Parts mark up at a shop?

"wantafuncar" (wantafuncar) 01/09/2018 at 11:31 • Filed to: partslopnik, auto repair shop

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I’m genuinely curious, why is there such a substantial mark up on parts at a shop?

Most people know that they can get the exact same part online at various places for less.... yet shops continue to get away with charging more than even the local parts stores charge. Are they charging for delivery?

atfsgeoff > wantafuncar 01/09/2018 at 11:41

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It takes time to order and inventory parts, especially ones that are not already in the system. I have to do this all the time where I work (at a computer repair shop). In my line of work, the parts are constantly changing so pretty much every special order has to be added into inventory manually. It takes probably 20 minutes to a half hour between actually ordering the parts and then entering it and the pricing into the system, so that adds $30 to $40 just from the time I’m spending to do so.

Routine stuff that I order all the time, I usually charge a 15% markup for. If they’re getting a lot of work done besides the parts purchase, sometimes I’ll knock that down to 10%.

Rust and Dust - Oppositelock Forever > wantafuncar 01/09/2018 at 11:41

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With pretty much any service industry, if they provide parts/components for their service, they’re selling to you at higher than their cost.

Takuro Spirit > wantafuncar 01/09/2018 at 11:45

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Its easier to make a profit on parts than it is on the labor to install them.

SOMETHING has to pay for overhead, advertising, equipment, etc.

If only EssExTee could be so grossly incandescent > wantafuncar 01/09/2018 at 11:45

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Shops have parts suppliers that they know and trust and they want to stick with them even if they cost more. Shipping for said parts is also expensive, especially if the shop overnights it to get your car fixed ASAP.

Even if they get them from the same place you might order from, there’s a markup so they can absorb the cost of finding and freighting the part.

wantafuncar > Takuro Spirit 01/09/2018 at 11:48

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yeah, but isn’t that the justification for the appx. $100/hr labor cost. no other labor is that expensive (short of highly skilled services, such as legal or medical). https://www.google.com/amp/s/mobile.nytimes.com/2017/04/27/automobiles/wheels/automobile-repair-jobs.amp.html this says some mechanics are making $100k/yr., no concerns about overhead if you’re paying a mechanic six figures.

LOREM IPSUM > wantafuncar 01/09/2018 at 11:49

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Profit and greed. Dealers make most of their money in the service department.

...and most of em won’t install parts if you buy them elsewhere, so you’re stuck if you want them to do the work.

Even if they do install them, they generally won’t warranty anything.

Oh, and if you’re intentionally undercutting them on parts to save a buck you can almost be guaranteed the job will be screwed up so you have to return. They’ll tell you that the part you provided is responsible, and you’ll end up having to buy another one from them because exchanging the part you provided will take too long. In the end you’ll have spent at least double on labor, the full shop price for the part, plus whatever the part you provided ends up costing you. You’ll wish you had just paid the original shop asking price and kick yourself for trying to save a buck... and that’s exactly what they want because profit and greed.

bob and john > wantafuncar 01/09/2018 at 11:49

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parts is where a decent chunck of money is made.

and not, they are OEM parts. some of the stuff that you get online isnt OEM, just produced by another company. ‘same’ part number, but a knock off

OpposResidentLexusGuy - USE20, XF20, XU30 and Press Cars > wantafuncar 01/09/2018 at 11:53

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You hav e never seen overhead per dollar in your life, until you have seen a repair shops books . The best mechanic at my parents shop makes around 70k. They lose money on oil changes and labor barely breaks even i f it even does actually break even. Also, my parents don’t allow people to bring parts(unless its highly specialized, because often they are junk.

OpposResidentLexusGuy - USE20, XF20, XU30 and Press Cars > LOREM IPSUM 01/09/2018 at 11:55

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It is profit but its not greed. Everyone has a right to make money. If the markup is stupid it can be greed, but otherwise it’s j ust how they mak e a living.(dealers often charge the stupid markup , I am talking indy shops).

OpposResidentLexusGuy - USE20, XF20, XU30 and Press Cars > bob and john 01/09/2018 at 11:57

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People don’ t understand that the water pump they saw online for 19.99 is not the same as one that is bought straight from a OEM supplier for 99.99

wantafuncar > bob and john 01/09/2018 at 11:57

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i was referring to honda charging me more for OEM part than i can get it from delray online (or other incredibly similar circumstances), where literally the same part is more money.

OpposResidentLexusGuy - USE20, XF20, XU30 and Press Cars > Takuro Spirit 01/09/2018 at 11:58

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People don’t realize how expensive the overhead is on a shop. It take a lot of job to pay for the $5000 a year software... for one brand of car... And no the $20 OEM reader from Oreillys is not the same.

LOREM IPSUM > OpposResidentLexusGuy - USE20, XF20, XU30 and Press Cars 01/09/2018 at 12:01

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Indy’s tend to be a bit more reasonable when it comes to parts markup and labor rates. Dealers are usually really bad. Any sort of chain, however, and it’s a whole lot of corporate greed and often dishonesty.

300 for a generic brake rotor

400 for a (rebuilt) master cylinder that didn’t need replacing to begin with

Etc

facw > wantafuncar 01/09/2018 at 12:01

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A lot of it is just profit. They can charge it because most people don’t know what they need, where to get it, and don’t want to wait to do so. They also want their work to be warrantied, which may not be the case with customer supplied parts. However there are real expenses. They keep inventory at the shop which is not cheap, especially since they have to deal with parts that may not be used, and parts that go missing. For parts not at the shop, they often get same day/next day delivery from a local supplier, which is also expensive. Some shops insist on using OEM parts which are pricier. Additionally, the fact they warranty their work may add overhead to the parts costs. You are also paying for the know how to get the right part.

Some of these things probably should change. Shops can leverage Amazon’s massive selection and logistics operation to stock less, and cut out inefficient suppliers. They can offer customers willing to wait a few more days to get their car fixed lower prices. Online parts catalogs (both from Amazon, and from OEM parts departments) have gotten far better, so finding the right part is easier. It’s tough to cut out a profit center though, so those sorts of changes will be slow, as the market forces shops to adapt.

Takuro Spirit > OpposResidentLexusGuy - USE20, XF20, XU30 and Press Cars 01/09/2018 at 12:02

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I’ve seen some of my dealership’s bills..... electric, gas, the DMS, etc.

That’s a LOT of money to recoup on the back end. Cause we all know ain’t nobody making money on car sales anymore.

LeaksOil > wantafuncar 01/09/2018 at 12:04

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~13 years experience in automotive repair industry checking in.

1. Parts from local vendors aren’t always discounted below retail. Shock. Horror. Insert people calling me a liar. It’s true. It depends on THEIR markup. Some items absolutely come at a discount, while others the shop literally pays the same price as Joe Blow walking in off the street. So our “starting point” for markup is often retail, or close to it

2. Referring to number 1, parts online are way less for retail customers. Shops cannot adequately depend on online parts suppliers. Again, not all parts are discounted to the shop. You’d me amazed at the frequency of defective parts, parts ordered by the VIN that don’t fit (!?)?, missing components in a sealed box of parts, etc. I’ve literally had to order 4 different brand belt tensioners for a Honda J-Series because the first 3 were defective, in the box. Reputable suppliers & brand name parts. Rockauto can’t deliver it to me in 10 minutes. They can’t run to the next town over and grab it if their particular store doesn’t have it on the shelf,…etc. True story- I ordered an XJ clutch master cylinder from rockauto while working FT as management at a parts chain because even with an employee discount/rock auto was a much better price on the same dang brand!

3. It’s not always up to the guy helping you. Other then running locally owned Quicklube/detailing facilities, my experience is all in nationwide, corporate run stores. For markup- there is specific policies we have to follow or risk termination. There is multiple ways to markup, depending on the situation. Preferred way to order/price parts is in what’s called an EOP system. I have the vehicle info entered, I select a part (say waterpump) , I get a list just like any other online shopping. It says the vendor, part brand/number/etc. , retail cost, our cost & their stock level. If I select it, all the information is transferred to the workorder. One more click & orders the part-no phone call needed. There is a Dropbox that I can select messages for then such as “warranty”, “need by EOD”, “need ASAP”. To call a vendor & get the parts info to manually input in the workorder- the markup process is called “boxing”. I input all the information (“water pump”) and input our cost- hit the tab key & it’s auto marked up. My colleagues & I have tried many times to crack the algorithm- but the only conclusion that I could 100% verify was the markup % varies depending on the part cost. Specific nationwide company policy for dealer acquired parts was +10% above list price. In other words-10% over what the dealer would charge a walkin customer carrying the part out. The only person in the entire store who can see store cost on stocked parts is the store manager- I don’t know what the markup is.

Bonus- for tires we kept in stock- company decided what to charge. For outside purchase tires from wholesalers- we had some more wiggle room & was usually up to store management. Each store has “rubber margain” goal to keep tire GP% within a certain range. I usually had a blanket markup that I started used and rarely deviated from. I’ve seen other managers vary it on the brand of tire.

OpposResidentLexusGuy - USE20, XF20, XU30 and Press Cars > LOREM IPSUM 01/09/2018 at 12:04

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Yeah $300 for a generic brake rotor is a lot. Indy shops can be crap too but there are plenty of good ones. The most expensive brake job my dad usually does(i talked to him about it this morning as I’ m looking at an ISF) is the GS F Sport. Its a $850 for the customer I think he said.

His Stigness > wantafuncar 01/09/2018 at 12:04

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But did that article also mention how much tools are? I’m guessing not because if they did you would probably change your tone. I can almost guarantee you that these techs who supposedly make 100k a year have well over $100,000 in tools, and spend a significant amount of money each year on new tools and software for their scan tools.

The automotive industry is a fucked up place to work, mainly thanks to this mentality that automotive technicians are somehow less valuable than other professions like a doctor or a lawyer. Just because you don’t have to go to school to be a tech doesn’t mean someone is any less competent.

And techs who make over 100k a year are few and far between. Most barely make any money after you account for their tools. As I said, this industry is fucked and there aren’t many shops who pay their employees a decent wage, and instead keep what profits there might be for themselves. The industry is rampant with labor violations (and workplace safety violations) left and right.

OpposResidentLexusGuy - USE20, XF20, XU30 and Press Cars > Rust and Dust - Oppositelock Forever 01/09/2018 at 12:06

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I payed $370 to have my fridge fixed with a $50 part. The home warranty company covers $270 of it but still, t hats what it is.

Steve is equipped with Electronic Fool Injection > wantafuncar 01/09/2018 at 12:08

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I expect a markup of 100% from wholesale if I’m going to a local shop. It seems fair to me because a lot of the time they don’t charge as much for labor. Like when we took the Cherokee in for its daily-driver-duty refresh, they charged us $35/hr for labor. I know the mechanic himself was making about $18-20 of that, so it seems fair to me. They charged me $45 each for motor mounts and $25 for the trans mount.

ITA97, now with more Jag @ opposite-lock.com > wantafuncar 01/09/2018 at 12:12

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A shop has time involved in ordering parts and opportunity costs sunk in a car sitting on the lift waiting for part sellers runner to deliver them (or sunk time in getting the car off the lift, storing it and then back on the lift later), and this isn’t otherwise really billable time. Even inventory parts have some cost sunk into them to order, store and track them.

In the end, I don’t think it is usually a terrible deal. An indy shop is usually going to mark up parts 20-30%, but they also bought them for 40-50% less than retail price. While you can usually beat the shop’s prices from a wholesaler like rockauto that will sell directly to you, there is cost involved in shipping, and a cost in down time waiting for them to arrive.

Back when I was turning wrenches for a living, we almost never allowed customers to supply their own parts. There was too much risk involved in them supplying parts that might be of questionable quality and unknown origin that cause a warranty comeback when they failed, and also the very substantial risk of them supplying incorrect parts and then having to deal with that whole situation while their machine (or part of their machine) is in pieces in the shop. 

LeaksOil > His Stigness 01/09/2018 at 12:14

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Biggest problem I’ve seen increasing is technician shortages. I’ve worked in 4 markets between 2 states. We can’t find people to turn wrenches & we give paid training! We’ve had guys walk in out of high school, never popped a hood before in their life ,…with hard work and the paid training we offer, become master techs! We sponsor ASE testing (cover the cost of test, get a one time “spiff/bonus” for each test passed, and raise at next review according to how many certs you’ve acquired!)

LeaksOil > OpposResidentLexusGuy - USE20, XF20, XU30 and Press Cars 01/09/2018 at 12:18

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Yes. Or a quality, reputable aftermarket brand. I had a customer argue they could buy an alternator for their car on eBay for less than $100 brand new. “A new alternator is new alternator”. No- there is a ridiculous quality difference.

LeaksOil > wantafuncar 01/09/2018 at 12:20

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Quantity? Doesn’t Delray online sell a ridiculous amount of parts compared to a dealer that only services its locale? I wonder if Delray is as cheap in person as online.

My wife & I went to Walmart once to buy DVDs- realized the online price she found was better than on the shelf price. Asked a manager to price match- he said they couldn’t. Same company, literally same product, different price.

functionoverfashion > wantafuncar 01/09/2018 at 12:21

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Since when does any business give you something for the same price it cost them to get it?

Most of the small independent shops near me charge ~$70/hr for labor and a small markup on parts. It’s a competitive industry that has an image of being dishonest, whether true or not. These places aren’t raking in the cash.

Then when you look at the service shop at a dealer, with multiple service advisors and tons of highly specific equipment and tools that the manufacturer may simply require them to have, you can see where the cost comes from.

OpposResidentLexusGuy - USE20, XF20, XU30 and Press Cars > LeaksOil 01/09/2018 at 12:22

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Yeah my parents warranty all work and parts for 3 years/36,000 miles. They can’t afford to sell crap. 

bob and john > wantafuncar 01/09/2018 at 12:24

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are you sure its the same part?

I remember someone here order a set of ‘oem’ headlights from some place....looked similar and bolted up. but small details. the rubber was a bit cheaper. the plastic not as thick. the little details on the inside not the same.

the is a mark up, thats for sure. but its not as crazy as you might think.

LeaksOil > OpposResidentLexusGuy - USE20, XF20, XU30 and Press Cars 01/09/2018 at 12:25

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Exactly. Not only that-but if you pay to have a repair & have to keep bringing it back for issues- it isn’t a good experience. Parts fault or shops fault doesn’t always matter to consumers. Bad experiences don’t tend to lead to lots of repeat business & word of mouth advertising, lol.

His Stigness > LeaksOil 01/09/2018 at 13:02

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Part of the problem is our society looks down on technicians as inferior to others. People have no idea how much skill the job actually takes, how much training, and how many tools it takes.

Also, shops like yours are few and far between. Most shops are miserable to work for. They pay jack shit, the owners are assholes, and the other techs are assholes. I hate this industry and I can’t wait to finish law school and get the hell out. I’m valued by my boss, but not by customers. I really don’t feel like sharing my expertise with them because they see no value in it. So they can go get their ass handed to them at another shop who charges more and does a shittier job.

Sorry if I sound so bitter.

Aaron M - MasoFiST > wantafuncar 01/09/2018 at 13:02

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In all honesty, the indie shops that I go to will sell me parts essentially at cost, though they pass on shipping and anything else.

Dealers charge more, but they also pay for inventory management...I’m willing to pay more when I can walk in and get something relatively specific right then.

Most of the online places I’ve seen selling OEM parts are dealers with sidelines...they pass on the savings of not having to warehouse anything, but that’s about it...usually 10-15%.

I did once, in a fit of ill-advised thriftiness, track down the OEM suppliers for every individual pulley in a Subaru timing belt kit...saved maybe $70 on about $400 worth of parts. Not worth the time spent squinting at photos of pulleys for manufacturer markings.

wantafuncar > functionoverfashion 01/09/2018 at 13:04

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I was/am genuinely curious - not saying they ‘have to.’ I do think charging $300 for a part I could get for $100 is ridiculous, and I’m sure most would agree with that & that there is some of that gouging going on

LOREM IPSUM > wantafuncar 01/09/2018 at 14:15

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I use a mobile mechanic for a lot of the stuff I don’t want to tackle myself, and he encourages me to provide my own parts. I don’t recall his hourly rate offhand, but every quote he has given me has been far lower than my favorite indy(s), and his work has proven to be excellent. Win-win, really.

His last quote was to r&r basically the entire rear suspension of the e38, AND swap out the fuel tank and pump. He quoted me $400 in labor for everything. Damn straight I’m calling him if I ever get around to ordering the parts.

YMMV on a lot of these guys though. I sent two of them packing before they ever got a chance to pick up a wrench. Probably more bad ones than good out there so best to tread carefully.

bob and john > Steve is equipped with Electronic Fool Injection 01/09/2018 at 15:20

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What the fuck where the hell are you find 35$/h labour rate?!?!?!?!

Steve is equipped with Electronic Fool Injection > bob and john 01/09/2018 at 15:22

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Small independent shop in rural NC. That’s closer to $45 in metric dollars like you use up in Canuckistan.

functionoverfashion > wantafuncar 01/09/2018 at 20:12

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Oh, there’s no doubt some places overcharge for... just about everything. Lots of shops will charge more or less fair prices, but do jobs that don’t really need to be done, or at least don’t need to be done YET.

pip bip - choose Corrour > wantafuncar 01/10/2018 at 05:01

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because we can get away with it

LeaksOil > His Stigness 01/13/2018 at 09:24

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I’m finishing my education and trying to get out, too. Techs, other managers, ,customers,…way too many jerk-offs. Since I’ve been in the industry a lot has changed in the world. Smart phones with readily consumeable media and everyone wants more convenience. Customers want the same jobs on more complicated cars in less time and want to pay less and throw hissy fits over it all.

I can’t tell you how many grown men with their wife & kids present throw a full-on temper tantrum, ridiculous.

His Stigness > LeaksOil 01/13/2018 at 16:32

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The industry is full of complete dickheads, it’s a terrible place to work.

I can totally see an “adult” losing their shit. I’ve had people cuss me out for failing their cars during a smog. “Why couldn’t you just look at it first and not fail it?!?!?” It’s fucking pathetic how oblivious and shitty people are.

LeaksOil > His Stigness 01/14/2018 at 10:50

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Thankfully I’ve never lived anywhere with emissions- but I did service advisor/management for Virginia state inspection for years. According to the law- first thing the inspector is supposed to do is scrape the old sticker. You leave with a rejection or pass. I’ve been threatened, had stuff thrown at me, cursed out and screamed at ,…etc. for literally following state law. Usually that’s an easy resolution, turn the phone around and say okay Im dialing state police, they’ll dispatch a trooper to resolve,…oh? Suddenly you aren’t as mad and you didn’t mean it when you said you’d stab me? Imagine that,…

His Stigness > LeaksOil 01/14/2018 at 13:54

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Holy shit, that sounds like a delightful job.

I had a customer walk out the other day after I failed his car, and he lost his shit and started telling me how I’m supposed to smog cars. I would have called the police, but my boss has zero backbone and let’s people walk all over him. As soon as I buy the shop, though, and anyone tries that shit on me again, they’re talking to the police.

LeaksOil > His Stigness 01/14/2018 at 14:25

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Who oversees the emissions testing there (what state?) ?

Virginia state police are in charge of inspections. There is an awesome satisfaction when some douche insists your failing them to try to sell them a job and the responding officer inspects the car, tells the douche off for wasting his time and says he’ll ticket him for improper equipment if he catches him driving without it fixed .

His Stigness > LeaksOil 01/14/2018 at 15:35

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I’m in California and the Bureau of Auto Repair regulates the smog check program. They work with CARB to actually come up with emission limits. The BAR is under the Department of Consumer Affairs, and the BAR also licenses and regulates other auto repair shops.

Our state police, the CHP, are the ones who do street enforcement, local PD’s and Sherrif’s don’t know and don’t care about smog enforcement.

LeaksOil > His Stigness 01/15/2018 at 16:30

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Never been there ,…California to me seems odd as far as cars are concerned. I understand there is significant car culture there ,…but also seems like much stricter vehicle related laws (I’ve never had an emissions test).

His Stigness > LeaksOil 01/15/2018 at 18:01

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We do have pretty strict limitations, but no one actually follows them, so we have a big car culture.