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How much profit do you make on material?

moonlight machine said:
I have a customer that wants copies of my material receipts for his job. He wants to pay receipt + 10%! Anyone run across this BS?
Click to expand...

Requote the job with customer supplying the material. He might be surprised when your quote comes back with a slightly higher price than before. :D

For most of my work, I would rather the customer supply the material anyway. Makes it a LOT easier for me.
 
moonlight machine said:
I have a customer that wants copies of my material receipts for his job. He wants to pay receipt + 10%! Anyone run across this BS?
Click to expand...

IME that is very old school, going right back to 1970 when I left school, that system was used by our Ministry Of Defence for some of the ''chosen'' contractors and certain types work- especially rush orders.

A single phone call from the MOD with a verbal order number, (paperwork to follow pre inter web and fax days? ) on a time and materials basis, the hourly rate (usually good ;) ) was fixed by agreement, and the materials were paid at the contractors invoice cost + 10% as a handling charge.

I have come across it outside of ministry work a few times, but only with long standing customer relationships.
 
Limy Sami said:
IME that is very old school, going right back to 1970 when I left school, that system was used by our Ministry Of Defence for some of the ''chosen'' contractors and certain types work- especially rush orders.

A single phone call from the MOD with a verbal order number, (paperwork to follow pre inter web and fax days? ) on a time and materials basis, the hourly rate (usually good ;) ) was fixed by agreement, and the materials were paid at the contractors invoice cost + 10% as a handling charge.

I have come across it outside of ministry work a few times, but only with long standing customer relationships.
Click to expand...

The guy is from New Zealand, I wonder if it is common their as well?
 
I wonder why he did this in the first place, are you giving too much detail in your quotes to begin with? What happens if you use "drops" or "leftovers" from another job that ran at zero scrap on his, does he then get free material? What will stop him from questioning how much stock you ordered in the first place?
 
Dualkit said:
I wonder why he did this in the first place, are you giving too much detail in your quotes to begin with? What happens if you use "drops" or "leftovers" from another job that ran at zero scrap on his, does he then get free material? What will stop him from questioning how much stock you ordered in the first place?
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He called for separate material in his RFQ. I happen to have most of what I need already, I see no point in buying more. No, he does not get it free.
 
I mark all material up 30%. If the customer wants to supply his own material, I have him order it, pay for it and deliver it to my shop. He also has to know where to get it and what to get...the 30% markup covers me finding the stuff, ordering the stuff and carrying the financial burden until the customer pays.

If your customer does all the work, finds the material, pays for it and delivers it to you, you have no real leg work in it so 10% might do OK...but it still seems pretty shady for the customer to demand that, sounds like he's trying to low ball you!

Stuart
 
If he wants a material receipt, tell him to buy it himself.

He probably thinks you're screwing him on the material side... Any repeat jobs you get,
break them down so it looks like he was getting the material AT COST, and that he just
screwed himself by offering up the extra 10%. Then tack on a paperwork copy charge of
25 cents a page, just to be an asshole.

I like the customer buying the material on big jobs. Little stuff, that's easy to find, I have no problem
getting it... Big stuff where I have a better source(open account), I'm fine with handing them the invoice when it comes in,
and they pay it.
 
moonlight machine said:
The guy is from New Zealand, I wonder if it is common their as well?
Click to expand...

Not normally- sounds like the sort of customer that bleeds you.
At one stage I marked up materials 15% from retail and found that it barely covered costs unless i was buying at a trade rate.
At trade, the usual 20% allowed gives a reasonable margin and I can often source at a better rate than the customer and make good margin on window and door hardware.
 
Tell him to buy his own material, then tell him you already have it and will sell it to him for $XXX.XX whatever. At that point if he asks you what you paid for it tell him to order it from another supplier and see what they say when he asks them what they paid for it.
Sheesh
 
10% doesn't make it unless it's a huge order or really expensive material.
The price is for the part what the material cost is none of the customers business.
your price is your price if they don't like it they can try and buy it elsewhere.
 
be sure to add in the "administrative time for sourcing, quotes, certs" plus "freight with fuel surcharge", another admin fee for "unloading, ISO cataloging, and incoming inspection", and pad that with a bill from a third party rigging service taking it off the truck....

10% seems awful thin on a low material number.
 
10% is thin.

We try for 40-100% markup on material.

If customers want to supply material, they are welcome to...but even with us marking it up, it's likely still cheaper to buy from us, because once you supply your own, we have to "insure" it...meaning, it's our ass if we have to buy it twice. Not a big deal for cheap stuff, but can get expensive really quick.

The handling alone is huge. Does your customer have a crane? Do they buy in quantity? Do they have an account with the supplier that shows your volume discounts?
 
moonlight machine said:
I have a customer that wants copies of my material receipts for his job. He wants to pay receipt + 10%! Anyone run across this BS?
Click to expand...

Yes I have.
So the bill is the material bill total including scrap or drops from standard lengths, quoting material time, purchasing time, receiving time, shipper and invoice processing time, check writing time all at 1 dollar per minute.
Then of course money carrying charges at 1 1/2% per month from the time it hits my door until his check clears my bank for the finished parts.
Add 10% on that for profit and yup, seems good.
Given this breakdown most shut the puck up.
Bob
 
Tell him to take a couple egg's and some sausage to Mc Donalds and ask them to cook them for breakfast then ask him what the reply was.
 
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