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How much is too much on parts markup?

17K views 31 replies 24 participants last post by  tomv 
#1 ·
Something I have always wondered and maybe, just maybe there is someone here who has the inside scoop. What is the markup on parts you buy from the MOCO Stealership? I would guess its probably right at 100%. I mean the local indy shop here carries some harley parts and most of the time he has them at 15% off MSRP. He has to be making something. For instance, the dealership buys a part for $50. I bet the MSRP is $100. Does that sound about right. I'm not 100% sure I want to know cause I will probably only get mad the next time I have to buy a part. Comeon.....shed some light on the subject.

peace--
 
#2 ·
Markup isn't consistent and will vary from vendor to vendor. In some cases the manufacturer will dictate the markup. 20-30% is typical for most products, but in some cases it can be well above this. I spent some time as a service manager for a large office equipment company and the markup on parts could be in the neighborhood of 200-300% for generic parts. 30% was typical for genuine parts. Value, or how much the item is worth to the world will also play a part in the markup.

There is so much that goes into the equation it's sometimes hard to determine what is fair and what is not. Obviously, there are some resellers that attempt to rape the buyer at every turn, but there are also times when the markup is justifiable.
 
#3 ·
Knew a guy whose wife worked at dealer, if memory serves, she got half off on clothes, don't know about accessories.
 
#4 ·
a couple of local dealers have 30% off sales - in stock or ordered - anything in the store...
one of the guys told me, after they factor in expenses that day, they aren't making too much(on parts)...clothes have more of a markup, so they make some $ there...
another dealer that has 20% off parts once in awhile, has 40% off leather/raingear a couple times a year...
if your a HOG member at the dealer i bought my bike at, you always get 20% off anything...
 
#5 ·
Razor, I can't help but wonder... why would it possibly matter? :hmmm: I'm not flaming you, just really don't understand the thinking that 'how much the guy makes' would matter to me. My usual concern is 'how much is it gonna cost ME?'...whether the seller paid a penny for it, or a penny less than me, doesn't seem important. If he's selling to me for the best price I can get, he has the best deal for me. Am I missing something?:unsure:
Why take a chance on makin' yourself mad?

The question reminds me of the stuff you hear about knowing the "dealer invoice" on new cars. As if knowing the dealer's cost would make the sale price different.
Side note: I have an ex-Sis-in-Law who actually said she was going to buy a new Acura from dealer 'A' for some five hundred dollars MORE than dealer 'B' had offered. Her reason? She believed that dealer 'B' was going to make more profit and she wasn't gonna let that happen(!) That is a true story. I talked her out of doing that, but I probably shouldn't have. She's SUCH a dingbat. :duh?:
 
#6 ·
razorsedge said:
Something I have always wondered and maybe, just maybe there is someone here who has the inside scoop. What is the markup on parts you buy from the MOCO Stealership? I would guess its probably right at 100%. I mean the local indy shop here carries some harley parts and most of the time he has them at 15% off MSRP. He has to be making something. For instance, the dealership buys a part for $50. I bet the MSRP is $100. Does that sound about right. I'm not 100% sure I want to know cause I will probably only get mad the next time I have to buy a part. Comeon.....shed some light on the subject.

peace--
In business, profit is understood as a percentage of the selling price. Selling a part that costs $200, for $400 would be a 50% margin.
I would think a 33.33% - 45% margin, with the higher margin on the inexpensive parts like the $5 screw, and 33% on the stuff over $50 would be fair. That would allow the dealer to offer a 10% discount to good customers, or larger sales and still make money. The cost should include a freight allowance unless HD pre-pays and includes shipping.
An example: a muffler costs the dealer $100, $90 plus $10 shipping. Some would say "he gets a 50% mark-up." He multiplies x 1.5 to get a 33.3% margin. (66.66% cost, 33.33% gross profit) So the retail is $149.99. Then he offers a 10% discount and sells it for $135. He's now at under a 20% margin. That could cover the dealer overhead and a profit *if* the dealer overhead is kept modest! What HD has "encouraged" dealers to spend on bricks and mortar, halogen lighting, ceramic tile, etc. could make it difficult at those margins and that's where my beef is.
 
#7 ·
The internet dealers are selling everything at 20% off retail and you know they are still making money. This means the mark-up has to be at least 30% on parts. It's probably more like 100% on clothes. Even the cheap t-shirts are selling for $25 now.
 
#8 ·
masstch said:
... The question reminds me of the stuff you hear about knowing the "dealer invoice" on new cars. As if knowing the dealer's cost would make the sale price different.
What am I missing in your argument? A dealer tries to sell a car as close to MSRP as possible... and a buyer tries to pay as close to invoice as possible. So yes, knowing what the dealer pays and working your deal towards that number will a) save you money and b) make the sale price different.

Your analogy doesn't really work because nobody really dickers on retail prices (parts, clothing, groceries)... while buying a car is one of the only times you never pay the asking price.
 
#9 ·
Markup will vary, generally the more expensive items will have a lower margin. I know for example that an item I special ordered once that had a 499.95 MSRP cost the dealer 350.00, I get 10% HOG discount, so I know they made 100.00. The same is true in my business, the higher the price the lower the margin, but even at a lower margin there will be more gross profit dollars, and dollars are what pay the rent. It seems that many people, including this thread starter, are comsumed with how much someone is making on the sale of an item, it's almost as if they begrudge someone making a profit. You can't make a living if there is no reasonable profit, and some people's version of "reasonable profit" would leave most of us in poverty.
 
#10 ·
Ridewv said:
In business, profit is understood as a percentage of the selling price. Selling a part that costs $200, for $400 would be a 50% margin.
I would think a 33.33% - 45% margin, with the higher margin on the inexpensive parts like the $5 screw, and 33% on the stuff over $50 would be fair. That would allow the dealer to offer a 10% discount to good customers, or larger sales and still make money. The cost should include a freight allowance unless HD pre-pays and includes shipping.
An example: a muffler costs the dealer $100, $90 plus $10 shipping. Some would say "he gets a 50% mark-up." He multiplies x 1.5 to get a 33.3% margin. (66.66% cost, 33.33% gross profit) So the retail is $149.99. Then he offers a 10% discount and sells it for $135. He's now at under a 20% margin. That could cover the dealer overhead and a profit *if* the dealer overhead is kept modest! What HD has "encouraged" dealers to spend on bricks and mortar, halogen lighting, ceramic tile, etc. could make it difficult at those margins and that's where my beef is.
wouldn't 200 to 400 be 100%?
 
#11 ·
It's the "new math". Oh by the way, dealers are not obligated to give HOG members any discount. It's nice and helpful though if they do. I know mine does and we appreciate it. We also appreciate that he's in business to make money. How much is too much? Not for me to know or care. It's all about whether I'm comfortable in paying the asking price in whatever I'm thinking about buying.

There's some good comments on this post.​
 
#12 ·
Auto parts are different. They usually get one price for stocked items and another for special order. A stocking dealer for auto electrical items and hoses and belts pay 15-20% of list price. They usually make 50% on oil and much more on additives, cleaning supplies, stickers, etc.List price is what you pay for the part in a shop that does your work. Over the counter (on auto parts) is usually 10-15% less than full list, and shops usually pay 30-40% less for the part.
The dealer almost always gets full list for over the counter sales. It doesn't matter what the place pays for a part, it is what you pay. If you have a friend with a commercial garage or a resale number, you can usually get a discount. You usually get the best price on Harley parts from a 20% off online dealer. If you buy from an out of state dealer, you don't pay sales tax, that usually covers shipping.
 
#15 ·
Keep in mind also the nature of the part or product. A dealer might have a higher margin on things like oil, filters, etc. because they probably buy this type of item in higher quantity. There's no reason for them to buy 200 sets of the same foot peg or whatever other slow moving item.

I would venture to guess that dealers don't make as much on parts or accessories as one might think. I was talking to a local custom builder the other day about this very subject and he was bitching about what parts cost him. If he was building 500 bikes a year he could problem get a decent discount on frames and all the other required items, but they simply don't buy enough to get a decent deal themselves.

The vast majority aren't out to screw anyone. They gotta eat and keep the lights on just like everyone else. It's the occasional numbnut that comes along trying to sell at 500% markup and really believing they deserve to get it that gets you really pissed. But, the easy way to deal with that is to walk.
 
#16 ·
GearGrinder said:
In the capitalistic system, "it's what the traffic will bear", is the fair markup price. If I inherit a car from my deceased Aunt and now I want to sell it, what is a fair selling price? I will ask book value, possibly more if I can get it, I think that's a fair mark-up.
Ding ding ding.....we have a member who passed Econ 101!!!!! Good answer!

:clap:

T113
 
#18 ·
91fe said:
What am I missing in your argument? A dealer tries to sell a car as close to MSRP as possible... and a buyer tries to pay as close to invoice as possible. So yes, knowing what the dealer pays and working your deal towards that number will a) save you money and b) make the sale price different.

Your analogy doesn't really work because nobody really dickers on retail prices (parts, clothing, groceries)... while buying a car is one of the only times you never pay the asking price.

I'll happily explain, :whisper: but first I must make a couple of small corrections:%potstir@
A dealer tries to sell a car for as MUCH as possible and this price is determined
by the current market for that car. This price might well EXCEED the MSRP.
(many many examples available.) This price could even be below invoice. (examples available)

A buyer tries to buy the car for as LITTLE as possible. This price might well EXCEED
the MSRP. (many many examples available.) This price could even be below invoice. (examples available)
Note that there is no maximum and also no minimum price regardless of MSRP and invoice.

My analogy stands quite well on it's own because I used the analogy not in
reference to the practice of dickering,
but in reference to the buyer's
interest in the seller's margin.

Note that "dealer invoice" is not a true index of a dealer's cost for a car. The
invoice will not always include various rebates, incentives, package specials,
seasonal promotions, etc,etc.

When comparing prices, the price is all that ultimately matters. Knowing the
seller's margin will not change your cost;
knowing his margin can only serve to change your attitude.:hmmm:

You claim that having the invoice number will effect your buying price; does
that mean that without knowing the invoice price, you wouldn't plan to
bargain for the lowest price you could get?
How would adding the invoice information change your plan?
If you dickered your way to the dealer's bottom dollar....and then discovered
that the invoice price was HIGHer than his offer; would you stop the deal?

Put yourself in the place of my Sis-in-law as stated above; lets assume that
the premise is accurate, that the two cars are equal and the two dealer's
costs are actually different for whatever reason... are you going to pay more
for the higher-priced car just because that guy will make less margin?
Say it ain't so, 91.:eek:

When shopping for a car, if you compare prices and then challenge each
dealer to 'beat the other guy' you'll find the lowest price, guaranteed. If you
then produce your invoice copy, you'll find that the dealer is not going to
lower the price even more, just because you have this "secret number" to shoot for.
In the end result, the competition between dealers will determine the lowest price.

If it makes you FEEL better to go armed with the invoice number, mo powa to ya!~!Awesome!

Ultimately, if you need a new chrome-plated Harley-widget and Dealer A wants a 100 bux...and Dealer B will sell his for 85 bux....wher're you gonna shop?:duh?:

Your (our) concern for dealer B's margin should be: I hope he doesn't cut himself so low that he goes out of business...and then we're stuck with only Dealer A!:xhere:


My apologies to Razor, I didn't intend to hijack!:blink:
And yes.... I am a ;!pstwhore
#Spankme@
 
#19 ·
I haven't read all the replies, but the way I see it- dealers need to make a profit so that there is a point to them opening their doors every day. Your job, is to shop around and reward your business to those dealers that treat you right and have the best prices.

Let the less educated or the naive keep the expensive dealers with poor service in business, and you and I can keep places like Benji's and Zanotti's in business...
 
#20 ·
masstch said:
In the end result, the competition between dealers will determine the lowest price.
I can attest to this because I just bought a new car. The 'invoice' meant squat in the end. With 5 dealers competing I ended up buying it for well less than the mystical invoice price. Took about 2 weeks of back and forth with 5 dealers, what the winning dealer was willing to part with the car for was nearly $2000 below 'invoice', all the while telling me they couldn't let it go for less than $200 below invoice.
 
#22 ·
BOUTYM said:
I was talking to a local custom builder the other day about this very subject and he was bitching about what parts cost him. If he was building 500 bikes a year he could problem get a decent discount on frames and all the other required items, but they simply don't buy enough to get a decent deal themselves.

This custom builder is trying to use quality custom parts. Even if he paid 40% of list for those parts, the bike's parts costs would make the bike prohibitive.
Hid headlight $400
springer front end 1800
custom 1 off wheels 4000
top of the line handlebar controls 2000
S&S engine & trans 11000
custom running lights turn ind 400
avon venoms 600
braking system (brembo) 2000
frame and tin 2000
paint 2000
custom seat 300
air ride 2000
custom pegs shifters 700

That is some of the major expenses. you still have to make wire looms, supply fasteners, battery, starter and time to put it all together. All of this cost, as well as a shop and the equipment needed.
Now the owner wants to sell for a profit, and the place that actually sells to the public wants a profit. How do they make money?
These custom builders get a big break for using some parts, the makers hope that others will want them and pay big $. How could these places like Big Bear make money when selling for the prices they do?
 
#23 ·
As many have pointed out 100% profit means you paid $0 for the item in question.

To calculate the selling price you divide by the difference...

to make 40% profit, you divide your cost by .6

Rule of thumb is 40% in retail. Little items have bigger margins, larger have smaller. If you have lower overhead you can make ends meet in many cases w/a 28-32% gross profit. Last time I checked Wally World was at the top end of that.

I'm betting when you mail order HD parts at 20-25% off the dealer is only making 20%, which isn't to bad for him considering he doesn't have to spend much on inventory for ordered parts not-in stock. Order a part from a non-discounter and it's free money for them, the more the merrier and they collect it ahead of time!
 
#24 ·
It might surprise you to know that "Genuine Harley" P&A and motor clothes etc are not marked up very much. I know this as my wife works for the local dealership. Her discount is based on the cost of the product plus a percentage. When we buy genuine Harley parts or accessories we only save about 15 to 20 percent. When we buy non Harley P&A we save closer to 30 to 45 percent. For instance a Genuine Harley tee shirt might retail for $30.00 but still costs us about $24.00. A non Harley shirt (the ones with the dealer logos) retails the same but costs us about $18.00. On jewelery we save almost half which is typical for jewelery anywhere. On P&A we don't save as much as virtually all are genuine Harley parts though the savings vary and are substantial on some things.
 
#25 ·
I can tell you if motorcycle parts are anything like aftermarket car and truck performance parts the profits are not nearly what you may think and it's getting lower all the time.

Many manufacturers are enforcing pricing policies and getting more and more strict every day. If they are allowed to continue down the road they are on now you can expect the day to come that you will not find any price competitiveness.

I know this may not necessarily apply to the MoCo or motorcycle parts but if it doesn't today it will soon enough.
 
#26 ·
Years ago I was an Independent dealer. My brother-in-law at the time was always looking for some type of vehicle-truck, car, whatever. He absolutely would not buy anything from me because he couldn't stand the thought that I might make a dollar off of him. Instead, he would buy some POS off the street, pay more for it, then have to dump money in it to keep it running. My vehicles were always fully serviced and ready to go. Matter of fact, most I sold to other dealers, because they knew my vehicles were top notch and there was never a problem after the sale. A fair price is whatever one is willing to pay irrespective of 'margin'.
 
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