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following the mark up on Bikes thread, what do you guys make in your trade, call me nosy, I just want to know just how much money you are making that makes or prevents you buying from a IBD vs Mail order giants, I don't want to know how many staff you have, or your overheads, just profit so I can be judgmental and use it against you if I was ever to darken your door.
Just curious really !
Aim for cost of manufacture less than 20% of selling price. Significantly less on some products.
aerials, satlellite and cctv. 20%
but there is new technology monthly, so a fair bit gets sold off for less to get rid.
Bikeshop staff/owners say 'yeah but there's premises and heating/staff overheads'.
Do normal businesses not also pay wages, business rates, rent, heating etc etc?
Flour Milling, lets just say if you were to approach a bank to invest in a new mill they would kick you out the door as over 50 year payback isn't a business case.
You either need the infrastructure in place or very deep pockets, similar for most food production across the board
What if you supply good and services? Its not a question that work very well unless you are inly talking about a soly retail or manufacturing business. Even then it depend how quickly sock moves etc
Initial manufacturing cost is about 20% of final sale cost....
It looks worse than it really is as the manufacturing center is required to sell the part to the distribution center. When they do this they are also required to make a profit so that competition laws are not violated.. As this process is repeated along the chain the numbers get closer to the sale value...
@Hora - what is it with you and bike shops, seriously? You seem to have a major chip on your shoulder...
Anyway, you haven't answered the question- what do line of work are you in? And what sort of markups are involved?
Edit: Forgot to say, I work in the bike industry. If you listen to Hora, we work on a 500% markup and are all driving Ferarris.
What pinetree said 🙂
1,000,000% coz evil defence
Depends on which of the 3 different prices we sold the product at.
Zero it's free. For now.
We sell our kit (Telecoms) at approx 40-45% gross margin. Sounds like a lot, but the costs of support, sales etc soon eats all the gross margin up.
Very little to none. In my industry I'm expected to run round and get the best deals for everyone and then pass all the savings on to the customer, I get viewed as Satan himself if I try to mark anything I buy up. Expected to only charge for the labour element.
As an average for work produced in-house we look for 4 to 5 times material cost on run-of-the-mill work. The labour cost of manufacturing can vary a fair bit though, some jobs are dead simple so don't take long, other a lot more complex.
If we buy in from trade suppliers we can mark up a minimum of 1.5x, and normally 2x. Very occasionally we go as low as 1.3x.
I get paid 50% of what my employer charges for my time and skills.
And about 25% of the cost of employing someone else to cover my shift.
Depends on which of the 3 different prices we sold the product at.
Similar here. I work in for a global tech company and the product gets charged per use. The cost per use is down to the deal negotiated. I'm not a salesman, but often sit with one of the sales teams.
On that note I now have no issues buying used cars or dealing with estate agents. Or arguing about how the local bike shop trade is actually a bloody hard and competitive trade.
Pimpmaster Jazz - MemberI work....
I call bullshit. 😉
I reckon our place is running at a loss & has been for years, doesn't seem to bother anyone though.
20 to 70% depending on how much value I can add along the way (testing and consulting in construction), ebitda is about 22%
2 or 3% across the industry.
15%
Edit: Scrap that 🙂
A fairly standard rate in my part time work is approaching 250%.
I met an IT 'consultant' today, who was lone chap, working from home (so laptop, car, nice tie as overheads), who was charging £1025 a day - and was overrun with work... 😯
Massive markup...
I call bullshit.
😆
Fancy a cheeky rum? 😀
High end recruitment here. 20%-22% on first year salary is about normal, nearer 15% for lower level roles, occasionally 30% for some retained work but that's rare.
Fancy a cheeky rum?
Wouldn't go with my curry. Besides, I expect you drink rubbish rum.
😉
matt_outandabout - Member
I met an IT 'consultant' today, who was lone chap, working from home (so laptop, car, nice tie as overheads), who was charging £1025 a day - and was overrun with work...Massive markup...
Not really the same for a service industry. He must have some rare knowledge.
A trifling [url= http://www.theatlantic.com/health/archive/2015/09/daraprim-turing-pharmaceuticals-martin-shkreli/406546/ ]5000%[/url].
(A bit less than this for most products)
180-220%, sometimes more (i.e I'm paid about 1/3 of what the company sells me for). Depends if you want to argue my time is the product or the deliverables are, but the cost of a a DVD is ~10p, so it's several million percent if you like at it like that!
Higher than the industry norm, because they implemented a company wide pay freeze just as:
I transferred into a (better paid) niche group
I was due a pay rise with the new banding structure (i.e. they had been undervaluing me)
I was due a promotion, but along with the no pay-freezes they froze that too!
And now it looks like I'll be redundant anyway.
I met an IT 'consultant' today, who was lone chap, working from home (so laptop, car, nice tie as overheads), who was charging £1025 a day - and was overrun with work...Massive markup...
Not when you consider the training cost to get to the point where you can charge out £1025 a day.
To put that in perspective, when I worked for a software house as a lowly developer, my charge out rate for a T&M project was £1250 a day, which was about a 1000% markup on my annual salary so probably 500% on my actual costs.
Besides, I expect you drink rubbish rum.
All the more for me. 🙂
*hic*
As much as I can get away with.
Bikeshop staff/owners say 'yeah but there's premises and heating/staff overheads'.Do normal businesses not also pay wages, business rates, rent, heating etc etc?
Oh yes, I never thought that, 🙄 all business owners work know this, however having a potential 20% or so margin is good for nothing if you have to discount it by that much to match mail order.
@Hora - what is it with you and bike shops, seriously? You seem to have a major chip on your shoulder...
My guess is he is a rider scorned, like a woman that hates men because she was cheated on, he must have had a bad experience once in a bike shop, maybe one day when he goes on a crazed rampage he will tell us his story of sadness.
Spent most of my working life in catering . Percentages are worked out in a slightly unusual way in as much as if you buy something for £1 and sell it for £2 you have made 50% profit as it's worked out on how much of the selling price is profit . When I started the standard was 60-65% which meant that stuff sold for almost 3x what it cost . Some modern places aim to achieve up to 75% or 4x cost which means that if I buy a dover sole for £12 , add on the cost of veg , garnish and then add VAT the cost of the finished dish should be over £50 which is bloody steep so you tend to lower the prices on really expensive dishes and recoup on cheaper dishes . Interestingly a lot of restaurants fall foul of the VAT man because virtually everything you buy in is zero rated for VAT but everything you sell has 20% VAT on it .
About 40-45% gross margin.
I could give the % on the 2 things we sell (software and my time) but factoring in all the costs would probably depress me. For the guy charging a grand a day in IT, how much time (not charged) does he spend on quotes, bids, contract negotiations, chasing payment and not actually working. Soon kills the margins
get paid 50% of what my employer charges for my time and skills
Jesus! I think the rule of thumb in my industry is that 1/7th of hourly rate is actually paid to the worker (although there are a lot of support workers needed for that billing worker. These tassles don't iron themselves you know).
As much as cost plus 15%, as little as cost plus 0.25%. IT distributor
On average, very slightly better than putting our investment in a decent bank account an leaving it there
I think the above illustrates why there is no answer to the how much margin in X business question. There is no fixed figure unless you are dealing with RRP's and fixed wholesale prices for all.
The art of negotiation is just that, an art. Just because you read on the internet that all car dealers work on 50% mark up, it doesn't make it true.
All markets are governed by supply and demand. Brand new Apple product on launch day will be full retail with a waiting list. iPhone, 4 new old stock, considerably less than the launch price.
If you want that latest thing that everyone else does, you pay the money or wait until it is no longer the latest thing.
no mark up on materials.. everything sold at cost, getting by on labour charges. get stung occasionally as today when somebody booked for a job then couldnt go ahead when we got there.
reviewing what others are charging though as i am far too cheap in comparison, one call today they had a plumber to fit their new tap last week and it was 135 to fit a tap..
Previous job (large mostly white collar engineering company), hourly rate for staff on long-term projects with ~100% billability would be 2x raw cost, which in that world meant salary / 2080 hours. So someone on £50k would be charged out at about £48/hour. Smaller contracts would be at a higher rate, maybe 2.5x, and for very specialist disciplines under the "consultancy" banner it might be 3-4x.
The company as a whole, on close to $10bn turnover globally, made a wafer thin net margin of about 2% IIRC.
A markup figure in isolation is meaningless without knowledge of the associated overheads.
no mark up on materials.. everything sold at cost, getting by on labour charges.
You need to do better than get by.
A markup figure in isolation is meaningless without knowledge of the associated overheads.
Exactly - a lot of people in employment know what the earn but have no idea what they cost.
100% billability would be 2x raw cost, which in that world meant salary / 2080 hours. So someone on £50k would be charged out at about £48/hour.
We use 1600 hours per year for this kind of thing as its more realistic. Your £x/2080*2 doesn't really cover costs, surely?
IT Support.
Varies massively - for 'box shifting' stuff - I.E. all the value we've added is knowing the right product it's 20% I.E. will sell it for 120% of cost.
For PCs and Laptops it's 30% but that means a fresh windows install bloatware free, migrating data and whatever else.
On top of that it really depends on how difficult / time consuming it is and who the end user is - our charity clients get charged about half the rate of our commercial clients.
Labour is covered by our service contracts, but if it's a new project rather than support it's £75 an hour - our lowest paid apprentice get the living wage of £8.25 per hour.
It's the way the industry works, clients won't pay the true cost of what IT support costs, so we sell it at a loss and make it up selling them hardware and 'solutions'.
30 to 40% margin is what we aim for. Sometimes its much higher, sometimes much lower, especially when some of the main contractors we work for do everything in their power to not pay us, then ask for a "deal" to let payment go through. 🙄
Large multinational IT manufacturer. You'd be surprised how little money we make on a lot of products, commodity products like laptops are often sold for a genuine loss in order to generate market share. We make more profit as you move further up the complexity of the solution being offered.
Final margin across everything works out around 12-14%.
Of the mainstream tech manufacturers only Apple makes significant margin on its products
My guess is he is a rider scorned, like a woman that hates men because she was cheated on, he must have had a bad experience once in a bike shop, maybe one day when he goes on a crazed rampage he will tell us his story of sadness.
omg Miss Haversham!
I work in IT, so mark-up is infinity as ones and zeros are free.
Engineering/manufacturing for the Defence sector here -
15-20% GM on new product (sometimes a bit less if its worth going in low to win the job.
anything up to 50% on spares/service support.
omg Miss Haversham!
You might say he has [i]great expectations[/i] of his local bike shop.
Chortle chortle...