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Question DetailsAsked on 3/1/2018

RLG
How much is it acceptable for repair parts to be increased over retail?

I had Irving fuel repair my furnace. They installed a new Blower Motor they got from CW Web and charged me $422 just for the part. I checked with CW Web and found out it was only $219. That is a large increase, almost 100%. Is this normal?.

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Normally 50% or so markup from their wholesale cost to your "Retail cost", in their shop / store (if they have retail sales out of their shop). Commonly higher markup on special-order items. Normally, that marklup on wholesale cost would work out to 10-25% more than you could buy it for online or going to a distributor yourself - assuming they bought it at wholesale, not retail price in the first place. Don't know who CW Web is - or whether your HVAC company would deal with them on a wholesale basis as a normal supplier, or if this was a one-off sale at retail.


For parts sold "off the truck" - so taken out of truck stock and used on-site (like wire, fittings, ducting, pipe, etc), almosat certainly at least 25% overhead/handling markup, certainly more commonly in my experience 50%, and sometimes 100% or even more. That would be for parts taken from the truck stock.


Whether they charge the "off the truck" rate or the shop / store rate or something in between for parts they have to go back to the shop to get (so you are paying the labor on the round trip to the shop) depends on the vendor - my go-to Plumbing and HVAC guys normally charge the shop store rate for items they specifically bring to install (say a new water heater or furnace) and also on items they pick up from the shop on your billed time, but the truck rate if they pick it up at the shop during lunch or outside of the time you are paying for.


If it was a part they figured out they needed during the job and went to go get it on their own time (not on hours being billed to you) like on a start-of-day parts stop or at lunch, or sent a parts runner to get it and bring it to them while they continued working, 50-100% markup from what they paid would not be uncommon.


Also on the markup thing - some companies apply overhead markup across the board so around 50-100% if realistic in that case, resulting in (hopefully) lower labor rates because much of the overhead cost is recovered in the parts and materials markup. Others only charge 10-25% on parts/materials for billing-cylce money value and some handling fee and profit - and sink the bulk or all their commonly 50-100% business overhead into the labor rate. The latter is also more common with companies dealing with government agencies, which commonly only allow a fairly low materials/subcontract markup, so those companies commonly distribute almsot all the company overhead costs to labor charges.


You could also question why so high a markup - all you can lose if having them say that is their standard markup and that is it. Of course, look on the invoice - if they have some terms there (at bottom or on back) then they have to stick to that markup - including on any freight cost if it came FedEx or such.

Answered 8 months ago by LCD




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