Hypothetical pricing question

[Kottwitz-Graphics]

Here is a hypothetical / general pricing question...

Let's say you have a customer that wants a high ticket item, such as an awning, or set of channel letters. Those items are produced by a 3rd party (wholesale) and all you have to do is install.

Price to you is $8,000. Is say, a $12,000 sale price to the customer leaving money on the table, a good profit, or greedy?

Out of that $4,000, you also have expenses of concrete, labor to install, and other miscellaneous expenses....

 

[Johnny Best]

Good profit, don’t have guilt for charging for your knowledge on getting things accomplished for your customer in a professional manner.

 

[Gino]

After you pay for the item(s), the extra materials needed, your time and anyone elses, your overhead, your taxes, it doesn't sound like you'll have any markup left to be considered a decent profit.

Maybe it's just age showing, but if ya ain't gonna get paid..... and paid well, why not do something you like for free, like fishing or something ??

 

[henryz]

Without giving full details of the install and your buyout being 8k you should be around 14k IMO, thats with a 1.5 markup on your buyout. You are also probably not paying commission so can take that in consideration.

 

[Billct2]

One of my considerations on projects like that, where I buy a big ticket product wholesale, is the risk I am assuming if something goes wrong. The customer will hold me responsible for any problems, and dealing with a remote supplier that may or may not respond quickly can cause a lot of headaches.

 

[rossmosh]

I would agree with others, it's a pretty marginal profit on a one off job. If you were doing 20 installs like that, completely different story. 1 job, it's not great.

1. You have to factor in for the "what if something goes wrong"

2. You're selling yourself short on the profit of the actual item. I generally try not to go under 40% profit on these types of projects and install would be a separate line item.

3. I try my best to understand the market rate. That also plays a big role in my pricing.

 

[KMC]

depends on:
what you are installing it on?
are you connecting the power (did they run power to that location)?
are the channel letters on a raceway or wireway?
how many channel letters?
how high up?
do you have to rent a bucket truck etc?
are there anything in the way of the install crew eg trees power lines?
permits to close or block the sidewalk / road side?

 

[equippaint]

Maybe you already did this but figure your sell price on the product and installation separate even if you quote it together. Id say 30-40% markup plus install. Ultimately it is whatever you are comfortable with
When I worked at equipment dealers parts were 40-50% and national accounts around 30%. Machines were usually 15-20% (sometimes a bit skinnier since market share was a big metric) but that's on $100k+ items. The thing is that when you are the dealer you have a captive customer base on parts but not on selling new machines.