Parts costs vs MSRP

[KE4AVB]

Have anyone else noticed that we are paying more for parts but are being asked sell them at a MSRP that hasn't changed. At least that I am seeing in my prices that I download from my distributors. Otherwords we as shop owner are expected to take the price hikes caused by the tariffs but are not expected to pass this along to the customers. What ends up is having items that actually sell below cost when shipping is figured in especially when shops like mine have orders below the free shipping level. No wonder some shops in the area is charging shipping on all parts sold.

Personally I can not absorb these additional costs just to shield the customer from these increased costs. I usually make about 30% net profit including my labor but this year I am running around 10%. I am now trying to figure how to reprice the price files MSRP prices at a flat percentage rate of mark-up to take these tariffs cost into account as I once did before having distributors. This way I don't need to manually check and change prices on every repair job or parts counter sale. Kinda hard to do; unless, I can find a way to the formula to a whole column of prices as one file of 158,000 lines of SKUs. Now my accounting will allow to do percentage markup of the current MSRP but I prefer to do it base on the cost instead.

A good example is the Murray belt that I sold earlier in the week where cost me $28 and retailed at $32. Heck the shipping was $11.49. A lost of nearly $8. If I keep this up I end up going out business. I am also wondering just how higher those 3 quart fuel tanks are to be. They was nearly $100 cost the last one I brought and they are out of Mexico so I figure they will go up the rates trump threatening to add in tariffs. Customers are already balking at the $128 MSRP.

[bgsengine]

Yeah - prices are a moving target any more, I no longer pay any attention at all to MSRP and simply markup from cost (on a curve) for example cost $.01 to $1.99, gets a markup of 100% (So, a $1,99 part at cost sells at $3.98) while an item that may be a $89 cost might see a 35% markup (89 / 0.65 = $136.92).. So it might happen to be a part with a price code that only gives 25% discount from MSRP, or it might be a 40% discount , it don't matter - In the first case,it sells for more than MSRP, in the second case, sells for less...

[Luffydog]

Can you raise your labor rate up to a flat rate to cover the extra cost. I have heard of some shops going up to $85/hr around here. Also some charging $200 just for service and one shop trying to get business by doing services @ $120 including air filter some of those are $30 plus won’t be long that shop will suffer and cause prices drops around and others will match and suffer as well. Heard they went from $60/hr to $85/hr and one off the chart $100/hr. But only paying the mechanic about $15/hr or under. Most people are thinking why should I have it fixed when I can trade for a new one for a few hundred more. Before to many more years there is going to also no need for the shops. When a new push mower needs to be serviced starting about $60 before air filter then blade is bad $15-25 then you look at the new ones @$130 have to think it might be best to buy a new one and then take the used one and sell for what you can to pay for the new one almost a no brainer. These days parts are going up so bad that I have seen the carb costing more than the mowers are worth before labor. Some say fix it some say not. Just last week there was a part just a month ago that cost a hundred dollars not bad then had one with the same thing this week quoted same as I did the other but when I called to place the order the part was over $300 had to call the customer back and explain to him what had happened he came picked it up without the repair. There is gonna be a big increase in mower grave yards. Can’t wait until our medicine goes up like that as well be a lot more graves being dug if that happens. If you raise rates then it will be covered like $20 extra/hr probably be good to cover most of them and if you don’t have to order parts for some mowers then that’s money ahead. Sounds like a bad deal but have to do what has to be done to say afloat. Good luck let us know if you come up with anything other than raise parts cost or labor rates. This one will be a good thread to follow thur time to see how it changes not just mowers but auto and tools and just about anything right down to the ole cheeseburgers

[RoyM]

I worked for the Canadian Briggs distributor on the order desk, the factory got a lot of complaints about our pricing and insisted we match theirs even with the unfavorable exchange rate. The company president asked how much they were paying for warehouse space, was told around $3/sqare foot. He said I'm paying 12. He pays $10-$15 to ship from Toronto to Ottawa, a distance of 250 miles.
It's a delicate balancing act. If the product is too expensive the consumer either shops elsewhere or doesn't buy yet the dealer cannot survive on such thin margins. You have to stay competive while putting food on the table. An acquaintance was mad because the repair estimate on his Stihl trimmer was almost the price of a new unit, he bought Stihl to get away from box store crap. He fails to realize he has their least expensive model which is priced to be competitive yet costs just as much as a pro unit to repair. I am glad to be retired.

[Skywatcher]

Greetings All

I too have seen the mark-up margin decreasing, especially in the last year or so. Stens parts have remained stable at a 66.7% mark up with free freight if ordering $250.00 or more. They used to give free freight on back ordered parts, not any more.

The real kicker is the B&S distributor here in Canada, I've had a $200.00 order broken up by them into 5 separate shipments with $16.00 freight on each package. If they have to back order an MTD part, that opens up a whole new can of worms. Dealer cost IS MSRP + back order charges + freight + GST.

For example $15.00 MSRP part costs me $15.00 plus $37.00 freight charges plus tax, so ends up costing me $54.60. I then have to mark that up to cover my time looking up the part, ordering it and unpacking it when it gets here. Add 15% to that and the customer is expected to pay $63.00 for what should have been a $15.00 part.

As you say, when a new lawn mower can be bought from Canadian Tire for under $200.00, why would the customer bother putting a $63.00 part plus $75.00 labor into an old machine? All the best,

Sky

[bgsengine]

in some cases, It'd be cheaper for the dealership to go buy a few new lawnmowers (or those $74 trimmers) at wal-mart and then just break them down for repair parts at MSRP, part out the rest in scrap or "no warranty" repairs, and still come out ahead of the game.. over buying the parts from distributor.. Matter of fact, even the distributors are struggling to turn a buck either..

[KE4AVB]

in some cases, It'd be cheaper for the dealership to go buy a few new lawnmowers (or those $74 trimmers) at wal-mart and then just break them down for repair parts at MSRP, part out the rest in scrap or "no warranty" repairs, and still come out ahead of the game.. over buying the parts from distributor.. Matter of fact, even the distributors are struggling to turn a buck either..

Only one problem with the tactic BGS as I in the office equipment repair where we did that as some part cost more than we buy a complete machine for. The problem it seems to be always the same part that fails. A lot machines went to the landfill just missing one part.

The real kicker is the B&S distributor here in Canada, I've had a $200.00 order broken up by them into 5 separate shipments with $16.00 freight on each package. If they have to back order an MTD part, that opens up a whole new can of worms.

I having a similar problem with Dixie Sales where they break up my order and then I no longer have the freight allowable order. A real pain when you expecting the order to ship free and then it don't especially they charge 11.49 even on a $2 part. I am surprised they don't hit me with additional below order fees. Power Distributors is hitting me with additional drop ship fees. I am considering placing a "Do not back order" tag on my account that way I just order from someone else when an item need back ordering.

What this has caused me to do is more cost shopping before placing an order.

[RoyM]

Greetings All

I too have seen the mark-up margin decreasing, especially in the last year or so. Stens parts have remained stable at a 66.7% mark up with free freight if ordering $250.00 or more. They used to give free freight on back ordered parts, not any more.

The real kicker is the B&S distributor here in Canada, I've had a $200.00 order broken up by them into 5 separate shipments with $16.00 freight on each package. If they have to back order an MTD part, that opens up a whole new can of worms. Dealer cost IS MSRP + back order charges + freight + GST.

For example $15.00 MSRP part costs me $15.00 plus $37.00 freight charges plus tax, so ends up costing me $54.60. I then have to mark that up to cover my time looking up the part, ordering it and unpacking it when it gets here. Add 15% to that and the customer is expected to pay $63.00 for what should have been a $15.00 part.

As you say, when a new lawn mower can be bought from Canadian Tire for under $200.00, why would the customer bother putting a $63.00 part plus $75.00 labor into an old machine? All the best,

Sky

Unless policy has changed you should not be charged freight on back orders, it's not your fault the part is not in stock. They will include b/o's in regular shipments where they can but they don't count toward your minimums for prepaid freight.

[38racing]

I'm pretty sure the church's 99 mtd needs a new pto clutch. My normal aftermarket supplier discount price is $187 cdn. I've found it on ebay.ca amazon.ca and a cdn online site. These last 3 appear to be the same seller. Shipped price varies from $106 to $147 cdn depending which of their sites I buy from. Not sure if they collect our tax on all three.

[38racing]

It's getting even crazier for us Canadians to buy parts. I could only get jb weld extreme heat on amazon.ca or ebay.ca for $30 plus cdn. Needing more I searched again. Found the same as last time but this time I found it on amazon.com and they would ship to canada and bill in cdn $. So it was $22 cdn shipped. Meawhile I was needing a briggs 10 series governor spring. Oem was 8.50 cdn if i picked it up . amazon.ca was 6.60 but only available if added to a larger order. So I checked amazon.com. I got 2 added to my jb weld order for additional8 $ cdn. On its way from California via Calgary.