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Determining Cost of Parts…
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Determining Cost of Parts…
Hey everyone,
Recently I’ve been struggling to determine how much to charge the customer in regards to parts for a repair. The best example of this I can give would be guitar strings. Occasionally I’ll buy strings on sale, other times when they’re not on sale, and since cost of strings often varies, I may buy strings at the start of the year, and at the end of the year the price will be different.
So the question is, what variables do I need to consider in between what I paid for strings, and what the customer pays?
I was considering creating a spreadsheet on Google Drive which would be open to anyone who wanted to use it or edit it. Let me know if you’d be interested in this.
Thank you!
-David
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3 Replies
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At least for me, there’s relatively few variables to consider – it’s the cost of obtaining the part, factoring in shipping costs and taxes, and adding my desired margin. Factors that influence the margin could be how long it takes you to sit down and do your regular parts ordering, the volume you sell etc.
When it comes to hardware, consider that by you supplying the parts, your customer is receiving several benefits vs them supplying the parts:
– They gain the benefit of your expertise in knowing what parts will fit and what won’t. This reduces the risk of them wasting money on the wrong part, and saves them the time and effort of doing the research and working out what they need.
– If there’s some issue with the part, generally the supplier (you) will take the lead in contacting the vendor/manufacturer and arranging a replacement.
– The supplier (you) handles chasing up shipping delays, lost packages etc
You deserve some compensation for providing these benefits, so don’t short change yourself!
I generally find I can maintain a margin of at least 30% on parts and still keep the price fair for the customer. For parts I can obtain wholesale, this means I can generally supply them at MSRP.
In terms of strings, I charge MSRP. I’m not going to try and compete on retail price with some online megastore that relies on volume and is making margin of 0.5% per set. I’ve never had a customer object to the price I charge for strings – my workshop is not near any retail music stores, so it’s a major convenience for them to not have to make a separate trip or detour to grab strings. The margin for strings varies based on the manufacturers wholesale price structure.
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Hey Josh, thanks for the reply! I’ve never really sat down and thought about it before and so this certainly clarifies things on my end.
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I would recommend getting an account with a few wholesalers. That’s trickier if you’re a sole proprietor and don’t have the FEIN and reseller permit but that’s all obtainable. I also recommend not being a sole proprietor because you get screwed on self employment tax, but I digress.
Wholesalers make it easy. You charge your client tax when they purchase. You don’t have to double dip in that way (you buy online and pay tax, and the presumably charge tax again to your client).
Wholesalers will charge you roughly 50% less from MSRP or MAP depending. As suggested you figure out your own margins (shipping and admin) and price accordingly.
Clients can also bring in their own strings and parts; when I was a small shop and just starting out this was my preferred route, as some of the companies require business references/hoops to jump through for sure. Some also have buy ins — usually $500-1500, and not annual (once you’re a dealer you’re always a dealer)
If you’re in the US I’d look at LPD and Daddario. Very easy to work with and have relatively low buy ins. Gives you enough options for strings and things and if they have their own brand they prefer they can source it themselves and typically do. Whether or not they are providing strings is part of my digital intake process so they can come prepared.
Stringjoy is another easy one to work with.
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