just BUY someone’s time - for 4 hours?

I'm confused...how do you think this works? If we do away with book time, how do you want people to be billed? Please tell me you think it's as simple as doing away with book time and charging people what the job takes? You'll have people melting down because they're billed tons when a bolt is snapped that needs drilled and taped. Or their cars from Minnesota and I had to torch all the control arm bolts. Better yet, I'll just sell all my cordless and air tools, my ratcheting wrenches and...everything else. Mechanics everywhere will go back 50 years in tool tech and everything will take them 2 or 3x what it does now. That's good tho, we can bill the customer 8 hours for spark plugs instead of 3.6 (the tech could originally do it in 2.5) but we charge what it took the tech in labor, and fairs fair, right? Lmfao.
 
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four.cycle

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^ Without having to go back and read the posts which were the catalyst for that exchange:

It's evident there are not a lot of people outside of the automotive repair industry who have an understanding of what "book time" is, or where it comes from.

In the simplest of terms: "book time" is the time it takes a factory trained journeyman mechanic to perform an assigned task in the automobile manufacturer's facility and having at his immediate disposal all of the specialized factory tools and equipment necessary to perform the task.

It does not mean "how long does it take the ASE-certified line mechanic at your local friendly neighborhood repair shop to do a job he's never tackled before with the tools he currently has in his roll-away."

There are light years of difference between the two. As the end consumer, you pay "book time" because in the end, it works out most equitably for you.

(* As an aside: while there may be slight differences in "book time" between various publications (e.g., "Chilton" or "Motors"), overall the differences average no more than about 10% across the board, and in most cases are comparable. *)
 
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kctyphoon

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Yes, I've read your posts. You're continually upset about the high price markup in the automotive industry and it not being displayed, but have failed to address why you think this industry should show that when few others do?



Every industry where a bid is submitted....? Let's say the boss estimates 10k worth of labor and his workers come in under that. The contractor tells the customer its 10k to plumb his house. He accepted our bid, we go to work. Now we plumb it and it take us 95 hours of labor and not 100. Our profit margin is greater. It takes us 105 hours instead of the 100. Our profit margin is less?

I'm confused...how do you think this works? If we do away with book time, how do you want people to be billed? Please tell me you think it's as simple as doing away with book time and charging people what the job takes? You'll have people melting down because they're billed tons when a bolt is snapped that needs drilled and taped. Or their cars from Minnesota and I had to torch all the control arm bolts. Better yet, I'll just sell all my cordless and air tools, my ratcheting wrenches and...everything else. Mechanics everywhere will go back 50 years in tool tech and everything will take them 2 or 3x what it does now. That's good tho, we can bill the customer 8 hours for spark plugs instead of 3.6 (the tech could originally do it in 2.5) but we charge what it took the tech in labor, and fairs fair, right? Lmfao.


i believe i said - any sane person wouldn’t have a problem with parts being marked up to make the time spent ordering them and supplying them profitable. MAYBE you skipped over that. i believe i also said that blindly doubling the prices of every part, is ******** - because thats far beyond a 20% increase of something thats already expensive at retail - which shops ARENT paying retail in the first place. If a place is saying they “have to” sell an alternator they actually paid $175 for, at $400 so their business can turn a profit - i suspect theres a problem elsewhere in their business model. I also suspect those claiming they have to sell rebuilt parts ABOVE the cost of NEW OEM to turn a profit - wont be so open online about what the flaw in their business model is. Maybe that money is going to their spending problem with SO. Maybe they leased a building so expensive it’s nearly impossible for a mechanics shop to operate. Maybe it went up their nose. NONE of that is the customers problem. The idea that “I’ll just open a shop inside ONE World Trade Center, and customers will just have to fork over $750 for an oil change - cause thats what ‘I NEED’ to be profitable here - so thats what IM GONNA charge” is comical.
Enter the death spiral - when customers DONT go back for repeat business, so those that walk in NEED to be charged more to try to keep the place profitable, and then they don’t return either. 90% of all small businesses fail, many because people really DONT know how to run them, make good decisions, handle money, advertise, etc , - despite their insistence they do.

A shop i went to regularly when i was younger used to give me receipts WITH the prices of the parts he bought, and then the adjusted prices after his 15% markup. So yea - if your claim is theres nothing to be ashamed of when doubling the prices of everything - what’s the problem with transparency?? YOUR the one saying theres nothing wrong doubling the prices.. if you do good work, and you are fair with customers, people come back. The ones that survive even with having bad reputions, usually do so because their isn’t competition nearby. The day a place opens the next block down that doesn’t double their parts prices, might be the day you decide you really didn’t “need” to be doing that in the first place.

Contracts are bid out by the job - not by hours. Hours /days is a tool bidders use to help themselves estimate that bid - but if you’d like to start a contracting business and walk off the job as soon as you hit the hours YOU set for yourself, good luck ever getting another job. You got hired for the job - if you finished early the only thing anyone else would be, is HAPPY you finished before schedule. This is one reason why so many companies can go under - cause with BIG -jobs that may take years to complete - if they bid wrong, they can put themselves out of business. That’s why they have a saying “you’re only one bid away from bankruptcy”.

You don’t walk in for a haircut - and only buy 15 minutes of the guys time cause “thats what you paid for”. You paid for a finished job - not increments of his time. if he wants to take his time, great. If he wants to hustle to get more customers in the seat to make more money - great.. it’s his experience and performance level that rewards him the ability to fit more jobs in within an 8 hour day and make more $$ then the next guy. If you went in for a new haircut and a shave, and the guy said , its $100 an hour, this is gonna take me an hour to do what ya want - and you agree Assuming he’s giving you an accurate estimate of how long is going to take HIM to do it - but then the guy blasts though it in 20 minutes - I’m pretty sure you’d then be on the other side of this debate, asking why your paying for a full hour and not half instead..

People go to mechanics to have a professional thats knows what they are doing perform a service on their cars, not a guy that doesn’t know what to do. they are paying over a $100 an hour for THAT service which is SOLD to them in HOURS of labor. So Go ahead - get rid of your air tools and do it all by hand. What’s the result? You actually work the 4 hours the customer got billed for?? Sounds good to me smart guy -thats what the dealers were selling, and what the customers are payin for anyway - ‘4 hours of your time’. so I’m not so sure what your “lmfao” about, cause it sounds like everyone held up their part of the agreement.. seems to me the only person that would be upset with that, is the mechanic thats not getting paid for the time he DIDNT spend on the car.. is he upset that he lost free time? Or is he upset that now he cant start working on a second car - under the same time he’s still getting paid for with the first - as he’s trying to get himself paid for 8 hours of billable labor, under the 4 hours he actually spent laboring between the two of them??

You didn’t answer me before. If i bought 4 hours of labor, did i or did i not pay for 4 hours of someone’s time? The level of self entitlement here is ridiculous.

Go buy an hour long massage - and when the person doing it packs up 30 min early - and says too bad buddy - “Since i used this massage gun - and it sped up the work - I finished early. But yea - it WOULD HAVE taken me an hour to do by hand - so i get paid based on that. It’s in this stupid book that my company wrote.. Please pay at the counter on your way out”.. “NEXT!”.....
 
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tom-ky

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I see the point that is being stated about you paid for a certain amount of time. I know the other post mentions working on something from the rust belt taking longer, how is that fair to pass that cost on someone living in the south?

In my job we look at the unit to be repaired and if it looks like there will be issues above a normally repair we quote extra hours. If I think some broken bolts of rusted part will hold me up, or if it is a really dirty unit I add plenty off hours. Not uncommon for me to add about 25% extra labor. In the end if I do a job in 4 hours that had 8 quoted on it they only get charged 4.

So far the only thing my vehicles for somewhere for is tires, alignments and warranty work if they are that new. I dread the day that I have to take one somewhere because I don't have special tools or equipment to do the job.

If some people knew how much some retail items are marked up they would really complain, not uncommon to see 100-300%.
 

Mr_B

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So does a builder plumber, electrician, vet, doctor, dentist charge you same they pay for materials .
I don't think so, nothing wrong with sensible mark up, it part of business and part prices quoted before customer agrees on job commencing.
I do see some shops with silly mark ups but most even with a 30% load will be about same you likely pay for local same day supply if have accounts and getting trade account discounts .
I quite happy customer supply parts within common sense of quality and fit suitable for task and no come back for issues or moaning if extra charges make parts fit .
If you been in trade for decades you buy specific brands and deal with specific suppliers for very good reason and our choices are not about profit they about what likely save customer time and money and hassle long term . If everything so cheap and easy buy and jobs only take a easy 15 minutes why we get so much work, tools are cheap and most people got a drive and spare 15 minutes, they always find time talk about it online but never time source parts or do the work lol .
 
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lardy1

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The free market system allows me to take my work to the business of my choice. If I don't check references, prices, quality of work, etc, shame on me. And, even if I do, I still am under no obligation to go back to that business.

Seems to me some are making a mountain out of a molehill because they're butthurt about the price of auto repairs. Do your homework.
 

zkdiesel

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i believe i said - any sane person wouldn’t have a problem with parts being marked up to make the time spent ordering them and supplying them profitable. MAYBE you skipped over that. i believe i also said that blindly doubling the prices of every part, is ******** - because thats far beyond a 20% increase of something thats already expensive at retail - which shops ARENT paying retail in the first place. If a place is saying they “have to” sell an alternator they actually paid $175 for, at $400 so their business can turn a profit - i suspect theres a problem elsewhere in their business model. I also suspect those claiming they have to sell rebuilt parts ABOVE the cost of NEW OEM to turn a profit - wont be so open online about what the flaw in their business model is. Maybe that money is going to their spending problem with SO. Maybe they leased a building so expensive it’s nearly impossible for a mechanics shop to operate. Maybe it went up their nose. NONE of that is the customers problem. The idea that “I’ll just open a shop inside ONE World Trade Center, and customers will just have to fork over $750 for an oil change - cause thats what ‘I NEED’ to be profitable here - so thats what IM GONNA charge” is comical.
Enter the death spiral - when customers DONT go back for repeat business, so those that walk in NEED to be charged more to try to keep the place profitable, and then they don’t return either. 90% of all small businesses fail, many because people really DONT know how to run them, make good decisions, handle money, advertise, etc , - despite their insistence they do.

A shop i went to regularly when i was younger used to give me receipts WITH the prices of the parts he bought, and then the adjusted prices after his 15% markup. So yea - if your claim is theres nothing to be ashamed of when doubling the prices of everything - what’s the problem with transparency?? YOUR the one saying theres nothing wrong doubling the prices.. if you do good work, and you are fair with customers, people come back. The ones that survive even with having bad reputions, usually do so because their isn’t competition nearby. The day a place opens the next block down that doesn’t double their parts prices, might be the day you decide you really didn’t “need” to be doing that in the first place.

Contracts are bid out by the job - not by hours. Hours /days is a tool bidders use to help themselves estimate that bid - but if you’d like to start a contracting business and walk off the job as soon as you hit the hours YOU set for yourself, good luck ever getting another job. You got hired for the job - if you finished early the only thing anyone else would be, is HAPPY you finished before schedule. This is one reason why so many companies can go under - cause with BIG -jobs that may take years to complete - if they bid wrong, they can put themselves out of business. That’s why they have a saying “you’re only one bid away from bankruptcy”.

You don’t walk in for a haircut - and only buy 15 minutes of the guys time cause “thats what you paid for”. You paid for a finished job - not increments of his time. if he wants to take his time, great. If he wants to hustle to get more customers in the seat to make more money - great.. it’s his experience and performance level that rewards him the ability to fit more jobs in within an 8 hour day and make more $$ then the next guy. If you went in for a new haircut and a shave, and the guy said , its $100 an hour, this is gonna take me an hour to do what ya want - and you agree Assuming he’s giving you an accurate estimate of how long is going to take HIM to do it - but then the guy blasts though it in 20 minutes - I’m pretty sure you’d then be on the other side of this debate, asking why your paying for a full hour and not half instead..

People go to mechanics to have a professional thats knows what they are doing perform a service on their cars, not a guy that doesn’t know what to do. they are paying over a $100 an hour for THAT service which is SOLD to them in HOURS of labor. So Go ahead - get rid of your air tools and do it all by hand. What’s the result? You actually work the 4 hours the customer got billed for?? Sounds good to me smart guy -thats what the dealers were selling, and what the customers are payin for anyway - ‘4 hours of your time’. so I’m not so sure what your “lmfao” about, cause it sounds like everyone held up their part of the agreement.. seems to me the only person that would be upset with that, is the mechanic thats not getting paid for the time he DIDNT spend on the car.. is he upset that he lost free time? Or is he upset that now he cant start working on a second car - under the same time he’s still getting paid for with the first - as he’s trying to get himself paid for 8 hours of billable labor, under the 4 hours he actually spent laboring between the two of them??

You didn’t answer me before. If i bought 4 hours of labor, did i or did i not pay for 4 hours of someone’s time? The level of self entitlement here is ridiculous.

Go buy an hour long massage - and when the person doing it packs up 30 min early - and says too bad buddy - “Since i used this massage gun - and it sped up the work - I finished early. But yea - it WOULD HAVE taken me an hour to do by hand - so i get paid based on that. It’s in this stupid book that my company wrote.. Please pay at the counter on your way out”.. “NEXT!”.....

The book time is the estimate you are Asking for as you want a quote before you commit.
But they you ***** if they beat the estimate but not if they don’t make the estimate.


Or you can go into the shop and say your willing to pay $112 an hour, but they aren’t gonna tell you what it takes till guy is finished with the job, can track his time and then your bill is your bill! Bet you would cry rip off then
 

Aileron

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So if they have a part delivered, who is eating the delivery charges? Someone has to pay for the driver, fuel etc. I'm surprised no one is bitching about oriellies or whoever charging the same prices for someone picking the parts up at the counter. Its like free shipping on ebay, you know its added in there somewhere.
 

Shane6377

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I had my air conditioner worked on last summer. Tech ordered the part from his laptop in front of me. Zero mark up. I paid what he paid.

A friend is in construction. He buys materials in bulk and gets a discount but charges the customer no more than retail. If he has to go to Home Depot to get a last minute part he charges cost. He doesn't mark up materials by another 40% or more over retail.

The auto repair industry gets discounted parts from a supplier then marks them up 40% (or more) over retail.

Surely you see why people have issue with this compared to other industries.


Sent from my iPhone using The Garage Journal mobile app
 

dr_clyde

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Most mechanics I have hired don’t charge time and materials, they charge by the job.

Book time is used to estimate time. If a mechanic can beat book time, that’s profit. If I’m quoting a weld job and I bid 8hrs per assembly but I takes me 10, I can’t charge 10, only 8. But if I bust ***, get a fancy welder or positioner and get it done in 5 or 6, I can still charge 8. Same with book time. That’s how quotes work.

A shop quotes a job based on time and materials then tries to beat that time to make extra profit. If you did it on time, no worries, you made rate. Faster is gravy on the biscuit. Slower is lost profit.

Parts markup is standard op, and it provides a little cushion on labor. It DOES NOT matter how much mark up there is. The job costs the same.
 

Elsinore13

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Collision guy here.

Who here even realizes that book time is based on the time it takes to install a new undamaged part on a new undamaged car. First off, we rarely work on an undamaged car.

Secondly, body parts don’t always come in undamaged. Do you want me straightening up a $1000.00 new oem door for your car? You didn’t pay for a fucked up part so I have to send it back. Glueing a mounting tab back on your new $1250.00 F250 headlamp? Nope, send it back too. Can’t tell you how many times I have had $6000.00 worth of headlamps delivered before I got a usable one. Now someone has to make sure all that stuff gets returned and the account gets credited before the statement gets paid. And dammit to hell if one of the guys throws that headlamp box away and you can’t get your $150.00 core charge back. Gonna have to eat that...

Yep, damn those repair shops for making a profit on parts.
 

wood02

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Evansville, Indiana
Call me crazy! I have laid on the ground on many a cold day to fix/repair my vehicles. I do not have deep pockets. I am old now and can not do a lot of the "stuff" I could when I was young and invincible. I am happy to pay 1/3 parts, 1/3 labor and 1/3 profit. The cold and the heat have finally triumphed. I do my homework and have been successful in finding and supporting the honest shops.
 

volaredon

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Exactly! I bring home more than 150k as a tech. If we have a rough year the boss brings home less than I do, so why risk it at that point! Your in business to make money

bring home over $150k as a tech....in a year?
HOW? that's 2-1/2 years' pay for me.... and I do the same thing for a living and have for years.
 

Mr_B

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I had my air conditioner worked on last summer. Tech ordered the part from his laptop in front of me. Zero mark up. I paid what he paid.

A friend is in construction. He buys materials in bulk and gets a discount but charges the customer no more than retail. If he has to go to Home Depot to get a last minute part he charges cost. He doesn't mark up materials by another 40% or more over retail.

The auto repair industry gets discounted parts from a supplier then marks them up 40% (or more) over retail.

Surely you see why people have issue with this compared to other industries.


Sent from my iPhone using The Garage Journal mobile app

Your example is best scenario of one trade to worst scenario of other and rather unrealistic view point of the real world .
Reality is all do it and some unfortunatly abuse it .
I been in the game over 35years and run my own shop over 20, part markup is perfectly normal business practise and I never had complaint from it .
When we quote for job we try balance costs and not abuse markups or over charging as realistic real world costing is what gets you the work and repeat business .
If so many of you guys getting such bad costs/service you need review way you source your repair shops and approve the work .
 

Shane6377

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Your example is best scenario of one trade to worst scenario of other and rather unrealistic view point of the real world .

Reality is all do it and some unfortunatly abuse it .

I been in the game over 35years and run my own shop over 20, part markup is perfectly normal business practise and I never had complaint from it .

When we quote for job we try balance costs and not abuse markups or over charging as realistic real world costing is what gets you the work and repeat business .

If so many of you guys getting such bad costs/service you need review way you source your repair shops and approve the work .


My examples are normal practice for those industries. Some posts were asking why all the fuss over parts markup so I explained the differences in industries and why the auto industry practices are viewed as shady while others are not. You don't have to agree or like it but it is what it is.

FWIW, that's one of the reasons I hire A/C repairs but do my own auto work.


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setfocus

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Book time is a tool used to make an estimate that reflects the amount of work to be done, and estimates are designed to protect the customer. I like how if a mechanic is good and beats book time he should be paid less for the job. We save the customer time and should be punished for it? There would be no point in trying to get something done quickly. I'd only work as fast as what I'm paid on. So if the job was easier than expected, I should make less. What about if it's harder than expected? I don't get to make more money? The customer shouldn't be charged more than the estimate?

Sounds like all the people bitching should do their own work, and just sell the car if it's something they can't handle. Or move to a communist country where there is no point in working harder than anyone else because you're paid the same as a lazy pos

If all shops were gouging customers, wouldn't someone open a shop that didn't and under cut everyone else? Put all the gougers out of business? Yet this doesn't happen, either it's one big conspiracy and anyone who owns a shop is a millionaire as a result, or most shops aren't gouging
 

Batscat

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i believe i said - any sane person wouldn’t have a problem with parts being marked up to make the time spent ordering them and supplying them profitable. MAYBE you skipped over that. i believe i also said that blindly doubling the prices of every part, is ******** - because thats far beyond a 20% increase of something thats already expensive at retail - which shops ARENT paying retail in the first place. If a place is saying they “have to” sell an alternator they actually paid $175 for, at $400 so their business can turn a profit - i suspect theres a problem elsewhere in their business model. I also suspect those claiming they have to sell rebuilt parts ABOVE the cost of NEW OEM to turn a profit - wont be so open online about what the flaw in their business model is. Maybe that money is going to their spending problem with SO. Maybe they leased a building so expensive it’s nearly impossible for a mechanics shop to operate. Maybe it went up their nose. NONE of that is the customers problem. The idea that “I’ll just open a shop inside ONE World Trade Center, and customers will just have to fork over $750 for an oil change - cause thats what ‘I NEED’ to be profitable here - so thats what IM GONNA charge” is comical.
Enter the death spiral - when customers DONT go back for repeat business, so those that walk in NEED to be charged more to try to keep the place profitable, and then they don’t return either. 90% of all small businesses fail, many because people really DONT know how to run them, make good decisions, handle money, advertise, etc , - despite their insistence they do.

A shop i went to regularly when i was younger used to give me receipts WITH the prices of the parts he bought, and then the adjusted prices after his 15% markup. So yea - if your claim is theres nothing to be ashamed of when doubling the prices of everything - what’s the problem with transparency?? YOUR the one saying theres nothing wrong doubling the prices.. if you do good work, and you are fair with customers, people come back. The ones that survive even with having bad reputions, usually do so because their isn’t competition nearby. The day a place opens the next block down that doesn’t double their parts prices, might be the day you decide you really didn’t “need” to be doing that in the first place.

Contracts are bid out by the job - not by hours. Hours /days is a tool bidders use to help themselves estimate that bid - but if you’d like to start a contracting business and walk off the job as soon as you hit the hours YOU set for yourself, good luck ever getting another job. You got hired for the job - if you finished early the only thing anyone else would be, is HAPPY you finished before schedule. This is one reason why so many companies can go under - cause with BIG -jobs that may take years to complete - if they bid wrong, they can put themselves out of business. That’s why they have a saying “you’re only one bid away from bankruptcy”.

You don’t walk in for a haircut - and only buy 15 minutes of the guys time cause “thats what you paid for”. You paid for a finished job - not increments of his time. if he wants to take his time, great. If he wants to hustle to get more customers in the seat to make more money - great.. it’s his experience and performance level that rewards him the ability to fit more jobs in within an 8 hour day and make more $$ then the next guy. If you went in for a new haircut and a shave, and the guy said , its $100 an hour, this is gonna take me an hour to do what ya want - and you agree Assuming he’s giving you an accurate estimate of how long is going to take HIM to do it - but then the guy blasts though it in 20 minutes - I’m pretty sure you’d then be on the other side of this debate, asking why your paying for a full hour and not half instead..

People go to mechanics to have a professional thats knows what they are doing perform a service on their cars, not a guy that doesn’t know what to do. they are paying over a $100 an hour for THAT service which is SOLD to them in HOURS of labor. So Go ahead - get rid of your air tools and do it all by hand. What’s the result? You actually work the 4 hours the customer got billed for?? Sounds good to me smart guy -thats what the dealers were selling, and what the customers are payin for anyway - ‘4 hours of your time’. so I’m not so sure what your “lmfao” about, cause it sounds like everyone held up their part of the agreement.. seems to me the only person that would be upset with that, is the mechanic thats not getting paid for the time he DIDNT spend on the car.. is he upset that he lost free time? Or is he upset that now he cant start working on a second car - under the same time he’s still getting paid for with the first - as he’s trying to get himself paid for 8 hours of billable labor, under the 4 hours he actually spent laboring between the two of them??

You didn’t answer me before. If i bought 4 hours of labor, did i or did i not pay for 4 hours of someone’s time? The level of self entitlement here is ridiculous.

Go buy an hour long massage - and when the person doing it packs up 30 min early - and says too bad buddy - “Since i used this massage gun - and it sped up the work - I finished early. But yea - it WOULD HAVE taken me an hour to do by hand - so i get paid based on that. It’s in this stupid book that my company wrote.. Please pay at the counter on your way out”.. “NEXT!”.....



Dude your in the wrong forum.
Go back to your desk and sit down.
 

Hiball

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Book time is a tool used to make an estimate that reflects the amount of work to be done, and estimates are designed to protect the customer. I like how if a mechanic is good and beats book time he should be paid less for the job. We save the customer time and should be punished for it? There would be no point in trying to get something done quickly. I'd only work as fast as what I'm paid on. So if the job was easier than expected, I should make less. What about if it's harder than expected? I don't get to make more money? The customer shouldn't be charged more than the estimate?

Sounds like all the people bitching should do their own work, and just sell the car if it's something they can't handle. Or move to a communist country where there is no point in working harder than anyone else because you're paid the same as a lazy pos

If all shops were gouging customers, wouldn't someone open a shop that didn't and under cut everyone else? Put all the gougers out of business? Yet this doesn't happen, either it's one big conspiracy and anyone who owns a shop is a millionaire as a result, or most shops aren't gouging

Well said... Everyone’s Market is different, Supply and demand controls the pricing structure, Not Joe Blow living in rural America versus a sprawling city. On the other hand, I’m not going to a franchise or a dealer with expectations that the Comfortable seating, free snacks and advertising on Sunday afternoon aren’t built into my final bill.
 

gsingh

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This guy saying parts shouldn't be marked up and only charge the time spent on customers vehicles should open up his own shop. I'd like to see how it goes.
 

MattT

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IIRC he is a union linesman, or at least his previous avatar lead me to believe that.


Ah yes, the union employee. Master of all things business and an expert in minimizing costs.:lol_hitti

Yeah but not a regular, POCO, lineman. IIRC he works for a Telco. Wonder what the markup is on phone & internet service.................................................
 

Downwindtracker 2

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Book time. I remember replacing the heater fan on our Volvo station wagon. I had to take a lot of the dash apart. I was complaining at our small local Volvo dealership. Her response, the book time is 8 hours, nobody has ever done it that quickly. I hated that car there after and bought a minivan.
 

ChevyEFI

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There's a tapered bearing. Common to the big 3 and others, and available from Timken.

Timken is < $15 at auto parts stores all over.
Last I checked, Mopar is $60.
Last I checked, GM was $90+

Since the overhead makes the markup reasonable and valid, what does that lead you to believe about FCA and GM operational efficiencies?
 

Mr_B

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My examples are normal practice for those industries. Some posts were asking why all the fuss over parts markup so I explained the differences in industries and why the auto industry practices are viewed as shady while others are not. You don't have to agree or like it but it is what it is.

FWIW, that's one of the reasons I hire A/C repairs but do my own auto work.


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Your example is certainly not normal practice, speak to other trades.
I have family and friends in construction trades and I know they also have material mark ups.
To suggest it only the motor trade is completely false ...
 

Yarpo

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i believe i said - any sane person wouldn’t have a problem with parts being marked up to make the time spent ordering them and supplying them profitable. MAYBE you skipped over that. i believe i also said that blindly doubling the prices of every part, is ******** - because thats far beyond a 20% increase of something thats already expensive at retail - which shops ARENT paying retail in the first place. If a place is saying they “have to” sell an alternator they actually paid $175 for, at $400 so their business can turn a profit - i suspect theres a problem elsewhere in their business model. I also suspect those claiming they have to sell rebuilt parts ABOVE the cost of NEW OEM to turn a profit - wont be so open online about what the flaw in their business model is. Maybe that money is going to their spending problem with SO. Maybe they leased a building so expensive it’s nearly impossible for a mechanics shop to operate. Maybe it went up their nose. NONE of that is the customers problem.

Yeah I don't know of many places marking up parts that high, and again I would encourage you and anyone else to avoid those places. I think a few people pointed out 40% seems to be typical. Thinking of this conversation and two of the most extreme parts I can think of. One as little as a dollar, and one as much as 80k, put the average right around 40%. I bought a clip from my dealership at cost because I work there, ~1.10, customer cost was ~1.65 per clip. (~55%) A tech was also working on replacing a brand new AMG motor in a GT63. Our cost ~60k, customer cost, 80k. (A little less than ~40%)

The idea that “I’ll just open a shop inside ONE World Trade Center, and customers will just have to fork over $750 for an oil change - cause thats what ‘I NEED’ to be profitable here - so thats what IM GONNA charge” is comical

If a customer walks in and wants to be charged 750 dollars for an oil change...you know thats the customers choice, right? Nobody forced them to. That place obviously wouldn't be open long as nobody would go there but they can charge WHATEVER they want to be profitable.

A shop i went to regularly when i was younger used to give me receipts WITH the prices of the parts he bought, and then the adjusted prices after his 15% markup. So yea - if your claim is theres nothing to be ashamed of when doubling the prices of everything - what’s the problem with transparency?? YOUR the one saying theres nothing wrong doubling the prices.. if you do good work, and you are fair with customers, people come back. The ones that survive even with having bad reputions, usually do so because their isn’t competition nearby. The day a place opens the next block down that doesn’t double their parts prices, might be the day you decide you really didn’t “need” to be doing that in the first place.

I'm not defending doubling the prices, in fact in my first reply I even said I think 50 or 60% is to much, but it makes sense given they need to warranty the part and their work. Seems like we're in agreement that doubling the price of parts is ****** and I stand by that, I don't know how any of those shops stay busy regularly or stay open. Plenty of shops that are not doubling the price of parts.

I work in the industry and I agree, markup should be zero or very little. It takes nothing to get the parts. Markup of 50 or 60% to just punch it in on the computer and have it delivered? Obnoxious, in my opinion, and I deal with the **** every day. That said most shops will backup the part (depending on part) with a warranty and will have to eat it should it be bad, so I can see markup for that, but be reasonable.



Contracts are bid out by the job - not by hours. Hours /days is a tool bidders use to help themselves estimate that bid - but if you’d like to start a contracting business and walk off the job as soon as you hit the hours YOU set for yourself, good luck ever getting another job. You got hired for the job - if you finished early the only thing anyone else would be, is HAPPY you finished before schedule. This is one reason why so many companies can go under - cause with BIG -jobs that may take years to complete - if they bid wrong, they can put themselves out of business. That’s why they have a saying “you’re only one bid away from bankruptcy”.

Right...just like auto repair? You literally are defending it here with contracting but against it in auto repair. I'm not even sure if you see it.

So you bid the job. You get done early and your words, everyone would be HAPPY you finished before schedule. Yet in the automotive world, you finish early and people feel like they got robbed because again, your words, they can go onto another job while still being paid for the first. ???


I was a non union, new construction plumber for a year. If we finished early by a half day we went to the next house and layed out, dug ditch, or got started setting fixtures. Boss is being paid for the job we finished early on, while we're also getting a head start on the next job that he also bid "x" hours on. You bid based on what your guys can achieve, as you said, the job @ an average or good pace. Say it takes us 10 days to do a whole house on average. 3 ground work, 3 rough in, 3 finish, 1 for inspection or any **** ups. Boss knows what 10 days of labor costs him @ 100 an hour, its factored into his bid for the job. Yet we show up and bust *** and it takes us 8 days to do this house. Whats the difference, other than here the contractor/home owner is happy we're ahead of schedule, when I fix your car I'm a thief. :headscrat - Hello?


You paid for a finished job - not increments of his time. if he wants to take his time, great. If he wants to hustle to get more customers in the seat to make more money - great.. it’s his experience and performance level that rewards him the ability to fit more jobs in within an 8 hour day and make more $$ then the next guy.

???? I'm confused. This is exactly how the auto industry works...again. You pay for a finished job, a crankcase vent valve, not increments of time. Its my hustle, experience and performance level that rewards me the ability to fit more cars in within an 8 hour day and make more $$ then the next guy. Thanks, I couldn't have said it better myself. :thumbup:

If you went in for a new haircut and a shave, and the guy said , its $100 an hour, this is gonna take me an hour to do what ya want - and you agree Assuming he’s giving you an accurate estimate of how long is going to take HIM to do it - but then the guy blasts though it in 20 minutes - I’m pretty sure you’d then be on the other side of this debate, asking why your paying for a full hour and not half instead..

You're not being charged by the hour in an auto shop, you're charged by the job, setup by booktime as pointed out above.

People go to mechanics to have a professional thats knows what they are doing perform a service on their cars, not a guy that doesn’t know what to do. they are paying over a $100 an hour for THAT service which is SOLD to them in HOURS of labor.

No, its sold to them by the JOB, same as contracting and same as a hair cut person. Their shop has a labor rate, which gets billed to the customer in respect to the completed job. They're billing it by the job, setup by book time, which is (In the simplest of terms: "book time" is the time it takes a factory trained journeyman mechanic to perform an assigned task in the automobile manufacturer's facility and having at his immediate disposal all of the specialized factory tools and equipment necessary to perform the task.) - as stated by four.cycle.

It's the exact same as my plumbing job. As you point out above, the bid is bid based on the job. 10 days of work @ 100 dollars an hour, is 10,000 dollars. Boss notes that along with the cost for materials + 15% markup and...there's his bid. Everyone has a labor rate and most everything is booked by the job.

So Go ahead - get rid of your air tools and do it all by hand. What’s the result? You actually work the 4 hours the customer got billed for?? Sounds good to me smart guy -thats what the dealers were selling, and what the customers are payin for anyway - ‘4 hours of your time’. so I’m not so sure what your “lmfao” about, cause it sounds like everyone held up their part of the agreement.. seems to me the only person that would be upset with that, is the mechanic thats not getting paid for the time he DIDNT spend on the car.. is he upset that he lost free time? Or is he upset that now he cant start working on a second car - under the same time he’s still getting paid for with the first - as he’s trying to get himself paid for 8 hours of billable labor, under the 4 hours he actually spent laboring between the two of them??

But its not going to take 4 hours anymore, that's my point. Now instead of the customer getting charged 4 hours for the job, hes charged 6 or 8. Everyone loses. We're not paid hourly...and you're not charged hourly.

You didn’t answer me before. If i bought 4 hours of labor, did i or did i not pay for 4 hours of someone’s time? The level of self entitlement here is ridiculous.

You didn't buy 4 hours of labor, you bought a completed job, a crankcase vent valve that takes 4 hours. With my hustle and experience, I completed it faster. Wait, who said that again?

I hope somebody reads this, because I feel like Im taking crazy pills and each and every one of your examples is pretty much standard for how the auto industry bills, somehow its only wrong in the auto industry.

Go buy an hour long massage - and when the person doing it packs up 30 min early - and says too bad buddy - “Since i used this massage gun - and it sped up the work - I finished early. But yea - it WOULD HAVE taken me an hour to do by hand - so i get paid based on that. It’s in this stupid book that my company wrote.. Please pay at the counter on your way out”.. “NEXT!”.....

That's somebody that's charging hourly. Similar to a lawyer who charges 200 dollars an HOUR for their time. We're charging you by the job. I think you're thoroghly confused on how you're billed, and this post is a gold mine. Thanks for the great examples, I love how respectable the hair cutter and contractor are, makes me have hope for the mechanic ;)
 

u2slow

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Question. I always thought that 'overhead and profit' were rolled into the hourly shop rate?

Not so cut & dry... or at least not anymore.

Dealing with parts has an administrative and logistics side. Costs more directly linked to the parts themselves are usually covered in markup. Wrong parts, waiting for parts, core handling, and warranty all have costs. And there's no doubt a profit component too. Hourly shop rate is more linked to 'keeping the doors open' and wages... plus a profit component. These aren't hard boundaries - just a taste of the complex picture.

Your example is certainly not normal practice, speak to other trades.
I have family and friends in construction trades and I know they also have material mark ups.

The formula for a lot of construction/service trades (on-site work) is your material costs shouldn't ever be more than one-third of the total bill. It took a good 2 years to face that reality, and I could begin to pay myself a liveable wage.
 

Shane6377

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Your example is certainly not normal practice, speak to other trades.

I have family and friends in construction trades and I know they also have material mark ups.

To suggest it only the motor trade is completely false ...


Read my post. This is a real example. This is from a good friend who owns a construction business. Again, he does mark up materials over what he pays... but not over retail.

If retail is $3.00/ea. for lumber he gets a 10% bulk discount price and pays $2.70/ea. He charges the customer $3.00. He doesn't charge the customer an additional 40% over retail or $4.20/ea. making the total markup over cost roughly 64%.

I'm sure there are some shady tradesmen out there who have high material markups but I don't employ them because I don't think it's an ethical practice. I think they inflate prices to compensate for poor business practices and I don't want to pay for that. I'll either find someone that can do a quality job at a fair price or do the job myself.

Personally, I think the auto industry knows the average customer can't just walk away and do the job themself so they establish practices like parts markups, 'up selling' unneeded repairs, and 'shop fees'.

Some call it unethical and some say it's capitalism at its finest... but that's why the auto repair industry has the reputation that it has and other trades don't.


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Mr_B

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Read my post. This is a real example. This is from a good friend who owns a construction business. Again, he does mark up materials over what he pays... but not over retail.

If retail is $3.00/ea. for lumber he gets a 10% bulk discount price and pays $2.70/ea. He charges the customer $3.00. He doesn't charge the customer an additional 40% over retail or $4.20/ea. making the total markup over cost roughly 64%.

I'm sure there are some shady tradesmen out there who have high material markups but I don't employ them because I don't think it's an ethical practice. I think they inflate prices to compensate for poor business practices and I don't want to pay for that. I'll either find someone that can do a quality job at a fair price or do the job myself.

Personally, I think the auto industry knows the average customer can't just walk away and do the job themself so they establish practices like parts markups, 'up selling' unneeded repairs, and 'shop fees'.

Some call it unethical and some say it's capitalism at its finest... but that's why the auto repair industry has the reputation that it has and other trades don't.


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I see a lot of plumbers, electricians, carpenters, masons, metal workers, dentists, doctors etc with some level of reputation issue
Many of these jobs is same scenario of unable do job yourself .
The insinuation it only an auto trade issue is just ridiculous .
There is acceptable practice and unacceptable practice and both happen in all trades .
markup is nothing new and nothing underhand as long as end prices are realistic to the market, if an individual has issue with pricing he should be proactive in dealing with that before work is authorised .
Having been in auto and heavy goods repair all my life I see many good shops with fair pricing on parts and labour and handling any comebacks honourably, lot of issues are customer induced by poor decisions poor understanding and general bad attitude.
For those who do face real issues, confront them on it and get it resolved and then find a better shop .
 

MJK

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May 21, 2018
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Like a lot of folks here, I usually do my own work.

When I can't or don't want to do it, I pay my indy shop rate * hours projected for job + OEM parts billed at retail price or just above. If the job turned out to be more than I/we thought it was, they call me and explain what they found. I either agree to the expanded scope, or thank them for finding it and tell them I will DIY it once they are done. Everyone seems happy with this arrangement, we have developed relationship of trust over the years, and I have referred a lots of business to them.

This type of transparency seems perceived in the public's eye as the exception rather than the rule. Even in this thread, there appears to be a lot of different pricing models amongst what I am sure are reputable shops. Throw in the shadiness stories we all hear as a consumer, and I am curious what the shop owner's perspective is?

* Is there just not enough money to made by charging a realistic ($120ish here) shop rate for both the business and employees to live on due to healthcare laws? Maybe people just can't or won't accept an hourly rate that size?
* Does technology or policy make it harder to compete with dealer service now?
* Do cars that come in pre-butchered and are a bigger pain to work on than book would suggest, and the consumer says 'don't care / your problem'?
* Are litigious consumers are trying to screw the shop and get something for nothing?
* Or is this simply viewed as a 'maximize this transaction's profit' rather than 'build a relationship' business?

I am sure I have asked a lot of less than intelligent questions, but I am genuinely curious how this looks from the other side of the service desk.
 
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WittHay

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IIRC he is a union linesman, or at least his previous avatar lead me to believe that.


Ah yes, the union employee. Master of all things business and an expert in minimizing costs.:lol_hitti

Exactly, not sure how 6 guys standing around a telephone pole with half a million dollars worth of trucks and equipment payed for by billion dollar company is somehow comparable to getting a tie rod fixed by a small business.

My opinion is that how or what a mechanic gets paid is strictly between the mechanic and his employer. It is of no concern of the customer. Flat rates are a useful and necessary tool to quote jobs. A student or a retired person takes a car in for a brake job. The shop quotes say 3 hours x the shop rate plus parts and the person decides whether they can afford it

The parts markup much beyond full retail at the most expensive parts place in town is what I dont agree with. We have places like Canadian Tire that sell parts and also has a service area. The parts are the same cost through the service area or bought from the parts department.

Same as a car, truck, equipment dealership. No difference in parts prices between walk in or sold as a repair. The OP has a valid claim in this thread because the parts store is close to the repair shop. Not like the part is special or the repair shop is out in the sticks
 

Shane6377

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I see a lot of plumbers, electricians, carpenters, masons, metal workers, dentists, doctors etc with some level of reputation issue
Many of these jobs is same scenario of unable do job yourself .
The insinuation it only an auto trade issue is just ridiculous .
There is acceptable practice and unacceptable practice and both happen in all trades .
markup is nothing new and nothing underhand as long as end prices are realistic to the market, if an individual has issue with pricing he should be proactive in dealing with that before work is authorised .
Having been in auto and heavy goods repair all my life I see many good shops with fair pricing on parts and labour and handling any comebacks honourably, lot of issues are customer induced by poor decisions poor understanding and general bad attitude.
For those who do face real issues, confront them on it and get it resolved and then find a better shop .


Of course every industry has its bad apples (I acknowledged that if you read the post that you replied to) but I don't know any industry that has decided that it's acceptable to mark up material prices like the auto industry.

No one, aside from those working in the auto repair industry, views this as a fair practice.

The only industry that I can think of that does something along those lines is the medical insurance industry... but that gets into politics so I won't go there. [emoji481]


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Mr_B

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Of course every industry has its bad apples (I acknowledged that if you read the post that you replied to) but I don't know any industry that has decided that it's acceptable to mark up material prices like the auto industry.

No one, aside from those working in the auto repair industry, views this as a fair practice.

The only industry that I can think of that does something along those lines is the medical insurance industry... but that gets into politics so I won't go there. [emoji481]


Sent from my iPhone using The Garage Journal mobile app

You already stated your friend has markup, many industries/trade do it if open your eyes, even my dentist does it, I know plumbers and electricians who markup parts they supply from trade accounts.
It fair practice and part of general business practice as long as cost still realistic retail and customer aware of cost prior to authorising work commencing .
It generally not as ridiculous or underhand as this thread is suggesting .
 

Bacon!

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Jul 16, 2016
Messages
402
It irks me too, outright fraud if you ask me.

The parts should have no markup above the acquisition cost, then to make their money they should charge appropriate labor and shop fees. Even if the bill is the same total price, at least be honest about where the expenses are.

Nobody is suggesting a shop shouldn't be profitable. An out of business shop does nobody any good... except maybe their competition that didn't markup parts prices as much so they had more repeat business. Depends on the area, busy shops can ream people because they can afford to lose customers, or just call it supply and demand.

As a consumer you do have the option to go elsewhere, but once you take the vehicle there, you may face diagnostic fees that make the difference not worth the bother so some of them can pull a fast one, one time before you realize their questionable parts markup policy.

DO leave an honest, fair, online review so prospective customers know who they're dealing with ahead of time, and whether the total price was competitive or all blown up by the parts cost.
 
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