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Old 04-13-2007, 01:30 AM   #1 (permalink)
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How much is too much on parts markup?

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.

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Old 04-13-2007, 06:25 AM   #2 (permalink)
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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.
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Old 04-13-2007, 06:46 AM   #3 (permalink)
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Knew a guy whose wife worked at dealer, if memory serves, she got half off on clothes, don't know about accessories.
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Old 04-13-2007, 07:23 AM   #4 (permalink)
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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...
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Old 04-13-2007, 10:22 AM   #5 (permalink)
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Razor, I can't help but wonder... why would it possibly matter? 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?
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.
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Old 04-13-2007, 10:50 AM   #6 (permalink)
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Quote:
Originally Posted by razorsedge
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.
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Old 04-13-2007, 12:07 PM   #7 (permalink)
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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.
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Old 04-13-2007, 12:07 PM   #8 (permalink)
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Quote:
Originally Posted by masstch
... 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.
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Old 04-13-2007, 12:32 PM   #9 (permalink)
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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.
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Old 04-13-2007, 12:57 PM   #10 (permalink)
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Quote:
Originally Posted by Ridewv
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%?
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Old 04-13-2007, 01:04 PM   #11 (permalink)
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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.
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Old 04-13-2007, 01:51 PM   #12 (permalink)
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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.
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Old 04-13-2007, 03:10 PM   #13 (permalink)
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Quote:
Originally Posted by bill corkey
wouldn't 200 to 400 be 100%?
Yes doubling, adding 100%, would allow for a 50% margin. Now if HD would loose the invoice and the dealer received the part without cost, whatever the dealer sold it for would be 100% profit.
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Old 04-13-2007, 03:28 PM   #14 (permalink)
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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.
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Old 04-13-2007, 03:51 PM   #15 (permalink)
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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.
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